5

More dodgy disclosure

My previous post, Deep T’s (In) Stability Review, provoked some critical responses on the calculation of a bank’s capital. The record needs to be put straight, as these responses were wrong. As a world-renowned biologist and prominent atheist once said, “Never underestimate the ignorance of your critics”. So it’s back to school on Banks’ Capital 101,

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3

Boom and bust is back

With Brent and WTI crude both surging to post-GFC highs Friday, I’m beginning to suspect that the world has entered a new era of oil price and growth volatility that spells the end of the Great Moderation. Why so? Supply and demand are the key to all things economic.  Previously at this site, the Unconventional

10

April 4 links: Oil high

Week ahead for the DOW. Calculated Risk Fukushima radiation. NYT Is the EU planning to invade Libya? Zero Hedge IMF wants Greek default. Reuters US/Saudi swapped Libya and Bahrain. Asia Times Told ya. The end of QE2. Alphaville America’s slow turnaround. The Economist What would the CPI look like if it included houses? Floyd Norris

89

Fresh calls for housing stimulus

Yesterday’s Australian Financial Review published an article entitled Capital house prices slide, which provided a sobering assessment of the housing market, particularly in Brisbane, Perth and Melbourne. House prices fell in most capitals in February and analysts expect poor affordability to prevent any real recovery for at least a year… Rp Data senior research analyst

39

Weekend musing: What’s a crash?

The saturday morning ritual of moving the yard apes between their various activities is over so it time to sit back for an afternoon of musings. Firstly, after yesterday’s little bomb drop from NAB on housing I note that Bill Evans from Westpac has joined in (h/t janet) with a bearish post on Business Spectator. A sustained relaxation and

7

Weekly Market Analysis – 1st April 2011

Conceal me what I am, and be my aid For such disguise as haply shall become The form of my intent. Shakespeare Summary Stocks rallied hard last night on the US and European markets after – well, choose your reason and stick to it really. Jobs? Corporate profits? No new meltdown? Cow mutilations are up?

9

Power hungry China

Analyst presentations can be tedious affairs, often an equal mix of the obvious and the dubious. But one I saw about China’s Five Year Plan’s implications of Australia really had me listening closely. The visiting China-based analyst was showing a slide of the projections of the growth in “low carbon” energy out to 2015. It

2

Weekend Reading: The mutt opens an eye

Rockets: energy, ore. Up: Aussie. Mixed: grains. Flat: $US Down: metals. Oil speculation. Daily Finance (h/t Naked Capitalism) The Mellon doctrine. Paul Krugman America’s the April Fool. Henry Blodget US ISM strong, BIS solid. Calculated Risk Jobs recovery path. Zero Hedge Syria, Yemen protests. Give them Bancor. Joseph Stiglitz IEA courts Chinese oil. FT Chinese shadow banking. FT China PMI accelerates. Bloomberg No slowing

45

WTF AIG

Sigh…I’m having an angry week. Regular readers will know that I’m no fan of vested interests. But I make one exception. Right now, the nation DESPERATELY needs a new vested interest body to support the non-resource tradable goods sectors of manufacturing, tourism and education. I can’t remember a peep out of either the education sector

4

Fukushima and financial regulation

The Wall Street Journal has been running an excellent series of stories this week about the astounding lack of disaster preparedness at Tokyo Electric’s Fukushima nuclear plant. Among the revelations from this and other recent media reports: The plant’s disaster plan called for only one stretcher, one satellite phone, and 50 protective suits. In case

41

Did NAB just give up on housing ?

I am amazed how quickly the housing story is changing in Australia. Just 8 months ago anyone mentioning the fact that housing was heading for a correction was met with howls of laughter. I know, I was one of them. Today however sentiment is very different, and it seems to have gotten so bad that

38

China’s largest ghost city filled

At last, a good news story on China. Readers might remember that I posted an article in December showing alarming satellite photos of entire cities laying vacant (see China’s empty cities). In that article appeared the below photo of Zhengzhou New District, which was supposedly “China’s biggest ghost city, complete with entire blocks of totally

24

Boganomics: Negative hearing

Boganomics, along with its sister project Things Bogans Like, performs a crucial role in Australian society. While bogans may tell you that they want to bed you or glass you, they also have many other wants and needs that they are less adept at articulating. As the bogan’s unofficial mouthpiece, we simply must take exception to

7

Health Stocks Part 2: Excellent Elixirs

On Tuesday I published Part 1 of a two part series on healthcare stocks.  I described how the health care industry is in a market sweet spot – high levels of government support, recession-proof demand and a large group of wealthy, ageing consumers (Boomers) entering a time of their life where healthcare expenditure will significantly

3

Risks to the Aussie

The question I asked last week about Chinese growth and iron ore demand seems to have been answered for now. That question was the following: Not only has the market not priced a significant, if cyclical, China slowdown, if it comes, Chinese steel makers may very well enter an inventory cycle that liquidates some portion

