Iron ore in the crosshairs

I have been consistently behind the curve on China. Unlike the US, Australia or even global capital markets, where recognisable raw data and a lively media make it possible to forecast with some confidence, China is a black box. There isn’t much data. What there is is unreliable. And the media is lousy. This leaves

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Links March 23: Uncertainty everywhere

US evacuating base south of Tokyo on radiation. CNN Radioactive rain. Zero Hedge Japan supply damage bad. Alphaville Portugal wants default. FT The Fins now want to stuff Europe. FT PIIGS 10 year yields: Ireland, Portugal, Greece, Spain, Italy, Belgium. Pressure on 2 years as well. Flat: $US, Ore, metals, grains. Up: Aussie, energy. OPEC wants stable oil, at $120. Reuters Civil war in Yemen. WSJ


Mirror image

As regular readers will know, I am a close follower of the Canadian economy and housing market. Like Australia, Canada is a commodity exporter and more or less dodged the global recession that recently shocked the developed world. As in Australia, there is also widespread debate about whether Canada is experiencing a speculative housing bubble


It seems to be getting worse

As my readers would know I am a keen watcher of all things real estate and that makes me a very interested in the Queensland market. As tourist destinations, places like the Gold Coast and Cairns have always had large percentages of holiday homes and holiday “investment” properties. They are therefore fringe markets and in


Japan and local stocks

The financial markets are starting to settle after the tsunami in Japan, although matters remain ominous in North Africa. Brokers are starting to return to more conventional analyses of commodity trends, suggesting that stocks will also return to more predictable valuations, experience less volatility. UBS is reasonably bullish on the effects of the earthquake on


The US economy: hurtling towards another crisis

In a recent post, “Should the US balance its budget“, I argued that it would be a folly for the US to try to balance its budget in the near term, as this would seriously impede the economy’s recovery from the recent deep recession. But this leaves us with some obvious questions. Is the economy


Gotti is wrong on oil

But should be congratulated for staking out a position, a rare event in today’s world of commentary flip flopping. As Deus Forex Machina likes to say, disagreement makes a market so let’s rip in. Gotti asks: Why should oil prices rise in response to the latest turn of events in Libya? We are already seeing


Research Bonds

My fellow equities blogger Sell on News recent excellent post gave an credible rationale on why property has become the No.1 investment option for Australians – purely by default. This post will go over a very “beta” version of an idea I had awhile back in how to arrest the problem of an insufficient base


ASIC’s insider

John Durie commented yesterday on likely changes in the leadership ranks at ASIC: ASIC chief Tony D’Aloisio formally advised staff today for the first time he would not seek a new term as corporate plod when his contract expires in May. The staff notice came in the wake of media reports over the weekend that


Links March 22: War rally

Long war. FT Yemen at the brink. FT Bahrain polarising. Mother Jones, WSJ New low: $US. Down: Ore. Flat:  futures for metals, grains. Up: Aussie, energy. Radiation falling. LA Times More food radiation. NYT Japan’s knock-on effects worse than thought. Money Game, The Oz Imagine that? El Erian, QE3 hurdle will be very high. Beyondbrics. Yeh, about as high as 1100 on


Dateline questions the China growth story

SBS Dateline last night showed an investigative story entitled China’s Ghost Cities. The video takes viewers on a tour of vast new cities of apartments and shops that are being built across China and which remain almost completely empty – all in the name of achieving economic growth. One of the people interviewed in the


Guest Post: Leigh Harkness

I discovered Leigh Harkness’s web site a few months ago while doing some research on foreign trade.  His site so intrigued me that I contacted him to see if he would be interested in doing a series of guest posts about his research and experience in his little understood area of economics. Leigh accepted my


Ponzi dynamics (by Leith van Onselen)

An article in Friday’s Australian Financial Review (AFR) entitled “Getting a foot in the door” neatly highlighted the ponzi-like nature of the Australian housing market and the unsustainability of current housing values. Below are some extracts from the article along with some commentary of my own. It took Lee Palmer two years of trying before


And now a war…

It’s a busy year. We’ve only just begun and we’ve had global famine, nuclear plague and now war. So, where are we in a global macro sense? The great settings remain unchanged. The US is still struggling out of its funk by attempting to reflate the entire world through a falling dollar. China is still


Links March 21: Extrapolations

Japan’s severe industrial fallout. Bloomberg Japan’s food fallout. FT, WSJ Japan and commodity fallout. Reuters Japan and local growth. Huy McKay More on the supply chain. Calculated Risk The Libyan war. George Friedman Where are the Arabs? FT All over the place. AFP, Zero Hedge Nobody knows where this is going. The Interpreter Iran calls for


