37

Is it a bird? Is it a plane? No, it’s Rogoff

What a day today for markets. Everything was under pressure early and then Ken Rogoff turns up on Bloomberg talking about QE3 and off we go. This could be true or a complete furphy as it is just coincidence that the Fed is due to make an announcement on monetary policy at 2.15pm New York time

Latest posts

20

Paths of recession

As I wrote this morning, I’m of the view that global equity markets have begun to price a forthcoming Western recession. Since then markets have rallied hard on the hope of QE3 tomorrow, which would change the game, but I thought anyway that I would trace the possible lines of weakness in the global economy and

10

More on Housing Finance

As H&H said earlier today, the 5609 dataset from the ABS has been updated for June. We actually need to wait until tomorrow to get the whole story on housing credit because the 5609 dataset has a sister dataset 5671 which contains the investor data. In the meantime here are some drill-downs on the owner occupier

19

Bank CDS prices rocket

Find below a chart of recent CDS price movements for the major banks:   And for a longer term perspective, try this one: This chart tells us a couple of things. First, the cup and handle formation identified last week has now delivered its promised surge and we have broken through the level set in

4

NAB Survey shows further weakness

For what it’s worth, the NAB Business Survey for July is out and shows steadily increasing weakness. Here’s the commentary: Business conditions weaken showing an economy continuing to lose momentum and traveling below trend. Confidence remains subdued in the face of continuing uncertainty – but carbon didn’t appear to cause further retreat. Growth in the domestic

12

Trichet’s bazooka

The ECB’s bond market intervention did its job for Italy and Spain last night, but as I expected we also saw some risk shipping. While periphery bonds fell off, French bonds started wearing the risk and we saw French sovereign credit default swaps hit a record high of 160 basis points overnight. As I have

22

Trading Day

The S&P/ASX 200 slumped again on the open, after absorbing one of Wall Streets biggest one day falls in history. The market is down over 168 points or 4.4% and stands at 3817 points. Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 4.5% at 8692 points, and the Hang Seng

4

Chinese inflation accelerates

In news that the global economy did not need, inflation in China shows no sign of coming under control, even as the People’s Bank of China has slowed its pace of tightening in the past 1 or 2 months.  The headline consumer price index (CPI) rose 6.5% on an year-on-year basis vs. 6.4% in June, and

12

JB Hi Fi earnings update

JB Hi Fi released its FY11 result yesterday.  Given the shellacking retail has been taking in recent months, and the ongoing market ructions, we have been eagerly awaiting the results of our favourite retail stock. Sales Revenue increased 8.5% to just under $2.9 billion.  Consumer electronic sales (which represent 75% of total sales) grew by

0

Housing finance bounce ends

JUNE KEY POINTS VALUE OF DWELLING COMMITMENTS June 2011 compared with May 2011: The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.5%. Owner occupied housing commitments rose 0.9%, while investment housing commitments fell 0.4%. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations

4

Earnings Update: JB Hi-Fi and Bendigo

Two companies reported earnings yesterday on the ASX: JB Hi-Fi (JBH) and Bendigo and Adelaide Bank (BEN). Macrobusiness will be reporting on earnings and valuing the key companies throughout the earnings season. Remember to bookmark the overall update here. JB Hi-Fi (JBH) JBH reported a profit of $134.4 million in the 12 months ended 30

44

Respect please

Dear readers, A mix of active traders, buy and hold punters, as well as regular superannuation holders read MB. Can you please keep your comments respectful of that fact. Whilst some of you may make money out of the big price shifts we are witnessing, others will be suffering. Thanks for reading and commenting.

20

Australian dollar crash

The AUD has fallen 2.45% in the first 26 hours of this trading week and currently sits at 1.0170 as I write. Last week I said that I thought the AUD would fall to 0.9700 within two months and I continue to hold that view even though it might happen much sooner than expected. But how does the

24

Where’s the bottom?

