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How Japan will hit local growth

I am surprised at the resilience of Australian equities to the global sell-off. Either the local market is confident that the crisis can be contained (for some reason I can’t fathom, it’s behaving irrationally, or, it has assessed any economic fallout from the disaster to be minimal for Australia and already priced in). The only

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Risk is off, but China is still on

Houses and Holes is right on the AUD we need to be careful what we wish for. We do not want to be a reserve currency – already we are seeing the strength of the AUD reallocating resources around the economy. HH’s post on Dutch disease a week or two back highlighted this and it

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Has the REIV destroyed the evidence?

Earlier in the week, a reader sent me a link to a recent Real Estate Institute of Victoria’s (REIV) news release. The release contained the following quote [my emphasis]: Members report positive expectations for market activity in the March quarter at the same time as a drop of 3–5 per cent in the median house price is expected.

6

Sell finance

With global markets facing a period of sustained uncertainty, it is worth taking a longer perspective, comparing the current conditions with the so-called “Goldilocks” economy that existed just prior to the GFC. It turned out then to be a case of all the three bears instead of Goldilocks, but at the time things seemed robust

9

Japan’s critical moment

An hour ago the IAEA released the following: Temperature of Spent Fuel Pools at Fukushima Daiichi Nuclear Power Plant Spent fuel that has been removed from a nuclear reactor generates intense heat and is typically stored in a water-filled spent fuel pool to cool it and provide protection from its radioactivity. Water in a spent

5

The safe haven meme

There’s more argument today that the Australian dollar is now a global safe haven currency, which, I must admit, agitates my innate cringe gene. Let’s see if there is any evidence. First, the following graph is the last six months of futures movements for traditional safe havens by percentage: The $US is green, Japanese yen is

4

Japan Update 2

The situation in Japan seems to have just got considerably worse. From the BBC live feed. 0325:More on that news conference by Chief Cabinet Secretary Yukio Edano. He said: “At around 0830 today, at Fukushima Daiichi nuclear power plant, white smoke has been seen coming out of reactor three. And regarding this, currently we are

10

Stocks for Bears

It’s a scary and volatile world at the moment:  floods, cyclones, earthquakes, tsunamis, US housing crashes, Aussie housing bubbles, the GFC, QEII, PIIGS, Japanese debt, revolution in the Middle East and Charlie Sheen.  As the Chinese curse goes, we are living in interesting times. So what’s a bear to do?  I’ve never been the “head

11

Wow! – The MSM on FHBG

I am starting to think I have woken up in the twilight zone. Something very odd seems to be suddenly happening in the Australian mainstream media. Last week the Unconventional Economist posted about the MSM’s foray into anti-REIX journalism with a well researched opinion piece about the failings of negative gearing. Today I note that

6

The RBA airbrushes history

Deputy Governor of the RBA, Guy Debelle, yesterday delivered an analysis of Australia’s recent financial history that left a few things out. Let’s take a look: Over much of the past two decades, demand for credit outpaced the growth in deposits, so that banks accessed wholesale funding markets to support growth in lending. This outcome reflected

23

Spruiking as they exit

You’d seriously think that the Real Estate Industry sponsored media in Queensland would have given up by now. With north Queensland, the Gold and Sunshine coast going through well publicised correction you wonder why they would bother spending the money. But I guess old habits die hard. So once again we are subjected to the

3

Will this cat bounce?

Today’s strong uptrend in almost all risk markets is not that surprising. In trader’s parlance, this may just be a “dead cat’s bounce“. Sorry for the awful terminology, but there it is. This broad correction offers both risks and opportunities for trader’s and investor’s alike. For the latter, it offers excellent buying opportunities in “Very

21

History resumes

I remember the nineties fondly. They were the years before housing bubbles. The years when cricket still had meaning and moustaches were not yet the gimmick of some new age fad. The years when talent still determined who became famous. And the years when the singularity of American might gave the world a moral centre,

10

Japan Update

Update: European markets are also getting hammered . See BBC for more. It seems that only the stock market has realised what the hell is going on. I captured this on my phone earlier in the day, the Nikkei closed down 10.55%  after BOJ intervention. But it just seems absolutely bizarre that I am even discussing

