RBA warns on speculation, lending standards

By Leith van Onselen The Reserve Bank of Australia (RBA) has today released its half-year Financial Stability Review (FSR), which suggests the RBA is fairly relaxed about the pick-up in house price appreciation and the strong growth in investor lending, but cautions that the situation could deteriorate: The continued low interest rate environment, together with

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Kohler slams FoFA tweaks

Alan Kohler is in good form today demanding the Coalition dump its entire FoFa reform platform. He argues: The eight changes proposed by the Coalition, presumably written by the banks, are: 1. Allowing commissions to be paid for the provision of “general advice”, as opposed to personal advice. 2. Making the annual fee disclosure statement apply


RBA warns on floating yuan

Deputy Governor of the RBA, Phil Lowe, is on the hustings today with a boring speech about the liberalisation of the Chinese currency. My comments are at the end. Opening Remarks to the Centre for International Finance and Regulation Conference on the Internationalisation of the Renminbi Sydney – 26 March 2014 I would like to


Labor’s budget booby trap springs

From The Australian today the budget rhetoric is flying as Joe Hockey finds $17 billion per annum in new spending for 2017/18: Following the Coalition’s partyroom meeting, the Treasurer told parliament Labor had “buried a tsunami of spending” in 2017-18. This was one year beyond the standard four-years of budget projections and, as a result, did not


A textbook case of infrastructure pork

By Leith van Onselen The Canberra Times is today running an article on cost blowouts relating to the $600 million light rail project connecting Gungahlin in the north and Civic, which is expected to commence construction in 2016: ACT government figures show the staff bill for Canberra’s light rail project will soon hit $45,000 a


One last drink for the Australian dollar!

Last night the Australian dollar broke out as expected and is flying towards 92 cents: The longer term chart shows the key levels: From locked Business Spectator: The Australian dollar has struck a fresh 2014 high overnight as Bank of America Merrill Lynch analysts issued an upbeat near-term forecast for the currency. …”While we are


Murray Inquiry and regulatory capture

A few days ago, Joe Hockey announced the appointment of the international advisory board to the Murray Inquiry. It included former Westpac chief ­executive David Morgan, now based in London, chief executive of hedge fund Convertible Quantitative Strategies Sir Michael Hintze; ; JPMorgan Chase global chairman of technology, media and telecoms Jennifer Nason; and Andrew Sheng,


Hudson: Hiring intentions fall

Hudson has released its quarterly hiring intentions survey and the results are mediocre: Positive hiring intentions dipped slightly across Australia, down 0.1pp quarter in quarter to 23.3% NSW has the highest positive hiring intentions this quarter, moving from 4th to 1st place, up 5pp to 27.9% For the second quarter running, Professional Services has the highest proportion of


Chinese urbanisation to slow

From Bloomie today: The pace of migration of rural Chinese to cities, a dynamic hailed by Premier Li Keqiang as key to the nation’s development, is set to slow by a third in coming years, deepening economic-growth concerns. A government report released this month projected a 6.3 percentage-point rise in the share of people living in cities from


Five reasons China won’t stimulate

From Bloomberg Briefs via ZH: 1. A significant step toward stimulus would be a step back from reforms intended to control runaway corporate credit and local government debt. Doing so might risk a sharper correction down the road. 2. The State Council’s statement suggests little in the way of new government spending. It promises to accelerate existing projects


US approves another LNG export competitor

And on it rolls: Veresen said that it has received a conditional order from the U.S. Department of Energy (DOE) to export liquefied natural gas from the proposed Jordan Cove LNG export terminal to those countries that do not have Free Trade Agreement (FTA) status with the United States. Under the DOE order, Jordan Cove


Our Nev bluffs it out

Its  a brave from FMG’s Nev Power today. From the AFR: Fortescue Metals Group chief executive Neville Power says Gina Rinehart’s Roy Hill project won’t stop his company or BHP Billiton from ramping up exports out or Port Hedland. …“The port is currently under-utilitised and even with Gina Rinehart’s additional tonnes, they are not going to


Daily iron ore price update (limit up!)

Here are the iron ore charts for March 25, 2014: Stimulus party! From Reuters: A contraction in China’s manufacturing activity for a third straight month in March spurred hopes that the government will implement stimulus measures, although some analysts warn that those pricing in any aggressive move may only end up disappointed. “There is a


Links 26 March 2014

Global Macro / Markets: Bank says money multiplier is wrong – should we be shocked? – Mainly Macro North America: Is grad school to blame for student-loan crisis? – Marketwatch IRS Says It Will Treat Bitcoins As Property, Not Currency – NPR US loses edge as employment powerhouse – Financial Times Europe: Draghi: ECB Has


ASX at the close

By Evan Lucas for Chris Weston, Chief Market Strategist at IG Markets Asian trade dominated by China again Weakness across the Asian region was broad bushed in morning trade, with no specific index or sector really able point to a reason for the slides. Leads from the US were soft as the flash manufacturing read came


Housing in a world of infinite demand

Cross-posted from The Conversation It is true that the main culprits for housing prices in Australia are taxation and regulation regimes, as argued by Stephen Kirchner last week. But this is more because of their impact on demand than supply. Generous incentives including negative gearing and concessions on capital gains tax encourage investment in housing,


Japan FTA not so free after all

By Leith van Onselen Earlier this year, I cautioned the Abbott Government against committing to conclude its free trade agreement (FTA) negotiations by September: A big risk is that in setting a one year deadline to conclude negotiations, the Abbott Government could forgo quality. The Australia-US FTA is a case in point, whereby the Howard


Defaults not stimulus ahead for China

From the SMH: Speaking at the Credit Suisse Asian Investment Conference in Hong Kong, former member of the People’s Bank of China, professor David Daokui told a gathering of over 600 investors that more corporate defaults were needed in China to help “clean up the financial sector,” but that a repeat of the huge 2008-09


Australia’s fantastic five industries

By Leith van Onselen Above is an interesting segment from ABC’s The Business last night, which discusses a new Deloitte Access Economics report highlighting five “fantastic” growth industries that are poised to take the baton from mining over the next few decades, namely: agribusiness; gas; tourism; international education; and wealth management. According to Access, these


A land of sweeping plains & jam-packed apartments

By Leith van Onselen Financial Review Sunday included an interesting segment on the shift by Australian households towards apartments, which now account for more than 50% of total approvals in Sydney, Melbourne, Brisbane, Canberra and Darwin (see next chart). The segment began on the presumption that the shift to apartments has occurred organically, as “people