RBA musings

A couple of the banks have put put out commentaries on the RBA Minutes that are of interest. First up, Paul Bloxham of HSBC: Minutes show they were on the verge of hiking The minutes were mostly old news. But they do remind us just how close the RBA was to hiking, due to inflation

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Hong Kong property hits a wall

Recent market turmoil and a poor land auction result  have pushed the consensus view of Hong Kong property towards a possible correction of as much as 10%. At the same time, some hope that renewed US stimulus will flow through to Hong Kong real estate prices. I take issue with the view that US quantitative easing will weaken the


Wage growth slashed

The Melbourne Institute is out with its quarterly Wages Report and chalk it up as another data point showing that the labour market has shifted from strength to weakness: Total pay growth over the 12 months to August 2011 slowed sharply, to 2.9 per cent from 5.1 per cent in the 12 months to May. Wage


The theoretical rate hike

RBA Minutes are out (find them below) and they, as always, make fascinating reading. The entire meeting was dominated by discussion of external and internal risks.  Although there is a still quite upbeat assessment of the mining boom and ongoing concern about medium term inflation, the discussion about whether to raise rates seems to have


Is the US already in recession?

Following my earlier discussion on the different impacts different kinds of shocks, from the eminently sensible team at Forecast comes this analysis of the implications of the recently recorded collapse in US consumer confidence. Enjoy. M/T: Confidence shocks – why the US may already be in recession * Michigan confidence plunge is a red alert


Conference Board: China slowing significantly (not)

From Bloomberg: Aug. 16 (Bloomberg) — Growth in China, the world’s second-biggest economy, is slowing “significantly,” according to The Conference Board, a New York-based research organization. “The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York ahead of the release of


The shocks that matter

Last night, the US blog, Calculated Risk, had an interesting argument about whether or not “event” shocks have a different effect on consumer psychology than do more enduring economic shocks. He produced the following table to make the point that the recent debt-ceiling debacle was an event-driven blow to confidence that is likely to be


Chart of the Day: rich man’s panic

Today’s chart comes from a commentary on Charles Hugh Smith’s blog, Of Two Minds, which compares the GFC market activity of the Dow Jones Industrial Average (DJIA) overlaid with the “Rich Man’s Panic of 1907”. A curious graph – and originally from The Chart Store – which carefully notes one needs to be careful in


Fighting the Fed

Last night’s market action screams QE3. Anything physical – grains, oil, gold – went bonkers, whilst the $US and Treasuries got thrashed. Welcome to QE3 and a new  “undollar” rally. An “undollar” rally is, of course, the process of buying anything physical that is priced in US dollars and therefore is set to rise in price


Yes or no to Eurobonds?

Billionaire US investor George Soros gave an interview  to German Magazine Der Speigel yesterday in which he outlined his thoughts on the European Crisis. I have included the full interview transcript at the bottom of this post. In the interview Soros was scathing about the lack of leadership across Europe claiming that: “The politicians have not really tried


Can China save us a second time?

In Sunday’s weekly Economic Note, Australian Treasurer, Wayne Swan, reaffirmed his belief in the underlying strength of the Chinese economy and expressed his confidence that China can continue growing solidly even in the face of sluggish growth in the US and Europe [my emphasis]. I’ve been asked a number of times in the past week


August 16: Undollar rally

Rockets: grains, metals, energy, CRB, Euro, Aussie, gold Smashed: $US, Treasuries Contagion mixed: 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 Germany 2


Positioned for crisis

The global economy is entering a two speed phase, both in an economic and financial sense. The economic growth is mainly occurring in developing markets, especially China and India. The financial sophistication is still heavily concentrated in the developed markets. That is creating something of an illusion. The developed markets are clearly in a state


New car sales jump

From the ABS this morning comes July new car sales with a big bounce. Obviously there’s a seasonal aspect to but equally so, it was bigger than usual, coming after months of weakness. In part, there may be a snap back from the tsunami related delays for Japanese cars but there were no tax-related changes


Inflation expectations dump(ed)

Here’s an important data point I missed last week amid the market madness. From the Melbourne Institute: The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, decreased to 2.7 per cent in August from 3.4 per cent in July. According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “Consumers


Unemployment and house prices (revisited)

Back in May I published an article, Unemployment and house prices, that sought to determine whether changes in employment levels in Australia are likely to lag/lead changes in house prices. The purpose of this article was to test the commonly held view that Australian home values won’t fall significantly until unemployment rises, since people that


A lonely voice on manufacturing

Money talks and so there’s nothing like a billionaire or, at least, CEO of a multi-billion dollar firm lending support to your ideas. On that note I can only applaud the lonely voice of Andre Liveris at the Australian American Leadership Dialogue: One of Australia’s most senior expatriate executives has been lobbying political and business


Is recession priced in?

