On Canadian and Australian bank risk

Banking sectors in both countries are highly concentrated. The top four banks in Australia account for about three quarters of the banking assets. The top six Canadian banks account for upwards of 90% of the Canadian banking assets. According to Fitch, the concentration and high profits of the banking sector is favorable to each as it provides a cushion against losses and need to pursue higher risk activity/lending.

Both Canada and Australia are experiencing over-valued housing markets. The IMF estimates Canadian house prices are about 10% risk while Australia is 10-15% over-valued

Seven Observations about Commitment of Traders in FX

The Commodity Futures Trading Commission requires futures traders to identify whether they have an underlying business interest (commercials) or if they don’t (non-commercials). Here are seven take-aways from the most recent report that covered the week through January 17th

Chart of the Day: Developed economies’ debt levels by sector

This is a great chart below via the Wall Street Journal. It shows the total debt to GDP ratios for the largest developed economies in the world broken down into four sectors: households, non-financial corporations, financial institutions and government

Edward Harrison’s Ten Surprises for 2012 (short version)

Yesterday morning, I did the first weekly newsletter on my ten surprises for 2012. Here’s a brief version of the list

[Premium] Edward Harrison’s Ten Surprises for 2012

Welcome to Credit Writedowns Pro. This is the first post in a series here. Let me start this Byron Wien-style and make a predictions list. Wien defines his surprises as events to which investors assign 1-in-3 odds of happening but which he believes have a more than 50 percent likelihood of occurring in 2012. That’s how I am playing it too

On the ECB’s Long-Term Refinancing Operation and 2012 macro ideas for investors

The end of year is usually a good time for markets. There was a lot of angst about the European situation a few weeks ago, but there is less of that now because we’re hitting year-end (tape painting). Does that mean the credit crisis situation is stable? No, but it has stabilised somewhat. 2012 will be a different story though. I talked about the European sovereign debt crisis and my themes for 2012 with Howard Green of BNN and Ryan Avent of the Economist yesterday. The link to the video is below but let me say a bit more, particularly about today’s LTRO by the ECB. I’ll try to be brief

Thoughts on Europe and the global synchronised slowdown

We are in a second synchronised global growth slowdown. Moreover, the policy response must be more muted this go round as the public sector is more indebted and has less policy space than in 2008 or 2009. Expect policy inaction followed by fits of volatility due to inaction. This points to a risk off a lot more than a risk on environment

Full Text: Moody’s revises rating outlook for Australian mortgage insurers to negative

Below is the press release issued by Moody’s in conjunction with the down grade of Australia’s mortgage insurers

Pending EU Summit May Curb Response to ECB

The dollar is trading slightly firmer ahead of today’s ECB rate decision and tomorrow’s summit. We expect the ECB to cut by 25bps, with a possibility of a 50bps cut; look to fade knee-jerk reaction. Australia’s employment much weaker than expected; Singapore imposes news taxes on homes

News Links: Draghi – If fiscal policy becomes hawkish, monetary policy will be dovish

News links from 2 December 2011 include links on the European sovereign debt crisis, the UK economy, the latest on mortgages and technology as well as other stories.

Jim Chanos on China, Hong Kong and Australia

Famous shortseller Jim Chanos was in Hong Kong and Australia and reported back on what he saw to Bloomberg Television. Copy provided below including a link to the video

Chinese coal now costs over $150 per ton again – huge gap to Australian prices

The Ministry of Finance is pumping money like mad into the weakened Chinese financial sector, over 1 trillion yuan, in order to shore it up from the souring of loans from all of the malinvestment over the past few years. If the Chinese succeeded in engineering a soft landing, Andy Lees believes the record premium for Chinese coal would disappear as Australian coal prices started to play catch-up