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Australia: the land of easy mortgage credit

Recall the Hayne Banking Royal Commission’s very first recommendation, which was to maintain responsible lending laws: Hayne arrived at this recommendation after observing multiple cases of predatory lending over the Royal Commission’s 12 month deliberation. Also recall that Treasurer Josh Frydenberg tried to repeal these responsible lending laws, claiming they are essential to helping the

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NSW records 1259 COVID cases, 12 deaths

NSW Health has recorded another 1259 locally acquired COVID cases and 12 deaths: NSW recorded 1,259 new locally acquired cases of COVID-19 in the 24 hours to 8pm last night. Two new cases were acquired overseas, and 36 previously reported cases have been excluded following further investigation. pic.twitter.com/BADIDtqn2Z — NSW Health (@NSWHealth) September 15, 2021

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Treasury: Mass immigration wrecked housing affordability

Yesterday, the Australian Treasury’s Macroeconomic Division head Crystal Ossolinski told the parliamentary committee into housing affordability that housing supply had not kept pace with rapid population growth in the early 2000s, which caused house prices to surge: “We’ve had some periods of strong population growth in Australia, particularly in the early 2000s, where population growth

2

Fundies worry about stagflation

China is taking care of global inflation as we speak but that hasn’t entered the minds of fundies yet. Via ZH comes the monthly BofA fundie report: Over the past few years, one of our recurring laments about the Bank of America Fund Manager Survey was the at times irreconcilable intellectual inconsistency of the survey

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Coalition narrows poll gap with ALP

From Roy Morgan Research: ALP support has dropped to 52.5% (down 2% points since late August) cf. L-NP on 47.5% (up 2% points) on a two-party preferred basis. This was the first increase in support for the L-NP since mid-June, before the current Sydney lockdown began according to the latest Roy Morgan Poll on Federal

5

Rental vacancies shrink to decade low

SQM Research has released its August rental report, which recorded the lowest national rental vacancy rate since March 2011 at just 1.6%: The next chart plots the time series at the national level and shows clearly the sharp reduction in the vacancy rate over the past year: The next chart plots vacancies across the five

7

Daily iron ore price update (Ding! Fasten your seat belts)

The ferrous complex was weak again on September 14, 2021 as spot fell, paper fell further overnight and steel is looking toppy worldwide: The PBoC tightened futures limits again and Evergrande is going bust. Enough said. Perhaps more importantly, the China property developer bust is transpiring just as the global post-COVID steel boom tops out.

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Victoria records 423 COVID cases, 2 deaths

Victoria has recorded another 423 locally acquired COVID cases and two deaths: Reported yesterday: 423 new local cases and 0 cases acquired overseas. – 41,856 vaccines administered – 54,649 test results received – Sadly, two people with COVID-19 have died More later: https://t.co/OCCFTAtS1P#COVID19Vic #COVID19VicData [1/2] pic.twitter.com/SMkSBLYqyt — VicGovDH (@VicGovDH) September 14, 2021 Most are mystery

1

Macro Morning

It’s risk off as the latest CPI print in the US underwhelmed Wall Street, sending US stocks to a new one month low. Bond yields fell back sharply in response with the 10 year Treasury back to 1.26% while gold and other major currency pairs roundtripped around the print, with the shiny metal able to

41

Worldcom. Enron. Lehman. Evergrande.

Evergrande is going bust and nobody knows what that means. Here is its HK regulatory filing that reads like an obituary: Beijing has also retained bankruptcy specialists. The unhappy investors who were happy to take huge yields but not the risk that comes with it stormed Evergrande head office: “Evergrande return our money!” pic.twitter.com/F6zbJu21jF —

6

Australian dollar bashed by China

My charts are still skewiff so forgive the brevity. DXY was firm overnight and EUR fell: The Australian dollar was bashed: Gold and oil were strong, copper weak: Treasury yields fell hard and Value stocks followed them lower. Westpac has the wrap: Event Wrap US CPI inflation in August was slightly weaker than expected, +0.3%m/m and

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Aussie housing towers over economy

The ABS yesterday released its property price data for the June quarter, which valued Australia’s dwelling stock owned by households at $8.5 trillion, whereas the total housing stock was valued at $8.9 trillion. As shown below, the ratio of the dwelling stock owned by households against Australian GDP hit a record 4.1 times as at

12

Immigration moves back into negative

The Australian Bureau of Statistics (ABS) has released Overseas Arrivals and Departures data for July 2021, which suggests net migration into Australia moved back into negative. There were a net 3,130 permanent & long-term departures in July, which followed June’s 2,540 net arrivals. Still, over the July quarter, there were 2,890 net permanent & long-term

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Links 15 September 2021

Global Macro / Markets / Investing: The S&P 500 drops for a fifth day, its worst stretch since February. – NY Times Growing risk of once-in-a-century solar superstorm that could knock out internet, and power grid for 2 years study says – CTV News Three ways to tax the subtraction and exclusion, not the addition,

