ASX as overvalued as ever

There are two things that matter in terms of choosing a weight to Australian stocks in your portfolio. First, are stocks expensive overall. Then, are Australian stocks expensive relative to global valuations. I’m going to deal with the second problem today. The simple version has Aussie stocks looking cheap. But it is wrong. Dig deeper

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RBA: Aussie real wages to fall to 2009 levels

The Reserve Bank of Australia’s (RBA) August Statement of Monetary Policy (SoMP) shows that the rebound in Australian wage growth has badly lagged other developed nations: The SoMP also notes that “aggregate wages growth outcomes are expected to continue to be restrained by wages growth in public and private enterprise agreements, particularly in the near


Kohler crucifies gas cartel

The criminal conspiracy that is Australia’s gas export cartel is pounded again today by ex-AFR media that appears to have finally figured it out. Alan Kohler joins the condemnation in a brilliant little video that makes the case that being nice to the cartel is very stupid: Even the gas cartel-captured AFR has finally read


Bear market rally pushing extremes

Michael Hartnett at BofA with his latest. Heard on the Street: “are you still sure 4200 the summer high?”…painful rally for many. Pain Trade: since June 16th lows…biotech 38%, bitcoin 27%, Nasdaq 19%, UTIL 15%, 30-year UST 10% vs oil -28%, copper -23%,China stocks -14%, Euro banks -11%…QEwinners (bonds, tech) outperforming QTwinners (commodities, banks). Tactics:


CBA: Markets too hawkish on Australian interest rates

CBA’s head of Australian economics, Gareth Aird, has released a note explaining why he believes that the market’s projected official cash rate (OCR) for Australia – currently tipped to peak at 3.35% in March 2023 – remains too bullish. Instead, Aird tips that the OCR will peak at 2.6% – a level that he considers


Australia’s housing pipeline swells as builders go bust

The Reserve Bank of Australia’s August Statement on Monetary Policy (SoMP) showed that the pipeline of houses under construction has swelled to all-time highs on the back of rising costs and supply constraints: The Australian economy… [is] likely to be supported for at least the next year by the large pipeline of detached house construction


Daily iron ore price update (the bottom)

The ferrous complex bounced on August 5, 2022: Chinese trade data for July was unexceptional with iron ore imports trending sideways: Steel imports have benefited from the Urkraine war: And port inventories of iron ore are climbing again and remain very high relative to output: The stabilisation of Chinese property sales and base effects has


Chinese economy in L-shaped recovery

COVID is going nowhere in China: Mobility edged up: Stimulus is keeping the economy afloat and property is bottoming: But, developers are still going bust: We are through the worst of the COVID and property crises. But, ahead is the flatlining recovery as property flatlines, stimulus wears off and external conditions deteriorate. Patheon: External headwinds


Macro Morning

Wall Street was mixed on Friday night due to the quite strong US non-farm payrolls aka NFP aka unemployment print, with the USD regaining ground against all of the major currencies as the Fed has a clear path to more rate rises. The Australian dollar was put back in its place as the RBA can’t


Housing market “settling” as vendors accept lower prices

CoreLogic’s preliminary auction results for the weekend report a slight rebound in clearances; albeit off relatively thin volumes. Across the combined capital cities, the clearance rate was 59.5% – up from 58.8% the previous weekend (later revised to 54.0% at final figures). Importantly, both Sydney and Melbourne reported preliminary clearance rates above 60% – both


Links 8 August 2022

Global Macro / Markets / Investing: Rate hikes are not the right answer to “wage-price persistence” – Interest.co.nz CEOs Blame Remote Workers for Slow Sales, Earnings Shortfalls – Bloomberg It’s time to ban private jets – or at least tax them to the ground – The Guardian ‘They are not slowing down’: The rise of


Weekend Sundries: 6 – 7 August 2022

Boomengineering For Arthur. Cervelo have notoriously weak derailleur hangers which caused catastrophic damage when Di2 went into spokes also buckling wheel. Made a new stainless height adjustable hanger fixed to axle incorporating axle angle ajustment Still working on it (work in progress)   Geoff McVeigh Royal Mail Hotel built 1895 at Lake Cargelligo Commonwealth Bank


Weekend Reading: 6-7 August 2022

Global Macro / Markets / Investing: Wall Street Bonuses Poised to Plunge Following Slowdown in Deals – Bloomberg Oil Falls Below $90 For First Time Since War as Demand Slows – Yahoo Pfizer CEO Complains to Investors About Lower Drug Prices Under Inflation Reduction Act – The Intercept UN head says Big Oil’s “grotesque” greed


Macro Afternoon

Asian stocks are having a solid session to finish the trading week as markets position themselves for what is likely to be a robust US unemployment print tonight. The USD is mixed versus most of the major currencies, although the Australian dollar is caught between the RBA playing catchup and the Fed as it hovers


New Zealand housing market “weak and getting weaker”

Prominent economist Tony Alexander has released new survey datasets on New Zealand’s housing market, which have been summarised below. Alexander believes New Zealand housing is “weak and getting weaker”, with more price falls likely over coming months. ____________________________________________________________________________________________ New Zealand’s housing market is weak and getting weaker. The number of sales in June was down


The Greens are right about privatisation

Greens leader Adam Bandt yesterday unloaded on former Labor Prime Minister Paul Keating, labelling him the “patron saint of privatisation”, claiming he started a rot that has left Australians worse-off: Mr Bandt branded Labor as a “neoliberal” party which had drifted to the far-right… Bandt said the former prime minister had a “short tongue but


Labor finalises details of federal anti-corruption commission

The federal government aims to introduce legislation to establish a national integrity commission (NIC) by the end of 2022. Independent MP Helen Haines has welcomed indications from the government that the anti-corruption commission will be overseen by a joint parliamentary committee. However, some crossbenchers contend that the committee should be chaired by a non-government MP.


Productivity Commission: Axe import tariffs once and for all

Around 90% of imported goods now come into Australia tariff-free, with cars, furniture and knitted goods among the remaining 10% of goods on which tariffs apply. The federal government currently collects around $1.5 billion from tariffs, or just 0.3% of its total tax take, and the amount that it collects will fall further as new


Labor readies to unload immigration dump truck

According to The AFR, the Department of Home Affairs informed the incoming Labor government in a brief that there were over 962,000 active non-humanitarian visa applications on hand. It also informed ministers Clare O’Neil and Andrew Giles that 130,000 of the applications could be processed more quickly if category-specific visa caps were lifted: “The cap