Housing values continued to rise in March (CoreLogic)

Slowdown arrives

Early in March housing market activity was running hot, giving rise to further price gains over the month.

However, transactions were stalling by the latter half of the month as open homes and auctions are no long permissible due to restrictive COVID-19 regulations.

The +0.7 per cent increase was already the slowest growth for a year.

Sydney led the quarterly gains with an increase of +3.9 per cent.

Source: CoreLogic

The full report from CoreLogic is here.

Scout's honour

Value versus growth

Today we discuss sectors which will be well placed for the decade ahead.

See here for more (or click on the image below):

A few new clusters

COVID-19 update

Another 11,278 Coronavirus tests were carried out in Australia today, taking the total to 244,359.

Aussies have one of the highest testing rates in the world.

Today there were 309 new known cases reported, taking the cumulative total to 4,559.

There have been a couple of new notable clusters, including a spike at Adelaide Airport, with half a dozen baggage handlers reportedly having tested positive.

Airports do seem to be a key risk area, alongside cruise ships, of course, with several new cases today linked to the Ruby Princess. 

So this isn't enough to change the trend just yet.

But still there was no real deterioration again, today with new known cases tracking lower than 8 days ago. 

Stay safe everyone!

China gets back to business (V-shaped recovery)

Credit limps along

A quick look the now largely redundant credit aggregates for February 2020.

Private sector credit growth limped higher to +2.79 per cent for the 12-month period.

There was a considerably better two-month period for business credit growth, with a +0.9 per cent reading for February, following on from a decent result in January. 

The personal credit growth figures are questionable in  terms of what they actually capture these days, but in any case remained massively negative. 

Housing credit growth was flat at +3.17 per cent as the bushfires raged, following a period of recovery.

Investor credit growth was still in negative territory, although homebuyers were very active.

As such there was considerable price momentum heading into March.

So much so, in fact, that CoreLogic will report further price growth for this month, and +9.1 per cent price growth for the capital cities over the year to March 2020.

The housing price growth was led by Sydney (+13 per cent) and Melbourne (+12 per cent) over the year to March 2020, ahead of the shutdown. 

As March has rolled on Australia has headed into a near-lockdown, and property transaction numbers will now sink into a deep freeze.

That said, recent COVID-19 figures have been surprisingly positive, giving hope that we may face only the short, sharp shutdown scenario.

China back in business

Well, well, well...what a turn-up, as China's PMI activity gauge fairly roared back to life in March!

The manufacturing reading of 52 comes after just 35.7 in the preceding month, for a classic V-shaped recovery.

The non-manufacturing gauge was even more startling, ripping from 29.3 to 52.3 in a single month.

The sceptics may say that there's been some gentle 'massaging' of these figures - the most sprightly since 2012 - and perhaps with some justification.

Don't forget, though, that the gauges measures relative expansion rather than absolute output, so compared to the previous month's shutdown the strong expansion is likely justified. 

Regardless of the small print, with a marked improvement in the growth of daily new cases in COVID-19 from Italy to Germany to Spain over recent days, there's a growing sense of optimism that the world can get on top of the situation as China has done.

The figures from New York continue to horrify, however, and serve as a cautionary note. 

Value investing through a crisis

Searching for value

Today, we take a look at starting to look around the traps for value in a crisis.

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Morrison unleashes $130 billion in JobKeeper payments

Stimulus to deliver

The Prime Minister just announced the third stimulus package, being an unprecedented $130 billion in JobKeeper payments.

Here are the initially discussed terms:

$1,500 per fortnight is about 70 per cent of the median Aussie wage, and the payments can apply to full time, part time, and casual workers with at least one year in their job, as well as sold traders with no employees.

Last week the JobSeeker payment (formerly Newstart) was also doubled to $1,100 per fortnight.

Businesses with a turnover dropping 30 per cent since March 1 (or 50 per cent for business with a $1 billion plus turnover) will be eligible for the subsidy.

This is tremendous news for workers in the gig economy and other recently stood down workers.

6 million Aussies are expected to be eligible for the payments.

This could result in shorter-term cashflow challenges for some businesses, but it's a huge move, and a very positive one.

Interestingly this could actually result in a payrise for some casual workers, especially many of those in retail and hospitality (where the bulk of stood down workers presumably lie).

