ASX at the close

Stan Shamu for Chris Weston, Chief Market Strategist at IG Markets

Markets cautious as Greece deadline approaches

Optimism remains rampant in global equities with investors focusing on the latest Fed meeting minutes and any developments on the Greece front. The FOMC minutes were deemed more dovish but this wasn’t enough to inspire a significant rally in US equities as some mixed data dampened sentiment. It seems many fed members felt there are many risks which would justify a later lift-off.

The result was USD weakness while rates sold off as treasuries rallied. While the minutes were not all-out dovish, positioning had been skewed to the hawkish side as investors felt the statement from the meeting suggested lift-off around the middle of the year, along with some fairly hawkish fedspeak.

The bottom line is jobs growth in the US has been solid but concerns on wage growth, inflation and premature lift-off are seeing many members take a cautious approach. Essentially, while there are some good signs that lift-off is on track, the Fed is concerned about disrupting the recovery.

Focus now shifts to Janet Yellen’s testimony next week as market participants look for more direction on when to expect lift-off and the key risks to look out for.

Japan equities outperforming

USD/JPY was tracking higher heading into the release of the minutes but has since lost a bit of ground on the back of the release and is back below ¥119.00. There has been talk recently suggesting BoJ Governor Kuroda is considering delaying the 2% inflation target and that could be having an effect on the yen.

However, this has not deterred Japanese equities, which have remained above 18,000 and traded through 2007 highs to their highest since 2000. There has been trade balance data out of Japan today showing a narrower-than-expected trade deficit.

Strong export growth (17% rise) drove the numbers with the country enjoying strong demand around Asia. Clearly the yen weakness is playing a big role in Japan’s exports with automobiles drawing the most interest.

Perhaps the interest in Japanese goods as the yen weakens has also been playing a role in the drop off we recently saw in China’s exports. As testament to how well trade is going for Japan, firms in the country are holding a record amount of cash.

Yesterday Japan Post Holdings announced a takeover of Australian transport and logistics company Toll Holdings at a significant premium. With trade activity for Japan picking up around the Asian region, it seems the acquisition makes strategic sense and hence the premium.

After rallying to a fresh six-year high earlier, the ASX 200 has pulled back as we approach a fairly important session on the European front.

Euro risk heightens

European markets are also pointing to a weaker open as we approach the deadline on Greece submitting an extension application. Investors have been anticipating an application from Greece for a couple of days now and failure to submit one by tomorrow would mean Greece has to request an extension to its current bailout before it expires at the end of this month.

While there is still optimism that Greece will submit something, it remains uncertain whether the submission will be acceptable. With time running out and risk heightening on that front, it’s not surprising to see a mild risk-off tone in equities.

Surprisingly, the euro has remained resilient and EUR/USD is holding its ground above $1.1400. I would expect this to be the first to react once headlines start filtering through on Greece. Once again, I would prefer to react to headlines as opposed to pre-empting a result in this environment. It just seems there is limited reward for quite a lot of risk ahead of a key event at these levels.

On the European calendar we have French CPI and current account numbers for the region. In the US we have unemployment claims and the Philly Fed manufacturing index.

Comments

  1. Super Retail (SUL) reports growth in all (Auto) categories bar tools and all states with the exception of Queensland.

    LFL sales at BCF down 5% – lower demand in ‘mining areas’

    The CUB market is rooted.

    That said – outlook statement all bullish and stock up 10% !

    I would imagine the falling AUD is going to hit margins at some point for these guys too.

  2. The Traveling Wilbur

    Sincere apologies to Mr Whitman (and Mr Lincoln), but not to Mr Stevens.

    O Captain! My Captain! our fearful trip is done;
    The ship has weather’d every rack, yet the prize we sought is gone;
    The port is near, the bells I hear, the people all revolting,
    While follow eyes the steady keel, the instruments grim and daring:
    But O heart! heart! heart!
    O the bleeding drops of red,
    Where on the deck my Captain lies,
    Fallen cold and dead.
    O Captain! My Captain! rise up and hear the bells;
    Rise up—for you the flag is flung—for you the bugle trills;
    For you pyres and wreaths of thorns—for you the shores a-crowding;
    For you they call, the swaying mass, their angry faces turning;
    Here captain! dear father!
    This arm hacking at your head;
    It is some dream that on the deck,
    You’ve fallen cold and dead.
    My Captain does not answer, his lips are pale and still;
    My father has felt my arm, he has no pulse nor will;
    The ship is beeched and run-aground, its voyage closed and done;
    From fearful trip, the resources ship, comes in with object gone;
    Exult, O shores, and ring, O bells!
    But I, with mournful tread,
    Walk the deck my captain lies,
    Fallen cold and dead.

