CEO: Aussie economy too reliant on services

By Leith van Onselen Soul Patterson’s CEO, Todd Barlow, has delivered a nice reality check to Australia’s economists, warning that the economy is far too reliant on services for growth. From The Australian: Mr Barlow told The Australian the nation’s shift towards service-based industries, and away from manufacturing, created problems when consumers “tightened their belts” and

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Retail slump “worst in 20 years”

By Leith van Onselen The news for Australia’s retail sector continues to worsen with a leading corporate restructuring experts, Ferrier Hodgson’s James Stewart, warning that the collapse in shopping centre traffic in the two weeks prior to Christmas was the worst he’s seen in more than 20 years. From The Australian: Shoppertrak, an analytical tool


Dwelling construction enters correction phase

By Leith van Onselen With yesterday’s release of Australia’s dwelling construction data for the September quarter, it’s once again time to examine how Australia’s dwelling supply is tracking against population growth. The below charts track the following, which are based on the latest available quarterly data: Dwelling approvals to September 2018; Dwelling commencements to September


Citi: Aussie property prices to fall 10% in 2019

By Leith van Onselen Citi has dialled-up the bearishness, predicting 10% house price falls in 2019 – the biggest losses anywhere in the world. From The Australian: Australia was the only country that might experience year-on-year declines exceeding 10 per cent. The analysts warned that given Australia’s particularly high share of residential investment relative to


Links 17 January 2019

Global Macro / Markets / Investing: Tariffs are ineffective as well as counterproductive – The Economist Are We Living Through Climate Change’s Worst-Case Scenario? – The Atlantic New Zealand Crypto Exchange Cryptopia Goes Offline Citing Hack – Coin Desk Doing a Buffett? Bet on S&P 500 causes flap on options market – Reuters Warning to


Macro Afternoon

The risk on mood from overnight markets has not translated into any substantial gains here in Asia with most stock markets retreating although local stocks blipped higher due to a rise in bank stocks. Currency markets are somewhat back to normal as well after the big moves in Pound Sterling overnight while gold retreated slightly.


Engineering construction and pipeline retraces

By Leith van Onselen The ABS has released engineering construction data for the September quarter of 2018, which revealed a 3.8% seasonally adjusted decline in the value of work done over the quarter and a 34% decrease over the year. The construction pipeline also retraced. According to the ABS, private sector engineering construction slumped by 6.4%


Motorcycles join new car sales smash

By Leith van Onselen Hot on the heels of the heavy 15% decline in new car sales, motorcycle sales have also tanked: Australia’s motorcycle market contracted 8.7 per cent in 2018, with total sales for the full calendar year of 95,080 according to official figures released by the Federal Chamber of Automotive Industries (FCAI). …of


Dwelling commencements dive as building boom nears end

By Leith van Onselen The ABS has released dwelling construction data for the September quarter, which recorded a sharp fall in commencements but an increase in completions. According to the ABS, the number of dwelling commencements fell by a seasonally-adjusted 5.7% over the September quarter and were down by 2.2% over the year. Detached house


Labor’s negative gearing policy to hit Liberal electorates hardest

By Leith van Onselen The Coalition’s incessant lies that Labor’s signature negative gearing and capital gains tax (CGT) reforms would primarily impact ordinary working Australians has been debunked again, this time by a Fairfax investigation showing that the nation’s wealthiest and largely Liberal-held electorates will be hit the hardest, whereas Labor electorates are among those


Grattan Institute’s urban infill utopia makes Sydney hotter

By Leith van Onselen For years, ‘Big Australia’ booster, the Grattan Institute, has called for Australia’s supposedly underutilised middle-ring suburbs to be bulldozed for apartments and townhouses in order to house the many millions of extra migrants projected to inundate our cities over coming decades. This transformation into a dense urban form is to be


Could Trump’s shutdown push US into recession?

by Chris Becker The record US government (partial) shutdown moved into its 25th day overnight, with both sides digging in as Senate Leader McConnell blocked another continuation vote in the Senate to re-open the government. The impact is being felt at a micro level by the near 1 million US government employees who haven’t been


