Econ Grapher

Macro
Econ Grapher
Macro
Contributor since: 2009
Company: Econ Grapher
Outsource retirement to China...
Spot on, you can confirm this by looking at the structural current account deficit.
High payout ratio? NZ stock market has traditionally been a high dividend market. Also the listed property sector likely plays a part in skewing/keeping the rate up.
migration stats: http://bit.ly/MiI6kK
Thanks for the comment.
In terms of migration, check the "international travel and migration" stats. There is indeed a persistent outflow to Aus (no visa requirements for NZ citizens, warmer weather, better opportunities etc), but at the same time we have positive net migration as poms/europeans and Asians more than make up for the loss of those chasing the greener (browner) grass in Australia.
Re earthquakes: probably similar risk level to Japan and various other countries on/close to fault lines. There is some work being done in chch, not to the extent expected yet, it may end up that various satelite cities are built instead of one big city, but there is the cash from insurance and govt budget to get something underway, but yes the ground still moves, check: http://www.geonet.org.nz
Absolutely, you should also check out "bigger than enron" - its about Enron's auditors
how'd you come up with 70% ... seems a bit of a stretch to me
Good point - I'll work on getting some volume stats together for the next report
Thanks for the insight Michael, I had suspected as much, I would have preferred to show a higher frequency inflation chart to show the spike, though the interest rates do in some sense give an appreciation for it...
Thanks for the helpful comment
A key driver of China's investment is securing copper supplies...
and there tends to be a bit of a spike towards the end of the year (christmas sales)
I'll look into that, might do a separate piece on the details
The more I look into it the more I think that in -aggregate- there is no major bubble, but there are a few cities where prices have gone a bit crazy e.g. Beijing, Shanghai, Shenzhen ... but yeah, analysis is still work in progress, I plan to look at income levels vs property prices soon...
I'm not sure, but one could argue that keeping the Yuan artificially low may be encouraging hot money to flood in - anticipating that eventually the Yuan will rise. I'm not sure how high the Yuan would need to go to help with inflation, but I do know that a stronger currency is kind of the opposite of inflation (i.e. a weak currency requires more units of that currency to buy something than a stronger one)...
Speaking of China's monpol...
People's Bank of China Raises Reserve Requirements Another 50bps to an average 20.5% dlvr.it/NpPL0
Hmm, property, the devil's wine (or perhaps the devil's moutai in this case). China's monetary policy moves are primarily aimed at consumer prices (which does have a property component, but...). Of course China would probably prefer that property prices were affordable (and they are doing things like a massive scale build-out of social housing (10m+ units per year over the next couple of years)) - particularly as it pertains to social stability. But it is more than happy to accept the short-term wealth effects of rising property prices and strong demand. First off it helps individuals and certain private enterprises to gain from investment, but more so it is the golden goose for local government entities (i.e. how do you keep taxes low and still fund infrastructure etc, simple; sell land). But my reading is that they are taking more measurable steps to rein in property prices a bit, mostly with very hands-on regulations (though in China it seems selective enforcement of rules or flouting of rules is somewhat common - that said, once it comes into government focus things tend to get moving). But yeah word of warning too - you can't read too much of the US situation in housing crises into the China market because of the markedly different lending ratios. China's property price boom is not as credit driven as the US was, so I would certainly tread with caution but I wouldn't predict doom either...
I haven't seen that ICOR one before - I will look into that, thanks for the tip.
As for the others, I did my usual top 5 graphs on China which has that data here:
www.econgrapher.com/to...
Also here's a listing of recent graphs on CHina data:
econgraphergraphs.blog...
Simple answer: financial liberalisation, i.e. vis a vis the Yuan
Actual answer: hmm don't know - there's all manner of controls you can apply e.g. financial taxes (ala Brazil), but then those are hardly optimal.
Hmm, I try to use a few different sources when I can - e.g. non-government data such as the HSBC pmi, manpower employment survey etc etc. But I don't believe it is in China's interest to release blatantly false information. I do acknowledge that methodology changes in CPI and property price reporting may be potentially distorting at the margin though.
