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A Ford ability crisis

Henry Ford was born on the outskirts of Rockhampton in 1922. In 1925, he established Ford Australia, and subsequently travelled back in time to found the Ford Motor Company in the USA sometime prior. The upshot of all this, is that the bogan knows there is no car company more Australian than Ford, because Holden

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Insurance insurance

Insurance stocks have been taking a bit of hammering for obvious reasons. QBE issued a couple of days ago an after market profit warning and is trading well below where it was a year ago. IAG has performed a little better, but not well. Southern Cross has a buy on Suncorp, arguing that it is

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Yesterday’s hero

Will they never learn? Nearly 11 years on since it was first introduced the federal grant for first home owners still stands at $7000, even though the average house price has more than doubled in that time. That’s led one leading mortgage broker to suggest it is time the scheme was upgraded. The residential housing market

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June 17 links: Up and down

Rocket: $US Flat: gold, ore, metals, energy, Down: euro, Aussie, CRB Smashed: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Philly Fed crashes. Calculated Risk Housing starts, jobless slightly improve. Zero Hedge Royal wedding effect passes. Alphaville Banks using secured funding. Alphaville India tightening. FT Libyan oil gone for years. FT Papandreou wrestles with new cabinet. FT No more stimulus. Tim Duy Citi trashes coal lobby carbon report.

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Central banker makes housing sense!

I was disappointed in RBA Governor, Glenn Stevens, speech Wednesday. I had expected that Mr Stevens would at least acknowledge Australia’s Achilles heel – its high level of household indebtedness and house prices – and warn of the significant risks that these pose to the economy. Instead, Mr Stevens ignored the debt Godzilla and linked Australia’s house price appreciation to population growth. Interestingly,

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Dutch Disease and jobs

Today the ABS released its quarterly Labour Force Survey – Detailed for May. I’ve broken it up into a series of sectoral charts by full time jobs below. Each says it ends in March but it don’t. Each ends in May, damnit. First up, let’s look at the growing sectors. Top of the pops is,

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Trading Day: game over

The S&P/ASX 200 opened down sharply reacting in line with overnight markets which were all down 1 to 1.5%, reversing yesterday’s gains. At just after midday, the index has lost just over 60 points or 1.31% down to 4510. Asian markets are similarly effected, with the Nikkei down 1.1%, the Hang Seng down 1.4% and

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Car sales crash

Governor Glenn may still be feeling feisty about the economy but it’s becoming increasingly obvious that he’s flying solo. ABS May car sales are out and can only be described as a crash, down 7.6% month on month and 14.5% year on year. These sales levels were first seen in 2003 and again in December

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Wolf debates Stevens

Today Martin Wolf of the FT joins the growing ranks of China skeptics. It is interesting to contrast his views with those of Glenn Stevens, enunciated in his speech yesterday. According to Wolf: Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding

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Bye, bye Macfarlane years

Over the past several years, the RBA, and some of its former staff, have engaged in a quiet reassessment of their role in the pre-GFC build-up of destabilising levels of debt in the Australian economy. There are a number of examples. There is the late 2009 confession by Ian Macfarlane’s former deputy, Stephen Grenville, that

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The problem with asset allocation

What is asset allocation and why discuss it? Surely super is all about putting money away for retirement: how hard can that be? In this post, I will outline the conventional thinking regarding asset allocation and why it’s mostly wrong. The empirical evidence regarding this contention is overwhelming and stark. The major academic theories that

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Shorting houses

Australia’s greatest housing champion, Chris Joye, is back with a new product for housing investment: Tired of the drudgery of finding, buying and managing an investment property? If the Australian Stock Exchange’s plans come to fruition, you will soon be able to get exposure to Australia’s $3.5 trillion residential real-estate asset-class without buying a home, paying

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June 16 links: Trojan markets

Rocket: $US Up: gold, ore Subterranean: euro, Aussie, energy, CRB, metals Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Greece burning. Bloomberg, FT Betting on a Greek accident. FT No QE3. Hilsenrath QE3 will be unlimited. Credit Writedowns US core inflation rises. Calculated Risk US capacity utilisation stalled. Calculated Risk Zombie consumers. Stephen Roach Interbank measures seizing. Zero Hedge Rosenberg calls new recession. Forbes US not yet

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The debt that killed the UK economy

Back in April, Dr Oliver Marc Hartwich from the Centre for Independent Studies wrote an article in Fairfax on the worrying parallels between the UK and Australian economies and housing markets. The current mood in Australia triggers eerie memories for me. I feel as if I have experienced this scenario before – not in Australia