Consumer sentiment dives to 16-month low

From Westpac: The Westpac-Melbourne Institute Index of Consumer Sentiment fell 4.7% to 99.6 in January from 104.4 in December. The ‘cautiously optimistic’ consumer mood that prevailed through 2018 has evaporated with sentiment beginning the new year with a slightly pessimistic view. At 99.6, the Index is below the 100 level, indicating that pessimists outnumber optimists,


Martin North: Aussie house prices to fall up to 30%

By Martin North, Principal Adviser at Digital Finance Analytics: We have updated our scenarios to take account of potential RBA rate cuts later in the year, revised mortgage stress and household confidence data and other factors. We also updated our probability allocation. Here is a summary. Our central scenario is one of home price fall,


Opal tower: the canary in the coal mine for high-rise apartment bust

By Leith van Onselen Already tarnished by the flammable cladding fiasco, the reputation of Australia’s high-rise apartments may be damaged beyond repair after huge cracks were discovered in the newly completed 34-storey Opal Tower at Sydney’s Olympic Park, raising fundamental questions about build quality. From The AFR: Government-appointed engineers revealed a fundamental shortcoming in the


Infrastructure falls further behind as migrants crush-load cities

By Leith van Onselen Australia’s infrastructure deficit is now projected to be around $800 billion, according to The Australian: Engineers Australia last year estimated the infrastructure deficit — classified as the amount needed to bring the nation up to scratch — at $800bn. Infrastructure Partnerships Australia (IPA), the private think tank, has put the figure


Doddering Keating still wants to lower worker’s pay

By Leith van Onselen Even after the Productivity Commission’s (PC) scathing final report on the efficiency and competitiveness of Australia’s $2.8 billion superannuation system, former Prime Minister and architect of Australia’s compulsory superannuation system, Paul Keating, has the gall to criticise the Coalition for delaying an increase in the superannuation guarantee, as well as attack the PC for


Another retail chain goes bust

By Leith van Onselen Last week it was Crabtree & Evelyn. Today, menswear retailer Ed Harry has been placed into voluntary administration, placing the fate of 87 stores and nearly 500 staff in doubt. From The Australian: On Tuesday, KPMG’s Brendan Richards and Gayle Dickerson were appointed voluntary administrators after a “particularly tough” Christmas sales period for


Macro Morning

By Chris Becker  With the UK parliament Brexit vote dominating markets overnight – particularly currencies – sentiment picked up as US markets opened and OPEC made some gestures towards production cuts, helping oil prices as US tech stocks pushed higher. The USD lifted slightly against the majors, with Pound Sterling obviously having the most volatility, while


May’s Brexit vote fails

by Chris Becker The Brexit parliamentary vote has come and gone overnight and it’s bad news for Theresa May. From the BBC: Prime Minister Theresa May’s Brexit deal has been rejected by 230 votes – the largest defeat for a sitting government in history. MPs voted by 432 votes to 202 to reject the deal,


Sydney rental vacancies rocket to 3.6%

By Leith van Onselen SQM Research has released its rental vacancy series for November, which revealed a seasonal 0.2% lift in the national vacancy rate over the month but no change over the year: Over the year, increases in vacancies were recorded in Sydney (+1.0%), Melbourne (+0.1%), Darwin (+0.8%), and Hobart (+0.1%), whereas Adelaide (-0.2%),


Another broken broker

Another unfortunate stockbroker collapse announcement in Halifax Investment Management leaving thousands of clients with over $200 million frozen while administrators review the damage and evaluate the return of capital (which may take months). You can add Halifax to a string of failed brokerages (although admittedly, the likes of Sonray and Opes Prime were based on


Links 16 January 2019

Global Macro / Markets / Investing: Doing a Buffett? Bet on S&P 500 causes flap on options market – Reuters Cracks are opening in the global monetary system – FT Ivanka Trump to Help Select Nominee for World Bank President – WSJ 2019: The End of the Beginning for Blockchain? – CFO Electric Vehicles Are


Macro Afternoon

It’s damn the torpedoes and full speed ahead as risk markets go into tonight’s Brexit vote with a lot of confidence, as the return of Japanese markets helped buoy the risk complex across Asia today. Yen sold off helping Japanese stocks while the Aussie dollar advanced slightly and Pound Sterling remained high in advance of