Banks have recapitalised, making up for some of their losses from 2008 and 2009. But you still have a financial system addicted to debt and leverage. Investors have bought into the recovery story, though, and taken a punt on shares at just the time they ought to be reducing their allocation to shares (in our estimate). Why?
January 29th, 2010 | Dan Denning | 12 comments | ContinuedAll Posts Tagged With: "rba"
Are Aussie House Prices in a Bubble?
First off, house prices are still rising in Australia, but for the second month in a row sales are falling. Here in Melbourne, the average house price is now $510,000 according to the RP Data Index. Melbourne prices are up 15% since January. Granted, that’s not quite as good as the stock market this year. The All Ords is up nearly 30% year to date. But it’s not bad for houses is it?
December 1st, 2009 | Dan Denning | 103 comments | Continued
Interest Rates and Inflation
And that’s the point. It is all money in the bank. There is, according to the press, a difference of opinion between Treasury and the Reserve Bank over interest rates and their proper direction.
November 3rd, 2009 | Dr. Steven Kates | 79 comments | Continued
Inflation is Evident If You Just Follow the Money
One quick note about this: there is obviously plenty of inflation in the prices you pay every day. But most consumer price indices are rigged to understate inflation, as our colleague David Evans pointed out yesterday in Canberra at the Gold Standard Institute conference in Canberra. Trimmed medians…hedonic adjustments…
November 2nd, 2009 | Dan Denning | 5 comments | Continued
Biggest Factor Affecting Consumer Price Inflation is Growth in Bank Credit
Much will be revealed this week in the Aussie market, although a lot will probably remain obscure too. Producer price data for the September quarter comes out from the Australian Bureau of Statistics. Inflation anyone? Maybe not in wages. But certainly in raw materials (energy).
October 26th, 2009 | Dan Denning | 1 comment | Continued
Stocks Better than Bonds When Inflation is a Big Threat
What we make of it is that dividends used to account for a much larger percentage of your total return in stocks than they have in the last twenty years. Times change. There’s no rule that says the future has to be just like the past. But if stocks beat inflation, should you invest in stocks for income or capital appreciation? That’s the second question.
October 19th, 2009 | Dan Denning | 4 comments | Continued
Why I Would Have Raised the Interest Rates
Am I privy to the discussions of the RBA Board? No again. But I do know this. I do know why I would have raised rates, and would keep on raising them until the Government gets the message.
October 9th, 2009 | Dr. Steven Kates | 16 comments | Continued
The Dead Weight Cost of the Stimulus
On 21 September I provided testimony to the Senate Economics References Committee on the damage done by the government’s “stimulus” package. The submission was broken into five separate sections.
October 2nd, 2009 | Dr. Steven Kates | 35 comments | Continued
Total Meltdown of the Aussie Housing Market
Next Wednesday will see the release of the national accounts for June. Those figures will probably show the economy being less bad than previously expected. That might lead to the end of the “emergency setting” of the RBA cash rate at 3%, which will precipitate the decline and fall…
August 28th, 2009 | Dan Denning | 93 comments | Continued
Purpose of Funds Management Industry IS to Put People into Common Stocks
The bad news is that existing shareholders took a hit on their shares when NAB discounted the offering to the current share price. It probably had to do this to incentivise buyers. But that was the hidden cost, and it was born by existing shareholders. And in any event, we’re still not convinced that capital raised to buffer against further loan losses is the kind of event a shareholder would be bullish about.
July 24th, 2009 | Dan Denning | 20 comments | Continued
Dividends and a Sea Change in Corporate Behaviour Toward Shareholders
Maybe we’re getting ahead of ourselves with the idea that Aussie companies will begin boosting dividends to attract shareholders. After all, Bloomberg reports that Aussie firms tapped the equity markets for over $90 billion in capital in the last fiscal year. It’s what you do when you’re rebuilding your balance sheet and paring back debt.
July 8th, 2009 | Dan Denning | 1 comment | Continued
Bogus Bond Bust
Bonds, however, are looking rather infirm. Prices fell and yields rose on U.S. Treasury bonds. This is easy enough to dismiss as a natural consequence of the recovery theme gaining traction. But might also have something to do with the fact that the U.S. Treasury will auction another $140 billion in bonds next week. That amount tops the $104 billion amount auctioned last week. It’s a lot of borrowing, isn’t it?
June 19th, 2009 | Dan Denning | 2 comments | Continued
Central Bankers Encourage Debt Booms That Become Debt Bombs
Do you think maybe Dr. Bernanke is just trying to talk his book too? After all, the U.S. Treasury has heaps of debt to sell this year (gross issuance over $3.25 trillion according to Goldman). If Dr. Bernanke makes adult sounds come out of his mouth, it might give people the impression the U.S. is returning to sobriety and fiscal sensibility.
June 5th, 2009 | Dan Denning | 4 comments | Continued
Commodities Tell Us the World Won’t Stop Turning in a Financial Crisis
The Aussie gold price is fighting its way up despite the fact that the Aussie dollar keeps gaining on the greenback. While the Aussie gold price is up just $1.71 in the last 30 days (0.14%), the U.S. gold price is up nearly nine percent. We reckon the Aussie gold price will begin moving up closer to $1,500 again on a combination of events (weakness against the greenback for one.)
June 1st, 2009 | Dan Denning | 2 comments | Continued
Australia’s Currency and its Economy Will Benefit from China’s Stimulus Package
“Asia is still going to expand, and China and India will have growth above 5 percent. That’s fuelling demand for commodities, so Australia’s exports are holding up much better than the rest of the G-10 countries.”
Paresh was also referring to the 21% rise in the Aussie dollar versus the U.S. dollar since February 25th.
