Greece: End of days ?

Another day, another episode in the soap opera that is European economics. It seems more detached from reality the longer it goes on. From Reuters: Euro zone finance ministers postponed a final decision on extending 12 billion euros ($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.

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Trading Day: 20th June

The S&P/ASX 200 rebounded on the open from positive leads from “rally” in US and EU markets on Friday, but has since gone slightly in the red, or 2.5 points down, back below 4500 points just after midday. Asian markets are actually up, with the Nikkei up over half a percent to 9406 points (just


Is the RBA or market wrong?

In its weekly economic missive this morning, Macquarie Bank has an interesting take on the current mismatch between the RBA’s stop/start hawkish rhetoric and pricing in the interest rate futures market. The Macquarie Weekly: The central bank that cried wolf For the past year, the Reserve Bank of Australia has been forecasting great things for


Want Australian dollars with that?

News in The Australian this morning that the Russians are buying Aussie Dollars is just another example of the kinds of forces that are at work as a result of the rerating of Australia and our currency. From The Australian: The Russian Central Bank will pour up to $US5 billion ($4.7bn) into the Australian dollar


The neglected art of selling

By low, sell high!  That oft-used 80s catch cry is what all investors should aim to do.  In most cases the first part – buy low – can often be the easiest part to do.  I could have picked 10 random stocks from the ASX200 in March 2009 and I’d be on a winner because


Old economy fights back

Last week, the Unconventional Economist made a fascinating comparison between the rhetoric of the Canadian and Australian central banks on overvalued houses. He noted how much more candid the Canadian central bank has been about the degree of house price overvaluation and the need to mitigate those risks. As we know, neither the government nor


June 20 links: Gimme back the old economy

Europe to withhold half of Greek aid. Bloomberg European liquidity. Zero Hedge Core Europe and Greece. Felix Salmon Central Europe and Greece. Beyondbrics The euro will survive. Wolfgang Munchau Mismanaged crisis. Gavyn Davies FOMC meeting preview. Calculated risk Week ahead for the Dow. Calculated Risk Japan finds hot spots. Washington Post China copies Austrian city. Daily Mail (h/t


Qld’s budget backfire

Last week I mentioned that Queensland’s tax back-flipping government was introducing some strange new tinkering to the housing market as of August 1st this year. [They are] removing the deduction of primary place of residence stamp duty as of August 1. By removing the stamp duty concession non-first home buyer owner occupiers purchasing a median value


China and the future of capitalism

Let’s try some more scenarios, but this time with your participation. My reasoning is this. Most economic and financial commentary is about telling the story of the past leading up to the present. So why not try to tell the story of the future? After all, that is what matters for investment and policy. Can’t


Weekend Musings: The see-saw, endless spruik

My,  that was a quick week. A couple of things in the thinker this weekend. The see-saw After a very successful muse last weekend about the economics of Futureboom! I have been thinking a little more on the intricacies of what I can see happening in the macro-economy. Glenn Steven’s speech posted by H&H this


Australian Dollar Weekly Wrap

The Aussie and the markets performance this week has actually been very constructive for a move higher if Greece ever gets sorted. There is enough pressure on politicians to get their act together and we had German Chancellor merkel backing away from a bail in of investors overnight which gave some hope that a rabbit


Weekend reading: You call that a rally?

Crushed: $US, energy Down: ore Flat:  metals, grains Up: euro, Aussie, CRB, gold Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece Germany concedes. FT As predicted and solves nothing… Greek maths. Zero Hedge Greece’s Lehman moment. Alphaville Renew Greece. Mohammed El-Erian Beginning global restructuring. Chris Whalen Michael Pettis podcast on China. Alphaville China’s political problem. Bloomberg China house prices still rising. Bloomberg More layoffs coming to Wall St. NYT


The two faces of housing data

RPData’s latest newsletter highlights that the housing market is falling unevenly, with the top of the market taking a bigger hit than the rest of the market at this stage. With the premium market underperforming, many of the higher priced capital city regions have recorded a significant decline in median house prices since they peaked


Equity Spotlight: JB Hi-Fi

Following on from Q Continuum’s post on investing during sideways markets, today we shine the light on Australia’s best retail stock, JB Hi-Fi (JBH). Interestingly, this position is not shared with the current marketplace, as JBH remains the No.1 stock to sell short (i.e to profit on a fall in price), with over 14% of