It is not just economics

Some days I get some very nice messages from readers, other days I don’t. Friday was one of those “other” days. An excerpt from my inbox after a run through the abuse filter. When will you renter losers just accept that you are wrong and that housing isn’t going to crash. I am sick of


Questioning the wisdom of austerity

I have written a series of posts on this blog questioning the wisdom of fiscal austerity in the United States today. Inevitably when I make such an argument, I get comments along the lines of “what about Zimbabwe!”, “it’ll lead to hyperinflation!” and “they’re even worse off than Greece!” But these worries are all based


Weekly Market Analysis: March 18

Summary The S&P/ASX200 index eventually closed 0.4 per cent lower to 4,626.8 points today, after a wild rollercoaster ride. The index is down 200 points or 4.14% for the month and 2.4% since the start of the year. In effect, the XJO has gone nowhere since September 2009, rangebound between 4200 and 5000 points. In


China decrees consumption!

It’s official. China’s 12 Five Year Plan confirms that China has a two speed economy that makes Australia’s two speed economy look thoroughly normal. On one side of the two speed economy is the private sector, which is well documented in an overview by The Economist. Ninety per cent of China’s 43 million companies are private,


Weekend reading: Crisis drags on

Crisis deepening. NYT Or stabilising. FT Winds to swing towards Tokyo. Bloomberg More radiation released than truth. Zero Hedge Japanese damage. NYT Fukushima described in 1976. Time Japan and local growth. Ian Verrender, Rowan Callick, Michael Stutchbury. Yawn. You read it here days ago. Libyan ceasefire, or not. CNBC Too late to help Libya. Max Hastings


The Banksters: Part 1

Note: This is part 1 of a 2-part series on trading and valuing the big four Australian banks. Part 2 shall be forthcoming soon. Fellow equities blogger Sell on News completed an excellent thematic post on the bubble like growth of the finance industry recently. In the face of a likely change in how capital


Intervention and the AUD

AUD/JPY and USD/JPY are up sharply at present on the back of comments from Japanese Finance minister that G7 countries will intervene to support the Dollar (sell Yen). There is also talk they will buy stocks which is what the HKMA did during the Asian crisis. The New York Times just sent a release out


Banks continue to lower lending standards

First, ING – Australia’s fifth largest lender – announced that it would begin issuing never-ending mortgages that have no fixed term and no requirement to repay any capital along the way, in a bid to reduce monthly home loan repayments and increase the size of housing mortgages. Then Westpac, Australia’s largest mortgage lender, announced that


Enough rope

Meet Paul Bloxham. He’s HSBC’s Chief Economist for Australia and New Zealand. This morning at Business Spectator, Bloxham damned the life boats and hoisted this petard: There has been much discussion over a number of years about whether Australia’s house prices are too high, and indeed whether there is a house price ‘bubble’. This notion is


Boganomics: Online gear shift

It used to be so easy. In recent decades, controlling the bogan’s retail habits was as simple as spending a few million dollars on an advertising campaign on commercial television, and inviting television cameras to film other bogans trying to kick the front door of the shop in at 5am on Boxing Day. Even the


Michael Pettis: China slowing

` Exclusively from Michael Pettis newsletter: Quite a few numbers came out this week, but none of them were especially dramatic or likely to change anyone’s mind about anything. The most interesting thing to me is that there are indications that, once again, the economy may be slowing quickly. Every time Beijing gets worried about too


Late to the party

As governments far and wide wake up to the danger of fallout in Japan, one is tempted to conclude that the crisis is past its worst. Governments have a habit of coming late to the party. But, in this case, I’m not so sure. I continue to think that markets are underestimating the damage being


Links March 18: Worse than thought

Cooling spent rods to take weeks. FT Japan shuts supply chain. NYT Canberra panics late. The Age Japan and the global economy. FT Japan’s damaged ports to hit bulk commodities. The Oz Action in Libya suddenly possible. FT Was it my article that changed Obama’s mind? 😉 Gaddafi threatens everything in response. Reuters Weak: Aussie, $US. Flat:  Ore. Up



After publishing my latest post I received the following e-mail from a reader. I suspect you may be interpreting this REIV move incorrectly. If history is any guide the Real Estate Agents are in the process of “switching sides” figuratively speaking (as they are really on their own “side” at all times and everywhere).   If the REA’s


How Japan will hit local growth

I am surprised at the resilience of Australian equities to the global sell-off. Either the local market is confident that the crisis can be contained (for some reason I can’t fathom, it’s behaving irrationally, or, it has assessed any economic fallout from the disaster to be minimal for Australia and already priced in). The only