4

Consumers’ dour expectations

Westpac has today released its “Expectations Chart Pack”, which includes both inflation and employment expectations (find it below). This month’s results are fascinating. It is no surprise that consumers view of future inflation remains unchanged from last month as the heat has gone out of the CPI debate: I am a little surprised, however, at

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18

Chart of the Day

Today’s chart is from Zero Hedge (h/t Bullion Baron), showing how New York Stock Exchange (NYSE) short interest has returned to July 2009 highs (black bars) vs the S&P 500 (red line), the broadest US stock market measure. What is short interest? It’s a measure of the number of shares that have been borrowed (the

10

European unity!

Another exciting episode in the European Soap overnight. Yet another German Finance representative, this time Bundesbank President Jens Weidmann, released statements containing the opposite message to the one delivered by Angela Merkel when she’d asked all of the elites in her country to keep quiet for the sake of unity: The European Central Bank has burdened itself with “considerable

5

More signs of US slowing

I’ve been arguing for some months that the US economy is slowing. More recently I added the narrative that at the zero bound for monetary policy, where the core price signal ceases to have meaning, it is the expectation of price intentions in the economic leaders themselves that becomes the primary signal. In short, it

20

Accounting for the rentier

My post last week on APRA’s Discussion Paper on the new Basel III Capital requirements, created a few ripples around what APRA did not address in the discussion paper. Perhaps I can turn these ripples into waves by providing more detail on why APRA’s failure to address these issues will eventually lead to systemic failure

75

Harry leaves a dent on Australia

Harry S Dent is a well known author and founder of HS Dent Investment Management, an investment firm based in Tampa, Florida. Dent writes a regular economic newsletter and has written seven books analysing demographic trends and their affect on the economy and asset markets. I first stumbled across Dent’s work early last year at my

3

CPI change confuses markets

Yesterday the ABS released a revision to their methodology for seasonal adjustment to CPI subgroups – an outcome of the 16th Series CPI review.  It resulted in a new lower estimate (not a revised estimate) of the trimmed mean and weighted median measures of inflation for the June quarter. News headlines and the foreign exchange

8

China versus India

Earlier, I read a wonderful book by Yasheng Huang on Chinese growth model.  He is a critic of the Chinese way.  He believes that the current Chinese growth model is more like South American model (old Brazilian way, for example) which ultimately failed. In the below video, he compares China with India, and the gist of his

2

How the CPI hid the housing bubble

Recent discussions about the CPI have brushed over a key change that occurred in the construction of the index in 1998. In its 13th Series the CPI became a pure price index utilising an acquisitions approach, rather than a cost-of-living index utilising an outlays approach. One feature of this change is that it removed land

10

Trading Day

The S&P/ASX 200 Index closed down 1.6% or 67 points today to 4005, after a solid up-session in the morning, when the one-two punch of lower inflation and Moody’s downgrade of French banks tipped the bourse into the red. In after hours trading, the market is steady whilst the Euro and US futures point to

12

CPI revisionism

Here are a couple of bank takes on today’s ABS CPI revisions. Consensus is that the RBA’s job of holding rates steady just got a bit easier. I beg to differ. The ABS just handed a PR weapon to every disgruntled business lobby in the services economy. Anyways, Rumplestatskin, our very own CPI guru, will

32

Taxpayer takes it in the team

Last weekend Wayne Swan announced a new permanent guarantee of bank deposits up to $250,000 under the Financial Claims Scheme (FCS).   The existing scheme, introduced during the financial turmoil of October 2008, guarantees bank deposits up to $1million, and will expire when the new scheme takes over on 1 February 2012. We now, in theory,

9

China is not a white knight

The last day or so has seen a string of wild rumours about China buying European bonds.  A hilarity in the whole thing is that in another report, Giulio Tremonti, the Economy Minister, complained that Asian investors just won’t buy bonds because the ECB isn’t buying enough.  So are Chinese really buying?  Probably. There is something

22

SQM reports falling listings

The latest SQM research newsletter contains some more rays of sunshine for the property market. Figures released this week by SQM Research revealed that residential property listings have actually declined during the month of August 2011, coming to a total of 362,793 nationally. Falling by 14,522 listings since July 2011, total amount of stock on

25

Interest rate magic

Consumer Confidence for September is out and shows a jump of 8.1%. Bill Evans puts this down to: This is a surprisingly strong result. We think it emphasises just how important interest rates are to households. Recall that since early May the Reserve Bank has been threatening to raise interest rates. As recently as the August Board meeting

129

Australian Housing Valuation Report

Australian housing is overvalued. Nobody denies it. Debate remains, however, about how overvalued. Surveys by The Economist and Demographia claim Australian housing is the most expensive in the world. On the other hand, the Reserve Bank of Australia and local data providers like Rismark acknowledge the overvaluation but see it as less extreme and sustainable. The

60

Do we need a media inquiry?

