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Why the banking royal commission will ultimately achieve little

Cross-posted from The Conversation: Will the banking services royal commission have a lasting effect of improving the banking and financial sector? The answer is “no”. A temporary change is apparent, but the problems lie deeper than those addressed by the royal commissioner. The worldwide pervasiveness of financial sector misconduct is an indication. This is not a


Austerity time! Victorian Budget tumbles into stamp duty, ScoMo black hole

By Leith van Onselen Over recent months we’ve warned how the impending stamp duty bust in Victoria will force the Andrews Government to tighten its belt. Now with the Morrison Government returned unexpectedly, things have gone from bad to worse: Treasurer Tim Pallas now faces the unenviable task of preparing a state budget without almost


S&P: WA mortgage arrears rip higher for major banks

Via S&P: Australian prime home-loan arrears rose in March, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages increased to 1.51% in March from 1.48% a month earlier. Arrears are up by 14 basis points year on year. Across the country, arrears movements


Xi Jinping has gone mad: Rare earths edition

Via Bloomie: President Xi Jinping’s visit to a rare earths facility fueled speculation that the strategic materials could be weaponized in China’s tit-for-tat with the U.S. on trade. Shares in JL MAG Rare-Earth Co. surged by their daily limit Monday after state news agency Xinhua said the Chinese president had stopped by the company in


Australia’s infrastructure delivery system is busted beyond repair

By Leith van Onselen Last weekend’s Federal Election offered another reminder of why Australia’s infrastructure delivery system is busted and badly ill-equipped to keep pace with the federal government’s mass immigration ‘Big Australia’ policy. In the wake of the Coalition’s re-election, the Morrison Government and Victoria’s Andrews Government are locked in a heated battle over


RBA minutes dove up

Via the RBA: International Economic Conditions Members commenced their discussion of the international economy by observing that global growth had eased in the second half of 2018 and looked to have continued at around this more moderate rate in 2019. Growth in Australia’s major trading partners was also expected to continue at around this slower


CoreLogic: APRA cuts won’t lift house prices

Via Cameron Kusher: APRA looks to loosen lending limits – CoreLogic research analyst Cameron Kusher: Earlier today, the Australian Prudential Regulation Authority (APRA) issued a letter to all authorised deposit-taking institutions (ADI) regarding consultation on revisions to prudential practice guide APG 223 residential mortgage lending.  While that may not mean very much to readers specifically


ATO: Tax cuts may get through this year

Via The Australian: Scott Morrison’s promised tax cuts will be delivered by the 2019-20 financial year, with the Australian Tax Office saying it can pass on the promised changes if Labor agrees to them. There was speculation in other media outlets this morning that the tax cuts would not be passed on as the Prime


Melbourne’s McMansion mushroom cloud rises into MSM

Last year it became apparent that Melbourne’s house and land market had become an giant bubble after the median pricefor a housing lot hit $339,000 – up 21% in only 12 months – with steeper rises in the cost per square metre: In August 2018, the panic began to set in with land speculators rushing for the exits: Speculators who


Mortgage brokers rejoice at re-election of Property Council PM

By Leith van Onselen Labor had planned to ban trailing commissions for mortgage brokers from 1 July 2020, so its defeat at the federal election has been welcomed by the mortgage broking sector. The Hayne royal commission had recommended that trailing commissions be abolished and that banks stop paying upfront commissions to brokers. Labor had


Motorists gouged by escalating toll road charges

By Leith van Onselen While residents of Sydney and Melbourne are suffering from crush-loaded roads, trains, schools, and hospitals, as well as hideously expensive housing, toll road companies like Transurban are making out like bandits. Earlier this year, ABC News reported that Sydney’s toll road network is the most expensive and extensive in the world:


Labor leadership turns into three horse race

Shadow Treasurer Chris Bowen has just thrown his hat into the ring to contest Labor’s leadership, turning it into a three horse race between him, Anthony Albanese and Jim Chalmers. From The Australian: The Australian has confirmed Chris Bowen will run as the Right candidate for the Labor leadership… Labor frontbencher Anthony Albanese has brushed


Bubble on. APRA to cut mortgage servicing requirments

And that’s how it long it took for our corrupt system to turn itself around: The Australian Prudential Regulation Authority (APRA) has begun consulting on possible revisions to its guidance on the serviceability assessments that authorised deposit-taking institutions (ADIs) perform on residential mortgage loan applications. In a letter to ADIs issued today, APRA has proposed


Manufacturing should leave Australia

I’ve tried my hardest but have failed and the result us upon us, at the AFR: A gas price cut is required for Queensland’s Gibson Island fertiliser plant to avoid closure this year, with owner Incitec Pivot urging the re-elected Morrison Government to ensure gas was ”available and affordable” for Australian manufacturers. Uncertainty over the


Macro Morning

By Chris Becker  US/China trade tensions are spiking again, this time on the hullabaloo around Huawei with tech stocks sinking overnight, dragging down industrials and taking away most of any remaining risk confidence. Interest rate and currency markets were more benign but the USD remains firm across all undollars, with the Australian dollar rolling over post


Steve Bannon sinks the dagger into Labor “elites”

Via The Australian comes Steve Bannon: Donald Trump’s former chief strategist Steve Bannon says Labor’s Bill Shorten “snatched ­defeat from the jaws of victory” ­because he pandered to inner-city elites at the expense of ordinary Australian families. “It’s the little guy who is the backbone of civic society but who is not outspoken … they


Australia has nothing to fear from population ageing

By Leith van Onselen Ivailo Izvorski – Lead Economist, Global Practice Macroeconomics at the World Bank – has penned a ripping article debunking the mainstream view that population ageing spells doom for the world’s economies: Longer and more productive lives should be celebrated as an achievement of mankind rather than considered a problem. Longevity, however,


Will Trump’s China trade war kill the international student trade?

As regular readers will know, China has been at the forefront of Australia’s international student boom. In the five years to December 2018, the number of international students residing in Australia surged by around 60% to half-a-million, as illustrated in the next chart: The lion’s share of international students studying in Australia comes from China,


UBS bears: Housing downside materially reduced

Via the UBS property bears: Election result materially reduces downside risk for UBS view on housing The main implication of the election is the absence of expected Labor changes, especially to negative gearing, capital gains tax & franking; rather than the Coalition’s mostly ‘status quo’. While this likely has limited impact on our credit tightening


Links 21 May 2019

Global Macro / Markets / Investing: Warren Buffett: If a bank needs a government bailout, the CEO and spouse should lose ‘net worth’ – CNBC Bitcoin loses $21 billion in market cap in 24 hours – CNBC How cryptocurrency Is Changing Basic Economics – The Spec Oil price jumps as Saudi suggests OPEC+ keep production


Macro Afternoon

A mixed session to start the week here in Asia, although dead cat’s are bouncing and rolling over here and there, the local market is soaring due to the pro-bank and pro-mining party getting voted in over the weekend. The Australian dollar is also on a tear post the election, although still remains below 70