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Stevens raises his fists

Governor of the Reserve Bank, Glenn Stevens, delivered a fascinating speech this afternoon. One would almost have to describe it as combative. He dismisses weakness in the services economy, wholeheartedly defends the mining boom as pretty much bailing us out (which I agree with)  and more or less tells you to get over any concern you

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Trading Day: jitters continue

The S&P/ASX 200 opened slightly down, reacting strangely to overnight markets which were all up 1 to 1.5%, and at mid-afternoon has lost just over 24 points or 0.5% to 4561 probably in response to Glenn Stevens inflation rhetoric about future rate rises. Asian markets are mixed, with the Nikkei down 0.13%, the Hang Seng

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Melbourne builds on

ABS March quarter dwelling commencements are out and show an onging decline in housing commencements, which is still a give back following last year’s FHOG. For apartments, however, there’s a big seasonally adjusted jump:         MARCH KEY POINTS           DWELLING UNITS COMMENCED The trend estimate for the total number of dwelling units commenced fell 1.9% in

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Marginal bet

An intriguing comparison between economic growth potential and valuation of stocks comes from Deutsche Bank this morning. When looking to invest globally, it is a good idea to track economic growth potential, right? And that means looking hard at emerging markets, doesn’t it? Well, not necessarily. The overall growth of the economy does not necessarily

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Dour mood sweeps consumers

The Westpac/Melbourne Institute Consumer Confidence Survey is out and makes dour reading. Sentiment fell by 2.6% in June from 103.9 in May to 101.2 in June. The commentary is equally gloomy: This is a soft result. It is the lowest print for the Index since June 2009 (100.1). At that time households were relieved that Australia appeared

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FHOG bust redux

Back in mid 2010 when I wrote for Business Spectator, I compiled a column on the turning point in Australian housing and the likely shape of the coming bust: This column concludes that the RBA has busted the first home-buyer bailout bubble, as it should. Now, we will see just how strong supply and demand

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Investing in a sideways market

There is always media chatter about what markets are going to do in the short to medium term.  It’s most intense at the end of each year, as the financial pundits stare into their crystal balls and attempt to divine the direction of the All Ords, FTSE, Nasdaq, S&P 500, Nikkei and every other major

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Gassy mines (and reports)

When we talk about methane emissions, we tend to think about farting (or burping, more accurately) cows. But another strong contributor to methane emissions (yes, odourless and colourless like CO2) are fugitive emissions from extraction of fossil fuels, particularly coal mines. Every tonne of methane released is the equivalent of 21 tonnes of CO2 released,

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Queensland whacks home buyers

3 Months ago the Queensland Treasurer Andrew Fraser had this to say about stamp duty on residential dwellings. One of Queensland’s most despised taxes could be axed to save homebuyers tens of thousands of dollars. Homebuyers have paid more than $12 billion in stamp duty since 2006 but the State Government yesterday said it should be dumped.

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June 15 links: Relief rally

Flogged: $US, grains Up: euro, Aussie, ore, energy, CRB, gold, metals Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece What will QE3 look like? Credit Writedowns, Zero Hedge Is the US slowdown temporary? Calculated Risk US retail sales fall. Calculated Risk US PPI tumbles. Zero Hedge Majority say no QE3. Bloomberg China to keep tightening. Imarket News India inflation raging. BusinessWeek Food prices stoke protests in China. FT Wolf

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Goosing the stockmarket

Regular readers will know that I am confident that QE3 is on the way sometime after markets get their swoon on. There are a number of reasons why I’ve formed that judgement. First, it’s because, in my view, the US economy is driven by markets, not the other way around. As Alan Greenspan argued in

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Churn baby, churn (a follow-up)

Following on from last night’s article on the relationship between home sales and home prices, a few readers asked me how the charts looked for the smaller capital cities, namely Canberra and Darwin. I originally left these cities off the original article due to time constraints as well as the fact that annual sales data was not

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Stimulus fallout

My long time readers would know that I was certainly not supportive of the first home buyers grant boost that the government implemented as part of its stimulus packages in response to the GFC. I have previously mentioned my issues with this sort of policy. It is unsustainable It brings forward demand, [so] can therefore

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Trading Day: steady?

The S&P/ASX 200 opened 30+ points sharply down, reacting to overnight markets (it was closed Monday) but then reversed and at midday is up nearly 9 points or 0.19% to 4573 points. Asian markets are generally up, with the Nikkei up 0.16%, the Hang Seng steady and Singapore also barely up. Other risk assets are

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Chinese inflation bubbles on

From Bloomberg (h/t The Lorax): China’s inflation accelerated to 5.5 percent in May, the fastest pace in almost three years, and industrial output grew more than economists forecast. The annual gain in consumer prices matched the median estimate in a Bloomberg News survey of economists. Production rose 13.3 percent last month, the statistics bureau said in