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1.Market Observations

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23 June 2018 (AFR) – ASX ends stellar week on softer note

(23 June 2018, AFR, p33, by Sarah Turner) ‘Australian shares ended a stellar week on a lower note, as caution crept into the market after traders pushed the index to a level not seen for ten years earlier in the week. The S&P/ASX 200 index dipped 6 points to end the day at 6225, with the … Continue reading

22 June 2018 (TheAge) – PM triumphs on tax – Turnbull lines up deal with Hanson on company tax cuts

(22 June 2018, The Age, p1, By David Crowe) ‘The Prime Minister is moving to add to his victory in Parliament on personal income tax cuts by striking a deal on $35.6 billion in company tax reform, as Labor antagonises One Nation in a bitter dispute before the July 28 byelections.’ Read more at TheAge.com.au

22 June 2018 (AFR) – Flat yield curve sends a grim message to investors in 2019

(22 June 2018, AFR, p29, by Robin Wigglesworth) ‘Of all the fashionable alarm bells that market-watchers keep an eye on, the yield curve is the most timeless. It is Coco Chanel’s proverbial “little black dress” of economic indicators.’ <snipped…> ‘In other words, on a global aggregate level investors no longer get a premium to hold … Continue reading

21 June 2018 (TheAge,SMH) – ASX hits decade high as banks rebound

(21 June 2018, The Age, Business, p27, by: Vesna Poljak and Sarah Turner) ‘A rally in bank stocks and a record high for Macquarie Group pushed the Australian sharemarket to a fresh decade high on Wednesday. The S&P/ASX 200 Index closed at 6172, up 70 points. or 1.2 per cent, topping the previous 10-year high … Continue reading

20 June 2018 (AFR) – Is this actually a house price correction in Australia?

(20 June 2018, AFR, p30, by Matthew Cranston) ‘Slap, slap, slap. That’s the sound of early back slapping from the commentators who picked a correction of Australia’s housing market – most especially the biggest market Sydney. There is no need name names – they will do it themselves – but it’s official, the federal government’s statistics collector has recorded the first annual price … Continue reading

20 June 2018 (AFR) – Sydney’s house-price party ends after six years in March quarter: values fall 0.8 pc

(20 June 2018, AFR, p30, by Michael Bleby) ‘Sydney house prices started to unwind six years of growth in the March quarter, with their first annual decline since 2012, official figures on Tuesday showed. The 0.8 per cent year-on-year fall in the value of detached dwellings was less than the 0.9 per cent contraction in … Continue reading

20 June 2018 (AFR) – US-China trade war escalates, wiping billions off Asian stocks

(20 June 2018, AFR, p11, John Kehoe, Michael Smith) ‘Escalating trade tensions between the world’s two biggest economies have rattled investors in Australia and around the region as US President Donald Trump’s threat to slap tariffs on an additional $US200 billion of Chinese imports wiped billions of dollars off Asian markets on Tuesday. China accused … Continue reading

20 June 2018 (TheAge) – Sydney, Melbourne house prices tipped to fall 10 per cent

(20 June 2018, The Age, p12, Melanie Beeby) ‘ANZ Banking Group is tipping falls in Sydney and Melbourne housing prices of about 10 per cent from peak to trough, driven by tighter credit and higher interest rates next year. ANZ senior economists Daniel Gradwell and Joanne Masters said the housing market had slowed further than … Continue reading

19 June 2018 (AFR) – US business warns on impact of Trump tariffs

(19 June 2018, AFR, p27, by Andrew Edgecliffe-Johnson and Patti Waldmeir) ‘Donald Trump’s new tariffs on $US50 billion of Chinese imports have run into stiff opposition from the US business community, changing the mood in boardrooms that had welcomed the president’s cuts to taxes and regulations and had largely shrugged off his protectionist rhetoric. The … Continue reading

18 June 2018 (AFR) – Blackrock poised to give five ETFs the chop

(18 June 2018, AFR, p24, by James Frost) ‘Global asset manager Blackrock is poised to delist five ASX-listed exchange traded funds with around $145 million under management at the end of the financial year, in the biggest wind-up of its kind to take place. The world’s largest asset manager says the ETFs have underwhelmed in … Continue reading