      • The Traveling Wilbur

        Thank you. Every time I read it back I almost shed a tear myself at the end. Sincerely. The original is one hell of a piece of prose. I only hope others of a more scholarly bent than I will consider it to have been used for an appropriate purpose (and for the greater good).

    • Divergence between 225 and JPY expands again

      225 is 500 points rich or JPY needs to hussle back to 121 to keep the pair tight again.

      Maybe Japan has hit escape velocity?

      Hahahaha

    • Ooohhhh…I think the lying little weasel is up for a heap of legal fees too.

      Once he did his job for the LNP they deserted him and left him hanging. That’ll learn him.

      The equally appalling Kathy Jackson is next.

    • I looked at the Heritage Foundation’s map, and most of the countries that have high economic freedom ratings also have high levels of political freedoms. How do we know it is the economic freedoms that primarily fuels prosperity?

      • “The Heritage Foundation will continue to be a key element in the phalanx of rightist groups with an agenda of austerity for the poor, hostility to minorities and women, upward distribution of wealth for the rich, economic domination of the Third World, with repression and bloodletting for those who rebel.” – Russ Bellant, – the coors conection.

        “Old Nazis, the New Right, and the Republican Party is the most controversial of Bellant’s books and the most widely cited. Chris Simpson wrote in the preface, “This book presents some of the best new research into the seamy side of the ‘Reagan Revolution.’ Russ Bellant’s careful dissection of the American Security Council Foundation and of certain Republican Party organizations clearly establishes that neo-fascist thinking is flourishing among some of the right-wing activists who today today drape themselves in the American flag.”[1]”

        Skippy… The meta burn is off the scale…

      • Wellie it seems our little Qld Cyclone has a glandular problems wrt growth, see ya in a few days.

        Skippy… whom knew Climate change was a bloody Keynesian.

      • “The Heritage Foundation will continue to be a key element in the phalanx of rightist groups with an agenda of austerity for the poor.. ”

        Yeah, not the most objective source. The IMF is at least a bit more credible, but you still wouldn’t expect them to think too far outside the neoclassical paradigm.

      • “Because you can buy things you want as opposed to just being able to vote for the idiot you want”

        Yep, because buying the things we think we want (but often can’t afford) has worked out so well for us! It has certainly increased our freedom to drown ourselves in debt and inflate asset bubbles.

        The masses will always sell themselves and their freedoms out for perceived safety and a few shinny trinkets. The only question is who they sell out to.

      • Obviously to the idiot promising the greatest return. Duh.

        Same as it ever was…. Can’t afford you say? Pffffft. Freedom and bunnings…

  3. Bunnings is an insanely profitable business

    30% plus ROC !

    Now 30% of Wesfarmers EBIT – 20 more stores for FY15

    Parent company priced to perfection though.

    They missed a huge opportunity not selling the coal division when the going was good.

    • Houses eh? God I hate being in this country, I’ve never been inside a bunnings!

      I propose a new moniker H’H’H houses hell-hole economy

    • The Traveling Wilbur

      Whoever it was a Wesfarmers who authorised the massive bricks and mortar expansion is a genius. Sans sarcarsm. They have timed it to perfection. Once their capex spend is done it will be just about the time in the housing cycle where everyone heads off to their local handyman store to do up their existing houses on a live-in-it rather than a cheap-do-up-and-sell-it-on basis (and therefore spends more on their property, mostly with them, especially kitchens) as no one can get a loan from the bank anymore. Remember that? 2010 I believe it was called. Didn’t last long. I suspect it will be longer this time, and therefore longer periods of impoving revenue growth for them. Outstanding foresight. This is the kind of person we should be giving a Knighthood to.

