All quiet on the iron ore price front

All quiet on the ore front yesterday with little movement anywhere (though swaps haven’t updated yet): As some buying support appears to be coming back into the market, I thought it worth revisiting a chart from Morgan Stanley from last year’s falls: Take a close look at the very sensitive relationship between the iron ore

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America sqeezes its youth

By Leith van Onselen The September issue of the Atlantic contains an interesting article lamenting how America’s Generation Y (“the Millennials”) are shunning  big ticket purchases, such as new cars and housing. The article raises a bunch of possible reasons for this phenomenon. But one reason, more than any other, is to blame in my


More European delay and delusion

As I wrote early last week Antonis Samaras was to spend much of the weekend in talks with Angela Merkel and Francois Hollande about the future of his nation.  As the Telegraph pointed out yesterday the results were, as expected, unconvincing: Angela Merkel and Francois Hollande pledged to keep Greece in the Eurozone, but offered Greece


The land bubble

By Leith van Onselen I have shown previously that the escalation of Australian housing values since the late-1990s has been caused, primarily, by an increase in land values rather than construction costs (see below chart). Now RP Data has released statistics showing the extraordinary (literally) escalation of land costs across Australia’s capital cities: Importantly, the


Dud earnings drive China’s bear market

The on-going weakness in Chinese equities has been a recurring theme for me. Here is the latest bear market low: There is nothing particularly out of the ordinary regarding the poor performances of equities if one compared Chinese equities with other stock market bubbles. More to the point, corporate profits have been quite weak.  Profit warnings filed with the Hong


Why you’ll get no QE3

As Jackson Hole approaches so too does disappointment on QE3. It’s one simple word: oil. Here is the history: Here are the charts for US gas and diesel prices: The more things change the more they stay the same. Why give more destabilising QE when the “QE put” is inflating everything already. Or, from the


Links August 28th

Global Macro: Hugo Chavez visits site of refinery explosion that killed 41. CNN. Venezuela’s oil infrastructure, accounting for 94% of the nation’s exports, is in a shoddy state. With accidents like this he’ll have to work extra hard to rig the next election. Deep political problems also plague Saudi Arabia. Financial Times Assad regime accused


ASX Shares Daily – 27th August

  By Chris Becker In case you’re wondering what that chart is above, its the intraday correlation between the Dow Jones futures (orange), the ASX200 (red) and the Shanghai Composite (black). Think you can get away with only looking at Aussie stocks only? The chart btw came from David Scutt, the Treasury Dealer at Arab Bank


Bears under the beds!

It’s all very entertaining. Last week it was Chris Joye at the AFR condemning some bearish menace looming over housing. Sadly too, the Governor of the Reserve Bank of Australia has recently taken to bear bashing, reckoning that Australians are more worried about the economy than the Greeks. Yesterday in his weekly drivel, Wayne Swan


China links

Courtesy of Sinocism In another sign of worry about the flagging economy, Premier Wen Jiabao visited Guangdong Friday and Saturday and urged targeted, effective efforts to stabilize export growth (千方百计稳定外需 努力实现稳增长目标–温家宝总理在广东考察  – 新华网). Bloomberg’s report on his visit (Wen Says China Need Measures to Promote Export Growth) emphasizes that his tour was more about confidence building than practical


Coking coal still sliding

From the ANZ: Newcastle FOB physical thermal coal prices were steady last week at USD89.05/t. Although market activity remained subdued, the end of the Muslim holiday of Eid al-Fitr in Indonesia should see more movement this week. Having hit a low of a low of USD81-82/t in late July, thermal coal prices have held up well. The same cannot be


Macro Investor Volume 1, number 9

Macro Investor Vol 1, No 9. is now available at the website and in PDF. War is peace, ignorance is strength, there was no mining boom… The mining boom has transformed Australia’s political economy in ways that will be felt for years to come as what has been forecast as a structural revolution will, in


