The Raw Prawn

Raf's party: turning four

Sat, 07 Nov 2009 12:21:34 +1100

Posted via web from sean carmody’s posterous | Comment »

Review of the markets for the week ending 30 October 2009

Mon, 02 Nov 2009 09:39:14 +1100

This week Inflation figures confirmed the case for an Australian rate rise. Meanwhile, both credit and equity markets were weak around the globe.

Economic data
Australian headline inflation for the September quarter came in very close to forecasts at 1%. Falling transportation and financial services prices in prior quarters mean that the headline inflation rate year on year is now down to 1.3%, but the Reserve Bank’s preferred measure, the trimmed mean, is still up at 3.2%, outside the bank’s 2-3% inflation target.

The US S&P/Case-Shiller house price index rose 1.2% in August, bringing the 12 month price change to -11.3%. While this was a little better than the market expected, September new home sales were released later in the week and, at 402,000, were almost 10% lower than forecasts.
Perhaps the biggest surprise of the week was US GDP which grew 3.5% in the September quarter, better than the expected 3.2% growth. The optimism this generated was dented on Friday by the 0.5% fall in consumer spending in September.

Rates
Interest rates at the very short end of the curve were up, pricing in upcoming cash rate hikes, but beyond six months, the market is becoming less bearish about the extent of future rate rises. The market-implied cash rate 12 months out closed 0.23% lower than it was a week ago.

Two-year government bonds rallied 0.23% and 10‑years rallied 0.16%, steepening the 3‑10 futures curve 11 basis points.

It was a volatile week for US rates and Treasury yields finished the week 0.11% lower.

Credit
As credit markets took their cue from weak equity markets, spreads widened. The CDX investment grade index was 9 basis points wider and high yield 63 basis points, while the euro investment iTraxx was 5 basis points wider. The Australian iTraxx index was unchanged on the week, but is likely to catch up with some widening following offshore weakness on Friday after the Australian close.

There was no new bond issuance in the domestic market.

Other markets
The US dollar staged something of a recovery, gaining 1.9% against the euro. The Australian dollar finished the week at US$0.915, a fall of 1.1%.
Oil prices showed some weakness mid-week, but finished almost unchanged. The WTI crude oil price fell back just below US$80 per barrel. The price of gold was down 1.4% to US$1,045/oz and the broad CRB index was stable.

Equity markets were down and the Australian market fared worse than most. The S&P/ASX 200 slipped 4.3%, while the S&P 500 fell 4%. The Nikkei 225 was down 2.4% and the UK’s FTSE 100 fell 3.8%.

The week ahead
As is traditional, the Reserve Bank has its November meeting on Melbourne Cup Day this Tuesday. Consensus is still for a 0.25% rate rise, although some view 0.50% as a possibility. The next day retail sales and building approvals figures are out.

The Fed also has a rate decision this week, but unlike in Australia, no-one expects to see a change in US rates.

Posted via web from Market View | Comment »

Review of the markets for the week ending 23 October 2009

Mon, 26 Oct 2009 09:42:49 +1100

Australian interest rates rose for another week as the economy shows less and less resemblance to the US, UK and Europe. Equity markets around the world were volatile.

Economic data
The release of the October board minutes showed that the Reserve Bank’s rate hike earlier in the month had been the subject of extensive deliberation. While global economic prospects remain uncertain, the influence of “developments in Asia” ultimately tilted the argument in favour of a rate rise.

The Westpac Leading Index for August was up 1.1% for the month, bringing the annual growth rate to 1.7%, not too far below the long-term trend of 2.8%.

US housing starts were up 5% in September at 590,000, although this was slightly weaker than expected. Building permits also fell below forecasts, falling 1.2% to 573,000.

The US Fed Beige book noted “stabilisation or modest improvements” across the 12 Fed districts, but also pointed to weakness in the commercial real estate sector. The US leading indicators index was up 1% for September, narrowly beating expectations of 0.8%.

Following a meeting of European finance ministers, ECB President Jean-Claude Trichet warned of the dangers of exchange rate volatility, but said that he took seriously the US commitment to a strong dollar. Growth in the UK continues to look grim as GDP fell 0.4% for the September quarter, bringing the annual GDP change to -5.2%, well below forecasts for an annual fall of 4.6%.

Rates
The front end of the Australian curve rallied a little on a reduction in the estimated likelihood of a 50 basis point rate hike in November. Further out, the curve rates rose. Two-year government bond yields were up 0.11% and 10-year yields up 0.12%. The mid-part of the curve did not sell off as far, and the 3‑10 year futures curve steepened 5 basis points.

