Macro Afternoon

by Chris Becker

Asian shares are trying to eke out gains after a lacklustre lead on overnight stocks, buoyed by a weaker Yen and higher commodity prices.

The Shanghai Composite is the only negative nelly, down more than half a percent to 3144 points as the PBOC keeps the onshore Yuan relatively unchanged in today’s fix. The bounce in mainland shares remains intact for now. The ang Seng is doing better, up 0.6% and building strongly above former ATR resistance on the daily chart, with momentum building as it tries to get back to the December highs:

HSI.fsDaily

Stocks are positive in Japan as well with the Nikkei taking back most of yesterday’s losses, back to 19353 points, still off my target of 20,000 but getting there. The USDJPY is the culprit as the Yen sold off on some BOJ comments, currently bid up to the 116 handle. The area to watch to tonight is rolling ATR resistance at 116.40 or so:

USDJPYH1

S&P Futures are very flighty indeed, absorbing the fake President, I mean news, and bottoming at yesterday’s lows at 2260 points into the London open:

S&P.fsH1

The ASX200 is barely treading water, up about 0.2% to 5760 points, with commodity stocks mixed and banks dragging everything down going into the close.

The Aussie dollar however is trying to breakout once more, continuing its drive to get to 75 cents against USD, just below the 74 handle and what looks like a triple top on the hourly chart. I’m watching the 74 handle for a follow through here:

AUDUSDH1

The data calendar tonight is relatively quiet with a slew of UK based domestic releases, culminating in Mark Carney testifying, while its weekly DOE inventories in the States.

Comments

  1. http://www.reuters.com/article/uk-china-regulator-banks-exclusive-idUSKBN14V0CP reposted here. Not sure if this is real or fake news, so hard to tell today.

    “”We’re not going to tell our customers that (our forex business) has stopped; we just have to find ways to turn down the business we’re not allowed to do,” said a banker at Chinese Commercial Bank Ping An who had received SAFE instructions from seniors.”

    It is interesting the timing of when this supposedly occurred (August 2016 for Shanghai which is where we do most of our business). If this is accurate, it can go a long way to explaining the delays we observed from June onwards to settle what were previously routine transfers.

    “They also told the banks to interview clients to make sure the forex deals were not for fake transactions, or else face punishment, according to two bankers at separate listed banks.” – this we have observed, but was always the case for the large transactions anyway. In the past it was a dinner with the bank manager (in one case it was at the 8’s in Sydney when he was on holidays in Australia – we had to fly him and his family from Cairns to Sydney to finalise the deal)….

    “Even where institutional investors have been granted quotas to invest overseas, they are finding it increasingly difficult to exchange yuan into another currency.” – true – I have been posting on this for 12 months now – old news

    “An investment programme set up so global funds can raise Chinese cash to invest overseas has ground to a halt without explanation. “The application process seems to be in a state of suspension,” Michael Lu, managing director of Greater China Business Development of Dutch money manager Robeco told reporters in November.”

    This was an insignificant news item in November, easily missed in the other noise generated in the US….

  2. Billion $$ handout Adani ain’t over!
    From Getup….. Although I fail to see what the problem is with the Cayman Islands – Our very own Malfunction uses them, so they must be Kosher…….

    Adani could get be about to get their hands on $1 billion of Australian taxpayer money. Right now the Turnbull Government is considering subsidising the destruction of our Reef and climate with a public handout for Adani’s rail line to its monstrous Carmichael coal mine. https://www.youtube.com/watch?v=n_C8S4Bz91M

    The government body that could provide Adani with this taxpayer handout is the Northern Australia Infrastructure Facility (NAIF). Many of NAIF’s board members have extremely close ties to the coal industry, so you can bet they’ll be feeling the heat to make sure Adani get their way.1 As the NAIF board members consider their decision, we have to make sure they hear the terrifying truth about Adani’s history of environmental destruction, corruption and tax evasion. They’ll be under pressure from the coal lobby and coal-loving MPs, but a flood of emails from concerned Australians will send the signal that they can’t do this quietly. And that’ll be sure to make them think twice about handing our money over to a dangerous company like Adani.

    Speak up now and show the board of NAIF that Adani’s coal is unpopular, unbankable, and unburnable.
    NAIF projects are supposed to be for the public benefit, so the board should hear from the public about why this project will benefit no-one but Adani. They should hear the community’s concerns about a dangerous multinational corporation being handed a billion dollars to steal our water and trash our Reef. And they should understand that Adani fail at least 3 criteria for eligibility for taxpayer funding.1

    And it gets worse.

    Adani are facing multiple financial crime and corruption probes in India.2 And the Adani rail line potentially being bankrolled with our money is ultimately owned in the notorious tax haven of the Cayman Islands.3 Adani are also trying to move other assets, like Abbot Point, into offshore tax havens. This allows the mining giant to hide their revenue. If something goes wrong, the Australian public will be left chasing Adani in overseas tax havens. The battle against Adani is one of the most decisive battles in the global fight for a safe climate. And GetUp members are ready for it. Since the Turnbull Government announced plans to give Adani a taxpayer handout, 7230 GetUp members have chipped in to an anti-Adani war chest to help us take on the might of the multi-billion dollar mining giant. That money is already being deployed on research and digital advertising in the most strategic electorates, and to build our organising capacity for the battles ahead.