The Economist on a China hard landing

By Leith van Onselen The Economist has published an article examining the potential impact of a China ‘hard landing’ on a range of China-dependent countries: According to The Economist: A sharp slowdown in Chinese investment was one of the risks examined by the IMF in a report this month on the systemic five. Ashvin Ahuja


Macro Morning – Stocks surge

Stocks in Europe and the US rallied on Friday after the ECB bond spread target rumour hit the screens again and a letter from Fed Chairman Benanke to one of his congressional critics was was released to the press. In the  letter Bernanke said that the Fed had more room for monetary stimulus which in


China’s disillusioned youth

By Leith van Onselen We often hear about the building social disquiet in China, and how civil unrest is a major threat to the Chinese economy’s advancement. From Al Jazeera comes the above fascinating video report exploring how China’s youth – particularly those with university educations – are losing faith in the Chinese ‘economic miracle’.


Credit crunch seizes iron ore price

Friday’s ore price movements showed some stabilisation: With 12 month swaps catching a break, there is some hope that last’s week’s heavy dump was the capitulation phase for the ore price. There is not much hope in the fundamentals, however, with rebar falling to a new low and little discussion so far of Chinese steel-makers


A history of terms of trade errors

The government spent the weekend in damage control about the forthcoming black hole in the Budget. Apparently: Australia’s mining boom is not even halfway over, federal Trade Minister Craig Emerson has declared, days after his cabinet colleague Martin Ferguson said the boom in commodity prices had reached its peak. “We’ve got a lot of projects


Vested interests perpetuate ageing myths

The Australian business lobby’s advocacy for higher immigration rates and higher population growth is relentless.  Anyone with an ounce of business nous or economic intuition would realise that the beneficiaries from high population growth are existing big business.  In particular those who exert a degree of monopoly power who stand to grow simply as a


China’s stimulus headaches

To this date, there remains a lot of confusion about the ability of People’s Bank of China (PBOC) to ease monetary policy. It has been constrained by what it appears to be a money outflow, which tightens liquidity within China automatically. The PBOC used to create money mainly as a result of foreign exchange intervention.  During the time when there


Links August 27th

Global Macro: Chart: World stock market recovery since 2007/2009 NYT Samsung infringed on Apple patents Reuters, Jury didn’t want Samsung to get off easy Reuters Apple patent victory boosts Microsoft as asian vendors scramble Reuters But, did Samsung win? Gigoam , either way they will appeal BBC United States: Schedule for the week ahead Calculated Risk So Mitt,


Will Stock Markets Survive?

There has been much debate about the demise of equities, inspired by PIMCO’s Bill Gross’s comment that equities are in a state of terminal demise. An interesting response came from Grantham’s Ben Inker, who argues that the relationship between GDP and earnings per share for equities is non-existent. And that therefore trying to pick stocks


Macro Investor this week

Find below the contents page of the past week’s Macro Investor report for you to consider a 21 day free trial subscription. Macro Investor Volume 1, No 8 MACRO: Running with the Draghi put Risk, Europe and equity markets are running with an enthusiasm that would impress even the crowds at Pamplona. Nonetheless, investors will need much more


Weekend Links August 25

4 months till Christmas – yippee Global Macro: 10 Best Central Bankers in the World – Global FInance Magazine via Business Insider. Seems I was wrong the RBA is not the best but second to the Bank of Canada. UE? 😀 IMF advises delaying austerity till growth returns. Better late than never but I fear


ASX Shares Daily – 24th August

By Chris Becker The top for the year or just another dip in a bear market rally? The ASX200 fell 0.8% today or 34 points to 4349 after reacting to last nights mild losses on Wall Street and in Euroland. I’ll take a closer look at the bottom of the post for a full roundup including


China links

Courtesy of Sinocism. The bad news about China’s economy is piling up faster than unsold cars at a Beijing auto dealership. A key China Manufacturing Gauge Fell to a 9-Month Low (WSJ) and the New York Times reports today in a front page article by Keith Bradsher that China’s Economy is Besieged by a Buildup of Unsold Goods.