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Monday, May 20, 9:47 AM UBS' 5 "suspected" asset bubbles: 1) Risk-free rates - specifically Treasurys (TLT), Bunds (BUND, BUNL), JGBs (JGBL, JGBT, JGBD, JGBS) 2) Credit (HYG, JNK) 3) Real estate in Asia (WPS) 4) Certain EM equity markets (EIDO, IDXJ, EPHE, THD, EWW) 5) Australian banks (WBK, NABZY.PK, ANZBY.PK, CMWAY.PK). Comment!
Monday, April 8, 3:23 AM The Australian dollar will this week become the third currency to trade directly with the yuan as China continues the internationalization of its currency. The country's central bank has granted ANZ (ANZBY.PK) and Westpac (WBK) the rights to trade in the dollar and renminbi. With China being Australia's largest trading partner and buying over 25% of its exports, the move should help cut trading costs. Comment! [Global & FX]
Thursday, May 3, 2012, 7:28 AM "The biggest bubble in recent history is heading for the mother of all hard landings," writes SocGen's Albert Edwards, tagging onto his bearish partner-in-crime Dylan Grice's analysis of Australia. Channeling Minsky, Edwards notes the lack of volatility in Oz's economy (no recession since 1991) leads to an excessive build-up in debt and a "bigger crash down the road." 1 Comment [Global & FX]
Tuesday, May 1, 2012, 10:59 AM Among Australia's troubles are banks that can't pass on RBA rate cuts (50 bp last night) because - reliant on overseas markets - the lenders' funding costs are on the rise. "Infatuation" with Oz's debt (foreign ownership gov't bonds is skying) may be propping up the aussie, writes Anthony Doyle, but not for much longer. FXA -0.7%. Comment! [Global & FX, Financials]
Wednesday, April 25, 2012, 4:43 PM Answer: Australia. Question (courtesy of Dylan Grice): "What do you call a credit bubble built on a commodity bull market built on a much bigger Chinese credit bubble?" The country has 5 of the world's most 15 expensive cities, runs a current account deficit despite booming commodity sales to China, and has seen a steep rise in debt/income. Shares: EWA +10.9% YTD, the aussie: FXA +1.1% YTD. 2 Comments [Global & FX]
Wednesday, April 18, 2012, 3:01 PM Might Genworth's (GNW -21%) delay of its Australian mortgage insurance business IPO be ringing a bell for the Oz property market? The company cites deteriorating market conditions in the Aussie mortgage market "as lenders accelerated the processing of late-stage delinquencies ... at a higher rate and severity than expected." Westpac WBK -1%. 1 Comment [Financials, Global & FX]
Friday, February 10, 2012, 6:36 AM Also weighing on Oz, Westpac (WBK) and ANZ (ANZBY.PK) both hike mortgage rates even with the RBA in the midst of an easing cycle. Australian banks are unusually dependent on overseas funding markets, and find their margins being squeezed. "The RBA's cash rate alone in not an accurate reflection of bank funding costs," says ANZ. (previous) Comment! [Financials, Global & FX]
Tuesday, January 31, 2012, 7:17 AM Australia's major banks - needing to raise $100B in 2012, dealing with a reversal in the country's bubbly property market, and facing an economy gasping for air in all but the mining sector - have been put on negative ratings watch by Fitch. The good news is the RBA's 4.25% benchmark rate - there's a lot of room for funding costs to decline. Comment! [Global & FX, Financials]
Friday, December 16, 2011, 9:09 AM Apache (APA) reportedly strikes a deal with Australian and New Zealand Banking Group (ANZBY.PK) to buy a 65% stake in ammonia producer Burrup Fertilisers. The conditional deal could be worth close to $600M and is at a discount to an offer by Wesfarmers (WFAFY.PK) made last year of close to $800M. Comment! [Energy]
Wednesday, May 25, 2011, 10:22 AM Australian banks continue to underperform a weak stock market in Oz, with some of the majors down more than 10% during May. More than other lenders, Aussie banks rely on wholesale funding as opposed to deposits, making them quite sensitive to the recent "risk off" vibe of global markets. Comment! [Global & FX, Financials]
Monday, May 23, 2011, 5:25 PM Last week's downgrade of Australia's banks has put a bullseye on their back for hedge funds to shoot at, says a fund manager. "If (they) target one bank from the short side, it will be Westpac (WBK -4.3%). Off 15.7% in the last month, Westpac's shares are still 22.5% higher Y/Y. Comment! [Global & FX, Financials]
Wednesday, May 18, 2011, 7:13 AM Moody's downgrades Australia's four major banks, saying they are too reliant on overseas funding. "The GFC has underlined the speed with which shifts in investor confidence can impact bank funding." Bank shares are unaffected, but the aussie is lower, -0.3%, despite a "risk on" day. Comment! [Global & FX, Financials]
Monday, May 16, 2011, 4:39 PM The downturn in Australia's housing market has real estate types researching the U.S. circa 2007 for cliches with which to lure customers. "It's definitely a buyer's market," says an agent as the number of homes available in Melbourne doubles while the pace of sales drops. "We are likely to see considerable price falls," counters a research group. 3 Comments [Global & FX]
Tuesday, May 3, 2011, 7:27 AM Australia begins to say "uncle" to the continued surge in its currency, as chatter begins regarding intervention. "We're seeing the worst trading conditions experienced in the last 30 years," says the head of a tourism council. Shares -0.85% last night, down nearly 5% the last 3 weeks. Aussie -0.6%. Comment! [Global & FX]
Tuesday, April 19, 2011, 11:08 AM In order to get borrowers into mortgages, Australian banks have been plugging cost of living assumptions well below the poverty level into their qualification models. It's not quite NINJA, but the practice would make New Century proud. 5 Comments [Global & FX, Financials]
Wednesday, April 13, 2011, 12:13 PM Cracks being to emerge in one of the planet's frothier real estate markets as Australia sees isolated (thus far) areas of weakness. Queensland's Sunshine and Gold Coasts are seeing a sharp slowdown in sales, falling prices and plenty of inventory. Nationwide, prices are still holding onto the flat line. 1 Comment [Global & FX]

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