17

Trading Day

After another day of “risk off” in Asian markets, the S&P/ASX 200 Index falling sharply at the open, slumping by midday and recovering slightly, but still finishing down 50 points or 1.2% to 4139: It seems likely, save a Santa Rally, that the market will continue to retrace back to the 4000 support level in

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4

Roy Morgan consumer confidence nudges up

Looks like Roy Morgan is registering some subdued effect from last week’s rate cut: Consumer Confidence had a small rise to 113.4pts (up 2.2pts in a week), according to the Roy Morgan Consumer Confidence Rating conducted last weekend (December 10/11, 2011). Consumer Confidence is now 5.9pts lower than a year ago, December 11/12, 2010 (119.3).

4

ACCI survey shows manufacturing recession

There is no good news in the quarterly ACCI Survey of Industrial Trends today. The headline index shows manufacturing in recession for the third straight quarter. Pretty much every sub-component sucks. Employment is waning along with capacity utilisation and investment intentions, costs are up and prices down. Even the export component shows deterioration, which contradicts

11

Where is the Santa Rally?

The Santa Rally meme has been spread through the mainstream media and the various bullhawks, particularly Clifford Bennett who called it on the 1st December, to finish the year a bit more joyfully. First what is “The Santa Rally”, how statistically significant is it, and what are the chances of it occurring this year? I’ll

16

Auctions still weak

Presented without comment ( because I am too busy ), but open for discussion, the latest R.P Data auction results which were released today and once again, just to confuse the issue, counter AFG’s latest report.

5

China links

Courtesy of Sinocism: U.S. Air Force Study Reports Vulnerabilities in Drone C2 Systems | Digital Dao – Analysis: China’s $300 billion fund a wake-up call to U.S. – Yahoo! News – BEIJING (Reuters) – China’s plan for a new $300 billion sovereign wealth fund is as much a warning to Washington as it is a body blow

0

Inflation expectations fall again

From the Melbourne Institute today: The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, decreased slightly to 2.4 per cent in December from 2.5 per cent in November.   According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “this month survey probably reflects consumers’ concerns about deteriorating

1

Cars sales slip

November cars sales data is out from the ABS. Trend is up, seasonal adjusted is down. There is a noticable jump MoM in NSW in the raw numbers. NOVEMBER KEY POINTS TOTAL NEW MOTOR VEHICLE SALES The November 2011 trend estimate (89 144) has increased by 1.2% when compared with October 2011. Seasonally Adjusted –

39

The housing agenda

The RBA yesterday published the papers and discussions from its conference in August this year on the theme – The Australian Economy in the 2000s.  The whole selection of papers makes for an interesting read, including the one clearly written for the benefit our resident troublemaker Houses and Holes, entitled Housing and the Mining Boom.

48

Gold blows up

Gold last night was the vanguard in a wide retreat of undollar risk assets, falling over 5% to settle at $1574USD per ounce before the Asian spot session opens shortly this morning. As I prefaced in my Trading Day posts this week, on Monday it had appeared the precious metal had formed a reversal head

39

France is next

I posted back in July that I thought France would be next after Italy in the contagion breakdown because of its macroeconomic metrics. High levels of public and private debt, a long running negative trade balance and current account deficit, stalling industrial production, GDP and employment along with significant banking sector exposure to the periphery

5

Merrill Lynch downgrades banks

From a little Merrill Lynch note last night: Aus Bank sector downgraded to NEUTRAL, flagging rising risks to consensus earnings forecasts: Elevated risks in wholesale debt market – recent step in the cost of hedging basis risk and long term debt spreads are impacting mortgage margins Mortgage margins (c.55% of banks loan books) also contracting

45

Bulk trouble

According to the AFR this morning: Falling industrial output in Australia’s key mineral export markets of China and Japan is putting pressure on energy coal prices. China is reportedly pushing back on shipments of thermal coal from Australia and Indonesia as inventories in Qinhuangdao and Guangzhou, as well as at coastal power stations, continue to

24

Is the death of manufacturing inevitable?

