Aus macro

Building approvals

The building approvals data show our cycle rolling over before the rates have even gone up!

This is said somewhat tongue-in-cheek, given we did have a fair amount of pull-forward stimulus in there (e.g. HomeBuilder).

By value, the data is much closer to trend, given price appreciation of everything to do with property and building more generally.

Still, the above would appear reflective of cyclical challenges now bubbling away, which could be quite problematic if the RBA needs to tighten, due to budding inflationary pressures (imported or otherwise!).

We are sectorally positioned away from some of the pointer parts of the market (such as consumer discretionary) and in general are running a very low beta (closer to .85) at the moment.

Private sector credit

Today’s credit data shows a solid lift for business credit, with housing year on year data still generally elevated, even if cooling somewhat at the margin.

Generally speaking, I would have thought the banks would trade a little better today, given the below, however, the overall market is down, and the financials are being pulled lower by the insurers (likely on the back of a broker note expressing the view that climate change will weigh more heavily on insurance underwriters than their present market caps permit).

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