There is an old trading adage which I subscribe to that says you should not overtrade. It’s the same with blogging about currencies – sometimes it is best to stay on the sidelines. So I’ve been quiet as there hasn’t been much to say on the Aussie this week. Really, it has just traded in a
In a recent post about the Budget I mentioned that Treasury has previously over estimated the taxation take for the federal government and therefore seem to be underestimating the pressure that large amounts of private sector debt is exerting on the economy under the current fiscal and monetary settings. This led me to make the following
There’s a proposal doing the rounds in Canberra for a floor price on the price of CO2 permits, to apply once the emissions trading scheme moves from its fixed price period into a floating price period. The UK has just implemented such a scheme as a “top up” on the price of permits under the
I wasn’t at my desk when I heard the news that Moody’s had downgraded Australia’s major banks. At the time I didn’t feel the need to look too deeply as I was feeling a little smug. I have been posting for quite some time that these banks are undercapitalized and therefore, by extension, over rated.
AMP Capital Investors chief economist, Shane Oliver, is a curious beast. Recently he has been arguing that Australian housing is not a bubble. Here’s an example of Dr Oliver’s “no bubble” thesis from an article published yesterday in SmartCompany: I don’t regard Australian house prices as a bubble. While there was probably a bubble seven or eight
The Australian dollar is the only currency that the bogan believes in. It’s the currency that last year’s designer drug can be purchased in, it’s the currency that Centrelink can be defrauded in, and it’s the currency that can be acquired in wholesale volumes when one goes to work in the mines. While Australia’s economy
Up: Euro Flat: Aussie, gold, grains Down: energy, $US, ore Hammered: CRB US home sales, Philly, Consumer all weak. Bloomberg China candidates for IMF. MarketWatch DOW signaling triple dip. Clustertock Reasons why China is a bubble. MarketWatch House prices drop everywhere. SMH More Moody’s denial. Malcolm Maiden Big tobacco next up with jawboning. Jessica Irvine
As highlighted today by my colleague Houses and Holes, a growing number of commentators — most recently Richard “Balance Sheet Recession” Koo — are weighing in on on the folly of quantitative easing and the risk that it poses for asset prices. The main charge is as follows. As The Bernank himself has hinted at
The ABS has today released its quarterly Average Weekly Earnings. Like the Wage Cost Index yesterday, wages are not accelerating and in fact, in this measure, in the big employment sectors of Retail Trade, Accommodation, Food Services and Admin Services they actually went backwards. Health care which is another big employer was up only 0.5%
The full impact of Dutch disease is being tracked by analysts mainly by their looking at the effect of the higher $A on earnings. Deutsche Bank has issued a currency review that tells a mixed tale. Wesfarmers, Sims, Bluescope, OneSteel, CSR, the materials sector, the gaming industry are all “negatively impacted”. Companies with significant off shore
This is the first of a regular equities analysis post we’ll be introducing to MacroBusiness. In the posts we’ll be taking a single company and analysing its business and financials from the perspective of a fundamental/value investor. In a continuation of this week’s earlier post on BHP and the AUD, today we look at BHP Billiton. The Business BHP
When it comes to recent banking/housing policy, our Kiwi cousins across the pond have it all over us Aussies. Back in April, I wrote about three policy actions being undertaken by the Reserve Bank of New Zealand (RBNZ) and the New Zealand Government aimed at reducing the economy’s exposure to the housing market and improving financial
I’ve said before that investing is more about psychology than about fundamental valuations, numbers and metrics. In the case of residential property’s evil “twin” brother, gold, this is more true than ever. Regular readers know that I am watching out for signs of the current bull market in gold becoming an out of control bubble.
