11

New CPI continues the housing deception

Yesterday the ABS released the new basket of goods weights for the CPI and the Analytical Living Cost Indexes (ALCI).  This draws upon changes agreed during the 16th Series review with weighting revisions in all groups using the results from the 2009-2010 Household Expenditure Survey (HES), which surveys the expenditure patterns of almost 10,000 households

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23

Europe must choose (Updated)

The big news from Europe last night was the “surprising” PMI numbers. But as usual the news also goes behind the headline. The PMI again highlighted the underlying issues and delusion in Europe. As I have spoken about many times before, the European model is based on the fact that Germany is an industrial powerhouse

2

Market vs RBA on bank stability

The RBA released its quarterly Financial Stability Review today. It is a fine document with some incredible research and, I’m happy to say, strikes a more cautious tone about bank stability than recent speeches by RBA boffins have suggested. The document tells an upbeat story of the steady cleansing of Australian bank reliance on wholesale

31

Chart of the Day: gold correction

Given last night’s undollar crash included an immense correction in gold, which was called by House and Holes here, I thought Data Diary’s chart on gold vs the USD is timely and convincing. First, here’s what happened in the last 3 days of trading gold, note the wild trading range: Here’s my technical chart of

83

How low will the Australian dollar go?

The Australian dollar fell precipitously overnight and as I sat down earlier this morning it was actually trading under 0.9700. Remembering that earlier this week the AUD was above 1.03. This is not unexpected to our readers and while I don’t want to turn this into a trading blog it is worth having a look

22

The fruits of lunacy

The Western recession I’ve been awaiting for three months is arriving. Last night’s European flash PMI for September was a shocker, falling 1.5 points into contraction at 49.2. Here is a chart of the PMI and its relationship to GDP: Moreover, here’s a chart of the core versus periphery nations: Well there’s a surprise. Peripheral

2

Chinese yuan set to fall

More than once, I have expressed the view that in the face of global slowdown, Chinese policy makers may want throw in the towel on yuan appreciation. Markets too are beginning to price the possibility after the weak HSBC manufacturing PMI flash estimate and the on-going market jitters following the disappointments of Operation Twist and concerns on Europe. Michael

30

High savings are the new normal

RBA Assistant Governor, Phil Lowe, yesterday gave an interesting speech on the changing patterns in Australian household saving and spending. In particular, the speech describes some of the possible reasons underpinning the recent rise in Australia’s household savings rate and ponders whether this shift is a temporary phenomenon or likely to be long-lasting. First of all,

22

Central bank independence under siege

The Reserve Bank of Australia’s independence is an illusion.  The RBA exists because the Menzies government passed the Reserve Bank Act 1959 to create it, and subsequent governments, while occasionally tinkering with the operational framework, have seen no reason to abolish it. I have long found it interesting that even relatively minor fiscal decisions of

7

Equities Spotlight – Webjet (WEB)

In this weeks second equities spotlight (what a bonanza!), we take a look at online travel company Webjet (WEB). The Business According to the FY11 annual report, Webjet is an: ..an electronic manager, marketer and credit card merchant of travel and related services utilising the internet and other mediums. Webjet started out as a website-based service that

7

Trading Day

The S&P/ASX 200 Index closed down 2.6% or 106 points to 3964, after a worldwide “risk off” event coming after the US Federal Reserve announced its Operation “Twist” last night. In after hours future trading, the market is slipping whilst Euro and US futures point to similar losses. Asian markets experienced similar moves, Japan’s Nikkei

11

Westpac ACCI Survey thumped

Westpac and the ACCI today released the 200th edition (started in Dec 1961) of their quarterly joint survey of Australian industry and it does not make comfortable reading. Westpac says in the summary conclusion that: This is a survey which is sending a very clear message. It is time for the authorities to ease financial

21

Chart of the Day: US dollar rally

With last night’s announcement by the Federal Reserve of Operation “Twist”, instead of milky wilkies (a proper QE3), the US dollar is now on a tear. Up. The US Dollar Index is something I’ve followed and mentioned in “Chart of the Day” posts and equity/risk market analysis for some time now. In my 7th September

7

The Shanghai mega-bear market

The past 10 years were really the decade of China, those who got into Chinese equities and real estate have struck it rich. Human memory has a recency effect and Chinese have ignored the fact that there are times when equities and real estate valuations come down for a very long period of time after an extreme overvaluation. As