    • Shipbuilding Orders Slump As Baltic Dry Hits Fresh Record Low | Zero Hedge

      http://www.zerohedge.com/news/2015-02-18/shipbuilding-orders-slump-baltic-dry-hits-fresh-record-low

      For the 56th day of the last 58, The Baltic Dry Index dropped. At 509, this is now down over 65% from the dead cat bounce highs in November 2014 and – yet again – a new all-time record low for the cost of shipping freight. It is no surprise then that, as Lloydlist reports, bulker new building orders slumped in January. When the Baltic Dry tumbled in 2012, the glut of ships then caused a 49% plunge in orders for shipbuilding – as JPMorgan said at the time, “you just have too many yards and too few orders,” and given the artificial signals provided by credit-inflated commodities since, we can only imagine the overhang now. … read more via hyperlink above …

  4. Wellie it seems our little Qld Cyclone has a glandular problems wrt growth, see ya in a few days.

    Skippy… whom knew Climate change was a bloody Keynesian.

      • Gezzz mig-i that’s a buggy site.

        All major religions are based on PIE foundation myths, whats relevant about Babylon is the Judaic debates and the latter results of that, the Torah and the Talmud.

        Yet at the day its all highly convoluted due to the speculative literary nature of it all over vast periods of time.

        Persoanly I find this more interesting.

        Did Yahweh,a the Israelite God, have a consort? Like many other scholars, I believe that a substantial number of Israelites thought so. Unlike most others scholars, however, I believe that many of these same Israelites considered the sun a symbol or icon of Israel’s God, Yahweh. Yet early Israel was far more developed than we might guess from this; the same evidence that points to Yahweh as having a consort (or wife) and being symbolized by the sun, also points to an understanding of Yahweh as an abstract, non-anthropomorphic deity. In short, many early Israelites combined various notions about Yahweh that we would call “orthodox” and “pagan.” Unravelling these various strands proves to be a fascinating exercise.
        Our principal evidence, in addition to the Bible, will be two archaeological finds familiar to long-time BAR readers—the pithoi (storage jars) from Kuntillet ‘Ajrud in the Sinai with their pictures and inscriptions;b and the famous four-tiered cult stand from Taanach that graced the cover of the BAR 17:05.

        http://members.bib-arch.org/publication.asp?PubID=BSBA&Volume=20&Issue=3&ArticleID=4

        Skippy…. yet I still think of you… Blissed-Out Fish on Prozac
        Why we can’t get our water supply free of drugs.

        http://nautil.us/issue/7/waste/blissed_out-fish-on-prozac

      • BOOM!!! #winning!!!!

        I f’ken knew that would drag out the real skippy on display!

        And also, yeah dude, that bit I agree with. MMT not so much…

    • Eh? Cat 4 maybe 5! When did it go berko? Running fast too.

      Seen too many. Hate the bloody things.

      • Its a 4 as of 6pm today, about seven hours earlier than first predicted, might tick 5 before land fall early tomorrow morning.

        Thought I noticed a wee bit of worry in the eyes of the meteorologist earlier today on telle. Ground is soaked here in Brisbane and will rain until it tracks down, it will be interesting to say the least..

      • Yep and next to the river – Kenmorish, waist high down stairs last go, tho I did drive up near Rocky in the damn thing to fetch the wife.

        The flood chased me all the way back, centimeters is all that was in it on some bridges and roads. Still we had it good, shacked up at brother in laws house next to the Gov Gens place. Tho was running all over the joint pre and post flood to help mates and others out. Proud member of the mud brigade.

        Skippy… around the homestead, 50m away and around it was up to gutters, two story gym a 100m away was almost completely under a lake.

      • Tropical Cyclone Marcia: Storm due to hit Queensland as category five system.

        A very destructive central core, spanning less than 100 kilometres, would generate gusts up to 295 kilometres an hour, the Bureau of Meteorology warned.

        http://www.abc.net.au/news/2015-02-19/category-five-cyclone-expected-to-hit-central-queensland/6151198?google_editors_picks=true

        2 bloody hours, that’s on top of the progression from 3 to 4 in less than a day, 3 magnitudes of power in a day. The energy required to do so is mind boggling.

        It will reach Murgon and Taroom [have pastoral family in both].

        Skippy… its all about topography now.

    • Crikey, not often a cyclone crosses near Yeppoon ! Lived there 20 years growing up and can only remember maybe two ?

  5. For those of you not up on infosec

    Let me get this right: I can extract the private key from my Lenovo laptop, and use it to MitM all other laptops at the local cafe hotspot?

    • People are going ballistic.

      Also Samsung has admitted it has lied about its TV’s listening and recording your conversations. Basically, either no internet, or all your bases are mine.

