21

Australian dollar: Give us a minute!

Today sees the release of the RBA minutes from this month’s Board meeting and there is a really strong chance that shortly after their release at 11.30 (EDIT previously I wrote 2.30pm) rates are a little higher than where they are this morning. Yesterday I was talking to an old colleague about the rally in interest

Latest posts

46

Killing the politico-housing complex

Over the last 25 years Australia and the rest of the world has witnessed the rise of the TBTF financial institution accompanied by the greatest misallocation of resources in the period since the industrial revolution. These institutions and the people employed by them have ensured that all but the rich in both the western and

6

Satyajit Das: Bail the banks, not the Greeks

Guest post by Satyajit Das The proposal to extend the maturity of Greek bonds emanating from the Élysée Palace reflects French strengths first identified by Napoleon III: “We do not make reforms in France; we make revolution.” Structured to meet a German requirement that private creditors contribute to the Greek bailout, the proposal falls short

32

Chinese malinvestment grows

Almost daily now, I come across interesting articles on the Chinese economy. Rather than share each article individually, I will from now on provide a weekly round-up of articles from around the web. If readers have come across any noteworthy articles that I have missed, feel free to add these to the comments section below.

25

France is next

While I was on holiday over the last week I spent some time musing over the current situation in Europe and just how bad I think it can get. I have been wondering for quite a while when France will finally join the PIIGS camp, given that it to is a highly indebted nation with

4

July 19 links: Europe burning

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

73

Burying the hawks

Bill Evans of Westpac has certainly thrown a spanner into the interest rate debate. The papers all went nuts over the weekend, leading with stories of imminent rate cuts and there are more stories today of an ensuing housing boom. Meanwhile, pretty much every interest rate commentator in the country disagreed with him. Over the

1

Two speeds not priced in

A report by Deutsche Bank today suggests that the two speed economy may not be being effectively priced in. The comparing with last financial year means it is not a long term comparison so of limited utility, but it may point to institutional trading strategies in the shorter term. Compared to their FY11 average, the

7

Trading Day: 18th July

The S&P/ASX 200 fell over 20 points on the open, reaching the low experience in late June, before rebounding and is now steady just after midday to 4475 points. Other Asian markets are up, with the Nikkei 225 up 0.39% at 9974 points, and the Hang Seng up 0.54% at 21,993 points. Other risk assets

5

Car sales bottom

ABS car sales for June are out and show signs of stabilisation after several months of big falls. Following are the key points: JUNE KEY POINTS TOTAL NEW MOTOR VEHICLE SALES Trend – The June 2011 trend estimate (78 267) has decreased by 1.6% when compared with May 2011. Seasonally Adjusted – The June 2011

23

Retail’s real struggle

Following my post last week Let Retail Burn, Cameron Murray has followed up with a series of log-scale charts that show real retail sales growth per capita since the early nineteen eighties. Firstly, Cameron offers the overall sales picture (I have added trend lines in red): As you can see, there is an accelerating trend

17

Newscorp brand risk

Quis custodiet ipsos custodes? Who’s watching the watchmen? That’s the question now dogging the future not only of Rupert Murdoch’s UK media interests but Newscorp globally. How bad is this going to get for the Sun King? I have no idea. But I thought I’d offer a framework for thinking about it. When society authorises private

24

Rental complex

Following on from my recent post, The case against home ownership, Canadian Business last week published a great article. entitled Rental complex, asking why more Canadians don’t rent – a question equally applicable to Australians. At over 2,800 words, it’s a long article (but well worth reading). Below are some of the key extracts. Note

25

A flood of spruiking for Queensland

After a week being disconnected from the outside world I have returned to Queensland to find that the real estate pushers have turned their attention to the January floods. Let’s start with Terry Ryder in the Australian. Brisbane’s housing price performance is among the worst of the capital cities. It is also, from another perspective, the

7

July 18 links: Wrangling Rupert

Rupert’s Brooks arrested. Bloomberg Rupert’s web. Businessweek Malcom Turnbull on Rupert. The Conversation Argentina in Greece. Vox Steve Keen on ratings agencies. Al Jazeera On Basel. London Banker h/t Naked Capitalism Oh my, economics and the male organ. Uni of Helsinki h/t Naked Capitalism The US depression. Calculated Risk Week ahead for Dow. Calculated Risk The

17

Buyer beware

Watch the full episode. See more PBS NewsHour. A few weeks back, in Aussie investors flock to US housing fund, I noted the relative undervaluation of US real estate compared with Australia, and how the newly launched US Masters Residential Property Fund, which is targeted at properties in the New Jersey area, was over-subscribed from

42

Ban the bots

Anyone who thinks that the stock market is about finding fundamental value so that worthy companies can find they capital they need should read a recent article in the London Review Books.  It is another example of what I call “meta-money”, which is spreading like a virus (the $600 trillion of derivatives being the worst example).