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Macro Afternoon

Risk taking in Asia is definitely limited to Japanese markets with Chinese bourses selling off and Australian shares unable to put in a new high as RBA Governor Lowe’s speech remaining dovish for the Aussie dollar. Gold is still struggling to get back above the $1800USD level, while Bitcoin is flat lining as well as

40

Tracking Australia’s vaccine rollout

After a slow start, Australia’s vaccination rollout continues to gather pace. 54.5% of Australia’s population has now received a single vaccine dose, with 34.2% now double vaccinated: NSW is the vaccine leader, with 63.3% of the state’s population now single vaccinated. This is followed by Tasmania (54.2%), Victoria (54.0%), SA (48.3%), NT (46.7%), Queensland (46.5%)

5

Push for “flexible quarantine” of farm slaves as Aussies lay stranded

19 months on from the pandemic and there are still around 40,000 Australians stuck overseas and unable to return home due to: 1) prohibitive arrivals caps and quarantine limits; and 2) extortionately expensive airfares and quarantine costs. Rather than developing solutions to bring stranded Australians home, our politicians are more interested in importing cheap migrant

0

Australia’s property market tightening amid lockdowns

CoreLogic’s weekly market update suggests that lockdowns are tightening the nation’s residential property market. Specifically, total listings have collapsed, down 17.6% year-on-year: At the same time, mortgage demand remains strong. As shown below, it is the strongest September for “mortgage activity events” since 2017: Strong buyer demand amid reduced market supply is obviously a recipe

2

What will a debt ceiling fight hurt?

Goldman with the note: We estimate Congress will need to raise the debt limit by mid-October, though it is possible the Treasury might be able to operate under the current limit until late October. It is possible, though not likely, that the Treasury might be able to continue to make all scheduled payments until sometime

2

ABS: Property prices surged 6.7% in June quarter

The Australian Bureau of Statistics (ABS) today released its property price indices for the June quarter, which registered explosive 6.7% growth across the combined capitals over the quarter and 16.8% growth year-on-year: The gains were broad-based with all capitals recording strong price growth over the quarter and year. The next table tracks price growth over

0

Consumer confidence rebounds on NSW reopening plan

From ANZ: Confidence rebounds Consumer confidence jumped 3.1% last week, as the NSW government released its much anticipated “roadmap to freedom”, which sets out the plan for easing of restrictions once 70% of adults in the state have been fully vaccinated. Four out of the five subindices made significant gains. ‘Current financial conditions’ rose 2.0%,

3

Next up: The coal crash

It’s been a wild few months for coal. We’ve gone from wallowing prices to record highs in the blink of an eye. But there are signs it’s coming to an end. Coking coal has been the craziest. As Chinese steel output has collapsed, coking coal has gone through the roof. This was always pretty stupid.

0

Wall Street goes all-in on inflation

The smartest guys in the room are as undiversified this week as always. Stagflation is the mem dejour with BofA still leading that pack: H2 view: macro backdrop = higher inflation, hawkish central banks, weaker growth, i.e.stagflationary; investment backdrop = rising Rates,Regulation, Redistribution (3Rs–Chart 6) & peak Positioning, Policy, Profits (3Ps); investment returns = low/negativestock/credit

4

Goldman won’t mention the ore

Clearly, Goldman Sachs is still too long commodities: Growing scarcity across physical markets. Since last October, policymaker and investor focus has remained on the vaccine-driven demand recovery from the deepest recession on record. Yet today, physical goods demand has reached such high levels — above pre-pandemic trends in all but oil — that the system

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NSW daily COVID cases continue to fall

NSW recorded 1,127 locally acquired COVID cases over the past 24 hours – the lowest number in nearly a fortnight: NSW recorded 1,127 new locally acquired cases of COVID-19 in the 24 hours to 8pm last night. pic.twitter.com/QS809aYxhy — NSW Health (@NSWHealth) September 14, 2021 Two people died with COVID over the past 24 hours:

7

Coalition lauds virtuous JobKeeper waste

The AFR’s Joe Aston has continued his full fledged assault against the Morrison Government’s JobKeeper waste, which saw more than 150,000 companies that weren’t in trouble – many of them actually thriving – receive $13 billion worth of subsidies from taxpayers. On 12 September, Aston highlighted Treasurer Josh Frydenberg’s hypocrisy and contradictions in defending these

4

Coalition sheds more housing affordability crocodile tears

Coalition MP Jason Falinski, who will chair the parliamentary inquiry into Housing Affordability and Supply, penned an article in The AFR lamenting the destruction of housing affordability across Australia and the need to boost housing supply: The Tax and Revenue Committee’s inquiry is our last and best chance to understand why in 1985, growth in