So, where is the bottom? To begin to fathom an answer, me must first understand why markets are falling. Last night’s action offers some clues. Although there is plenty of press blaming the US downgrade, it is far more than that. For starters, the downgrade has seemingly done nothing to the attractiveness of Treasuries as

33

RPData sees the light

RPData has seen the light. For the first that I can recall it has stepped outside of simple supply and demand arguments for house prices and provides a downbeat assessment based upon rates of credit issuance: The Reserve Bank’s private sector credit numbers for June 2011 showed the lowest level of annual growth in history

28

August 9 links: Freefalling

Parabolic: gold, US Treasuries Up: ore, $US Down: Euro, grains Crushed: Aussie, energy, metals, CRB Europe rips in on ECB: 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

35

Head and shoulders horror

I know we’ve had a bad day on the sharemarket and I’m no doubt doing a bit of data mining as a result. But I’ve noticed a rather nasty sequence of head and shoulders patterns forming on the S&P500. First, the 1 year chart: That’s a beauty isn’t it? We reported it last week and

6

Buy, sell, buy!

Brokers are predictably divided over the ructions in the market. In theory the declines should add up to some buying opportunities, but bear markets, and that is surely what it now is, are notoriously hard to pick. The big question in this a cycle — i.e. is there enough that constitutes a reliable centre around

7

Europe flails

I thought I would provide some updates on Europe given that the response to the current turmoil is moving quite quickly, and there have been some major announcements  since I wrote my previous post late last night. Firstly we saw a statement from some EU leaders re-iterating …. well, everything. President Sarkozy and Chancellor Merkel

8

Trading Day

The S&P/ASX 200 slumped on the open, after absorbing the S&P downgrade over the weekend, then recovered somewhat but has now rolled over again after lunch. The market is down over 73 points or nearly 2% and stands at 4031 points. Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 1.3%

21

G7 spouts twaddle

Here is the full statement of the G7 released recently: In the face of renewed strains on financial markets, we, the Finance Ministers and Central Bank Governors of the G-7, affirm our commitment to take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence. We are committed

7

Job ads flat

The ANZ July job market report is out and shows a slight deterioration from May: Total job advertisements on the internet and in newspapers decreased by 0.7% in July to be 8.3% higher than a year earlier. Newspaper job ads fell by 0.5% m/m, while internet job advertising decreased by 0.7% m/m. Newspaper advertising is

33

Pricing catastrophe

I have argued in support of Bill Evans’ end of year rate cut call. But today’s overnight index swaps (OIS) are pricing  50 basis points of cuts for the September RBA meeting and look overdone to me: 7/09/2011    4.256% 5/10/2011    3.879% 2/11/2011    3.641% 7/12/2011    3.508% 8/02/2012    3.370% 7/03/2012    3.325% 4/04/2012    3.301% And yes, that’s six

72

Crisis of the West

In one very important sense, the Standard & Poors downgrade of the United States credit rating is spot on. The debt ceiling debacle that preceded the ratings action showed an extraordinarily destructive political culture at work in Washington. To take the Federal Government within inches of default for no apparent reason was beyond infantile and

11

Europe’s end game

Last week there was a hint that the Europeans may have been finally grasping at a real resolution to their long running economic crisis. The speed at which the EFSF guarantee of the smaller periphery nations had led to contagion in Italy and Spain came as a surprise to the Euro-elite and under pressure from the

14

China’s morbid dependency

In the lead up to Standard and Poors’ (S&P) downgrade of US Government debt, the largest holder of US Treasuries – China – had stepped-up its warnings and condemnation of the US Government’s fiscal mis-management and its deteriorating debt repayment capability. In November 2010, China’s Dagong Global Credit Rating Co. reduced its credit rating for

10

The Great Volatility

The S&P/ASX200 has slid 12% in four weeks with similar falls across major developed markets as the Western crisis has gathered pace in the past month. Apart from the usual and vapid insistence to buy any and all stocks now because they are “cheap”, some commentators have said that ”buy and hold” is dead and