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Is the RBA or market wrong?

In its weekly economic missive this morning, Macquarie Bank has an interesting take on the current mismatch between the RBA’s stop/start hawkish rhetoric and pricing in the interest rate futures market. The Macquarie Weekly: The central bank that cried wolf For the past year, the Reserve Bank of Australia has been forecasting great things for

Latest posts

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Want Australian dollars with that?

News in The Australian this morning that the Russians are buying Aussie Dollars is just another example of the kinds of forces that are at work as a result of the rerating of Australia and our currency. From The Australian: The Russian Central Bank will pour up to $US5 billion ($4.7bn) into the Australian dollar

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The neglected art of selling

By low, sell high!  That oft-used 80s catch cry is what all investors should aim to do.  In most cases the first part – buy low – can often be the easiest part to do.  I could have picked 10 random stocks from the ASX200 in March 2009 and I’d be on a winner because

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Old economy fights back

Last week, the Unconventional Economist made a fascinating comparison between the rhetoric of the Canadian and Australian central banks on overvalued houses. He noted how much more candid the Canadian central bank has been about the degree of house price overvaluation and the need to mitigate those risks. As we know, neither the government nor

27

China and the future of capitalism

Let’s try some more scenarios, but this time with your participation. My reasoning is this. Most economic and financial commentary is about telling the story of the past leading up to the present. So why not try to tell the story of the future? After all, that is what matters for investment and policy. Can’t

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Weekend Musings: The see-saw, endless spruik

My,  that was a quick week. A couple of things in the thinker this weekend. The see-saw After a very successful muse last weekend about the economics of Futureboom! I have been thinking a little more on the intricacies of what I can see happening in the macro-economy. Glenn Steven’s speech posted by H&H this

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Australian Dollar Weekly Wrap

The Aussie and the markets performance this week has actually been very constructive for a move higher if Greece ever gets sorted. There is enough pressure on politicians to get their act together and we had German Chancellor merkel backing away from a bail in of investors overnight which gave some hope that a rabbit

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The two faces of housing data

RPData’s latest newsletter highlights that the housing market is falling unevenly, with the top of the market taking a bigger hit than the rest of the market at this stage. With the premium market underperforming, many of the higher priced capital city regions have recorded a significant decline in median house prices since they peaked

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Equity Spotlight: JB Hi-Fi

Following on from Q Continuum’s post on investing during sideways markets, today we shine the light on Australia’s best retail stock, JB Hi-Fi (JBH). Interestingly, this position is not shared with the current marketplace, as JBH remains the No.1 stock to sell short (i.e to profit on a fall in price), with over 14% of

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Trading Day: Friday 17th June

The S&P/ASX 200 rebounded on the open from positive leads from the US overnight, but has since reversed back below 4500 points just after midday. The index is up 7 points or 0.17% to 4486. Asian markets are similarly effected, with the Nikkei down slightly, the Hang Seng down 0.18% and Singapore 0.14%. Other risk

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This is still not risk off…

I hold a strong view that the instability that we have been seeing over the past few months has in many markets pushed longer term speculative capital to the sides and left the markets to trade on the whim of the short term guys and market news. How else can you explain the lack of

26

Four dark clouds

The Dow went up a bit last night. Hooray! But if you think this correction is over, think again. This is the correction we have to have. Think about it. There are four big economies in the world: Japan, EU, China and the US. A dark cloud hangs over each. Japan is far worse than

29

Private banking my butt

Last night, the Basel Committee on Banking Supervision circulated a draft document on what level of additional capital requirement Systemically Important Financial Institutions (SIFIs) will be required to hold. According to Bloomberg, it said it: would subject banks to a sliding scale depending on their size and links to other lenders, said the people, who

51

A Ford ability crisis

Henry Ford was born on the outskirts of Rockhampton in 1922. In 1925, he established Ford Australia, and subsequently travelled back in time to found the Ford Motor Company in the USA sometime prior. The upshot of all this, is that the bogan knows there is no car company more Australian than Ford, because Holden

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Yesterday’s hero

Will they never learn? Nearly 11 years on since it was first introduced the federal grant for first home owners still stands at $7000, even though the average house price has more than doubled in that time. That’s led one leading mortgage broker to suggest it is time the scheme was upgraded. The residential housing market

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Central banker makes housing sense!

I was disappointed in RBA Governor, Glenn Stevens, speech Wednesday. I had expected that Mr Stevens would at least acknowledge Australia’s Achilles heel – its high level of household indebtedness and house prices – and warn of the significant risks that these pose to the economy. Instead, Mr Stevens ignored the debt Godzilla and linked Australia’s house price appreciation to population growth. Interestingly,

9

Dutch Disease and jobs

Today the ABS released its quarterly Labour Force Survey – Detailed for May. I’ve broken it up into a series of sectoral charts by full time jobs below. Each says it ends in March but it don’t. Each ends in May, damnit. First up, let’s look at the growing sectors. Top of the pops is,

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Trading Day: game over

The S&P/ASX 200 opened down sharply reacting in line with overnight markets which were all down 1 to 1.5%, reversing yesterday’s gains. At just after midday, the index has lost just over 60 points or 1.31% down to 4510. Asian markets are similarly effected, with the Nikkei down 1.1%, the Hang Seng down 1.4% and

19

Car sales crash

Governor Glenn may still be feeling feisty about the economy but it’s becoming increasingly obvious that he’s flying solo. ABS May car sales are out and can only be described as a crash, down 7.6% month on month and 14.5% year on year. These sales levels were first seen in 2003 and again in December

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Wolf debates Stevens

Today Martin Wolf of the FT joins the growing ranks of China skeptics. It is interesting to contrast his views with those of Glenn Stevens, enunciated in his speech yesterday. According to Wolf: Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding

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Bye, bye Macfarlane years

Over the past several years, the RBA, and some of its former staff, have engaged in a quiet reassessment of their role in the pre-GFC build-up of destabilising levels of debt in the Australian economy. There are a number of examples. There is the late 2009 confession by Ian Macfarlane’s former deputy, Stephen Grenville, that

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The problem with asset allocation

What is asset allocation and why discuss it? Surely super is all about putting money away for retirement: how hard can that be? In this post, I will outline the conventional thinking regarding asset allocation and why it’s mostly wrong. The empirical evidence regarding this contention is overwhelming and stark. The major academic theories that

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The debt that killed the UK economy

Back in April, Dr Oliver Marc Hartwich from the Centre for Independent Studies wrote an article in Fairfax on the worrying parallels between the UK and Australian economies and housing markets. The current mood in Australia triggers eerie memories for me. I feel as if I have experienced this scenario before – not in Australia

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Stevens raises his fists

Governor of the Reserve Bank, Glenn Stevens, delivered a fascinating speech this afternoon. One would almost have to describe it as combative. He dismisses weakness in the services economy, wholeheartedly defends the mining boom as pretty much bailing us out (which I agree with)  and more or less tells you to get over any concern you

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Trading Day: jitters continue

The S&P/ASX 200 opened slightly down, reacting strangely to overnight markets which were all up 1 to 1.5%, and at mid-afternoon has lost just over 24 points or 0.5% to 4561 probably in response to Glenn Stevens inflation rhetoric about future rate rises. Asian markets are mixed, with the Nikkei down 0.13%, the Hang Seng