1

Links March 3: The die is cast

Bernanke chooses a side. Bloomberg, FT Fed’s rearview mirror. Tim Duy Libya’s gonna get a strongman. The Interpreter Gaddafi attacks east. Bloomberg And Brega. Zero Hedge War. FT $US, ore crushed. Oil, gold rocket. Ireland record wide. Bloomberg China’s airport overhang. Beyondbrics FIRB targeting China. The Age Asia-dumb. The Age Digesting mining. Michael Stutchbury India’s ore

Latest posts

11

Puru Saxena on China, Commodities and Australia

Financial Sense Interview with Puru Saxena (click to listen)  A reader, ‘Sceptic’, today posted the above link to an interview on Financial Sense with Puru Saxena. Mr Saxena runs Puru Saxena Wealth Management, an established money management firm based in Hong Kong. Mr Saxena produces the monthly Money Matters report, which follows economic, historical and geo-political trends,

3

Is Bernanke blowing another bubble?

Fed Chairman Ben Bernanke mounted a spirited defense of quantitative easing on Tuesday in his semiannual monetary policy report to Congress, arguing that it’s effects were little different to conventional monetary policy: Large-scale purchases of longer-term securities are a less familiar means of providing monetary policy stimulus than reducing the federal funds rate, but the

18

The Economist on Australian Housing

Some readers might have seen it already, but the Economist has just released an article questioning the sustainability of Australia’s house price boom. Here are some key extracts (article available here): This week in The Economist we will publish our quarterly index of house prices around the world. Australia’s homes are the most overvalued in the index. The ratio of prices to

2

Hundreds of thousands factory

Investors in Macquarie Group might wish to avoid an article in The Economist, entitled “Can investment banks make high enough returns on equity to exist?” They may also consider it appropriate not to look to closely to Macquarie’s fundamentals. The gist of the argument is that investment banks will be “clobbered”  by the new Basel 3 rules. For most types

4

The next domino

Predicting economic outcomes is hard. Predicting economic outcomes in conjunction with political unrest is impossible. Especially if that unrest is at the centre of global energy production. At least, that is the conclusion one should draw from last night’s US selloff. Rumours of Saudi unrest are flying, without much substantiation. Ongoing protests are planned in

3

Links March 2: Wild rumours

Libyan refugees. BBC Civil war. Bloomberg Iran protests. Reuters Predicting the next domino. Reuters Saudi stocks smashed amid Shia arrest. Beyondbrics Saudi’s subtle complaints. Guardian The poo revolution. Foreign Policy Oil, gold flying. $US up a touch. Bloomberg US ISM ripping. Calculated Risk Bernanke’s testimony. Fed What he said. FT Doves in control. Gavyn Davies UK Treasurys are

4

The US stock market’s declining importance

There has been an interesting debate going on amongst some of my fellow bloggers in recent days about the meagre future return potential of stocks in developed markets. The return prospects for the US look particularly cloudy. And this is important, because as Sell on News noted today, the US still dominates the global markets

14

Start the blame game

When the real estate market was in full swing they were best of friends.  A new client would approach the bank for a loan, the bank would ring the valuers. They would barely leave the office to come up with a number, they didn’t need to see the place, it was only going to go up in value anyway.

6

Is gold the new global reserve?

Someone else has finally noticed that a sea change has transpired in forex markets during the oil crisis. As this blogger noted last week, the $US has not enjoyed its traditional safe haven role on the flight to safety trade. Sovereign Man picks up the theme today to argue that this is the end for

12

Hats off to McKibbin

MacroBusiness would like to doff its hat to Warwick McKibbin. The current and soon to be former RBA member has embraced the spirit of the Trickster and thrown a big spanner into the works in Canberra’s bull factory. We don’t agree with everything Dr McKibbin has to say, and on some things he doesn’t say

11

Housing ponzi stumbles on

The RBA’s lending January credit aggregates were out yesterday and the reading is fascinating. It is no surprise to regular readers that the rate of credit growth in Australia has slowed, a phenomenon it calls disleveraging. January’s credit was a continuation of the several months before it. Owner-occupied mortgages grew month on month at a seasonally adjusted

1

Links March 1: QEIII looms

QEIII looms. Tim Duy No it doesn’t. Gavyn Davies (yes, it does!) More McKibbin. The Oz $US still getting hammered. Bloomberg $US finished. Sovereign Man Chicago PMI shows rising costs. Zero Hedge China to slow in next five year plan. WSJ China to embrace consumption. BusinessWeek China attacks media over protests. FT Blowout in long-term

1

Wanna try again Mike ?