7

The RBA’s message on debt

In today’s Minutes of the March 2011 Monetary Policy Meeting, RBA members had something of a coming out: The household and business sectors in Australia did not appear to be under financial stress, though both continued to show more caution in their borrowing behaviour, as evidenced in slower rates of credit growth over the past

4

Japan: Suddenly it seems much worse

There is a now  constant stream of slowly worsening news coming out of Japan.  As H&H linked to in a recent post the expected outcome of the Boiling Water Reactors should be far less worrying than what is being reported. A quick check of the BBC feed shows some chilling details of what is believed

1

QBE shaken

Given the enormity of what is happening in Japan, it seems a little trivial to be tracking the possible effects on Australian shares. The greatest concern will be the long term impacts on the world’s third largest economy and one of the power houses of the Asian region. Japan is a heavy consumer of Australian

3

High risks

The US equity market held up pretty well last night but looks to me to be are underestimating risks all around. Poor Japan seems headed toward mutliple meltdowns. Live coverage is available at the BBC. New Scientist reports that assuming meltdowns are occurring then it is only a question of whether containment of the radioactivity

31

The Economist on housing supply

I was disappointed with The Economist’s recent special reports on housing. Whilst the reports captured the psychology and the demand-drivers of bubbles well (discussed in an earlier post), they failed to adequately capture the role of supply-side constraints. As far as I could see, the only reference to the supply-side of the housing market were

0

Not today

There is so much to say on the financial front about what is happening in the world right now. China finally seems to be making the right noises about its movement towards consumer led economic growth, take it or leave it.  Bahrain has erupted again and is now asking for its much larger neighbour to step

4

Macquarie bursts the China bubble

The pressure is growing for China to open up its capital markets as a way to solve its internal bubbles. The question is: how will that affect the rest of the world? The greatest impact of China – its massive scale – is so far largely confined to trade and global production chains. What happens if

0

Will Japan rout the Aussie?

Not surprisingly the markets in Japan are under pressure in the aftermath of the earthquake and the massive destruction. The Nikkei is down 5.14% as I write and USD/JPY has bounced off a low for the day of 80.60, no doubt on the back of some intervention from Japanese authorities. The moves in Japan and

1

The great Aussie battle

Is the AUD weak or strong? It’s hard to tell because it seems to find support above .9950, like it did Friday night, but can’t get through 1.02. This tight trading range has been in force for about 6 weeks now and has the bulls and the bears excited in equal measure each camp expecting

37

Should the US balance its budget?

Deficit hysteria is alive and well in the United States as calls grow to slash spending and return the budget to a “sustainable” position. Today I am going to ask what may seem like a very obvious question: should the US quickly balance its budget or even return it to surplus? Of course it should,

2

Into the maelstrom

Let me begin my reiterating my sympathies for the Japanese. There are a number of very big cross currents at work for markets today. The first, of course, if the suffering of the Japanese. Across the world, the coverage is remarkably alike, a result perhaps of diminishing foreign correspondent budgets and the secrecy of the

29

NAB warns on offshore funding risks

The Australian banks’ heavy reliance on offshore funding has received limited coverage in the press lately. On Thursday, the Australian Financial Review (AFR) ran a story entitled Clyne sounds funding alarm, where NAB’s CEO warned about funding challenges facing Australia’s banks and the risks inherent to the Australian economy. Surprisingly, however, Clyne’s comments were not

3

Japan fallout

Right now we do not know what is happening in Japan’s nuclear reactors. According to CNN, however, the news is very worrying: A meltdown may be under way at one of Fukushima Daiichi’s nuclear power reactors in northern Japan, an official with Japan’s Nuclear and Industrial Safety Agency told CNN Sunday. “There is a possibility,

39

The property market is right

One of the best stockbrokers I have ever known once said to me, in characteristically gruff fashion” “Mate, the market is always right. Even when it is wrong, it is always bloody right.” He was a great broker because he understood crowd psychology and the limited utility of numerical analysis. A great lesson in humility.

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Japan tsunami

  Update 1:30am: Large wave hitting Hawaii again. Maui harbour bouy rising 7ft. Nikkei was down 170 for day, futures are currently down 200. Update 12:48am: Hawaii has been hit by second wave, water over roads(?), water has receeded out 200ft or so and seems to be rising. Water is moving up the beaches !!