18 June 2018 (AFR) – Trade war, slower growth revive China debt fears

(18 June 2018, AFR, p13, by Michael Smith) ‘The threat of a US trade war and a batch of weak economic data have revived fears that cracks are appearing in President Xi Jinping’s mission to keep the world’s second-largest economy on a stable footing, as state-owned enterprises and local governments battle to wean themselves off … Continue reading

18 June 2018 (AFR) – No mortgage required? The suburbs where sales are booming – Vendors forced to meet market as banks limit buyers’ access to mortgages

(18 June 2018, AFR, p10, by Michael Bleby) ‘Tighter curbs on credit and vendors holding out for last year’s prices in a softening market stifled the week’s auction clearances at a preliminary 56.9 per cent rate even as the number of auctions doubled. A total 1991 homes went to auction over the week to Saturday, … Continue reading

16 June 2018 (AFR) – Lendlease expects defaults to rise as Brisbane unit oversupply peaks this year

(16 June 2018, AFR, p27, by Michael Bleby) ‘Lendlease says Brisbane’s unit oversupply will peak this year and is bracing for rising defaults on settlements in the short-term as buyers fail to complete purchases. The developer, Australia’s best-performing real estate company over the past year, also said in an investor presentation on Friday the royal commission … Continue reading

16 June 2018 (AFR) – ASX has best performance in 11 months as Telstra recovers

(16 June 2018, AFR, p33, by William McInnes) ‘The Australian market has closed the week higher on Friday as the index recorded its biggest advance in a single session since July last year. The S&P/ASX 200 index rose 48.8 points or 0.8 per cent, for the week to 6094, with Friday’s session making up most of the … Continue reading

16 June 2018 (TheGuardian) – Trump announces $50bn in China tariffs, escalating possibility of trade war

(16 June 2018, The Guardian online,Dominic Rushe in New York,@dominicru, Sat 16 Jun 2018 01.05 AEST First published on Fri 15 Jun 2018 22.20 AEST) US-China trade tensions escalate as Trump approves $50bn of tariffs – business live President tells Fox News he is ‘very strongly clamping down’ China says it will impose tariffs of … Continue reading

16 June 2018 (AFR) – President Donald Trump set to approve $67b in tariffs on Chinese goods

(16 June 2018, AFR, p13, by Justin Sink) ‘Donald Trump is set to announce tariffs on Chinese goods worth about $US50 billion ($67 billion), ratcheting up a confrontation on trade that is likely to prompt retaliation from Beijing. The Trump administration is preparing to release on Friday (Saturday AEST) a refined list of Chinese products to be hit with tariffs … Continue reading

15 June 2018 (TheAge) – Big banks in bear market on housing, royal commission jitters

(15 June 2018, The Age, p20, Clancy Yeates) ‘Australia’s big four banks have slipped into a “bear market” as investors fret over multiple challenges including falling house prices, a regulatory backlash sparked by the royal commission, and higher funding costs. With the major banks lagging the broader sharemarket for several years, Commonwealth Bank closed at … Continue reading

15 June 2018 (TheAge) – Weaker jobs growth puts wage boost in doubt

(15 June 2018, The Age, p8, Peter Martin) ‘Jobs growth has slid dramatically, with new employment figures showing only 95,900 extra workers employed during the past six months, down from 208,000 employed in the previous six months. The change brings the average number of jobs created per day down from 1140 to 525. It came as … Continue reading

15 June 2018 (AFR) – US bond yields indicate recession as interest rates rise

(15 June 2018, AFR, p31, by William McInnes) ‘A US recession could occur within the next two years according to former US bond trader Charlie Jamieson, who says the flattening of the bond yield curve is a signpost of possible trouble ahead. Speaking on a panel on global macro at Livewire Live 2018, Mr Jamieson, … Continue reading

15 June 2018 (AFR) – China shows signs of losing steam as PBOC pauses after Fed hike – China holds amid ‘rotten’ growth figures and looming trade war

(15 June 2018, AFR, p29, by Bloomberg) ‘China’s central bank held off from immediately raising borrowing costs following the US Federal Reserve, a decision that came just as economic data for May showed that the economy is losing steam. With the prospect of fresh US tariffs on Chinese exports approaching, the world’s second-largest economy is already slowing … Continue reading

