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7 rate rises in the next 15 months?

Leith van Onselen BIS Shrapnel was out this week with some startling predictions for the Australian economy and housing markets. It’s worth taking a look, although let’s remember that their recent form on both the economy and housing has been questionable. For example, in July 2010 – near the peak of Australian house prices –

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Market Morning

Lets check out what happened in detail last night before the open of the local markets – remember to read Trading Week to always put this daily noise in context. The European PMI’s disappointed strongly last night and were likely behind the falls on the Euro bourses. UK FTSE finished down 0.8% at 5846, the German DAX falling

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Europe performing as expected

Anyone who has been following my European commentary for any length of time will know that I have been running a number of risk themes on Europe due to what I consider to be misguided and one-sided policy which will ultimately be counterproductive. These themes come under the major trend that I see in the Eurozone:

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Australian dollar pummelled on poor PMIs

Not a great night if you are bullish on stocks and the commodity complex, because commodity currencies like the AUD which were already off a tad on the back of the flash Chinese PMI after lunch yesterday, and then were put under more pressure from similar indexes in Europe. On the markets Bloomberg reported: March

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Chart of the Day: pining for wine

I was going to post a more gruesome chart of the flash PMI’s from Europe last night, but Delusional Economics is writing a report on the result, so this chart from The Economist should take its place: It really is a two speed global economy with the USA, China and Russia expanding,  whilst in percentage

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Is US debt growing at unsustainable rate?

Cross posted from Colin Twigg’s blog with permission: We often blame Fed monetary policy for the GFC, with interest rates at exceptionally low levels leading to “Greenspan’s bubble.” Treasury was just as culpable, however, with the massive 2004-2005 surge in public debt flooding the market with liquidity. The repeat in 2008-2011 was more justifiable: the spike

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Yuan swap deal for few

From the RBA and Banking Day: The central banks of China and Australia yesterday announced an agreement for future currency swaps notionally worth up to CNY200 billion or A$30 billion. According to the Reserve Bank of Australia’s announcement, “The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly

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Citi weighs in on commodity super cycle debate

Citi has joined the recent debate about whether the commodity super cycle is finished (or nearly so) with an argument in the affirmative. Bulls like to point to the fact that the apparent intensity of use for steel (in terms of kg per capita) for China is still well below some other countries at their peak. However,

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Links 23rd March: Europe worries return

Markets: Up: USD , Treasuries , ore Down: Stocks , energies, euro, Aussie , gold , CRB Sovereign Yields: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany

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Trading Day – AUD smackdown!

Trading Day covers the relevant moves in the Asian stock, commodity, debt and currency markets including a review of the top 8 Australian stocks – the top 4 miners and banks, highlighting trading ideas and investment opportunities. Remember to read “Trading Week“, published each Saturday morning, to put these events and ideas in context. Well

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Holden gets a hand

  Don’t listen to the gloom and doomsters. There’s a raging job opportunity going in Oz. All you need are two large hands with strong foreams, able to be held at the horizontal for long periods, sometimes decades at a stretch. Please make your CV out to “The Federal Government New Car Plan”. Don’t worry

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China manufacturing disappoints (updated)

The HSBC Flash Manufacturing PMI for March was just released and was disappointing – 48.1 – anything below 50 means contraction. This is the 5th consecutive month of contraction, last month the PMI was flat at 49.7 points. The downtrend is obvious. What is not so obvious is the mechanism behind the slowdown: Importantly, new

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Manufacturing sector continues to adjust

An interesting survey result from the Westpac–ACCI Industrial Trends which covers the first quarter of 2012, with manufacturing activity remaining weak with pricing power “extremely limited”, as selling prices declined and expected to remain steady – i.e deflationary in real terms in the next quarter. Here are some key points: Actual Composite edged lower in the

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Onesteel becomes two businesses

OneSteel is seen as a steel manufacturer but it describes itself as being vertically integrated and “self-sufficient in iron ore”. That puts it in an interesting position with the signs of demand weakness in China. Vertical integration in part protects the company from being overly exposed to the rise in iron ore prices, its operations

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China links

Courtesy of Sinocism: Bamman – With Twitter and Facebook blocked in China, the stream of information from Chinese domestic social media provides a case study of social media behavior under the influence of active censorship. While much work has looked at efforts to prevent access to information in China (including IP blocking of foreign Web sites

