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Weekend Reading: 20-21 October 2018

Global Macro / Markets / Investing: Goldman and Morgan Stanley Want to Lend the Ultra-Rich More Money – Bloomberg Bezos Bucks the Bullies – WSJ The Worst Kind of Bear Market – A Wealth of Common Sense How Uber Quietly Raised $2 Billion – Bloomberg The Great Recession was awful. And we don’t have a

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Macro Afternoon

Outside of China it’s been a poor finish to the week for Asian share markets, with the fallout from the US selloff and “bondcano” still being felt across the region. Chinese GDP data was slightly less than expected but did not translate into falls on the mainland or in Hong Kong, while a lower Yen

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Why the RBA and interest rates are spinning the wheels in neutral

Great work from Bill Evans at Westpac to round out a pretty bizarre week: We have recently read with interest a number of pieces from FOMC officials including Chairman Powell and Governor Brainard around the concept of neutral rates. Neutral rates are “the ideal” for central banks. At that neutral level inflation is stable around

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Chris Joye talks a little more sense on bonds

Better work from Chris Joye this week on bonds as he abandons the worst of his arguments about the benefits of floating rates. However, his main purpose seems to be to distract from his prior poor arguments and so he builds an irrelevant straw man and then demolishes said straw man. In his original piece,

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China builds apartments to Pluto

Lol, whoa! Check out the new China data. First up the headline numbers with GDP soft at 6.5%, industrial production likewise at 5.8%, fixed asset investment investment lifted slightly at 5.4% and so did retail sales at 9.2%: That may be the leading edge of the blow coming to industrial output from US tariffs. But the

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China’s dangerous dollar addiction

Via Edoardo Campanella, Future World fellow at IE University’s Center for the Governance of Change in Madrid, at Foreign Policy: The trade war with the United States may soon hit China where it hurts, making it hard for Beijing to satisfy its voracious appetite for natural resources. Every year, China spends roughly $350 billion just to purchase

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Joye: Negative gearing reform to hit house prices another 9-12%

Via our Chris today with permission: RiskWise Property Research predicts that if Labor comes to power, the situation will get much worse with house prices slumping a further 9 per cent in Sydney and Melbourne as a result of its policies to eliminate negative gearing and hike capital gains tax (CGT) by 50 per cent

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If Shane Oliver is right, 600k households hit negative equity

Via Martin North today:` AMP’s, Shane Oliver published a piece in which he revised up his expectations of the housing price correction from peak to trough to 20% in Sydney and Melbourne, and 10% nationally, a downgrade from their previous expectation for a 5% national average fall. He has, along with a number of other

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ASIC declares war on corrupt RBA and Treasury

And good on it, at Domainfax: Australian Securities and Investments Commission boss James Shipton has called for a radical increase in the regulator’s funding and slammed delays to legislation that will dramatically increase penalties against business crooks. Appearing at a parliamentary hearing in Canberra, Mr Shipton made his strongest speech since being appointed to the

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Macquarie: Here comes jingle mail

Macquarie is today arguing that a 15-20% fall in house prices would plunge 310,000 home owners into negative equity and would cost the banks roughly $6bn in legal costs and remediation owing to breaches in responsible lending laws. That is, jingle mail: For legal actions to eventuate, a customer would need to have suffered a financial loss

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