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S&P removes negative watch on Australia

S&P: OVERVIEW • We expect the general government fiscal position to return to surplus by the early 2020s, as the central government’s continued focus on fiscal prudence turns higher revenue collection into better budget performance. We view the government as having significant revenue flexibility to achieve this based on its track record of raising general


NEG architect warns on coal power

Via The Australian comes Kerry Schott, ESB chairwoman and NEG architect: “The fact of the matter is the existing coal plants we’ve got — some are low cost and very competitive,” Dr Schott said. “But the problem is that when you go to build a new coal plant and get new coal contracts — unless


National economists praise MB for delivering macroprudential

Via Westpac: APRA’s approach to housing pays off The macroprudential approach to easing credit growth while not spurring a shock to the housing market has “pleasantly surprised” regulators. This is the assessment of JP Morgan chief economist Sally Auld. Speaking on a panel at the Breakfast with the Economists in Sydney on Friday. Auld joined


NZ immigration retraces as more Aussies head home

By Leith van Onselen Statistics New Zealand released its permanent & long-term migration figures for August 2018, which revealed that immigration into New Zealand has continued to drift back from record high levels, with 63,288 annual net permanent and long-term arrivals landing in New Zealand in the year to August, down from a peak of


Purplebricks did vendors a favour encouraging sales

The AFR is in meltdown defending its real estate buddies today (Domain being in business with them and all): Real Estate Institute of NSW president Leanne Pilkington said she was left “horrified and speechless” over an “outrageous” competition run in NSW by fixed-fee agents Purplebricks to pressure vendors to lower their asking prices. As revealed


And now for the crush-loading of Adelaide

By Leith van Onselen As Melbourne and Sydney rage builds, the answer for the living standards destroying growth lobby (property, banks, retail) is South Australia, via Domainfax: Prime Minister Scott Morrison threatened to “pull levers” to get growth under control on Thursday, including sending international students to regional universities to relieve urban congestion as he puts


Coalition to bring forward small business tax cuts

By Leith van Onselen The AFR reports that the Coalition is pushing ahead with plans to bring forward previously legislated tax cuts for small and medium businesses with turnover of $50 million or less to 2021-22 from 2026-27, which would cost up to $3.6 billion. Labor opposes a further reduction in the small business tax


Melbourne joins Third World livability boom!

By Leith van Onselen It’s official, Melbourne is one of the fastest growing cities in the world, which is placing chronic pressure on infrastructure, housing and overall liveability: At 2.7 per cent last year, the city is growing at a rate usually associated with rapidly-expanding cities in China and South America… …”It is without doubt


Royal Commission findings to deepen credit crunch

As the Hayne Royal Commission prepares its interim report, the panic is growing. Citi expects Hayne to expose “systemic over-lending”: In our view the most material conclusion of the commission is likely to be that the lending process presently isn’t sufficiently responsible. Responses to this issue are likely to involve increased due diligence which will


Plunging auction clearances means prices will keep falling

By Leith van Onselen Yesterday afternoon, CoreLogic released its final auction clearance rate, which fell to just 51.8% – the lowest level since 2012: Interestingly, Domain analyst Eliza Owen also released research explaining the strong correlation between auction clearance rates and dwelling prices: Figure 1 shows the rolling annual clearance rate (Australia wide) alongside annual


Tribal Guardian slams tribal Newscorp for tribalism

The Guardian needs a mirror: News Corp has a distinctive culture – tribal, aggressive and centred around powerful editors – according to the accounts of former employees. Peter Fray, the former Sydney Morning Herald editor and former deputy editor at the Australian describes the difference between the news organisations this way; “Working for the Australian


Daily iron ore price update (already priced)

Spot flat. Paper flat. Steel flat. Chinese stimulus is already priced. In news, Vale wants more, via Reuters: Peter Poppinga, executive director at Vale, said at an industry conference in China that the world’s largest iron ore miner was studying expanding its S11D project in the Amazonian state of Para, even though it was still


CoreLogic Weekly Australian house price update: Melbourne dives

By Leith van Onselen In the week ended 20 September 2018, the CoreLogic 5-city daily dwelling price index, which covers the five major capital city markets, declined another 0.17%: Values fell across three major markets and rose in two: So far in September, home values have fallen by 0.40%, driven by Melbourne, Perth and Sydney:


Links 21 September 2018

Global Macro / Markets / Investing: Amazon Will Consider Opening Up to 3,000 Cashierless Stores by 2021 – Bloomberg Bond Traders Move Closer to Fed, Ramping Up 2019 Rate Hike Bets – Bloomberg Thiel-Backed Fund Hits the Jackpot With $12 Billion Tilray Stake – Bloomberg Financial stability and a decade of unconventional monetary policy – Brookings


Macro Afternoon

A mixed day here in Asia, with no strong positive follow through from overnight markets as a lack of economic data and any substantive change on the daily Yuan fix. The ASX200 was the only casualty, while Chinese stocks are putting in scratch sessions. The Kiwi is surging versus the Aussie dollar on the surprise


Buy dirt, sell debt

The Aussie dollar is off during the day: Bond yields have retreated as well raising the prospect of false breakout for the two year: XJO is falling modestly: Dalian is down given it priced the Chinese stimulus long ago: But Big Iron never did. RIO is ecstatic. FMG not so much: Big Gas is off:


Cynical Coalition tried $660m welfare bribe for company tax cuts

By Leith van Onselen Amid the growing controversy over Australia’s pathetically low unemployment benefits, it has been revealed that that the Turnbull Government cynically tried to bribe the Senate cross-bench with a $660 million welfare increase in exchange for them passing the company tax cuts. From The SMH: The Coalition government secretly proposed a $660


Victims of private VET rorts to get taxpayer help

By Leith van Onselen It has been dubbed the “biggest public policy scandal in Australian history: the systematic rorting of the vocational education and training system (VET)”. It was the reckless policy first introduced by the Howard Government and then expanded by the Gillard Government, which gave private VET providers virtually unregulated access to government subsidies


Immigration into Sydney and Melbourne remains extreme

By Leith van Onselen The ABS has released its Australian Demographic Statistics for the March quarter of 2018, which revealed that Australia’s population continues to grow rapidly led by turbo charged net overseas migration (NOM), mostly into Sydney and Melbourne. According to the ABS, Australia’s population rose by 1.55% in the year to March to


Final auction clearance rate lowest since 2012

By Leith van Onselen Last weekend, CoreLogic released its preliminary auction clearance rates, which revealed the following results: Today, CoreLogic has released its final auction results, which reported a large 4.0% decline in Sydney’s auction clearance rate to just 48.6%, with Melbourne’s also falling by 3.1% to 54.1%: According to CoreLogic, this was the weakest