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Australian bulls running through a China shop

At MacroBusiness we have been warning about the Australian policymaker love affair with all things Chinese for some time now. It’s not because we are natural contrarians but rather because we see risks in an over indulgence on any one economic theory or belief, be that overly optimistic (perma-bull) or overly pessimistic (perma-bear). How else did

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RP Data daily home price indices

By Leith van Onselen Please find below the RP Data-Rismark daily house price indices for 22 March 2012: And for added context, below are the index values as at the end of February, which you can compare to the above daily movements to get the month-to-date home price movements in each capital and nationally: Finally,

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Market Morning

Lets check out what happened in detail last night before the open of the local markets – remember to read Trading Week to always put this daily noise in context. The UK budget was handed down last night although I’m not if that was behind the initial surge on the UK FTSE which then finished flat (maybe

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RBA’s Debelle on bank funding

By Leith van Onselen Reserve Bank of Australia (RBA) Assistant Governor, Guy Debelle, this morning delivered a speech on bank funding. It is basically a summary of the recent RBA Bulletin article entitled Banks’ funding costs & lending rates, which was discussed on MacroBusiness last week (here). The key findings from the RBA’s analysis, discussed

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Commodity exports to the moon!

By Leith van Onselen The Bureau of Resources and Energy Economics (BREE) released its Resources and Energy Quarterly—March quarter 2012 (report below) yesterday, which provides a bullish outlook for Australian commodity exports. From the press release [my emphasis]: Australia’s resources and energy commodity export earnings are forecast to continue to grow over the medium term

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NZ growth weak, misses forecast

The New Zealand 4Q GDP results were released this morning and looks weak at first glance: The New Zealand economy, as measured by gross domestic product (GDP), grew by 0.3 percent in the December 2011 quarter, Statistics New Zealand said today. This latest result follows economic growth of 0.7 percent in the September 2011 quarter. The

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The exponential end game

By Leith van Onselen On Monday, I published a post entitled “Dangerous Exponentials”, which summarised recent research by Dr Tim Morgan, Global Head of Research for Tullett Prebon. In this research, Dr Morgan presents a series of “dangerous financial and non-financial exponentials” that are not sustainable and ultimately risk destroying the economy, environment, and overall living

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Chart of the Day: no limits on profit

James Montier of GMO (home of “doomster” Jeremy Grantham) published a fascinating note recently on profit margins, with a narrative around the well established concept of “reverting to the mean”. Two charts stood out, as Montier explained the macro drivers behind US corporate profits. The first is the historical review of US corporate profit margins

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Mortgage insurance gravy

From Banking Day: Mortgage insurers earned a total of A$999 million of premium income in the year to June last year and incurred claims of just $177 million. The segment is of increasing interest, not just to the banks and other lenders that buy this insurance (in a highly concentrated market) but also to investors,

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State by state forecasts for 2012

Yesterday NAB released its State Economic Update and it makes interesting reading. The first thing you will notice is that in the below summaries, the only three drivers of growth mentioned are mining, housing and government. They got that right. Here are the forecasts for state-by-state growth: First to NSW: Following a relatively sluggish year,

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Buiter throws cold water on Europe

Former high flying central bank advisor and current Citigroup Chief Economist, Willem Buiter, last night appeared on Bloomberg radio to politely destroy any notion that the European crisis is over. Among his statements he included high probability forecasts that Greece will need another bailout by year end, Portugal next year, Ireland before long and Spain

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Links 22nd March: … and then Spain

Markets: Up: USD , gold , CRB , Treasuries Down: Stocks , energies, euro, Aussie Flat: ore Sovereign Yields: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year

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Trading Day – crestfallen Newcrest

Trading Day covers the relevant moves in the Asian stock, commodity, debt and currency markets including a review of the top 8 Australian stocks – the top 4 miners and banks, highlighting trading ideas and investment opportunities. Remember to read “Trading Week“, published each Saturday morning, to put these events and ideas in context. The

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China links

Courtesy of Sinocism:   Wen lays ground for Tiananmen healing to begin – FT.com – As Mr Wen prepares to step down at the end of this year as part of a once-in-a-decade political transition, he may be gambling that the time has come to right historical wrongs as a way of launching political reform. The