US long-end rates rose almost 0.1%, but the implied pricing of the Fed funds rate fell another 0.10%.

Credit
There was some weakness in credit markets over the week and the Australian iTraxx widened 3 basis points. AAA bonds were weaker, but BBB bonds managed to tighten around 9 basis points relative to Commonwealth government debt.

US and European credit indices had a quiet week.

The bond primary market saw the launch of a Downer EDI 4 year bond. Slated for $100 million, the BBB bond issue was then increased to $150 million and priced at 3.75% over swap.

Other markets
The momentum of the Australian dollar slowed a little, but it still managed a rise of 0.4% against the US dollar, finishing the week at US$0.925.

Oil prices rose again. The West Texas Intermediate (WTI) crude oil price finished the week over US$80, up 1.9%.

Share market performance continued to be a little rocky. The Australian S&P/ASX 200 was up 0.5% and the US S&P 500 was down 0.7%.

The week ahead
The Australian inflation figures released on Wednesday will be important for the Reserve Bank in determining monetary policy next month.
Further housing data is out in the US with the release of existing home sales figures and the S&P/Case Shiller house price index.

Posted via web from Market View | Comment »

Moose Cafe in Newtown

Sat, 24 Oct 2009 13:26:52 +1100

Posted via web from sean carmody’s posterous | Comment »

Mainstream Media Exposure

Fri, 23 Oct 2009 15:16:19 +1100

In today’s Sydney Morning Herald Richard Ackland had a piece about asylum seekers with a reference to the Stubborn Mule. I may be a new media aficionado, but it was still a very pleasant surprise.

Posted via email from Stubborn Mule | Comment »

Review of the markets for the week ending 16 October 2009

Tue, 20 Oct 2009 08:53:46 +1100

The Reserve Bank governor continues to convince the market that cash rates are heading higher. Meanwhile equity markets continue to rise. Oil prices were also up.

Economic data
While Tuesday’s NAB business confidence index declined 4 points, Wednesday’s Westpac-Melbourne Institute consumer confidence release saw the index rose 1.7%, reaching its highest level in over two years.

Reserve Bank Governor Glenn Stevens gave a speech in Perth on Thursday. Hawkish comments such as “interest rates need to be adjusted to a more normal setting” combined with the strength of consumer confidence the day before, led markets to price in a high probability of a 0.5% rate hike in November.

The October reading of the Investors Business Daily consumer confidence index was down 3.8% on the previous month. Retail sales fell 1.5% in September and, while this was somewhat better than forecasts for a 2.1% fall, the decline largely reversed the growth in sales in August.

US CPI for September was exactly in line with expectations, rising 0.2%, compared with 0.4% the month before. This brings the inflation rate for the year to -1.3%. Inflation excluding food and energy was also 0.2% for the month, but the rate for the year is positive at 1.5%. Industrial production for September rose 0.7%, beating expectations of a 0.2% rise. Since the “cash for clunkers” program was almost certainly a factor driving this figure, production may fall back in October.

Rates

Following Stevens’ comments, the market is now pricing in a cash rate of 5.38% in 12 months’ time, up 0.35% from the week before and up 0.78% from a month ago. The 3‑10 futures curve steepened 6.5 basis points. Two‑year government yields rose 0.29% and 10‑year yields rose 0.36%.

US short-end rates rallied in response to the weak economic data. The market is now implying a Fed funds rate 12 months from now of less than 1%, a fall of 0.43% over the week.

Credit
Credit performed well over the week. The Australian iTraxx (series 12) rallied 11 basis points, while AAA-rated bonds spreads were largely unchanged and BBB‑rated bonds rallied an average of 11 basis points.

US CDX high-yield tightened 33 basis points. US CDX and euro iTraxx investment‑grade were both in 4 basis points.
Unlike recent weeks, the primary bond market was rather quiet, but an auto asset-backed deal was brought to market.

Other markets
The US dollar continued its decline, falling against all major currencies other than the Japanese yen. The Australian dollar finished the week up 0.71% at US$0.921.

Gold traded up and down in a 2% range, but finished the week unchanged at US$1,049/oz. Oil prices were very strong and the WTI crude oil spot price was up 9.4%.

US equities wobbled mid-week, but the S&P 500 managed to close up 1.9% despite falls on Friday. Australia’s S&P/ASX 200 was up 1.8%. The Nikkei 225 was up 2.4%. European markets were weaker and the UK’s FTSE 100 was only up 0.5% for the week.
The week ahead
The October minutes of the Reserve Bank board meeting are out and they will be closely scrutinised for hawkish sentiment. The Westpac leading index data for August is released on Tuesday, as is new motor vehicle sales data for September.

