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

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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

61

Let retail burn

The MSM is full of shock and awe at last night’s David Jones profit warning. Farifax and News are as bad as one another. Of course, this is absolutely NO surprise to MB readers, who have known all year that retail is in the gun. The question now is should the sector be bailed out

26

Milky wilkies

What can I tell you? The great boob has delivered. The great baby is lapping it up. QE3 is coming! That’s the simple truth screamed by markets following Ben Bernanke’s testimony last night. The Dow went berko, the $US got trashed, gold hit record highs and commodities (oh commodities!) went limit up in everything from

83

The case against home ownership

“The business of the United States used to be business. But somehow with all these Government programs, we turned the business of America into housing”… The above is just one of the great quotes from yesterday’s debate on Canada’s The Agenda (video below). The debate subject was The case against home ownership, and the panel

21

Is a rate cut coming?

Weak global markets, fears about European defaults, a weakening global economic outlook and business and consumer confidence that is very weak have all conspired to fundamentally change the market’s expectations about the course of interest rates in Australia. Here are a couple of charts which show what the market is now pricing into the interest

8

China booms on

This morning, Chinese National Bureau of Statistics published economic data for June and for the first half of the year. China second quarter GDP increased by 9.5% in real term over the same period a year ago, beating estimates of 9.3%, and slowing only slightly from 9.7% of the first quarter.  For the first half

2

Trading Day: 13th July

The S&P/ASX 200 jumped slightly on the open, after digesting a poor performance of overnight equity markets. The market is now .47% or 21 points higher just after midday to 4516 points. Other Asian markets have also up slightly, with the Nikkei 225 steady at 9926 points, and the Hang Seng up 1% at 21,882

12

The great immoderation

To what extent do share valuation trends reflect the rises and fall of economies and countries? That is the question that occurs when reading a report from Morgan Stanley’s Gerard Minack on long term trends. It says that the last 30 years were exceptional for shares: The past 30 years were exceptional, for a number

23

The rampaging golden bull

With gold almost rising to a new all time high in USD per ounce (Europeans get that tag for today) it’s time for another close look at the shiny metal. This will be a technical and chart heavy look at gold from a fractal viewpoint – i.e from the very long term (secular), then long

8

Lending finance not bad

ABS Lending Finance for May is out and the news looks better than Consumer Confidence suggests. All major categories (with the exception of leasing) rose modestly, with business finance looking strongest. These figures look more robust than the RBA’s credit aggregates for business lending, which showed a flat result for May overall. Nonetheless, there has