Trading Day: Friday 17th June

The S&P/ASX 200 rebounded on the open from positive leads from the US overnight, but has since reversed back below 4500 points just after midday. The index is up 7 points or 0.17% to 4486. Asian markets are similarly effected, with the Nikkei down slightly, the Hang Seng down 0.18% and Singapore 0.14%. Other risk


This is still not risk off…

I hold a strong view that the instability that we have been seeing over the past few months has in many markets pushed longer term speculative capital to the sides and left the markets to trade on the whim of the short term guys and market news. How else can you explain the lack of


Four dark clouds

The Dow went up a bit last night. Hooray! But if you think this correction is over, think again. This is the correction we have to have. Think about it. There are four big economies in the world: Japan, EU, China and the US. A dark cloud hangs over each. Japan is far worse than


Private banking my butt

Last night, the Basel Committee on Banking Supervision circulated a draft document on what level of additional capital requirement Systemically Important Financial Institutions (SIFIs) will be required to hold. According to Bloomberg, it said it: would subject banks to a sliding scale depending on their size and links to other lenders, said the people, who


A Ford ability crisis

Henry Ford was born on the outskirts of Rockhampton in 1922. In 1925, he established Ford Australia, and subsequently travelled back in time to found the Ford Motor Company in the USA sometime prior. The upshot of all this, is that the bogan knows there is no car company more Australian than Ford, because Holden


Insurance insurance

Insurance stocks have been taking a bit of hammering for obvious reasons. QBE issued a couple of days ago an after market profit warning and is trading well below where it was a year ago. IAG has performed a little better, but not well. Southern Cross has a buy on Suncorp, arguing that it is


Yesterday’s hero

Will they never learn? Nearly 11 years on since it was first introduced the federal grant for first home owners still stands at $7000, even though the average house price has more than doubled in that time. That’s led one leading mortgage broker to suggest it is time the scheme was upgraded. The residential housing market


June 17 links: Up and down

Rocket: $US Flat: gold, ore, metals, energy, Down: euro, Aussie, CRB Smashed: grains Sovereign contagion: Ireland, Portugal, Spain, Italy, Belgium, Greece Philly Fed crashes. Calculated Risk Housing starts, jobless slightly improve. Zero Hedge Royal wedding effect passes. Alphaville Banks using secured funding. Alphaville India tightening. FT Libyan oil gone for years. FT Papandreou wrestles with new cabinet. FT No more stimulus. Tim Duy Citi trashes coal lobby carbon report.


Central banker makes housing sense!

I was disappointed in RBA Governor, Glenn Stevens, speech Wednesday. I had expected that Mr Stevens would at least acknowledge Australia’s Achilles heel – its high level of household indebtedness and house prices – and warn of the significant risks that these pose to the economy. Instead, Mr Stevens ignored the debt Godzilla and linked Australia’s house price appreciation to population growth. Interestingly,


Dutch Disease and jobs

Today the ABS released its quarterly Labour Force Survey – Detailed for May. I’ve broken it up into a series of sectoral charts by full time jobs below. Each says it ends in March but it don’t. Each ends in May, damnit. First up, let’s look at the growing sectors. Top of the pops is,


Trading Day: game over

The S&P/ASX 200 opened down sharply reacting in line with overnight markets which were all down 1 to 1.5%, reversing yesterday’s gains. At just after midday, the index has lost just over 60 points or 1.31% down to 4510. Asian markets are similarly effected, with the Nikkei down 1.1%, the Hang Seng down 1.4% and


Car sales crash

Governor Glenn may still be feeling feisty about the economy but it’s becoming increasingly obvious that he’s flying solo. ABS May car sales are out and can only be described as a crash, down 7.6% month on month and 14.5% year on year. These sales levels were first seen in 2003 and again in December


Wolf debates Stevens

Today Martin Wolf of the FT joins the growing ranks of China skeptics. It is interesting to contrast his views with those of Glenn Stevens, enunciated in his speech yesterday. According to Wolf: Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding


Bye, bye Macfarlane years

Over the past several years, the RBA, and some of its former staff, have engaged in a quiet reassessment of their role in the pre-GFC build-up of destabilising levels of debt in the Australian economy. There are a number of examples. There is the late 2009 confession by Ian Macfarlane’s former deputy, Stephen Grenville, that


The problem with asset allocation

What is asset allocation and why discuss it? Surely super is all about putting money away for retirement: how hard can that be? In this post, I will outline the conventional thinking regarding asset allocation and why it’s mostly wrong. The empirical evidence regarding this contention is overwhelming and stark. The major academic theories that