As predicted, the national media has sidelined the Moody’s decision. They could not be more wrong. It is time to revisit a new Wallis Inquiry. Australia has a big imbalance. Call it what you like. A housing bubble. An overvaluation. An external imbalance. It doesn’t matter. It just is, and the rest of the world knows
Mr ‘balance sheet recession’ himself holds forth on the follies of QE. Highly recommended reading… As I spoke with investors in London and Geneva last week, markets were rocked by a resurgence of fiscal problems in Greece and a steep drop in the price of silver andother commodities.In London there was talk in the market that the drop in commodity
The number of people and organisations waking up to the fact that their “old growth” business models have suddenly imploded continues to grow. Yesterday it was the Housing Industry Association’s (HIA’s) turn to use its last gasp of air to scream at the government for even more stimulus for housing. Fresh cracks have appeared in
I have spoken about Greece many times before. It is a country in all kinds of trouble economically caused by fiscal mismanagement and monetary incompatibility. What has always amazed me is that for some reason, ignorance or delusion or a bit of both, anyone who expected to be paid on their Greek debts thought that
Rocket: grains, CRB, energy Up: Euro, $US, gold Flat: Aussie Hammered: ore Is it dangerous to borrow in dollars? Alphaville on Moody’s. MB gets a mention… No default for Greece says EU. Bloomberg Meanwhile, IMF says EU is stuffed. Reuters EU after Strauss-Kahn. Martin Wolf Who will get the gig? Simon Johnson Greece default worse than Lehman. Guardian How
There is no doubt that ratings agencies are on the nose. And it is probable that today’s Moody’s downgrade of the big four banks will be interpreted tomorrow by the broader media as a petulant and late attempt to recapture some lost credibility by picking on our perfect banks. Besides that, a one notch downgrade
From the SMH: Moody’s downgrades ratings for big four banks Chris Zappone May 18, 2011 – 3:52PM .Moody’s Investors Service has downgraded the debt ratings of Australia’s big four banks from Aa2 to Aa1, citing their relatively high reliance on wholesale funding. Moody’s gave the banks – Commonwealth, NAB, ANZ and Westpac – a stable
Martin Parkinson, the new Secretary of the Treasury, gave an excellent speech last night. Gone was the uber-bullishness on China and India that has characterised Treasury rhetoric since the GFC and it was replaced with a recognition that we’re in for cycles in China and at times, it’ll be painful. The Australian covered these things well enough.
There are growing signs of pessimism amongst fund managers globally, a point that has already been well covered on MacroBusiness. How is this affecting trading strategies and asset allocations? Merrill Lynch’s May fund managers survey sheds some light. It says that investors are questionnig global growth prospects. Only 10% expect stronger global growth in
Tomorrow we get the release of the AWOTE measure of wages which is widely known and probably more commonly watched than today’s wage cost index which was just released. The WCI is a little more obscure so it probably worth explaining what the ABS says it measures: The wage, non-wage and labour price indexes measure
A day after the most hawkish RBA Minutes that anyone can remember, Westpac’s Consumer Confidence is only going the other way: The fall for May was moderate but it’s now a major downtrend. Not to mention the expectations component, which is falling off a cliff. Can the RBA really be thinking of hiking in this environment? The
Recently I argued that the Australian economy is much closer to the US economy than we give ourselves credit for. One half of it at least is, the slow half (or should I say three-quarters): In the slow halves of the two economies, housing and services, the US is deflating much of its debt and
It takes courage and conviction to speak-out against the interests that employ you. Doing so can cause ridicule from peers and risks damaging one’s career prospects. So when Joseph Healy, business banking head of National Australia Bank (NAB), last year spoke-out against the Australian banks’ bias toward housing lending, I was suitably impressed. Here’s an
Attached find the full transcript of the inaugural speech of the new Treasury Secretary, Martin Parkinson. I will return later with analysis.
The People’s Bank of China has raised interest rates and reserve requirement ratios a number of times since last year as the government pledged to make inflation fighting and property price curbing their top priority. So far, the two main objectives have not been achieved. However, the effect of tightening has been increasingly visible. For