Smiles all around at the RBA: When the Reserve Bankers finish the institution’s 50th birthday tonight, there will be smiles all around, not though from the glow of the candles on the cake, or the after-dinner entertainment.  It will be the two stats out today showing that the RBA’s rate rises and talk of more to come, helped by the winding back of a key stimulus initiative, have had the desired impact in slowing home lending and winding back consumer confidence and expectations.

The Australian Bureau of Statistics today said that in seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions fell 2.8% in December, with a 5.7% fall in the number of loans to purchase existing homes and a sharp 6.4% fall in the number of loans to build new homes. But there was a 3% rise in the number of new loans to buy new dwellings, a sign that there’s still life in the first-home-buyers surge. Meanwhile the dip in consumer confidence in the latest Westpac/Melbourne Institute monthly survey for February still leaves it solidly positive. The Westpac-Melbourne Institute index of consumer sentiment fell 2.6 to 117.0 points in February, from 120.1 in January.

Hot Tip? Do you reckon Macquarie analysts are on to something? Bloomberg reported yesterday,: “Australian publicly traded companies may cut dividend payments more than $4 billion  as they wait for signs of a stronger improvement in the economy, the Australian Financial Review reported. “Payouts will fall to $26.2 billion this financial year from $30.5 billion, the newspaper reported, citing analysis by Macquarie Group Ltd.  Dividend-per-share payments are expected to fall 6.3% in the first-half and decline by 4.2% across the full year, the newspaper said.”

So what has happened so far this reporting season? Well, we have seen the following. Bradken, declared a fully franked interim dividend of 13 cents per share, up 30% over the previous period; Cochlear declared an interim dividend of 95 cents per share, against the interim dividend last year of 80 cents; Reckon a final, fully franked dividend of four cents per share, up from 3.5 cents in 2008. JB Hi-Fi more than doubled its fully franked dividend from 15c a share to 33c, News Corp lifted its quarterly dividend 25% to 7.5c a share, GUD, 4% to 28c a share, and even Alumina, which lost money, is paying 2c a share for 2009 (zilch in 2008) and suggesting there will be more in 2010 because the good times are returning (sort of). David Jones looks like it will be paying more after upgrading earnings for the first half and the year. And this morning the Commonwealth Bank lifted its interim payout 6%, or 7c a share to $1.20, BHP Billiton lifted its interim payout by a tiny 1 USc to 42 USc a share. Computershare boosted its dividend 3c to 11c a share. But Boral cut its interim payout by 0.5c to 7c a share. A trend there, I think, Macquarie?

Here we go again #1. No wonder the CBA could increase interim dividend, earnings were up 54% on the depressed returns of a year ago — $2.9 billion versus just over $1.9 billion. While the bank had warned of the improvement in an update last month, how it managed to drive earnings was interesting. A 19% rise in interest income (when the bank has been complaining about the cost of attracting fresh deposits). That came as official rates were at near record lows. It’s the extra 1% or thereabouts that its managed to rip from home loan customers during the period of rate cutting and rate rises, as well as charging more for loans to small business, credit card holders and big business (when they borrow). The most telling fact was the CBA’s net interest margin. It rose to 2.18%, from 1.99% in the same period of 2008. That 0.17% boost took the margin to the highest level since June 2006. Home lending jumped 17% to $311 billion, domestic deposits were up 6% to $328 billion, partly offset by lower business lending, down 5% to $156 billion. The CBA is absolutely rolling in it.

Here we go again #2. The planned revamp of America’s financial rules has seen Standard & Poor’s warn that it may cut the credit of Citigroup and Bank of America because the changes may make it less likely that the banks would be bailed out by US taxpayers if they run into trouble again. The move came despite an admission from the agency that the two banks had improved their balance sheets with fresh capital and improved performance in the past year when fresh capital and better quality assets (and by shrinking them). S&P revised its outlook on Citi and BofA from stable to negative, implying that there is a one-in-three chance that it will downgrade the two banks’ single A credit ratings over the next six months to two years. “The outlook revision reflects our increased uncertainty about the US government’s willingness to provide additional extraordinary support to highly systemically important financial institutions in a way that will benefit debt holders,” it said. In other words, if banks are no longer too big to fail, then they no longer deserve higher credit ratings.