Hi Dzog, thanks for that I will have a look at that website. As for the "part" one way you could try approximating it would be to get the detailed breakdown of job changes by industry and label certain industries (or portions of industries) as a key source of structural unemployment - the key ones that come to mind would be things like auto manufacturers (it's just not sustainable/sensible to compete against low cost manufacturers in the emerging markets, so that's an industry that will have to reallocate), another would be some of the complex of businesses that grew out of the housing and credit boom. But as for measuring the precise amount it is a hard thing to do - you're trying to find the unemployment that is a result of broken business models and redundant functions....
Interesting - yes it was always going to be a twig that wouldn't take much to snap...
Well they did it, a full 50bp cut
here's some analysis on the decision:
seekingalpha.com/artic...
All I can say is holy cr@p, congrats to anyone lucky enough to snag any of these returns!
Thanks for the interesting comment.
I'd be inclined - from a surface level analysis - to label Saudi and Iran oil risks as tail risks... it seems Saudi Arabia is subduing the masses with friendly policies e.g. subsidies, while Iran is more hardline in subduing protests. I reckon the measures they've taken will paint over the cracks for now.
That said the MENA geo political risks can't be ignored - it's caused a risk driven spike rather than a growth driven spike in oil prices so it may well lead to a correction in developed market equities, as well as energy importing emerging markets.
I agree on the 'buying the dips' point about China, a further sell-off in Chinese stocks would probably make for good buying; assuming the long term fundamentals story holds. Even from my trips to China the growth story feels pretty compelling - it really is something else to see the pace of development there.
Agreed.
Even the PM is on the bandwagon now:
noir.bloomberg.com/app...
This is the real deal, HSBC put out a flash report a week ago. But yeah China PMI is pretty much always out on the 1st of the month.
Here's the google translated report:
translate.googleuserco...
Yeah, I think the RB will end up cutting the rate - if not just to avoid the inevitable questions they'll get if they don't do anything. Last I checked the OIS shows market pricing about -33bps (or something like 120% chance of a -25bp cut). So I'm pretty much in the camp of a rate cut now... still hard to tell if they go for the full 50 ... the simplistic argument is; if you're going to do something you might as well do something big.
On the fiscal side John Key announced a few measures today e.g. $500 per employee per week payment to businesses so they can pay their staff - set to be in action by Wednesday... There will surely also be more measures to come (another interesting one was a proposed PPP by an accounting firm to offer greatly discounted business advice and recovery services)
www.nzherald.co.nz/bus...
Yeah but the thing is monetary policy is to blunt a tool to address the situation - what you need is a targeted (ideally intelligent/smart) fiscal response. And it's looking likely they'll announce some stuff along those lines early next week, there's a lot of talk of a national earthquake levy (which would make sense I guess, if the government paid the entire bill then an S&P downgrade would almost be certain due to the additional time it would take to get back to surplus).
That said, the NZ economy is doing OK - but could be doing a lot better, so it wouldn't be a bad excuse to drop the rate...
So watch this space - oh and the next RBNZ meeting is on the 10th of March.
Most of the banks here have changed their call on the rate to a cut - pretty much all the forecasters are picking either a 25 or 50bp cut in the interest rate. Could end up being a sort of tail wagging the dog thing...
Still, it's probably not entirely appropriate to drop the rate - you need a more targeted response - only makes sense to drop the rate if it has a broader impact (rather than a regional impact).
Here's a few more stories:
www.nzherald.co.nz/bus...
www.nbr.co.nz/article/...
An individual can do algo trading (or quant trading), just not high frequency or low margin stuff....
You'll need a decent grounding in financial econometrics (i.e. advanced statistics - applied to finance), and programming skills would help (although advanced excel skills will suffice), and access to a lot of data, and ideally some grounding in financial theory/economics so that you're not just data mining (i.e. you look for patterns that are sensible, rather than coincidental), and the lower your trading costs the better - oh and you'll need enough capital to fund your strategy.
So quant trading can be done by individuals, but due to lack of access to market infrastructure etc most individuals would be best suited to more medium term strategies (you may be interested in TAA/DAA).
Just found the Q1 2011 reports... all countries, all reports here: www.manpower.com/press...
The China Q1 2011 report here: files.shareholder.com/...
a very slight drop in hiring expectations (down to 38% from 51%), but still at pretty high levels given recent historical data in this series...