      • Even with “no internet”. Got a radio nearby? Can send signals through windows/other amplifying phenomena

  6. Ok so, you know f#@% its a lame Thursday night [which, off topic, doesn’t make for a great song because I can’t think any], so in my inimitable fashion I’ll throw this Molotov cocktail for a cheer, get one from 3d, and really get this evening’s “ASX at the Close” [close of what? Timespace continuum? ] rolling.

    To wit:

    All this Yanis V. love in is totally cool, and finally being able to talk about Marx and Libertarians without the porcupinal mention of “Stripes” being handballed around is admittedly pretty great, so you know, kudos YV, but, just on the actually making a difference to the unemployed thing. So how many Greek youth did you find a job for whilst penning that astute epiphany on Capitalism M. Varoufakis?

    • This might help you mig-i…


      readerOfTeaLeaves February 18, 2015 at 7:13 pm

      Tangential to this post —

      At the Guardian, a very thought-provoking piece by Varoufakis from a lecture he gave in 2013. Long form: How I Became an Erratic Marxist.
      http://www.theguardian.com/news/2015/feb/18/yanis-varoufakis-how-i-became-an-erratic-marxist

      …Marx’s brilliant insight into the essence of capitalist crises was precisely this: the greater capitalism’s success in turning labour into a commodity the less the value of each unit of output it generates, the lower the profit rate and, ultimately, the nearer the next recession of the economy as a system. The portrayal of human freedom as an economic category is unique in Marx, making possible a distinctively dramatic and analytically astute interpretation of capitalism’s propensity to snatch recession, even depression, from the jaws of growth….

      His analysis that the left has ceded ‘freedom’ to the neoliberals, which has been a fatal error, is among many very insightful observations in this piece.

      As I read this piece, Varoufakis sees the inhumanity of current financialized capitalism. But he also recognizes that simply to object to it leaves entire populations vulnerable to the rise of neo-Nazism, and other far right authoritarian forces.
      Reply ↓

      Santi February 18, 2015 at 7:33 pm

      You can watch him deliver the conference from which he later extracted this text here: https://www.youtube.com/watch?v=A3uNIgDmqwI including more than half an hour Q&A, where he talks about digital (TAN-like) currencies and other matters very current.

      BTW, according to The Guardian The ELA has been extended by 3.3B€ giving a bit of breathing space to Athens and signaling that the ECB is not blowing the Greek banking system, and the Greek Government will present (i guess Yet Another) proposal for an extension of the loan tomorrow. Yannis Palaiologos says at the WSJ it is “an offer Germany can’t refuse.” Let’s see…”

      http://www.nakedcapitalism.com/2015/02/greek-government-faces-cash-crunch-next-week.html#comment-2406884

      • Nah – just requested another can kick

        DJWire
        “ATHENS–Greece has formally submitted its request for a six-month extension to its loan agreement, a government official said Thursday, with senior eurozone finance officials expected to assess it later in the day.

        Bearing the title Master Financial Assistance Facility Agreement, the request comes after two weeks of stormy negotiations between Greece and its eurozone partners over the broad terms of a new financing deal for the country.”

        “So far Greece says that it only wants a new loan agreement, but has been vague on what sort of budget and reforms measures it would take in exchange for further funding”

        Because they haven’t really had enough time to plan over the last three years?

      • The problem with pure market optics is a lack of historical and political nuance i.e. everything is political in the first order of Business, secondly groups retain sociological memory’s and bias: see history, lastly price and valuations can not describe everything under the sun.

        Greece does have some problems, land records and taxation [sticky due to cultural norms and an intransigent oligarchy], the ECB vis a vis Germany is doing the neoliberal self interest thingy to a fault, even if it won’t work in the long run [oligarchy demands its pound of flesh].

        Just remember Marx wrote a scathing critique and not a palliative, that was the convoluted work of others.

        Skippy… that train to Sweden.

      • Sod off, Marx did neither! Marx did us a great service in quantification and qualification. Really, some brilliant if drudging stuff.

        Otherwise your fantasies are your own, its all just so much data and vector analysis. Which BTW, freaking awesome!

        Political in the first instance?! F#%@ off

      • Mig-i do you really think our species evolved into a preexisting market enviroment, the universe is a market of free willed atomistic actors.

        Politics (from Greek: πολιτικός politikos, meaning “of, for, or relating to citizens”).

        Skippy… Family, tribes, city – nation states, its intrinsic to our species… as a herd animal.