Well…yes…I should say so. Rupert Murdoch owns 70% of Australian newspapers. One of his UK operations has been shown to use unethical practices on an unsettling scale. Those two seem fair enough reasons to me. On the first, the concentration of ownership in newspapers is both a competition issue and a social-democratic one. Many of

31

A crazy 24 hours in Europe

Another crazy 24 hours for Europe. It would seem that Angela Merkel is trying to muster some form of actual leadership and set a direction for Greece. Her first step was to tell her counterparts in German parliament to stop talking to the media because every time they do the market blows up. Her second

8

A bizarre oversight of national financial prudence

  The liberties available to the real estate industry over other purveyors of financial goods is a constant source of angst for me. The fact that a real estate agent is able to spruik to his or her hearts content about the virtues of the “never declining” housing market with impunity while your local bank teller has

39

The Pascoe indicator

This afternoon, Michael Pascoe wrote a soothing piece on the European crisis that I found troubling. We don’t need to get past the first two paragraphs to find out why: Hands up anyone who thinks a Greek debt default is inevitable. OK, absolutely everyone can all put their hands down. That’s what Europe’s banks think too –

7

Trading Day

The S&P/ASX 200 Index closed up 0.8% or 34 points today to 4072. In after hours trading, the market is up another 15 points whilst Euro and US futures point to gains. Asian markets experienced similar moves, with the Nikkei 225 up nearly one percent to 8616 points, whilst the Hang Seng is closed for

21

Insolvencies jump

Just in case you missed my recent post about growing Australian business insolvencies or are still living on planet Bullhawk with the belief that everything is just fine and anyone complaining is simply a whinger, here comes Dun & Bradstreet with even more evidence to the contrary: Australia has joined Europe as the only markets to

34

Is the equity market a dill?

Yes, I’d say it is. As FOMC member, Thomas Koenig put it recently in a CNBC video interview with Steve Liesman: …a capitalistic economy – if you really believe in its long-term benefits – has cycles. People do make mistakes. See, the market is valuable not because it’s the smartest in the world, but because

23

Greek default certain

Another night of tension in the Eurozone. The Euro continues to head south and once again markets were down. The probability of a Greek default grew once again and doesn’t have far to go to reach 100 percent: Greece’s chance of default in the next five years has soared to 98 percent as Prime Minister George

64

Attention manufacturing, here’s your hire

Not just manufacturing, actually. There needs to be a new umbrella peak body/lobby group covering all non-resource exporters – manufacturing, tourism and education (maybe primary goods too). That group needs to go head-to-head with the Minerals Council of Australia over the soul of the Australian people and the fear gene of the Australian government. And

14

Whose GDP is it anyway?

They say what gets measured gets managed, but a measure as nebulous as GDP needs careful interpretation when used as a guide for economic management.  Putting aside the conceptual problems surrounding the use of GDP as a measure of progress, there is still the practical problem of taking estimates of production or expenditure in current

11

Did you hear about Cochlear?

Cochlear (COH, previously covered at MB here) announced a voluntary recall of its Nucleus 5 implant products yesterday.  The share price was promptly massacred, closing down 20% to $57.50.  The main jist of the recall was as follows: COH is undertaking a voluntary recall of the unimplanted Nucleus CI500 cochlear implant range and is currently

17

Trading Day

The S&P/ASX 200 closed down 3.7% or 156 points down today to 4038. In after hours trading, the market has slumped another 20 points whilst awaiting the Euro and US sessions, both of which are down 2-4%. Asian markets experienced similar losses, with the Nikkei 225 down 2.3% to 8535 points, now below its earthquake

23

Balance of trade still in surplus

The ABS today released their estimate of the balance of trade in goods and services for July.  The headline data showed that trade surplus inched up a little in both trend and seasonally adjusted terms since June to around $1.8 billion. This is good news. While the monthly release is extremely volatile, the surpluses over

21

Swannie’s con job

Did you know the Australian government is holding a jobs forum on October 6th? Me neither. Apparently the uptick in unemployment has them so spooked that they feel they need to come out on the front foot and have a confab. I stumbled upon this fact yesterday whilst choking on an appalling quote from Treasurer