Macro Afternoon

by Chris Becker

The USD is taking a hit in Asian trade as stocks are mixed coming off the poor US lead overnight. Only Chinese stocks are in the green as the safe haven trade going to Yen is seeing the inversely correlated Japanese bourses dragged down while locally its a profit taking session as banks are way overbought.

The Shanghai Composite is up only a few points on the other side of its long lunch, currently at 3172 points, remaining above its high moving average and stabilising as this bounce turns into something with more legs. The Hang Seng is doing better, up 0.5% and now moving away from ATR resistance on the daily chart, with momentum building as it tries to get back to the December highs:

HSI.fsDaily

Stocks returned to trading in Japan today after a public holiday, but the Yen bid and poor USD is putting off the traders, with the Nikkei down more than  0.5% to 19333 points, still off my target of 20,000. The USDJPY is erasing the NY gains, heading back below the 116 handle and possibly finding a short term bottom here at 115.30:

USDJPYH1

S&P Futures are selling off and continuing under the daily trendline into the London open so we could be in for a rough night:

S&P.fsH1

The ASX200 is retracing its recent gains too, down 0.8% to 5760 points, mainly led by a selloff in bank stocks, as expected.

The Aussie dollar however is doing the opposite and building on its own recent gains, now well above the 73 handle against USD, although its off slightly against the majors. I’m watching the 74 handle for a follow through here:

AUDUSDM30

The data calendar tonight is spares with just wholesale inventories in the US to worry about.

Comments

  1. Will post this here and in the Macro afternoon:

    “Just had an interesting call with a contact who specialises in “other” funds movement out of China. The quoted rate for USD$1,000,000 today for the FEES was 12-18% depending on the risk factors of the person in China and assumed destination was Australia…..” I suspect that this may have an impact on the upper end of the market…..

    For comparison, 12 months ago the same method was at 5-8% on fees. Bank of China quoted me 10% fees to “cash” a Standby Letter of Credit denominated in Yuan at the same approx level, and 2% if the SLOC is denominated in AUD. This channel is popular with HNW individuals who prefer to have no records of the transfers and the destination. Can readily move 10’s even 100’s of million this way if you want to pay the piper, but at the current rates, even the broker asked why would you bother unless you were desperate….

      • Assets used to secure the transaction during processing include cash (heavily weighted towards cash and cash equivalents which give a lower fee schedule), property value, property location, length of time property has been held, outstanding amounts, ability to get a guarantor to cover the transfer period. Basically typical factors used to secure a loan. Fees are paid on receipt of the funds offshore and at this point liens etc over security is released. Process can take time to complete depending on destination of funds (US was the quickest) and the amounts involved. Need to understand that this is not a loan per se but during the funding period, it acts like a loan. The originator wants to make sure their fees are covered even if the loan does not proceed thus the liens on everything.

        Risk factors are therefore simply the assets that can be used to guarantee the fees get paid to the originator. Trust is important but I can tell you that you do not want to piss off these guys, and generally the people who use this service are trying hard to hide something

    • If you willing to pay 18% to get your dosh out one would hope that Chinese intelligence has you on a list either there or here ……

      • It is an anonymous service that claims too avoid scrutiny… like I said, the people who use this this typically have something to hide.

      • OJ …..and the pathetic thing is our government will allow them to hide it in straya …………

      • Spot on TT. But these people for the most part give themselves away through their spending habits and desire to show how “wealthy” they are. Instead of laying low they splash out and draw attention to themselves on WeChat where they are easily found and hunted…..

      • I would strongly suspect that laying low won’t help eventually . I’m sure the Chinese intelligence in straya has a growing list of persons of interest.
        I look forward to sparks once that extradition treaty is in place .

  2. Can’t wait for Gotti to come back from holidays and tell us how unpleased his mate Harry is, and how the Australian government must institute a bailout for Meriton in the form of buying every single unsettled Meriton apartment at sticker price and turning it into public housing.

    • Rumour on WeChat claiming Harry sold the management rights for the Meriton apartments to a Chinese company – RUMOUR ONLY – but had to chuckle at it

      • I heard something along those lines as well.

        I guess the Chinese company will be able to achieve efficiencies, I.e. to import labour on 457 visas to do the cleaning, maintenance and bust kneecaps to get rent.

    • stop the stoats

      Gotti had a story in the Australian yesterday about how the ATO is going to send all the small businesses broke. He tells some stories that Gotti

  3. Australia, where the local politicians are so corrupt that the Chinese immigrants are calling for Xi Jinping to intervene

  4. This petition from a Mr Colin Mc Dermott has 10,000 signatures on changeorg ……..looks like the Ley to Arfur change is not going to make the pub test

    “Dear Hon Malcolm Turnbull
    Sussan Ley has rightly stood down as a minister while questions are being asked of her. It is fair that she answer a case of taking a taxpayer funded trip to buy an apartment and that she answer questions about her NYE flights to Brisbane accordingly. This is accountability. In stepping down, she is doing the right thing.
    You in planning to appoint Senator Arthur Sinodinos, are not!
    We understand that you intend to appoint Arthur Sinodinos in her place, is this a Joke! This is a man who was the former Chairman of Australia Water holdings (AWH) an Eddie Obeid associated company. He received a $200,000 a year salary for doing “a couple of week’s work”. He regularly enjoyed lavish perks like other AWH directors like Limosine rides and would get a $10-$20 million dollar payday if the right government contract was signed.

    He then gets mentioned in ICAC again with a $700,000 donation to the Liberal party from Real estate developers via an organisation called the Free Enterprise Foundation. ICAC has even said it found it “difficult to accept” that Arthur had no knowledge of these donations.

    Arthur is the exact kind of politician that we do not want in Canberra. If Sussan Ley has a small Jetstar sized question mark, Arthur has a Hundred thousand dollar one. I fail too see the point in appointing a man who clearly indulged in lavish perks to fill a casual vacancy created by a politician stepping aside while her potential miss use of perks is investigated.
    Don’t carry through and appoint Arthur Sinodinos in this circumstance. His behaviour was legitimate grounds for an ICAC investigation and even if not named, calls his actions into fair question. Many will find his past behaviour far worse then any potential digression of Ley. It is an absolute Joke and treats the tax paying public with utter disrespect.”