0

April Fool’s Day links: Risks return

Rockets: grains, energy, ore. Up: Aussie, metals. Down:  $US Ireland 10 year, 2 year Another 24 billion for Irish banks. Reuters The road to default in Europe. BBC Fallout from Irish default. Bloomberg Radiation keeps coming. Reuters Japan PMI smacked. FT Long war. FT Regional Fed surveys on fire. Calculated Risk WalMart inflation alert. Zero Hedge Higher grain prices ahead. WSJ Now, actually. FT

54

Why Australians aren’t spending

Robert Gottliebsen today posted an interesting article on Business Spectator providing an insight into why Australians are cutting back on retail spending: Retailers have been looking closely at what is causing stress among Australians and among Australian consumers… Those in lower income suburbs or in areas where there are many high mortgage/low deposit new houses,

16

Subtle old Gotti

I think I need to apologise to Robert Gottliebsen. I think I misinterpreted his words last November when he said It might not be intentional, but in Australia banks have developed a unique system to keep dwelling prices high. They are liberal in granting housing loans, so there is a strong consumer demand for houses. But

26

Housing reports

A couple of new statements/reports out today about the housing market. First RPData have their monthly statement. Housing flat in February with only 0.8 per cent growth over last year: February’s index result (0.0 per cent s.a.) suggests that Aussie home values continue to tread water despite robust household income growth. There was little revision to RP

7

The cost of zero

In an era of extremely low interest rates in most of the developed world, pricing the cost of equity capital becomes a real problem. When debt capital is close to zero, then equity capital theoretically becomes extremely cheap, too. The 90 day Treasury bill is at 0.24%. Translating that into an earnings multiple (by turning

25

Gold moves to next bubble phase?

Investing and speculating in gold is almost as emotive a subject as residential property, so I’ll try to keep this short and sweet. I treat physical gold as a “Type Zero” security asset, a small insurance hedge against financial instability – a “Minsky Metal”. (I will publish an article regarding my research into the “Minsky

3

The Aussie is running

I’m out of the office so I’ll keep this one brief but I just wanted to touch on the AUD/USD and the new highs it made above 1.03 overnight. Indeed as I write it is sitting at 1.0320 and looking like it wants to reach for the 1.0375 region that one of my colleagues thought

6

Where will all the jobs come from?

I have argued before that while there is no problem with the US running fiscal deficits while its economy regains its feet, in the longer term, reviving non-financial business investment and growing exports faster than imports is the only sustainable way out of the ongoing economic slump. However, this is going to be easier said

77

House buying strike!

The above headline can’t have escaped the attention of many Australians yesterday. It sat at the top of the SMH, The Age, Brisbane Times and WA Today websites all afternoon. I can’t remember the last time I saw 500 comments on a Fairfax story (I literally can’t remember so it may not be that long).

0

March 31 links: Miracle restored

Up: Aussie, ore, metals. Flat:  $US Down: grains, energy. Fukushima may be re-critical. Zero Hedge The wondrous new Libyan democracy. FT Give us a break. Saudi versus Libyan crude. Alphaville America liquidating housing. Chris Whalen Where the bailout went wrong. NYT ADP 200k. Calculated Risk Fed needs a comms strategy. Tim Duy And how. Treasury’s will survive Fed exit. Gavyn Davies

35

Saul-ute to a real economist

Saul Eslake is on fire. Earlier this month, Mr Eslake wrote a wonderful article in Fairfax lambasting the first home owners’ grant and other demand-side measures employed in vain by Australia’s governments to make homes more affordable: Governments have thus been providing cash handouts to first-time home buyers for almost half a century. Yet, strikingly,

8

Jobs point to restructure

The ABS released its Job Vacancies for February survey today. The overall release was a slight seasonally adjusted fall. More interesting is the industry split. The first chart below is for sectors with rising job ads for the month: And the second is for sectors with falling job vacancies for the month: This industry sector split

18

Paul Krugman versus the world

Paul Krugman has set off a storm of debate in the US blogosphere this week, with a post in the New York Times that raised the possibility of hyperinflation in the US. Right now, deficits don’t matter — a point borne out by all the evidence. But there’s a school of thought — the modern

1

Too pricey for M&A

One of the recent stock market puzzles is that, since it became obvious Australia would not be hammered by GFC, there has not been a significant rise in M&A activity. Over $100 billion in capital was raised on the market in response to the GFC. The supposed reason was to “maintain balance sheet strength” (translation:

12

Quantitative unease

Any critical analysis of the period leading up to the GFC lays some of the blame of the bubble that built at the length of time that Chairman Greenspan left rates in the US incredibly low after the September 11 attacks. Certainly there were many other and much more important drivers of the debacle that