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Credit growth remains subdued

The RBA has just released its Financial Aggregates for May. It is more of the same with credit growth remaining subdued, with housing credit growing at the slowest rate in 35 years of current data and at a three month annualised pace of just 5.2%. Below is a summary of the RBA’s release with charts of

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39

Another China ghost city filled

Back in April I published an article, China’s largest ghost cities filled, providing an ‘eyes on the ground’ report from Wendell Cox, co-author of the Annual Demographia Housing Affordability Survey, who was touring China at the time. Wendell had provided photographic evidence showing that one of China’s famed ‘ghost cities’, Zhengzhou New District, was in

35

S&P strikes back

It appears yesterday’s speech by RBA Assistant Governor (Financial Markets), Guy Debelle, has done little to allay the fears of the ratings agencies about the Australian banks’ heavy reliance on offshore wholesale funding. In today’s Australian Financial Review (AFR), Standard & Poors (S&P) issued its second warning in as many months on the banks funding

38

Myth: Tight rental market boosts home prices

Fellow econblogger, Cameron Murray, has written a thought provoking post on his Blog about the link between tight rental vacancy rates and home prices. Cameron’s post has been re-produced below for your reading pleasure. A common housing market myth is that low vacancy rates lead to rent increases, which lead to price increases (or at the very

3

Skilled vacancy data weak

The latest Department of Employment and Workplace Relations skilled vacancies report provides us with yet another weak leading indicator of employment growth. According to the latest report the trend growth in skilled vacancies fell to 2% from a month earlier where it registered a fall of 1.9%. However if we take a look at the

8

China Auditor-General warns on local govt solvency

In what certainly will not come as a surprise to daily China watchers, the country’s top auditor has issued a new warning about the solvency of local government bodies. The head of China’s national audit office warned on Monday that the country was facing growing risks because of a sharp rise in local government debt

0

Trading Day: 29th June

The S&P/ASX 200 jumped over one percent at the open this morning, and advanced to 4526 points, up 52 points or 1.15%. Is this on speculation of a “positive” vote in Greece on austerity, or the Senate Committee rejection of the MRRT, or a rebound rally amidst the growing bearish conditions? Asian markets are up

3

Questioning rising insolvencies

Yesterday dissolve released their latest business stress test report ( available below ) and as expected, well at least by macrobusiness , the finding weren’t  good. The quarterly cost of All Bank New Asset Impairment Charges (or “Bad Debts”) for Australian Banks in the Quarter to March 2011 is $5.1 billion. That is a drop from the

17

Fed’s Hoenig: big banks are a threat to capitalism

The Fed’s Thomas Hoenig delivered a striking speech this week on the systemic risk posed by the “Too Big to Fail” status of US banks.  In one of the bluntest speeches from a US central banker I have seen in some time, Hoenig suggests that so-called “systemically important financial institutions” have become a threat to

5

Equities Spotlight: SEEK Limited (SEK)

In this week’s Equities Spotlight, we shine the torch on well-known online employment business SEEK Limited. The Business Seek (SEK) is Australia’s number one job advertising website, controlling almost 60% of the Australian and New Zeland online job-seeking market.  Founded in Melbourne in 1997, Seek now employs around 400 people and has commercial stakes in the

69

Forecasting error

BIS Shrapnel are never afraid of making a bullish property forecast. In July last year, near the peak of the last housing cycle, BIS chief, Frank Gelber, made the following bold prediction on the future direction of house prices in Australia [my emphasis]: Frank Gelber gave members at a Real Estate Institute of Victoria lunch

26

Meditations on risk and investing

My MacroBusiness colleague The Prince has written at length on this site about some of the shortcomings of the “modern portfolio theory” (MPT) that still forms the basis of  investing today. I have had this post stewing for a while, so at the risk of repeating some of the material already covered in The Prince’s

26

Guy Debelle on Banking

Guy Debelle , the Assistant Governor (Financial Markets) of the RBA gave a speech this morning to the  Conference on Systemic Risk, Basel III, Financial Stability and Regulation. Today I am going to talk about a few interrelated issues concerning the banking system: collateral, funding and liquidity. The financial crisis brought into sharp relief the

0

Trading Day: 28th June

The S&P/ASX 200 jumped over one percent at the open this morning, but has fallen after midday, now at 4473 points, up 11 points or 0.26%. Asian markets are up, with the Nikkei 225 up 1.08 percent to 9681 points, and the Hang Seng up 0.36% to 22,121 points. Other risk assets are also up,

48

Spruikalicious

Once in a while a real estate article gets published in the mainstream media that is so bad that it just has to be dissected.  Mark Armstrong, an independent [sic] property analyst, adviser and director of Armstrong Property Planning, published one such article yesterday in Fairfax, entitled Bold investors buy in a softer market. Here

