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China’s pressures intensify

h/t WSJ The HSBC China flash PMI was out this afternoon. According to the SMH: HSBC’s China Flash PMI for July dropped by its fastest pace since March 2009 and pointed to a monthly contraction in the country’s vast manufacturing sector for the first time in 12 months, the purchasing managers’ survey shows, while a

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Trading Day: risk back on?

The S&P/ASX 200 opened higher this morning and built on those gains up over 0.5% before falling sharply just after midday – possibly due to news about the fall in Chinese industrial activity. The market is now 22 points off its intraday high, at 4554 points, only 5 points up on yesterday. Other Asian markets

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What if it’s all just a bad dream?

The debt problems in the US and Europe are creating widespread bearish sentiment in stock markets. The interconnection of financial markets is so great that reading investor sentiment has become a little like trying to spot fractals. A Greek butterfly flaps its debt laden wings and a hurricane occurs in the the Standard & Poors. But what happens

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Death of a gecko

The effects of the slowing rate of credit issuance (disleveraging) continue to seep into the broader economy. With sales volume charts like this in Queensland it really was a matter of time before something had to give. It therefore shouldn’t really surprise anyone that the Queensland Real estate industry is in for a tough time

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European risk rally?

News this morning is that there is something of a breakthrough in Eurozone negotiations. From the FT: Germany and France appeared to settle their differences late on Wednesday over a new rescue package for Greece. No immediate details were available but Steffen Seibert, a spokesman for Angela Merkel, the German chancellor, said “a common German-French

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Fearful symmetry

Find below Westpac’s newish regular economic document, called “Fearful Symmetry”, a monthly chronicle of the Indian economy. The research effort of the institutional bank is hot so right now!

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Chart of the Day

Following on from Bullion Baron’s chart of house prices in gold, here’s an interesting correlation (and yes, I know correlation is not necessarily causation) to ponder. First, the change in house prices in major US cities (from the Case Shiller price index): Then, the gold price plotted against the Washington DC:Detroit house price ratio: I

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Bulls at sea in falling market

As we recorded at the time, it was two months ago that Residex CEO, John Edwards, had the following to say on the falls in Australian house prices: I have been researching the housing markets for more than 21 years and I am sensitive to ensuring we have a properly informed market. Because of this,

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China warnings

In the past few days there have been three new interesting media outputs that warn of growing risks of a Chinese hard landing. The first is by, of all institutions, the Australian Treasury. In a new Working Paper full text below), Treasury offers a respectable assessment of Chinese macroeconomic navigation through the GFC, and the

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Ziggy’s nuclear meltdown

Nuclear doyen, Ziggy Switkowski, must be quite frustrated. Why doesn’t everyone get it? His beloved solution to climate change and energy security is not just a political hot (dare I say radioactive) potato, and the recently announced $10b Clean Energy Finance Corporation won’t be allocating a single dollar to funding it. His most recent piece on

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July 21 links: Three dark clouds

Up: CRB, euro, energy, ore Flat: Aussie, grains Down: metals, gold, $US Contagion easing: 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 Year 5 Year 10 Year

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Europe spins again

We are now stampeding towards god knows what in Europe. There is still absolutely no consensus on what, who or how the Greek issue is going to be resolved, and still absolutely no one is talking about the fact that without a full monetary and fiscal union, the issuance of true Euro bonds , or

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Should miners trade in yuan?

A month or so ago, before I was struck down with a monstrous lurgy, Rio announced that it was considering pricing some of it’s iron ore sales in yuan. From The Australian: In another sign of China’s growing power in world markets, the world’s third-largest miner is openly canvassing switching its iron ore settlements from

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The coming RBA downgrade to growth

As the debate rages over monetary policy the data continues to paint a picture of a weak domestic economy with  a growth profile which is likely to undershoot the forecasts of both the RBA and Treasury over the remainder of 2011 and into 2012, the Westpac leading index was released earlier today and after a

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Trading Day: 20th July

The S&P/ASX 200 jumped over 1% on the open, and has built on those gains, rising a total of 1.61% or 73 points to 4541 points. Other Asian markets are all up, with the Nikkei 225 up 1.34% at 10022 points, and the Hang Seng steady at 21,915 points. Other risk assets are mixed, with