In late 2010 Mike Smith was pushing ahead to move ANZ further into northern Asia via an acquisition in South Korea. ANZ Banking Group is continuing to conduct due diligence on Korea Exchange Bank, according to chief executive Mike Smith. “We’re still in the middle of that and it’s very hard for me to say

32

The Bogan is Doing it Tough

Australia is Doing it Tough. At least this is what we are led to believe, courtesy of a chorus of political and business leaders who lean on this phrase any time they wish to be seen to understand the traumas that Australians, bogan and non-bogan alike, face on a daily basis. We are constantly told

0

Pettis on Chinese inflation

From Michael Pettis’ exclusive newsletter: Last week the National Bureau of Statistics released inflation data for the month of January: In January 2011, consumer price index rose by 4.9 percent over the same period of the previous year. Of which, urban area and rural area was up by 4.8 percent and 5.2 percent respectively; the price

1

The flying wombat

When it comes to investing in shares, Australians love paying high prices for former government-owned monoliths.  And the love affair continues as Qantas (QAN) released its half years results with a headline $417 million underlying profit, before tax. The economic commentariat gave mixed reviews, with Royal Bank of Scotland saying the result was reasonable whilst

11

Moody’s uninformed market

After the announcement of the Moody’s review overnight, it’s something of a spectacle watching the banks swing from the line that they need to raise interest rates because of rising wholesale borrowing costs to telling us not to worry about rising wholesale borrowing costs. From the Wall Street Journal: In response to Moody’s, Commonwealth Bank’s

6

Key drivers of the Aussie

What drives the AUD/USD exchange rate? You would think that it’s a question that is fairly easy to answer yet conventional currency forecasters still have difficulty get their point forecasts right. I’m not making excuses for these guys and gals in the punditry but I’ve always thought that there was a little bit of an

2

Kloppers, Marius Kloppers…

As this blogger keeps saying, not all markets are created equal. In strategic commodity markets, where governments are big players, the dynamics are not as simple as the balance of supply and demand determining equilibrium. In strategic commodities, when prices go up, demand does not fall. Rather, it increases as governments panic about security of

44

The Baby Boomer Bust?

The 21st century will be the century of old age, where declining birth rates meet longer life expectancies. This ageing of the population will affect many areas of the international economy, from consumption and growth to asset valuations.  The impacts from ageing will likely be most acute in Western Nations, although some developing countries, most notably

8

No rate rise here

Following is the summary of today’s ABS employment report for January: Employment increased 24,000 to 11,441,500. Full-time employment decreased 8,000 to 8,022,400 and part-time employment increased 32,000 to 3,419,100. Unemployment increased 8,900 (1.5%) to 606,500. The number of persons looking for full-time work increased 900 to 426,800 and the number of persons looking for part-time work

62

Disparate groups slam Australia’s housing affordability

In the wake of the 2011 Demographia International Housing Affordability Survey, which identified Australia as having the most unaffordable housing in the Anglosphere, it appears that pressure is building on the Australian Government to take corrective action. Over the past two weeks, concerns have been raised by three disparate groups: the Sacred Heart Mission, the Real Estate Institute of

8

Paul Krugman is wrong (updated)

A few days ago, Nobel Laureate Paul Krugman declared again that there is no ‘financialisation’ element to the current commodity price surge. He began: I’ve been getting a fair bit of correspondence insisting that political unrest, in the Arab world and elsewhere, is being caused by … Ben Bernanke. You see, quantitative easing is responsible for

8

Queensland’s cyclone

Cyclone Yasi has been upgraded to a Category 5 storm ( the highest level ) and on current estimates is expected to hit between Cairns and Innisfail at around 10pm tonight. The size of this storm is overwhelming, and the bureau of meteorology has announced that this is largest recorded storm ever to hit Queensland. Weatherzone

20

The China domino

The stated goal of the Hu Jintao-led Chinese government is a “harmonious society”. Perhaps that is why the word “Egypt” was blocked on certain search engines over the weekend. Multiple factors are in play in Egypt, but there is one vital similarity with China: Food inflation of a breadth and severity that few in the

14

Macro 101 – Sectoral balance

I note today that the PM has announced the introduction of a flood levy, some policy changes and cuts of $2.8 billion dollars in government spending including a cut of the national rent assistance scheme. That last point is something I want to discuss in a future post because it will have some interesting effects on housing. All

22

UK deleveraging: “standard of living to plunge at fastest rate since 1920s”

The Telegraph today published a disturbing article on the dire state of the UK economy: Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again. Families will see their disposable income eaten up as

17

China’s Demographic Time Bomb

The 21st century will be the century of old age, where declining birth rates meet longer life expectancies. Nowhere are these demographic shifts occurring as quickly as in China, which is facing demographic challenges that threaten to slow its long-term expansion. China’s demographic headwinds stem from its ‘one child policy’, which was brought into effect in 1979 and is

87

Detailed Report: The 2011 Demographia Housing Affordability Survey (By Leith van Onselen)

The 7th Annual Demographia International Housing Affordability Survey has just been released and, once again, it has delivered a stern condemnation of housing policy in Australia. This year, the Demographia survey has been expanded to 325 markets in seven countries: Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom, and the United States. The