BHP the bank? BHP Billiton produced its interim results this morning. As we have seen, dividend was up, just (but down in Australian dollar terms because the rise in the value of the Aussie), after sales and underlying earnings fell because of the global slump. The same six months of 2008 marked the peak of the commodity boom for BHP, thanks to record prices for iron ore and coal. The latest half was nowhere near as bad as some had thought. The company didn’t seem to feel much pain. While underlying profit fell 22%, the gross profit margin eased from 46.8c in the dollar to “only” 40.7c. The company reported net gearing of 15.1%, net debt of US$7.9 billion, and interest cover from underlying profit of 42 times, which was down from 85 times in the December 2008 half.

China record #1: China continues to be the world’s biggest car market: car sales in January were more than anyone had thought. Final figures yesterday showed that sales and and output  more than doubled in January from a depressed January, 2009, to exceed 1.6 million units, a  record. China’s Association of Automobile Manufacturers said sales topped 1.66 million units while output reached 1.61 million units. Compared with December figures, auto sales and production grew 16.8% and 5% respectively in January. Passenger car sales were up 113% to 1.32 million units last month, and production was 1.24 million units, up 134% year on year. 2009 annual annual sales reached 13.64 million units last year, output reached 13.79 million units last year. Annualised its 18-20 million units this year. That’s a lot of roads, petrol, oil, tyres, Australian iron ore, and carbon emissions. But don’t tell Tony Abbott.

China record #2. Last month saw a frisson of delight in China, another world record was there for the taking. World trade figures for the first 11 months of 2009 saw China go past West Germany into the top spot. China’s 12-month figures, out later in January, seemed to cement the No.1 position, German trade figures overnight confirmed it. The People’s Republic, through hard work and social harmony, etc, is now the world’s trade top dog. Of course, it got there not by boosting its shipments in the worst year on record for world trade. No, German exports dropped a nasty 18.4% (the biggest fall since 1950). Overall, German exports last year were equivalent to $US1121.3 billion, which compares with the $1201.7 billion exported by China whose exports fell a slightly less nasty 16% over the year.

China Record #3. According to China’s central bank, the country’s consumers spent 166 trillion yuan ($US24.3 trillion) through bank cards last year. That was up 30.5% from 2008 (when spending was weaker, especially towards the end of the year, as it was in many other countries). Bank card transactions in China topped 19.7 billion in 2009, up 18.1% year on year. The People’s Bank said that 270 million new bank cards were issued in China in 2009, a fall of 10.1%. Is this a no growth market?

Risk Management 101. The ambitious have always been told to power dress to get ahead. To look the part and look confident, dress well. Armani, Boss, Gucci, Ferragamo, shoe makers, tie makers, suit makers, perfume makers, blingers, car companies, wine groups, pen makers, etc,  have all tried to build their fortunes on what is a natural desire to dress the part and and be successful. But should we believe this stuff? A paper published last November points out there has been relatively little research has directly examined the psychological consequences of exposure to luxury goods. The authors, academics Roy Chua and Xi Zou say their paper “demonstrates that mere exposure to luxury goods increases individuals’ propensity to prioritise self-interests over others’ interests, influencing the decisions they make. “Experiment one found that participants primed with luxury goods were more likely than those primed with non-luxury goods to endorse business decisions that benefit themselves but could potentially harm others.” Their paper suggests that luxury goods have an important effect on human behavior that is only now becoming clear — and that may have implications for addressing the continuation of objectionable choices among, for example, Wall Street high-fliers. A case of remove the Zegna, and lower the risk?