15 June 2018 (AFR) – US economy is ‘great’ again, Federal Reserve chair Jay Powell says

(15 June 2018, AFR, p29, by John Kehoe) ‘A bullish US Federal Reserve chairman Jerome Powell has declared the American economy is in “great shape”, as the central bank positioned for a slightly faster pace of interest rate rises over the next two years. The Trump-Republican tax cuts and government spending would “significantly support” economic … Continue reading

15 June 2018 (AFR) – Australia, US rates gap widens as Fed hikes

(15 June 2018, AFR, p28, by Vesna Poljak) ‘The market’s growing confidence that the Reserve Bank of Australia will keep interest rates on hold for close to another year opens up a widening gap between US and Australian rates that is being mirrored in advanced economies around the world. The Federal Reserve raised interest rates for … Continue reading

15 June 2018 (AFR) – This is why (US) productivity growth has slowed so much

(15 June 2018, AFR, p27, by Martin Wolf) ‘We live in an age judged to be one of exciting technological change, but our national accounts tell us that productivity is almost stagnant. Is the slowdown or the innovation an illusion? If not, what might explain the puzzle? The slowdown, if true, matters. As Paul Krugman, … Continue reading

15 June 2018 (AFR) – US fundraising for special purpose acquisition vehicles (spacs) hits record this year

(15 June 2018, AFR, p27, by Nicole Bullock) ‘Special purpose acquisition vehicles (spacs) are hitting the US market at the fastest rate on record, attracting the likes of Goldman Sachs and hedge fund investor Daniel Loeb for the two largest such deals in 2018. Spacs have raised $US4.5bn so far in 2018, the largest amount … Continue reading

15 June 2018 (AFR) – Jobless rate ‘supertanker’ heads lower despite capacity concern

(15 June 2018, AFR, p4, by Jacob Greber) ‘Growing evidence of skill shortages and the equal-lowest jobless rate in almost 5½ years is stoking speculation the labour market is gradually absorbing the spare capacity blamed for weak wages growth. The unemployment rate recorded the biggest fall in two years in May, down 0.2 percentage points … Continue reading

15 June 2018 (AFR) – How the big Aussie banks are feeling the Fed squeeze

(15 June 2018, AFR, p1, by Karen Maley) ‘Australian banks are being squeezed by higher borrowing costs as the US Federal Reserve accelerates its interest rate hikes and drains liquidity from global financial markets while the Hayne royal commission makes it difficult for them to raise home loan rates. The woes of the local banks … Continue reading

14 June 2018 (AFR) – Why it’s easier to sell at $20m than at $2m – As top-end sales slow, Peninsula Sotheby’s swallows Melbourne master franchise

(14 June 2018, AFR, p37, by Michael Bleby) ‘Realtor Sotheby’s Mornington Peninsula franchise is about to swallow its Melbourne-based parent as consolidation starts in the top-end Victorian residential market.  Peninsula Sotheby’s International Realty principal Rob Curtain is understood to be close to purchasing Melbourne Sotheby’s International Realty and wants to reboot the business, which owns the state rights to the Sotheby’s name. The … Continue reading

14 June 2018 (AFR) – Metro Property’s discounts leftover Brisbane apartments

(14 June 2018, AFR, p33, by Su-Lin Tan) ‘Real estate agents are offering 20 per cent discounts on apartment sales at four of Brisbane-based developer Metro Property Development’s Brisbane CBD projects as the apartment market continues to face headwinds.’ Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

14 June 2018 (AFR) – Sydney’s housing bubble deflates as loans revisit GFC declines

(14 June 2018, AFR, p31, by Michael Heath and Garfield Reynolds) ‘Australia’s east-coast property bubble is showing signs of deflating at a faster clip as home-lending data recorded the longest losing streak in almost a decade. Housing finance fell 1.4 per cent in April, the fifth straight monthly drop and the longest stretch of declines … Continue reading

14 June 2018 (AFR) – Owners of failing (US) malls ‘on their knees’ as buyers disappear

(14 June 2018, AFR, p31, by Sarah Mulholland) ‘Landlords have malls they’d like to unload. But who’d want to buy them? As they battle the rise of e-commerce, US mall owners are trying to clear their books of fading centres so they can focus on the most profitable ones. That’s proving difficult, with just a … Continue reading

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