6

Chart of the Week

From Avid Chartist, is a great comparison of the broad US share market index, the S&P500 and the Aussie 200 – the S&P/ASX200, but both priced in USD. As I remarked about diversification recently, it’s not much chop if correlation across risk markets is 1.0. As an Aussie, I have been a little disheartened that

3

Satyajit Das: CDS and Greece

Following is a guest post from Satyajit Das. The European Union’s linguistic gymnastics, redefining default as “restructuring” or “re-profiling” and the structure of any final deal on Greek debt has “real” implications for the arcane workings of the CDS market. In the film Casablanca, Rick (Humphrey Bogart) tells Captain Renault (Claude Rains) that he came to the city

4

Australian Dollar Weekly Wrap

Another week of the Aussie dancing on the spot as it traded inside the range once again. Excuses abound for Aussie selling but it continues to hold in relatively well all things considered. We had a good chat in the comments section after yesterday’s piece on the tussles between the bulls and bears in the Aussie.

4

Weekend reading: No country is an island

Rocket: energy Up: gold, metals, grains, ore Flat: CRB, euro, Aussie Flogged: $US, Contagion bubbles: 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

1

Next week: US earnings and RBA

With the full weight of the Labor Government carbon price (tax/permit/whatever) policy announced, ructions in Italy and Greece and the US dithering over a paltry trillion bucks or so, what’s coming up next week in terms of data, announcements and the like? (Black Swans aside…) Locally, everyone will be dissecting the RBA’s Board minutes on

53

Bill Evans backflips

Goodness me. Hot off the press. Following May’s bullhawkian flirtation, Bill Evans of Westpac has just rocked the market with a total backflip on interest rates. He has just called 100 basis points of cuts in 2012: The market is now pricing in a 25bp rate cut by October and 50% chance of a follow on

27

Attack of the housing “pessimists”!

Not that we needed another survey to tell us, but the Melbourne Institute Westpac quarterly Consumer House Price Expectations Index is sinking. According to the index, a majority of the house-loving Australian population remains convinced that price rises are ahead. But the number of realists (strangely, Westpac refers to them as “pessimists”!) is rising fast:

8

Inflation expectations up

Missed this yesterday. And in a far too late sop for the bullhawks, the Melbourne Institute Inflation Expectations Survey for July registered a slight rise. But just to show how bogged down we are in carbon tax mania, most of the analysis dedicated itself to next month’s effects. The median expected inflation rate, reported in

1

Trading Day: 15th July

The S&P/ASX 200 fell again on the open and has stabilised, now 0.38% or 17 points lower just after midday to 4473 points. Other Asian markets are mixed, with the Nikkei 225 up 0.25% at 9960 points, and the Hang Seng down 0.37% at 21,858 points. Other risk assets are also mixed, with the AUD

22

Australian dollar bulls and bears

A couple of competing stories in the press this morning highlight one of the reasons that the AUD/USD rate has been stuck in a range for some time now. In The Australian this morning we have the headline “China risk jangles nerves on high dollar” while over at the SMH we have “As might dragon

9

Crude solution

David Jones may want to blame Julia Gillard, Barack Obama may want to blame Republican austerity nutters and the EU may want to blame rampant ratings agencies, but what we all really need to get things going again is more simple: cheap oil. Last night’s market action delivered slightly cheaper crude, down 2% or so

154

Why Gillard has a mandate

At the risk of stirring up the howls of protests and calls for another election (if you don’t accept the outcome of the last one) or an early election (if you do), I thought I’d put forward a case for why I think the PM has a mandate to introduce the package she announced on

17

Time to buy JB Hi-Fi

Yesterday the retail stocks of David Jones, Harvey Norman, Myers and JB Hi-Fi all took a hammering.  It was sparked by a David Jones earnings downgrade as well as an awful run of retail spending/consumer confidence data.  To summarise the blood letting: David Jones (DJS) plummeted 18.2% to $3.20; Myer (MYR) dropped 6.4% to $2.48;