26

CBA pushes against the tide

The poor performance of the housing market mixed with banking competition has finally seen a move by a major bank. CBA has announced a small rate cut to one of its lending products. The Commonwealth Bank has cut the interest rate on its recently launched ”no fee” home loan offer as the battle for market

1

Trading Day: 27th June

The S&P/ASX 200 has fallen over one percent on the open this morning, and continues to fall after midday, now at 4455 points, down 53 points or 1.19%. Asian markets are also down, with the Nikkei down 0.86 percent to 9595 points, and the Hang Seng down 0.55% to 22,048 points. Other risk assets are

0

Un-normal analysis

Broker analysis relies heavily on looking at the fundamentals: assessing earnings forecasts, the validity of future earnings multiples, and discounting back to the present from the future. That tends to be highly normative. That is, it works best when markets revert to the norm: normal consumer demand, normal economic activity, normal price earnings ratios and

12

A small step of declaration

My long term readers would be aware that one of my pet hates is that members of the real estate industry do not have the same legal declaration requirements as other traders of financial wares. Your local bank teller has to declare far more when you open a new bank account than a real estate

44

Aussie investors flock to US housing fund

As reported in Fairfax last week, the US Masters Residential Property Fund (Investment Overview provided below) recently closed its initial public offering (IPO) for Australian investors, receiving more than double the minimum subscription. The Fund raised $69.5 million from over 1,500 investors, well above the minimum subscription level of $30 million, with the majority of

33

Bank offshore funding coming back to bite

The risks inherent in the Australian banks’ heavily reliance on offshore funding has received a lot of attention on this blog (for example see here). Now with the European debt crisis seemingly reaching a crescendo, it looks like these borrowings might now be coming back to bite. From the Australian: AUSTRALIAN and South Korean banks

49

Less economics, more leadership

The climate change proponents are clear on the matter. We need a “price” on carbon so the market can set about fixing the problem. Great. More derivatives. Exactly what we don’t need and yet another excuse to avoid the difficult job of governing. Consider what happened when there was a “price” on risk, perfected in

20

RBA debunks immigration boosters

The media’s response to the reported slowing of Australia’s population growth on Thursday summoned the usual hysterical commentary from those concerned about skills shortages and the flow-on impacts to wages growth and inflation. For instance, the usually reliable Tim Colebatch made the following comments in an article published yesterday in Fairfax [my emphasis]: NET migration

13

Weekend Musings: Language and $2 million

Since most of the MacroBusiness crew are under the weather, I thought I’d stick my oar in this weekend with some quiet musings. Two things to consider in this post: the notion of sound economic language, and how would you allocate $2 million for your retirement? Language is for the Birds Houses and Holes recently

1

Australian Dollar Weekly Wrap

I’ve been out of the office for the back end of the week so my observations are more ex-poste than normal. Sometimes that’s a good thing because we can always write history perfectly but at other times you miss the nuances that you gain when you are sitting in the midst of what’s going on. But I

26

RPData reports no change

RPData has put out their latest newsletter today and once again it isn’t great news for the housing market. The RP Data-Rismark Home Value Index results for May 2011 will be released next week and there is little evidence to suggest that there will be any significant change to market conditions with values likely to

36

SocGen on China’s construction bubble

Societe Generale (SocGen) has released a fascinating 50-page research report entitled Chinese construction bubble – Preparing for a potential burst. The report argues that the exponential growth of real estate and infrastructure spending in China is unsustainable and a painful adjustment will occur sooner or later, although SocGen acknowledges that it is impossible to predict when the slowdown or correction

0

Trading Day: 24th June

The S&P/ASX 200 has steadied after midday, now at 4498 points, down 0.04%, after opening slightly higher. Asian markets are mainly up, with the Nikkei up 0.28 percent to 9624 points, and the Hang Seng up strongly, 1.22% to 22,025 points. Other risk assets are mixed, although the AUD is just below 1.055 against the

13

The battle rages on

The battle for the hearts and mind of who’s telling the truth about housing prices in Australia rages on. In the latest installment SQM research’s Louis Christopher has returned serve to Michael Matusik via SQM’s newsletter. I have talked Mr Matusik previously, he is a housing bull , turned bear, who now seems to flip-flop between

23

Saul Eslake on commodity prices

Saul Eslake, Director of Productivity Growth Program at the Grattan Institute, yesterday presented a paper at the International Conference of Commercial Bank Economists in Amsterdam, the Netherlands, on some of the longer term demand and supply factors shaping the behaviour of commodity prices, over the past decade and over the next 5-15 years. The full paper is below and