US housing starts for September will be released on Tuesday and the FHFA monthly house price index is out on Friday. The Federal Reserve will also be publishing its “Beige Book” commentary on economic conditions.

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Excellent @Pollytics post about "push vs.pull" for asylum-seeker numbers

Mon, 19 Oct 2009 13:38:17 +1100

via blogs.crikey.com.au

An excellent piece of analysis showing that the number of asylum-seekers arriving in Australia is dominated by the “push” factors of conflict around the world, not domestic “tough stance” policies.

Posted via web from sean carmody’s posterous | Comment »

And now asylum-seeker league table ranked by economy size

Sat, 17 Oct 2009 10:06:39 +1100

I suppose it was inevitable that I would be asked to follow up the asylum-seekers per capita league table with a ranking by Gross Domestic product, so here it is.

Posted via email from Stubborn Mule | Comment »

Climate change and warfare correlation chart from The Economist #charts #climatechange

Fri, 16 Oct 2009 06:31:05 +1100

via economist.com

Increasing temperatures used to be negatively correlated with temperature: people fought less when it was warm. More recently it’s the other way around (just).

Don’t like the inverted scale and the lack of negative signs.

Posted via web from Stubborn Mule | Comment »

New Zealand has the best universities money can buy

Wed, 14 Oct 2009 14:47:56 +1100

Yesterday I concluded that Switzerland has the best universities in the world, after tweaking the results of the Times Higher Education university league table by accounting for population. I also claimed I would not get carried away and analyse the data any further, but @TheJamesGlover requested a ranking adjusting for the wealth of each country, as measured in terms of Gross Domestic Product (GDP). I relented and this chart is the result and it has New Zealand pushing Switzerland down into second place. Make of that what you will.

Posted via email from Stubborn Mule | Comment »

More from the OECD: Australian pension funds have the most aggressive asset allocation into equities

Wed, 14 Oct 2009 09:06:15 +1100

via oecd.org

I would say that the dominance of “defined contribution” rather than “defined benefit” schemes in Australia goes a long way to explaining this phenonemon. Individuals take the risk on how big their eventual pension will be and respond to this risk by trying to grow their nest egg as rapidly as possible. By contrast, around the world, pension funds with defined benefit schemes see their risk as one of liability management and, in particular, worry about their exposure to interest rates and inflation and so make greater use of bonds.

Hat-tip again to @dannyyee for the link.

Posted via web from Stubborn Mule | Comment »

Australia ranks fourth in the world in size of pension funds (hat tip @dannyyee)

Wed, 14 Oct 2009 08:17:57 +1100

via oecd.org

Posted via web from Stubborn Mule | Comment »

Does Switzerland have the best universities in the world?

Tue, 13 Oct 2009 16:33:27 +1100

Here is a snapshot of the top 10 places in the Times Higher Education ranking of the top 200 universities in the world. Don’t be deceived by the lack of Swiss universities in the top 10, for Switzerland may have the best universities in the world, at least that’s the conclusion of some data-mining from the Stubborn Mule.

Posted via email from Stubborn Mule | Comment »

What Will Drive Markets Higher (or Lower)?

Mon, 12 Oct 2009 10:06:46 +1100

I just published a post about “cash on the sidelines” being a bit of nonsense. Here is another take on the same subject from the “Sorry to Confuse You (with the Truth)” blog. It takes a stylized example of trading comic books to make the same point.

Posted via email from Stubborn Mule | Comment »

Review of the markets for the week ending 9 October 2009

Mon, 12 Oct 2009 09:26:53 +1100

The Reserve Bank of Australia raised the cash rate 0.25% to 3.25% and employment was up. The Australian dollar rallied against the US dollar and equity markets were strong.

Economic data
The Reserve Bank of Australia surprised many market observers by raising the target case rate by 0.25% on Tuesday. Two days later, in an apparent vindication of the RBA move, the Bureau of Statistics reported a rise in employment for September of 40,600 when the median forecast was for a fall of 10,000. Coming on the heels of the surprising poor employment release in the US the week before, this highlighted the differing economic fortunes of Australia and the US.

Continuing its downward trend, US consumer credit fell by $12 billion in August. While $2 billion worse than expected, it was better than the $19 billion fall the month before. There was some small comfort in a 0.1% rise in US ICSC chain store sales for the 12 months to September, the first annual rise since August 2008. Initial jobless claims for the week ending October 4 also showed some improvement.

