26

Bullhawk down!

Another of the bullhawks, Paul Bloxham, today concedes that his August rate hike call is wrong. Bravo! However, Mr Bloxham nicely demonstrates the maxim that there’s no better defense than a good offense, dedicating much of his conference call to hammering Westpac’s Bill Evans and his rate cut call. Click here for the conference call.

Latest posts

14

Bank CDS blowout

A credit default swaps (CDS) is a derivative that enables market players to insure holdings of bonds (as well as gamble on their price movements). CDS prices of Australia’s big four banks are on the move – the wrong way. Here is a chart of recent market action: On a longer term time time frame

28

Where to for Gold?

Time for another update, with the latest surge above $1600 USD per ounce last night. As I mentioned briefly in my last update, where to for gold? First a quick recap – here is the current price activity within the context of a major, long term bull market. And here we are today (using daily

21

Australian dollar: Give us a minute!

Today sees the release of the RBA minutes from this month’s Board meeting and there is a really strong chance that shortly after their release at 11.30 (EDIT previously I wrote 2.30pm) rates are a little higher than where they are this morning. Yesterday I was talking to an old colleague about the rally in interest

46

Killing the politico-housing complex

Over the last 25 years Australia and the rest of the world has witnessed the rise of the TBTF financial institution accompanied by the greatest misallocation of resources in the period since the industrial revolution. These institutions and the people employed by them have ensured that all but the rich in both the western and

6

Satyajit Das: Bail the banks, not the Greeks

Guest post by Satyajit Das The proposal to extend the maturity of Greek bonds emanating from the Élysée Palace reflects French strengths first identified by Napoleon III: “We do not make reforms in France; we make revolution.” Structured to meet a German requirement that private creditors contribute to the Greek bailout, the proposal falls short

32

Chinese malinvestment grows

Almost daily now, I come across interesting articles on the Chinese economy. Rather than share each article individually, I will from now on provide a weekly round-up of articles from around the web. If readers have come across any noteworthy articles that I have missed, feel free to add these to the comments section below.

25

France is next

While I was on holiday over the last week I spent some time musing over the current situation in Europe and just how bad I think it can get. I have been wondering for quite a while when France will finally join the PIIGS camp, given that it to is a highly indebted nation with

73

Burying the hawks

Bill Evans of Westpac has certainly thrown a spanner into the interest rate debate. The papers all went nuts over the weekend, leading with stories of imminent rate cuts and there are more stories today of an ensuing housing boom. Meanwhile, pretty much every interest rate commentator in the country disagreed with him. Over the

1

Two speeds not priced in

A report by Deutsche Bank today suggests that the two speed economy may not be being effectively priced in. The comparing with last financial year means it is not a long term comparison so of limited utility, but it may point to institutional trading strategies in the shorter term. Compared to their FY11 average, the

7

Trading Day: 18th July

The S&P/ASX 200 fell over 20 points on the open, reaching the low experience in late June, before rebounding and is now steady just after midday to 4475 points. Other Asian markets are up, with the Nikkei 225 up 0.39% at 9974 points, and the Hang Seng up 0.54% at 21,993 points. Other risk assets

23

Retail’s real struggle

Following my post last week Let Retail Burn, Cameron Murray has followed up with a series of log-scale charts that show real retail sales growth per capita since the early nineteen eighties. Firstly, Cameron offers the overall sales picture (I have added trend lines in red): As you can see, there is an accelerating trend

17

Newscorp brand risk

Quis custodiet ipsos custodes? Who’s watching the watchmen? That’s the question now dogging the future not only of Rupert Murdoch’s UK media interests but Newscorp globally. How bad is this going to get for the Sun King? I have no idea. But I thought I’d offer a framework for thinking about it. When society authorises private

24

Rental complex

Following on from my recent post, The case against home ownership, Canadian Business last week published a great article. entitled Rental complex, asking why more Canadians don’t rent – a question equally applicable to Australians. At over 2,800 words, it’s a long article (but well worth reading). Below are some of the key extracts. Note

25

A flood of spruiking for Queensland

After a week being disconnected from the outside world I have returned to Queensland to find that the real estate pushers have turned their attention to the January floods. Let’s start with Terry Ryder in the Australian. Brisbane’s housing price performance is among the worst of the capital cities. It is also, from another perspective, the

17

Buyer beware

Watch the full episode. See more PBS NewsHour. A few weeks back, in Aussie investors flock to US housing fund, I noted the relative undervaluation of US real estate compared with Australia, and how the newly launched US Masters Residential Property Fund, which is targeted at properties in the New Jersey area, was over-subscribed from

42

Ban the bots

Anyone who thinks that the stock market is about finding fundamental value so that worthy companies can find they capital they need should read a recent article in the London Review Books.  It is another example of what I call “meta-money”, which is spreading like a virus (the $600 trillion of derivatives being the worst example).