      • “Marx has given me the tools with which to become immune to the toxic propaganda of neoliberalism. For example, the idea that wealth is privately produced and then appropriated by a quasi-illegitimate state, through taxation, is easy to succumb to if one has not been exposed first to Marx’s poignant argument that precisely the opposite applies: wealth is collectively produced and then privately appropriated through social relations of production and property rights that rely, for their reproduction, almost exclusively on false consciousness”

        Ugh, now that is a sentence only a Marxist Academic could love.

        For those self employed business people out there – your wealth was collectively, blah blah blah – “you didn’t build that”…

        Having read that linked Guardian piece I found it striking that this guy was disappointed Thatcherism didn’t work out for the left by concentrating their efforts and making them strong.

        I would argue it didn’t work for the left as the pains of a deep recession created the reforms necessary to actually provide some upward mobility / improvement in life for those previously stuck in the class structure abounding in being a postal worker, coal miner or similar – just as your Dad was. Living in a crap public home – being ‘comfortable with your lot’.

        Thatcher stole the vote from the lower/middle class from the Left. The Tories hated her.

        Greece (add many other countries here) is fucked because during their Thatcher moment (deep recession) – no real reform has occurred – just money printing/lending/extensions and a series of can kicks.

        Japan has done exactly the same thing.

        Now they have voted for a good looking bloke who obviously has zero business experience but a solid grounding in Marxism.

      • 8~

        Your printing meme says it all…

        Skippy…. value is a fetish which can be stored in an object.

        Edit. No Business experience, you better inform yourself before making statements of fact.

        PS, the looks thing is a big meme in MSM at the moment.

      • I stand corrected – zero is incorrect.

        He did theoretical studies in a video game company as well as being a writer and artist.

        In hindsight – couldn’t be worse than a lawyer or a shop steward.

        EDIT: The looks thing was my personal addition, I dont catch a lot of MSM – the leather jacket look over a drone wearing the same tie everyday would almost swing my vote – if he wasn’t a Marxist…

      • For those self employed business people out there – your wealth was collectively, blah blah blah – “you didn’t build that”…

        No.

        You didn’t build that alone.

        If you think otherwise, feel free to parachute yourself onto a desert island and build an empire.

      • 8~

        Your still showing your ignorance proceeds even your bias, look at who his father and family are, hint his father became chairman of Halyvourgiki, Greece’s biggest steel producer.

        Roflol Engels was a capitalist whilst were at it.

      • Well I guess he must have had something behind him – art, Marxism, academia and writing aren’t exactly hotbeds of profitability.

        He sounds like he had an enjoyable rounded lifestyle despite his choice of ‘vocation’.

        All this aside – what is he going to actually do?

        So far he has just requested another can-kick

        Will he boot out the Troika – nationalise all productive assets for the benefit of the State and start up the Drachma presses?

      • 8~

        He has said that its not in the best interests to leave and no they can’t go back to the Drachma, its a non starter. If push comes to shove maybe TAN’s.

        That said there is about a 100 years of convoluted politics behind this, and a exceedingly dynamic environment at the present.

        Skippy… at the end of the day its a morality play…

      • Does the island have high speed internet and no taxes?

        Why would a desert island have internet or taxes ?

      • I can’t believe Worldcom would have missed somewhere?

        Build it and they will come?

        Perhaps the taxes could go to the bond holders…

    • @ mig Ever heard his take down of Piketty? Unlike your facile remarks he is accurate at the failures of the left position in the last 30 years.

    • when a stalwart adds to the electronic graffiti, the writing is ‘ah-hum’ on the several thousand screens for those that don’t like it.

  7. Headlines – lucky the Algos do all the trading now:

    DJ European Stocks Fall on Greece Worries 945GMT

    DJ European Stocks Rebound From Early Losses on Hopes of Greek Deal — Update 1046GMT

    DJ Greece, Creditors “Somewhat Apart” on Agreeing Bailout Extension — Eurozone Officials 1054GMT

  8. Central bankers from Europe to Australia have engaged this year in bouts of rate-cutting oneupmanship, leaving the U.S., and possibly Britain, as the only developed nations seen as likely to raise borrowing costs in 2015. The dollar climbed to its strongest in more than a decade as a result, prompting billionaire Warren Buffett and Goldman Sachs Group Inc. President Gary Cohn to question whether the Fed can now increase rates without damaging the U.S. economy.

    Didn’t see that coming did you H’n’H?

    http://www.bloomberg.com/news/articles/2015-02-19/did-fed-just-enter-the-currency-war-traders-detect-dollar-angst