Retail sales in Europe were down 0.2%. While better than most forecasts, this continues a two‑year pattern of weakness.

Rates
Interest rates were up across the curve along with the cash rate. The two-year government bond yield was up 0.32% and the 10‑year was up 0.12%. The 3‑10 year futures spread flattened 16 basis points.

US rates traded up and down through the week. Two and 10‑year government yields closed up 0.04%.

Credit
Like equity markets, credit performed better than the week before. The Australian iTraxx series 12 rallied 21 basis points and series 11 was in 16 basis points. The US CDX high‑yield index tightened 40 basis points and investment‑grade was in 5 basis points. Euro iTraxx was in 7 basis points.

Australia saw further bond issuance during the week. The Bank of Scotland issued government‑guaranteed fixed and floating rate 15‑month bonds at a margin of 0.20% over swap. AAA-rated supra-national IBRD priced 5‑ and 10‑year bonds totalling $1.6 billion. Meanwhile CBA raised US$4 billion in debt in the US, issuing three‑, 5‑ and 10‑year bonds.

The arrears rate for Australian prime RMBS fell to 1.3% in July from 1.4% the month before, while arrears for sub-prime RMBS fell from 13.6% to 12.7%.

Other markets
It was another week of weakness for the US dollar, which fell 1.4% against the euro. This weakness combined with the RBA rate hike pushed the Australian dollar up a dramatic 5% against the US dollar to US$0.906.

Equity markets more than made up for the previous week’s falls. The S&P/ASX 200 was up 3.3% for the week, bringing it up 5.1% over the last month. The S&P 500 was up 4.5% and even the Nikkei 225 managed to rally 2.9%.

In a volatile week for oil prices, WTI crude finished up 2.5% at US$72 per barrel. Gold was strong throughout the week and finished up 5% at US$1,047/oz. The broad CRB commodity index rose 0.8%. The Baltic Dry index was up 14%.

The week ahead
In Australia this week, NAB will release its business conditions and business confidence indices. The Westpac-Melbourne Institute consumer confidence index is also out.

In the US, retail sales figures will be published on Wednesday and inflation figures follow on Thursday.

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Marrickville cake shop

Sat, 10 Oct 2009 20:48:58 +1100

See and download the full gallery on posterous

Bought some treats here for lunch with @cbishops and @TheButlerEdit.

Posted via web from sean carmody’s posterous | Comment »

Try just entering “I”….and you get “I...

Thu, 24 Sep 2009 20:13:00 +1000

Try just entering “I”….and you get “I don’t believe this shit taoism”. The internetz are a funny place.

pufflepie:

rainbowtatt:

pufflepie:

snuff-d-rooster:

What’s wrong with you Australia?

Erm….nothing wrong with us. It’s fun to be a dinosaur and pray to a god of your own furry understanding. Who are you to judge with your freaky green avatar? Huh???

Just googled I LIKE TO to be sure that’s legit. and it totally is. lols!

Candle Power

Thu, 26 Mar 2009 13:28:07 +1100

In preparation for Earth Hour, here is some maths on the carbon emission of candles and light-bulbs.

Each hour a small candle burns about 2 1/2 grams of candlewax, containing over 2 grams of Carbon, producing 1 candlepower of light and 7 grams of CO2. So 40 candles will produce about 280 grams of CO2 each hour.

The much maligned and soon to be outlawed 40W incandescent bulb which produces the same amount of light as the 40 candles but accounts for production of about 40 grams of CO2 each hour at the power house.

A 7 Watt energy saver fluorescent bulb also produces the same amount of light while accounting for only 7 grams of CO2 each hour.

So for comparable lighting, candles produce 7 times the CO2 of incandescent bulbs or 40 times the CO2 of fluorescents.

Data used in the calculation:

Light output of a candle is 1 unit of candlepower
Light output of 100W incandescent bulb is approximately 100 candlepower, and a 40W bulb approximately 40 candlepower
A 14W compact fluorescent (energy saver) bulb has the light intensity of a 75W incandescent bulb and so a 7W compact fluorescent bulb has light output of approximately 40 candlepower
Candlewax has close to 5/6 carbon by weight
A small candle burns 2.5g wax per hour or more than 2 g carbon/hr
Power stations make CO2 at the rate of 1kg/kWh or 1 g/Wh

Gary Numan. Godfather of Electronic Music.

Tue, 10 Mar 2009 22:35:53 +1100

Gary Numan. Godfather of Electronic Music.

Tumblin from the iPhone

Tue, 10 Mar 2009 22:35:03 +1100

Tumblin from the iPhone