34

The centre cannot hold

It’s quaint you know. Analysts faith in the system, I mean. There are a couple of really smart articles out this morning from really smart people about really smart things. And they’re making reassuring noises that there is no recession coming and that you should stay in your trades, that yesterday’s money making strategy is

Latest posts

6

AFG’s July data

Just so we are clear about this, I am no longer sure if I trust the AFG data after the data revisions I reported on in early July. But in crazy times such as these it is important that everyone gets all the data and makes the decisions for themselves. So for the sake of

15

Will aged care exacerbate the baby boomer bust?

Yesterday, Fairfax published an interesting article, Sell the family home: PM’s aged care shake-up, which highlights one of the key longer-term challenges facing the Australian housing market: the impending retirement of the baby boomers. JULIA GILLARD will prepare the ground today for the biggest shake-up of aged care in decades with a speech calling for

43

August 5: The crash we had to have

Rockets: $US Pulverised: CRB, energy Only smashed: Aussie, grains, metals, gold, euro Up: ore Ragin’ contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year

6

Earnings Update: RIO, TCL, ERA

Three companies reported earnings today on the ASX: Rio Tinto (RIO), Transurban (TCL) and Energy Resources Australia (ERA). Macrobusiness will be reporting on earnings and valuing the key companies throughout the earnings season. Remember to bookmark the overall update here. Energy Resources of Australia (ERA) ERA reported a loss of $121.7 million in the six

48

PC report spanks online retail

In its monster retail report, the Productivity Commission has recommended (among a great many things) that the government lower the tax free threshold on online purchases of foreign goods. Thankfully, however, it has also amply demonstrated the practical foolishness of the idea with an assessment of the costs involved in monitoring the parcels at the

18

Europe’s dominos

There is a now a well-worn path beaten out by European nations as they approach the alter of the markets to plead that they “are different” from the previous cast that have just made the same trek. The speech given to market gods  is always the same, “we are different”, “the market underestimates us”, “we

10

Trading Day: QE reprieve?

The S&P/ASX 200 is down slightly after midday, 16 points or 0.3% at 4316, after digesting European market plunges and US market shenanigans overnight. Other Asian markets are experiencing gains, with the Nikkei 225 up 0.97% at 9724 points, and the Hang Seng steady at 22026 points. Other risk assets are generally down, with the

11

Cost cutting is not a strategy

It’s going to be tough out there for Australian companies not in the mining sector. A Macquarie report shows that companies are battening down the hatches as they are faced with higher costs and weaker demand. While this is hardly a surprise finding in an economy, ex-mining, that is close to recession it is clear

46

Is unemployment about to jump?

Yesterday, Roy Morgan Research released their latest poll on unemployment and and it caused a minor stir amongst market watchers: In July 2011 Australia’s total unemployment as measured by Roy Morgan was 885,000 (7.6%), up 40,000 (0.6%) from June 2011, and up 148,000 (up 1.3%) since July 2010. The Roy Morgan July 2011 ‘underemployed’* estimate was virtually

68

More rent hysteria

It’s been interesting watching the change in perceptions regarding the housing market. Around this time last year, several well-known housing commentators were predicting strong gains in home values, including: BIS Shrapnel, which in July 2010 forecast a 30% rise in home prices over 3 years; and Australian Property Monitors (APM), which in March 2011 forecast

3

Market ahead of itself on rate cuts

It was only a couple of days ago that the RBA told us they had expressly discussed the prospect of tightening rates at this month’s Board meeting yet this morning as I write the market has 80 basis points, that’s three RBA cuts, of easing over the course of the next year. This is an

5

RPData’s August video

RPData’s August housing market overview video was released today and is available below. Although I don’t agree with some of conclusions there isn’t much need for additional comment as once again the data trends speak for themselves. I do wonder however, given the latest credit issuance data, if those are bulltraps I see forming/ed at the end of some

3

Mining takes the money (all of it)

The lack of new capital raising in the Australian market is highlighted in a story in the Financial Review today. It is hardly surprising. According to Deutsche Bank, the ASX200’s performance between June 2009 and June 2011 is: 91%, relative to Europe, 84% relative to Asia ex-Japan and 80% relative to the US. That underperformance has

5

Charting the RBA

The RBA has released its monthly Chart Pack and like last month’s release, I’m going to have a look at this impressive data set for MacroBusiness readers. A warning, its chart heavy (obviously). The Chart Pack is divided into 16 categories, including international data, but this month I want to concentrate on domestic data, but