3

Satyajit Das: CDS and Greece

Following is a guest post from Satyajit Das. The European Union’s linguistic gymnastics, redefining default as “restructuring” or “re-profiling” and the structure of any final deal on Greek debt has “real” implications for the arcane workings of the CDS market. In the film Casablanca, Rick (Humphrey Bogart) tells Captain Renault (Claude Rains) that he came to the city

53

Bill Evans backflips

Goodness me. Hot off the press. Following May’s bullhawkian flirtation, Bill Evans of Westpac has just rocked the market with a total backflip on interest rates. He has just called 100 basis points of cuts in 2012: The market is now pricing in a 25bp rate cut by October and 50% chance of a follow on

27

Attack of the housing “pessimists”!

Not that we needed another survey to tell us, but the Melbourne Institute Westpac quarterly Consumer House Price Expectations Index is sinking. According to the index, a majority of the house-loving Australian population remains convinced that price rises are ahead. But the number of realists (strangely, Westpac refers to them as “pessimists”!) is rising fast:

1

Trading Day: 15th July

The S&P/ASX 200 fell again on the open and has stabilised, now 0.38% or 17 points lower just after midday to 4473 points. Other Asian markets are mixed, with the Nikkei 225 up 0.25% at 9960 points, and the Hang Seng down 0.37% at 21,858 points. Other risk assets are also mixed, with the AUD

22

Australian dollar bulls and bears

A couple of competing stories in the press this morning highlight one of the reasons that the AUD/USD rate has been stuck in a range for some time now. In The Australian this morning we have the headline “China risk jangles nerves on high dollar” while over at the SMH we have “As might dragon

9

Crude solution

David Jones may want to blame Julia Gillard, Barack Obama may want to blame Republican austerity nutters and the EU may want to blame rampant ratings agencies, but what we all really need to get things going again is more simple: cheap oil. Last night’s market action delivered slightly cheaper crude, down 2% or so

154

Why Gillard has a mandate

At the risk of stirring up the howls of protests and calls for another election (if you don’t accept the outcome of the last one) or an early election (if you do), I thought I’d put forward a case for why I think the PM has a mandate to introduce the package she announced on

17

Time to buy JB Hi-Fi

Yesterday the retail stocks of David Jones, Harvey Norman, Myers and JB Hi-Fi all took a hammering.  It was sparked by a David Jones earnings downgrade as well as an awful run of retail spending/consumer confidence data.  To summarise the blood letting: David Jones (DJS) plummeted 18.2% to $3.20; Myer (MYR) dropped 6.4% to $2.48;

13

Downgrading the crashed

If Macrobusiness readers are less than surprised by the downgrade of David Jones, the same cannot be said for the broking community. In their usual stampede to discover the self evident after the fact, they are turning very bearish. Sentiment, accordingly, is likely to turn ugly for the stock. Morgan Stanley says that there is

35

Hurtling towards a debt ceiling disaster

Another day passes without any progress in negotiations on raising the US debt ceiling… And the stakes are rising. From Thursday’s Wall Street Journal: Credit rating agencies moved closer to an unprecedented downgrade of the U.S. government’s debt amid deteriorating talks in Washington, with President Barack Obama abruptly walking out of a key meeting Wednesday with

8

Trading Day: 14th July

The S&P/ASX 200 fell slightly on the open, after digesting QE-easiness from overnight markets. The market has fallen further and is now 0.57% or 25 points lower just after midday to 4489 points. Other Asian markets are also down slightly, with the Nikkei 225 down 0.37% at 9926 points, and the Hang Seng down 0.22%

7

Property insiders losing faith

Typically, I don’t take much notice of the NAB quarterly property survey. It’s packed with industry representatives and as such risks reflecting the cognative biases so obvious across the industry. However, for the same reason, it is surely significant that the June quarter survey has printed a negative result, with even the property industry itself

8

Trade or bust

Overnight, volatility reinforced an old axiom to me that I used to use when I was doing the currency strategy thing full-time at NAB and Westpac. That is don’t mix up your time frames. When you are in a strategy role your job is to make calls on the market across multi-time frames and for different