31

‘Boom Boom’ booms

Find below last night’s speech by Deputy Reserve Bank Governor Rick ‘Boom Boom’ Battelino (with commentary) at the New York Euromoney conference where the Australia politico-housing complex is in full pitch. In general terms, I found the speech well constructed and its discussion of Australia’s economic relationship with the US and China appropriate. There were

18

Australian dollar crash

The FOMC released the decision from its two day meeting early this morning and, as widely anticipated, they announced that they were going to extend the duration of their Treasury holdings in order to try to get the entire interest rate curve lower. They said: …decided today to extend the average maturity of its holdings

9

Greece lops off another limb

Europe continued to struggle with its own self-destruction overnight . The Greek government has now announced its additional spending cut plan: Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced late today following two rounds of talks

43

Bernanke chooses deflation

So, down we go. The last impediment to lower … well … everything (except the $US) has been removed. There’s no QE3. Markets didn’t muck around. Everything risk and $US sensitive took an instant pounding and the $US jumped. The equity market got smashed into the close and is signaling more to come. What we got

82

Real estate agent hysteria

A few weeks back, I published a post highlighting how real estate agents seem to have turned from ‘talking-up’ the housing market to ‘talking it down’ in order to boost sales. I provided some recent email reports from a Ray White real estate agent that set a new benchmark for bearishness. Well, today I want

2

RMBS arrears stabilising

The latest Fitch Rating fair dinkum report is out in what looks to be a few more streams of sunlight for the economy. Arrears on RMBS are still high by historic standards, but flat interest rates look to be providing some stability. Fitch Ratings said that the decision by the Reserve Bank of Australia (RBA)

7

Trading Day

The S&P/ASX 200 Index closed up 0.8% or 31 points to 4071, after recovering some mild losses in the morning. In after hours future trading, the market is steady whilst Euro and US futures point to similar gains. Asian markets experienced smaller moves, Japan’s Nikkei 225 closed up 0.2% to 8741 points, whilst the Hang

16

Home buyer confidence etc.

I was going to ignore today’s Genworth Home Buyer Confidence Survey. I saw the press release this morning and it was so loaded with positive spin that I didn’t think it credible enough to report upon. However, I’ve noticed that both Bloomberg and Fairfax are now running the release so I thought I’d better take

1

Fearful Symmetry sees a policy blunder

Fearful symmetry was disappointed that the RBI saw fit to raise interest rates at its mid-quarter review on September 16. One can evince from the statement that the cycle will now enter into an extended pause, which is moderately heartening. The disappointment stems from the fact that the Bank should not have raised interest rates

16

Myer leaves the building

An interesting hypothetical is posed in a Merrill Lynch report. What would happen to Westfield Retail Trust if Myer were to exit its portfolio? It shows just how much the department stores are struggling to hold their position. First, Merrill reckons it would lift the EPS quite substantially: We have been asked by clients what

75

All hail Swan!

As no doubt many of you are already aware, Wayne Swan has been declared Finance Minister of the Year by Euromoney magazine. As someone who has created and engineered similar types of magazine executions, let me establish first that I really don’t think this is worth the bally-hoo it has received. Such special issues are

10

Equities Spotlight – Newscorp

With the recent News of the World scandal and the Australian media inquiry it has prompted, today we’ll take a look at the media empire at the centre of it all – Newscorp. The Business Newscorp is a global, diversified media company which operates in the following areas: Cable Network Programming, Filmed Entertainment Television Direct

6

Europe’s minnows revolt

Late last week I said this: Over the last few days I have attempted to be positive in support of the political messages coming out of Europe even though I have been well aware that the economics of the situation simply don’t add up. The renewed issues in Portugal, Ireland and Cyprus and Italy add to the rational

13

IMF slashes Australian growth

I am more used to laughing at IMF prescriptions for solving financial crises than I am used to praising their work, but the latest World Economic Outlook is a breath of fresh air in more ways than one. It begins with an admission that the last WEO got it all wrong, something a few Australian

30

Australia needs a Tobin tax

But I see offhand no other way to prevent financial transactions disguised as trade – James Tobin In 1972, after the collapse of the Bretton Woods system (where currencies were pegged to the USD, which itself was backed by gold), economist James Tobin proposed a tax on the currency exchange. As he says: The tax

62

WA first home owner’s grant revealed

Back in March one of MacroBusiness’s gold star recipients, Saul Eslake, penned a stinging review of first home buyers grant schemes in the Sydney Morning Herald: It’s hard to think of any government policy that has been pursued for so long, in the face of such incontrovertible evidence that it doesn’t work, than the policy