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Leading indicators point south

The Westpac/Melbourne Institute Leading Indicators for May are out and point to more weakness ahead. Growth Rate of Leading Index well below Trend The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 1.6% in May 2011, well below its long

3

Gas is solid

Energy is pretty much a one way bet in the global economy, perhaps the best play at a time when Australia’s two speed economy is sputtering. Brokers are having a look at Woodside, just about the biggest pure energy play in the Australian market. The question, as ever, is how much is the future priced

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Woolworths sales up 4.7%

Woolworths Limited (WOW) released their full year sales results (end of June 2011) today and it makes for interesting reading. The headline number is an increase of 4.7% in nominal terms on last year sales ($54.1 billion, up $2.4 billion). That’s an impressive result considering the flat line in other retail spending, as highlighted by

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All ahead slow

Interest rate discussion over the past week has been fascinating. Behind the media smoke, bullhawkian economists and commentators have capitulated on aggressive interest rate rises. Most have retreated behind the fallback position of a stalled RBA, in which rate rises are still coming, but later than thought. On the other hand, of course, we’ve seen

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The boys who cried rents

Economic forecasting – whether in relation to housing, currency, interest rates, or other markets – is tough. The world of economics and finance is very complex and predictions within a reasonable degree of confidence and accuracy 12 months hence are hard. Yet, the media continually publishes predictions by the nation’s economists and data analysts as

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Rethinking economics

Back in April I wrote a post titled “We’ve lost our way”. The point of the post is captured in the following paragraphs So after years of a China driven mining boom that continues to adjust our terms of trade ever upwards how did we get here? How is it possible that after so much

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Chart of the Day

For todays chart(s), the Bullion Baron has plotted house price data, but priced in gold and silver (in Australian dollars), over Melbourne, Sydney and Brisbane houses (using Residex data). The results are interesting, to say the least!

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July 20 links: Relief

Rocket: Aussie, energy Up: CRB, euro Flat: ore Down: metals, grains, gold, $US Contagion easing: 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 Year

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Bill Evans has a panic attack

Mother of the economic gods (if there are any). Bill Evans, my hero of the past couple of days, has just trashed himself with one of the great weathervane moments in interest rate commentary. Following this morning’s RBA minutes, the Westpac Chief Economist has released the following note: Reserve Bank of Australia Board meeting minutes

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Trading Day: 19th July

It’s deja vu all over again – the S&P/ASX 200 fell slightly on the open, falling slightly below the June lows, before rebounding and is now steady just after midday at 4470 points. Other Asian markets are all down, with the Nikkei 225 off 0.71% at 9903 points, and the Hang Seng down 0.28% at

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Housing TV bust

Last month I posted about the Channel 9’s latest revision of the property spruiking show “the block” when I stated that.. The television hasn’t been to kind to the housing market recently. Sure the constant re-runs of Location, Location, Location, Selling Homes Australia and Grand Designs have been streaming out of the box, but more

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RBA minutes fixated with risks

Below find the full RBA Minutes with commentary. Financial Markets Members began their discussion with a review of financial markets. Developments in Greece had again been the main factor influencing markets over the past month. Pessimism had been the dominant theme until late June. Sentiment improved after further fiscal measures were formulated and passed by

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Bullhawk down!

Another of the bullhawks, Paul Bloxham, today concedes that his August rate hike call is wrong. Bravo! However, Mr Bloxham nicely demonstrates the maxim that there’s no better defense than a good offense, dedicating much of his conference call to hammering Westpac’s Bill Evans and his rate cut call. Click here for the conference call.

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Bank CDS blowout

A credit default swaps (CDS) is a derivative that enables market players to insure holdings of bonds (as well as gamble on their price movements). CDS prices of Australia’s big four banks are on the move – the wrong way. Here is a chart of recent market action: On a longer term time time frame

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Where to for Gold?

Time for another update, with the latest surge above $1600 USD per ounce last night. As I mentioned briefly in my last update, where to for gold? First a quick recap – here is the current price activity within the context of a major, long term bull market. And here we are today (using daily