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Why opening international borders could ruin Australia’s economic recovery

Below is an article I wrote for News.com.au: It’s been hailed as “early Christmas” gift for hospitality, but reopening international borders could have a big downside. This week, the Morrison Government announced that Australia will re-open its international border to overseas students, skilled visa holders and working holiday makers, with Home Affairs Minister Karen Andrews

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Why developers ‘talk their book’ on land supply and planning

Last week, Dr Cameron Murray – author of the Book Game of Mates – gave testimony to the parliamentary inquiry into housing affordability whereby he completely demolished the Coalition’s supply-side thesis. Dr Murray was asked via a question on notice to provide evidence to the inquiry that developers manipulate the land market to ration supply

3

Retail sales surge post lockdowns

The Australian Bureau of Statistics (ABS) has released retail sales data for October, which rebounded by 4.9% after lockdowns ended across NSW, Victoria and the ACT: According to Ben James, Director of Quarterly Economy Wide Statistics at the ABS, the 4.9 per cent increase was the strongest monthly rise since Victoria’s first lockdown bounce back in

23

More experts slam Victoria’s child/teen vaccine mandate

Victoria’s restrictions on unvaccinated 12 to 15 year-olds are currently the toughest in Australia, barring them from venues such as cafes, retail shops and restaurants, along with social and school activities. Earlier this week, several health experts questioned why a vaccine mandate is still necessary once the double-dosed rate reaches 90% to 95%. They believe

22

Migrant influx stunts Canadian wages

Last month, the Canadian Government announced a plan to import 1.2 million migrants in just three years: Immigration Minister Marco Mendicino unveiled what he called an “ambitious” three-year immigration plan today that set targets for bringing skilled workers, family members and refugees into Canada. Canada aims to bring 401,000 new permanent residents in 2021, 411,000

28

COVID surge threatens Europe’s economic recovery

A resurgence of COVID outbreaks across Europe is threatening the region’s economic recovery: Austria announced last week that it’s going back into a national lockdown. Skyrocketing infections in Germany have also sparked questions about whether the region’s largest economy could reimpose sweeping restrictions… Starting Wednesday, German employees must present a negative Covid test, their vaccination

24

Victoria’s COVID cases ratchet back up

Victoria has recorded 1362 new COVID cases and seven deaths: By comparison, NSW recorded only 261 new COVID cases and zero deaths: Victoria’s daily cases have broken higher, recording the highest daily figure for around a month: Active cases have also risen: And hospital admissions have ticked higher: The divergence between Victoria and NSW remains

2

Macro Morning

Overnight share markets were relatively quite given the US Thanksgiving holiday with European shares finally putting in a decent positive session, while bond market volatility was lower due to the closed markets. The USD was down slightly against the majors although the Australian dollar remained below the 72 cent level, while gold continues to struggle

4

Goldman: US yields continue to rise on faster taper

Goldman with the note: The November FOMC minutes provided little new insight into the FOMC’s tapering plans. All participants judged it appropriate to announce the start of tapering at the November meeting and “some” participants favored a faster taper, but the September minutes had already revealed that “several” participants advocated for a more rapid reduction

2

For companies, not all inflation is created equal

TS Lombard with the note: Not all inflation periods are created equal: when inflation is “demand-pull”(pro-cyclical), corporates are able to pass on PPI increases to customers. Historically, margins improve when inflation is pro-cyclical and contract when it is counter-cyclical. The current regime is pro-cyclical; we remain positive on margins and equities. Rising input costs do

1

CoreLogic weekly house price update: Brisbane still booming

In the week ended 25 November, the CoreLogic daily dwelling values index increased another 0.25%: All major markets except Perth recorded rising values, again led by Brisbane and Adelaide: So far in November, dwelling values have risen by 0.97%, led by Brisbane (2.31%) and Adelaide (1.99%): Quarterly price growth remains turbo-charged but slowing at 4.09%

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Links 26 November 2021

Global Macro / Markets / Investing: OPEC Weighs Shift in Oil Policy After Crude Release – WSJ Inflation is about to get way worse in 2022 – Macleans JPMorgan’s Jamie Dimon and Tesla’s Elon Musk Feud Behind the Scenes – WSJ Cities with empty offices see new room to expand housing – Politico Fed members

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Macro Afternoon

Heading into the end of the trading week, Asian stock markets are starting to find some bullishness helped by lower domestic currencies across the region as USD remains very strong against most of the major currency pairs. Gold is climbing very slowly but has been unable to get back above the $1800USD per ounce level

8

Sydney’s apartments are riddled with defects

Last month, NSW Premier Dominic Perrottet declared himself “someone who believes in a big NSW” and promised to lobby Prime Minister Scott Morrison to significantly lift the migrant intake: “We’re going to have a real discussion [about] catching up some of those numbers that we’ve lost during this pandemic,” Mr Perrottet said… “I’m someone who

14

Highrise Harry celebrates migrant meat for property grinder

Earlier this week, the Morrison Government announced that Australia will re-open its international border to overseas students, skilled visa holders and working holiday makers, with Home Affairs Minister Karen Andrews expecting that at least 200,000 migrant workers will arrive in Australia by July 2022: “We are working on a figure of 200,000, it may well be

41

Victorians love Dictator Dan

The Victorian government intends to “revisit” its controversial pandemic bill in the last week of state parliament for the year. However, Attorney-General Jaclyn Symes has ruled out scrapping its vaccine mandate in order to secure the additional crossbench vote it needs to pass the bill in the upper house. Premier Daniel Andrews has previously stated

3

Aussie capex is a shadow of its former self

The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the September quarter, which registered a 2.2% seasonally adjusted fall in capex volumes over the quarter but a 12.9% increase over the year (see below table). The annual nation accounts were also released recently, which recorded a small increase in capex

0

Stay long King Dollar

Credit Suisse again today: Our expectation for ongoing USD gains remains intact, and becoming broader based. Last week, several Fed officials suggested that the Fed could potentially speed up the pace of asset purchase tapering beyond what is currently planned. On top of this, President Biden’s decision to re-nominate Jerome Powell as Fed Chair removed

2

Are bonds going to rise or fall?

Numera captures the prevailing view on Wall Street about the future of bond yields: • Recovery on track: Strong employment and retail sales figures, alongside falling public health risks, reinforce the view that the US recovery remains on track. Equity investments should yield positive returns in 2022, but high valuations and a likely increase in

2

Capex plans hold up

It’s going to be a decent year ahead for business investment which is no great surprise given the huge budget incentives for just that. The headline is tracking for the highest level in a few years: Estimate 4 for 2021-22 is $138.6b This is 8.7% higher than Estimate 3 for 2021-22 Of which mining has

26

Penny Wong shoots Labor in the head

Following Penny Wong’s very poorly crafted speech this week, Labor now faces two problems. First, the China kowtowers are back. Geoff Raby leads the way: Mr Raby is pretty loose with the truth. As I reported yesterday, the Morrison Government has been clear that it will consider CPTPP entry for China if it engages on

9

Australia’s never ending ‘skills shortage’

The Morrison Government will make changes to the temporary skills shortages (TSS) visa to address so-called labour shortages in key sectors of the economy. The reforms will provide a direct path to permanent residence for about 20,000 temporary skilled migrants who remained in Australia during the COVID-19 pandemic. The measures will also apply to holders