And this will make marked difference to the feared huge spike in the unemployment rate, so the Morrison government deserves credit for that, even if the details of the bill do prove to be a little rough around the edges.

Obviously, you can't be classified as unemployed if you're still receiving pay from a business.

Market bounces

Moody's sounded remarkably chilled about the AAA-rating, and markets seemingly liked this news a lot. 

The Aussie 10-year yield moved up a little.

Another positive development today was the lower reporting of new cases of COVID-19.

It looks like things are on track for another materially lower figure today, with a total of 266 new cases.

This is well down from 459 two days earlier, and the lowest daily result since nine days ago on March 21.

Whether this is actually due to positive behavioural changes or it's just an anomaly remains to be seen, but long may these improvements continue. 

State governments are not holding back here, however, continuing to incrementally tighten measures to restrict travel and social gatherings. 

The Aussie ASX 200 fairly ripped into the close - and into during the closing share price auction - on Morrison's announcement to be up by an enormous +7.00 per cent today.

This was the biggest daily increase on record for an ASX, and by a massive 1.22ppts margin (h/t @Scutty):

It's not a surprise that the fastest bear market will see some of the biggest daily rallies, but even so this was a ripsnorter.

Australia needs to build a bridge to the 'other side' of COVID-19, and today was a promising first, ah, pylon.

Kudos to Morrison and Frydenberg for delivering the goods. 

Stormy waters (oil back at a 17-year low)

Oil plunges anew

After a relief rally, the oil price has dropped back towards new cycle lows as the Coronavirus threatens to lead to a prolonged slump in demand.

A few more buying opportunities looking likely this week. 

The price of Brent Crude is now -67.2 per cent below its January highs (h/t @Scutty), and we're staring at the lowest price level in 17 years. 

Some analysts think that the oil price could hit $10/barrel over the coming months, which from my perspective would represent 'back up the truck' territory.

In other interesting twist, Rob Rennie of Westpac reported that this will the strongest month on record for Aussie iron ore exports (as measured in mt), as China gets back to business.

When we come out the other side of COVID-19 the resources sector looks a likely winner.

Stage 3 rolled out

There have been some more promising numbers for New Zealand and Australia on new cases of the virus.

The short, sharp shutdown looks likely to be the base case strategy to flatten the curve and buy valuable time for medical centres and hospitals.

Victoria ramped up its response to Stage Three, with spot fines of up to $1,600 for social distancing breaches, while gatherings of more than two are no longer to be allowed (excluding members of the same household).

Queenslanders now also face $1,300 spot fines for breaches. 

I discussed some of the other possible measures here. ]

It's all happening. 

How's your 2020 going so far?

A flicker of brighter news?

Testing ramps up

Australia has been ramping up its testing for COVID-19, with 22,154 tests reported as undertaken today.

There's a still selection bias at this stage, with a focus on imported cases.

Most of us don't or won't get tested unless we've knowingly come into contact with a traveller with the Coronavirus.

Still, at a total 228,054, Australia's rate of testing per capita is amongst the highest. 

Today a further 344 cases of COVID-19 were reported by 7pm, with more than half of those being located in New South Wales as cruise ship entries continue to show up in the figures. 

The equivalent figure yesterday was 460, and interestingly today's final result looks as though it could yet be about as low as we've seen for six days, which seems to be an anomalous result for a highly contagious virus (which one might generally expect to show an exponential increase in these early stages). 

Now, before anyone pops a champagne cork (or opens a now-rationed case of premix) there are a few other problems with these figures.

Firstly, test results may take 72 hours or more to be conclusive, so what we're seeing reported here doesn't equate to real time actual cases, but rather a snapshot of known cases based on a sample of tests undertaken some time ago. 

Furthermore, Australia was dismally slow to react initially, with travel from Italy only banned 18 days ago, and the controversial 'footy games' discussion taking place as late as March 13.

Given that people were still congregating en masse on Sydney's eastern beaches on March 20, and elsewhere even beyond this point, we might expect to see the ramifications of this flowing through over the next two weeks. 

Still, looking forward we should now at least be seeing some benefit of the travel ban and reduced travel more broadly.

And any day with a result like today, when looked at on a log scale, buys medical centres and hospitals valuable time, and brings us one step closer to flattening the curve.

Here's hoping for some more of the same this week, as we contemplate yet more time at home!