26

Gold Coast launches FHB triple pass (Updated)

Update: I was a little too quick on my judgement of the GCCC. It seems that this triple pass has actually been voted down 8-7 in this afternoon’s session. This may have been because on further inspection the new grant would have made the applicants ineligible for the latest state government grant. Either way the Mayor seems disappointed with the

1

Coal powers on in June

Today’s trade figures from the ABS provide some positivity after what has been a run of unequivocally weak local data of late. While the trade balance narrowed from a revised $2.7bln in May to $2.05bln in June the composition of the numbers was more positive. Imports rose 2.6% over the month courtesy of a 7.3%

7

Trading Day: bath of blood

The S&P/ASX 200 crashed on the open and is down over 2% at midday, or a total of 96 points at 4337, wiping out 12 months worth of gains, and back down to the pre-QE2 low of August 2010. Other Asian markets are experiencing similar losses, with the Nikkei 225 down 2.17% at 9631 points,

31

In-credible retail falls

ABS June retail sales are out and it’s more of the same with the seasonally adjusted estimate falling 0.1%. This follows a fall of 0.6% in May 2011 and a rise of 1.0% in April 2011. On to the charts. The first shows that the result was a big miss versus market expectations, God only knows

29

APRA must reach for the lash

This morning the Unconventional Economist posted an excellent article which points out that both credit rating agencies and our ADI regulator, APRA, are concerned about Australian banks’ lending practices for residential mortgages. In short, in the banks’ drive for both mortgage market share and to keep the credit machine churning there is concern that banks

1

Services sector still in recession, or is it?

The AIG PSI Index for July is out this morning and makes interesting reading with the services sector still in recession, but without the same collapse seen in Monday’s manufacturing gauge: ■  The services sector contracted in July, with the latest seasonally  adjusted Australian Industry Group/Commonwealth Bank  Australian Performance of Services Index (Australian PSI®) rising 

35

Whither now the US?

I’ve been warning for a couple of months that the US economy is in trouble. It’s hasn’t really been that hard to see, so long as you recognise its underlying condition. The US economy is in a depression. It’s not quite the kind we saw in the 1930s but it’s a depression nonetheless, just slower

37

APRA imposes the new normal

In recent months, the credit ratings agencies – Standard & Poors, Moody’s and Fitch – have warned against the re-emergence of the Australian banks’ pre-GFC business model of borrowing heavily from offshore to pump the Australian housing market. However, with housing credit growth now at 35 -year lows: Other categories of lending even more subdued:

8

China’s shadow banking explosion

Fitch recently released an eye opening report on the staggering growth of leverage in the Chinese economy (h/t Bernard Hickey). As many readers will be aware, the Chinese Government has been implementing policies aimed at curbing bank lending in order to slow inflation. However, as is often the case with regulation, these policies have shifted

4

The OECD has had one too many ouzos

As I have stated many times the current plan of pushing austerity onto the indebted periphery of Europe is not a sustainable solution because the current macroeconomic environment of the EMU cannot provide an auto-stabilising mechanism that will compensate them for the lack of credit being issued into their economies. While Europe continues on this

11

Building approvals by state

Following are a series of charts drawn from today’s ABS Building Approvals numbers. First up, is the national chart for dwelling approvals, which doesn’t look too bad, though is obviously in a significant declining trend, giving back after last year’s stimulus dragged forward demand: When we break down by state, however, we get a very

62

The agony of the bullhawks

As the bullhawks (Joye & Carr) withdraw to their high eyries, dragging the bloodied corpse of Terry McCrann with them, they should take a moment to raise their razor sharp beaks a few points above the strictures of yesterday’s war. Strict adherence to an inflation band is sensibly modified by an appreciation of imminent risks, whether

66

No hike

Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. The global economy is continuing its expansion, but the pace of growth slowed in the June quarter. The supply-chain disruptions from the Japanese earthquake and the dampening effects of high commodity

9

Trading Day: can’t get no relief

The S&P/ASX 200 slumped on the open and is down over 1% after midday, waiting for the princes at Martin Place to maker their decision. The market is down a total of 58 points or 1.32% at 4439, wiping out most of yesterdays stellar gains. Other Asian markets are experiencing similar losses, with the Nikkei

10

Equities Spotlight: Better (not) buy Bega

Bega – that well-known Australian food brand with the cheesy jingle – is launching an IPO, issuing 17.5 million shares at $2.00 a pop to raise $35 million.  They’ll also issue 850,000 shares to Bega employees at no cost as part of the float. One of the first things I read in the prospectus was