Just occasionally you get a good comment about manufacturing in Australia and today is one of those days. From Rowan Callick: EVEN the Australian Industry Group failed to generate much concern about one of the big casualties of this week’s cabinet reshuffle — manufacturing. Perhaps this indicates the extent to which much of Australia has

31

Economics of bike lanes

As an economist and keen utility cyclist (sorry, no lycra here) I have a close eye on the economic arguments surrounding urban transport investment.  The question I often ponder is whether investment in a cycling infrastructure network (on or off road) in Australian cities is justifiable on purely economic grounds.  To be specific, would the

9

December 15 links: Undollar demolition

Rocket: Treasuries, $US Pancake: euro, gold, metals, ore, grains, Aussie, energy, CRB Contagion: 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 Year

4

Trading Day

After another night of risk off, the S&P/ASX 200 Index fell at the open and then rallied in the afternoon before slipping right at the close, down only 2 points to 4190 points: Although there is some support at the 4150 point mark, it is likely the market will retrace back to the 4000 support

18

Martin Wolf macrobated

If you pop over to Business Spectator today you can read a really excellent commentary by the world’s biggest business columnist, the FT’s Martin Wolf, on why Europe has doomed itself. But if you really want to be in the know, you can read Delusional Economics, who Martin Wolf references as one of his sources

19

Boom Boom on Europe

Ric Battellino just gave a speech to the at the 24th Australasian Finance & Banking Conference on the topic of European financial developments. There isn’t anything earth shattering in the speech, but I do note a somewhat subdued tone from Mr Battellino who is famous for much more upbeat presentations. Introduction Over recent months we

21

From bad to worse for the IMF

For some time now I have been pointing out poor economic policy implementations within the European economy and how those policies are likely to effect the real economies of European nations. As I re-stated on Monday, my major concern with the current thinking from European economic leaders is their misguided belief that implementing austerity before

125

Why’s it so bloody expensive?

I’m not generally a fan of The Centre for Independent Studies. They have a tendency towards libertarian craziness that I find intellectually vacant and actually destructive to the cause of liberalism more generally. But, they do host some good people from time to time. In the past, foreign policy legend, Owen Harries, was one and

1

Skilled vacancies rise

The DEEWR Skilled Vacancy report is out shows a bit of relief with a 5.4% rise in December, though the trend continued to fall: This is some welcome relief for a jobs market that’s seen all marginal indicators under pressure since mid year. Jobs rose in all states but the two speeds are still very

6

Seven surprises for 2012

The key to reading markets is, of course, to understand surprises, the unexpected. What actually happens in markets is never predictable, otherwise those who are good at using financial analytics would always be right, and they almost never are. A report by Macquarie attempts to look at some possible surprises for next year, which is

3

Consumer confidence tanks

The Westpac Consumer Confidence Index for December is out and it appears the RBA has hit a brick wall with a big 8.3% fall in December from 103.4 in November to 94.7 in December. No doubt the media will paint this as a big surprise but it isn’t. That’s not because I predicted it, rather

10

Australia: The safe haven

At various times over the past year, Deus Forex Machina (who is on holidays) and I have argued that the Australia safe haven meme that has dogged discussion of the Australian dollar this year is overblown. Recent months have born that out with the dollar acting as it always has, falling as global risk rose

92

Parko arcs up

From the SMH this morning: TREASURY boss Martin Parkinson is losing patience with people who call for action to bring down the dollar. ”I will be completely open with you,” he told the Sydney Institute last night. ”Anybody who thinks you talk down the dollar or talk up the dollar is a fool. ”I mean what

1

Full FOMC Statement

Last night the Fed left things pretty much unchanged which, for some unknown reason, upset equities. What did they want, a party trick? Here’s the full statement: Release Date: December 13, 2011 For immediate release Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding

38

Chart of the Day: Lazy Germans

Today’s chart comes from Global Macro Monitor via The Big Picture, comprising international data compiled by the US Bureau of Labor Statistics and shows that: average number of hours worked for an employed person in Italy – 1,778 hours in 2010 – is 25 percent higher than that of Germany’s 1,419 hours. Although they acknowledge there maybe