Today I write (very short excerpt only): "Amidst the daily market chaos we can state a few things with certainty. First, the volatility of volatility (or the volatility of the VIX index in the US) is at a record high as investors struggle to figure out where fair value for... Show More
One of our best “short” (as opposed to “long”) ideas this year has been to bet that the credit spreads on residential mortgage-backed securities (RMBS) would widen—reducing their price—as a function of the toxic combination of falling house prices, rising defaults, surging supply and plummeting home loan prepayment rates. (We... Show More
I always think of periods of market volatility as manageable brush fires - while still causing market nervousness they’re actually better for the long-term market structure as they lower the risk of a serious bush fire. For the Australian market the latest ‘brush fires’ were the result of market nervousness... Show More
Today I review research that shows if Labor eliminates negative gearing and increases capital gains tax by 50%, national house prices could fall 9-12% on top of the current declines; parse new analysis from CoreLogic highlighting a spike in the share of apartment owners realising losses when they sell their... Show More
Today I argue that the Hayne royal commission's interim report is flawed in several respects that will force lenders to hike mortgage rates and reduce access to credit (click on that link to read the column): Show More
We have just published our August RMBS default index report, which you can download here. Key take-aways are as follows: Show More
Today I explain how ScoMo (and Turnbull) saved Australia's AAA rating, and in the process also saved borrowers from a certain 10bps per annum rate hike worth over $10,400 over the life of a typical home loan. Last week S&P shocked the market, but not us, by upgrading Australia's AAA... Show More
Today I analyse a case before the Federal Court where the judge has, thus far, refused to accept the joint submission from both ASIC and Westpac that Westpac should be fined $35 million for breaching Labor's new responsible lending laws because the judge cannot find any such breach. It is... Show More
This week I interview Tim Lawless, the head of research at Australia's largest real estate data company, CoreLogic, who says fears of a future Labor government eliminating negative gearing and doubling capital gains tax on housing (and equities) are one reason why house prices are falling as investors run for... Show More
Being able to measure and monitor the true level of mortgage delinquencies across an economy is essential for investors and regulators interested in asset pricing and financial system stability, amongst other things. Prior to the 2008 global financial crisis, rising mortgage default rates in the United States were an important... Show More
With tectonic plates shifting under the markets, we got in touch with three leading economists to get their number one chart in markets today. First up, Cameron Kusher, Principal at CoreLogic, tells us what the market’s been missing in residential housing. Next, Alex Joiner, Chief Economist at IFM Investors, looks... Show More
In the AFR I reveal that luxury home values are tanking, particularly in ultra-high-end beach-side suburbs like Sydney's Palm Beach, and then unveil our new hedonic regression index for mortgage default rates---a global first---that shows that RMBS arrears are increasing sharply in contrast to what the likes of S&P claims... Show More
In the AFR I assault the notion that the big banks are going to be threatened with irrelevance, nay disintermediated, by the various threats posed by fin-techs, blockchain, bitcoin, and/or the FANGs (click on that link to read for free or AFR subs can click here). Excerpt: Show More
The current 25-year credit cycle has seen Australian household leverage rates move to record levels versus all other developed markets. This degree of leverage is unprecedented in Australian history and is often a precursor to a major housing correction. Show More
Freely available credit has long helped fund a love affair with property investment, with Australian household leverage up 23 of the last 25 years. Hamish Chalmers from Watermark told us: Show More
An increasing number of data series have been turning negative for Australia’s housing market. Auction clearance rates, building approvals, housing credit growth, and even house prices themselves appear to have topped. Anecdotes are popping up of units being resold far below their original purchase value, or with significant incentives offered... Show More
In my AFR column I lean into the housing and banking debates, and give my old mate Jon Mott at UBS some more heat (click on that link to read for free or AFR subs can click here for direct access). Excerpt enclosed: Show More
I've been asked by a few clients why we exited our circa $250m position in AAA rated RMBS, which was a modest ~10% portfolio exposure that had performed brilliantly over 2017. The four charts below summarise why: house prices are falling; default rates are rising; supply of RMBS has surged... Show More
Despite the stronger than expected ABS housing data released yesterday, it increasingly looks like residential property prices peaked in late 2017. The bull market in property has seen prices rise from circa AUD $12,500 in 1970 to AUD $686,700 today, a total return of over 5000%. Show More
In my AFR column I explain the consequences of Labor leader Bill Shorten's proposed new taxes for shares, property and hybrids---it's worth noting that even the Greens appear to have a problem with the notion of king-hitting prudent retirees with the Greens' leader vocally criticising Shorten's desire to deny retirees... Show More