Delivered on

All-in on housing

Good morning! Today's theme again centres on housing, namely Australia's obsession with it. It's working out all right so far but the risks are certainly growing.

Speaking of risks, the government (all levels) hasn't done a very good job at mitigating them at our quarantine facilities. Yesterday there was yet another case of community transmission, this time a man aged in his 50s in NSW. Worryingly, no one yet knows from where he caught it (genome sequencing is underway), he was "very active" in the inner east of Sydney and had "a high viral load, potentially making him more infectious than average". 😬🤞

Market Wrap

Daily % change

AUD/USD

77.5

0.5%

10Y Bond

1.69

-1.3%

ASX200

7,096

0.4%

Brent (bbl)

68.7

-1.0%

Gold (oz)

1,788

0.5%

Iron ore (t)

186.8

0.7%

Bitcoin

56,951

3.8%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

The US S&P500 (+0.07%) closed marginally higher overnight after Treasury Secretary Janet Yellen 'clarified' her comments on interest rates, echoing Fed chair Powell that she expects any increases in inflation to be 'transitory'. No doubt there would have been more than a few panicked phone calls to the dear Secretary after her inflation comments yesterday.

A big bank gets bigger: Following closely behind Westpac's stellar March quarter earnings report comes ANZ, which saw cash profits increase by 126%, after "all parts of our business performed well". ANZ wrote 92,000 new home loans during the past two quarters while also boosting its net interest margin by repricing deposit interest rates lower (RIP savers).

The great reopening: The US trade deficit increased 5.6% to an all-time high of $US74.4 billion in March. The deficit was driven by a 6.3% increase in imports, with goods imports particularly strong at 7.0% ($US234.4 billion, also an all-time high). It seems those stimmy cheques are helping to prop up China's economy, too (imports of consumer goods were also the highest on record, with China accounting for 17.0% of total imports, the most of any country).


Data Wrap

All-in on housing

Building approvals are at an all-time high in terms of value, with the number tantalisingly close.
Building approvals are at an all-time high in terms of value, with the number tantalisingly close. ABS

Hot on the heels of yesterday's lending finance comes building approvals data, with the ABS reporting a 17.4% increase in March. Not as strong as February's 20.1% rise but still damn impressive, with private housing approvals now up 71.9% since June 2020.

A stimulus pull-forward: What do you get when you combine record-low interest rates, time-limited government housing stimulus and Australia's obsession with property? FOMO, with ANZ – one of the big four lenders – even having to tone "down the marketing because we've got enough business to keep us busy".

Fear the pull-back: The government's HomeBuilder stimulus is in place until the 14th of April (at a reduced rate), with construction required to start within 18 months from the signing of a building contract. That means there's likely going to be a decent amount of construction in the pipeline for the next year or so but beyond that something else needs to fill the void... like a rapid global recovery and mass immigration? 🤷‍♂️

The Wrap Up

  • One rule for thee, another for me: Quarantine Victoria's general manager of infection prevention and control, Matiu Bush, was stood down after The Australian obtained confidential ­reports showing he breached ­his own infection-control protocols – "I'm the head of IPC and I override that protocol" – on at least two occasions.
  • Melbourne and Sydney saw people more leaving for other Australian destinations than moving to them in 2020, with the cities of choice being Brisbane, Perth and Canberra.
  • A real disruptor! Trump's new social media platform is... "essentially just a WordPress blog" on his personal website. It was launched just prior to Facebook's oversight board upholding his suspension from the platform.
  • Protocol is providing constant updates from the ongoing Epic vs Apple trial. For those out of the loop, Epic (maker of the popular game Fortnite) is suing Apple over its 30% app store commission fee. The trial could run for multiple weeks, so buckle up. 🍿
  • Elon Musk's Starlink (a global space-based broadband network) now has over 500,000 preorders. However, a word of caution: Musk has a history of drumming up headlines with fully refundable preorders.
  • Japan's government is considering extending a state of emergency in Tokyo, Osaka, Kyoto and Hyogo prefectures beyond 11 May. Only 78 days until the Olympics... ⌛

All-in on housing was brought to you by Justin Pyvis. Forwarded this issue? Click here to subscribe.