Nope. Not even a bit. Sorry. That doesn’t mean that whatever it is that’s coming for Western growth isn’t priced in, but it definitely is not recession.  Needless to say, then, if you think a recession is coming then ipso facto markets are going much lower as well. The Economist has a very useful take on


Australian dollar calm returning?

Last week was a tumultuous week for the AUD trading down to important support at 0.9929 where it held in very well before bouncing to sit this morning at 1.0370 as I write. You can see in the chart above the volatility of the AUD and some selected risk markets on a hourly basis, indexed to 100,


Europe’s austerity GDP

A couple of updates for Europe over the weekend. The Italian parliament ratified the first stages of a larger austerity plan to speed up budget cuts. Italy’s cabinet has adopted sweeping austerity measures to cut the fiscal deficit by 45.5 billion euros ($64.8 billion) and balance the budget in 2013, a year ahead of its previous


Macro 101 – Reserves and interest rates

It has been quite some time since I did a post in the Macro 101 thread. There has simply been too much economic news to process lately. However, now that the stock markets seemed to have stabilised themselves at a lower base, and the western world has set itself up for a recession I think


China’s slowing M2

Late last week, the People’s Bank of China published the latest set of monetary statistics, which, I think, surprises on the downside. M2 Money supply grew by 14.7% compared to a year earlier to RMB77.29 trillion, lower than the expected growth of 15.8%.  Money supply growth has fallen further below the pre-crisis average level of 16.76%.  M1


August 15 links: Recession musings

Inflation may have stabilised in July. Bloomberg The softening? Too late for falling oil to save the US. James Hamilton Week ahead for the Dow. Calculated Risk Is a recession priced in? Zero Hedge Brazilian echoes. NYT Marx was right – Roubini. Alternet (h/t NakedCapitalism) Fearing Europe. Barrons Fed boxed in. Barry Ritholz Glad someone else finally noticed


Freedom versus free markets

Probably the most wicked intellectual subterfuge of the last three decades — and goodness knows there have been many — has been the pretence that democracy and markets are two sides of the same coin. Both have been extolled under the banner of “liberty”. “Free markets” are somehow the hallmark of democracy and they should


Data Vault

Australian Data The Australian data calendar was dominated by employment and confidence figures this week and unfortunately neither provided any evidence of an improving outlook for the domestic economy with leading indicators actually suggesting we are in for weaker outcomes over the reminder of 2011. Housing finance was also subdued with investors becoming increasingly disenchanted


Chart of the Week: the writing on the wall

This week’s chart comes from what who I now must call my favourite trader – Peter L.Brandt This chart was posted last night: But it is actually part of this chart posted on Tuesday (yes it looks different because of compression): Now Peter (and I) would contend that chartists and technical analysts do not portend


Weekend Links: US unconfident consumer

Rockets: CHF Up: CRB Flat: Euro, Aussie, $US  grains Down: Treasuries ,metals ,gold Contagion nowhere: 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


French & Japanese GDP crash

Not a great week for the French to report that Q2 GDP was 0.0% against expectations of 0.3% and from 0.9% in Q1 2011. But that’s just what happened as the the screenshot from my Bloomberg above shows. The year on year data was equally disappointing coming in at 1.6% against market expectations of 2%


Earnings Update: TLS, DMP, AWC, AQP

Five companies reported earnings yesterday on the ASX: Dominoes (DMP) Alumina (AWC), Aquarius Platinum (AQP), Telstra (TLS) and an update from Singapore Telecom (SGT). Further, we saw sales updates from retailers David Jones (DJS) and Harvey Norman (HVN). David Jones announced a 10% drop in sales in the fourth quarter, with a full year drop


Trading Day

The S&P/ASX 200 jumped on the open on overnight rallies in the US and Europe and is up 56 points or 1.35% at 4197 points. Other Asian markets are experiencing a mix of gains, with the Nikkei 225 up 0.17% at 8997 points, and the Hang Seng up 1.5% at 19896 points. Other risk assets