    Please continue to fight for a healthy Reef and a safe climate for future generations. With a government still beholden to the coal industry, it’ll take all of us speaking up loudly to defend our environment against the likes of Adani.

    Start by speaking up to the decisions makers who might be about to make the terrible mistake of giving a billion dollars to greedy, tax-dodging Adani. Click here to tell NAIF why you oppose Adani: https://www.getup.org.au/naif

  3. Sydney’s housing affordability problem – in three tweets … Sydney Morrning Herald

    http://www.smh.com.au/business/the-economy/sydneys-housing-affordability-problem–in-three-tweets-20170110-gtpagc.html

    Sydney house prices by suburb: Map comparing 2016 and 2011 shows how crazy city has become | Daily Telegraph

    http://www.dailytelegraph.com.au/news/nsw/housing-affordability-is-in-dire-straits/news-story/118c7adcbabc6e47676943f81a3d0ed3

    … Tonight’s New Zealand TV One News …

    Having trouble finding a rental property or even a room in Auckland? You’re not alone | 1 NEWS NOW | TVNZ

    https://www.tvnz.co.nz/one-news/new-zealand/having-trouble-finding-rental-property-even-room-in-auckland-youre-not-alone

    • Seems some learned nothing from the run up or aftermath of the GFC or worse in complete denial…. Hint… why would banks lend in shitty jobs markets on a depreciating consumable on absurd annual income to loan ratios….

      disheveled…. the endemic hot money laundering aside….

      • I understand why banks/staff lend – because that’s their business & their downside risk is negligable/limited… what I don’t understand is why borrowers choose to borrow 80-90% of the highest ever price on something worth 1/3 given they wear the big downside risks (negative equity, bankruptcy, etc). This is why I hate debt buyers decisions so much and why it is right that they, as soon as possible, deserve to reap the consequences of their extremely risky actions.

      • Andy!….

        I think you might read what actually happens, when what you pine for actual occurs….

        disheveled…. I don’t support the moralizing of the marks…. when its the architects and beneficiaries that should garner your ire….

      • >> I think you might read what actually happens, when what you pine for actual occurs….
        Which part of my bias is unreasonable?

        >> I don’t support the moralizing of the marks
        Same. My issue is that a risk / outcome has not eventuated – effectively 20+ years of a coin toss has only landed on heads!

      • Andy!….

        Wellie there was that thingy with the ev’bal godless commies, Larrys memo about offshoring toxicity, Greenspan’s opines –

        Most high-income people in our country do not realize that their incomes are being subsidized by their protection from competition from highly skilled people who are prevented from immigrating to the United States. But we need such skills in order to staff our productive economy, so that the standard of living for Americans as a whole can grow. –

        Monetarist games with fiat, corporations becoming people…. et al….

        Disheveled…. tis a short list….

    • Looks like debt to pay debt will be the next step ……….and Scomo thinks this is ok because of the “value “of the houses …….go straya you good thing !!

      “Another recent CoreLogic report put Sydney house prices at a whopping 8.3 times higher than annual household incomes and found households were dedicating an average of 44.5 per cent of their income to service a mortgage.
      Broadly, a homeowner is considered to be under “mortgage stress” if they have to devote more than 30 per cent of their household income to repayments. So Sydneysiders are paying 1.5 times the amount already considered as being under “mortgage stress”.”

      • Tailor Trash … Please don’t confuse mortgage affordability with structural housing affordability.

        Check out http://www.demographia.com … and too … my archival website http://www.PerformanceUrbanPlanning.org for the schedule of the Annual Demographia International Housing Affordability Surveys. This years 13th edition is due for release Monday 23 January. Check too on the latter the structural definition of an affordable housing market.

        2017 is shaping up to be one hell of a year for housing … both politically and economically … on both sides of the Tasman. The current bubble values could best be described as ‘lethal’.

      • Hugh…. land restrictions is about the lowest factor if not a factor at all, supply and demand is not a one size fits all universal fact….

        disheveled…. the only people wanting more unregulated land release is developers…. see Texas…. helps to use all the data Hugh…

      • Thanks Hugh ….good stuff there ….yes that is an important distinction …….3.0 and under is affordable ….and at 8.3 Sydney has reached the absurd …and it looks like those silly mortgages taken out to aquire these unaffordable million dollar houses are unaffordable in themselves and are sucking the life out of the proud owners.
        What do you think might be the catalyst to undo this “lethal ” bubble in 2017 ?…we have to be reaching peak ability to borrow surely ?……..even if our treasurer seems to believe that our ridiculous borrowing levels are OK because “they are matched by the “value” of the houses “…………

      • TT….

        Hugh has worked for RE developers and some ideological sorts from mobs like Heritage for a long time, they spruik RE.

        RE with soften with in two years as well as the rental due to credit risk averse and over supply….

        disheveled…. everyone in the game pretty much knows it….

      • Thanks skip ……those affordability charts are illuminating ………….AUNZ looks like it has room for some correction ……..

      • TT … I’m pure !

        Skippy has a very vivid imagination.

        Since initiating the Demographia Surcey late 2004, I have deliberately done about 36,000 of voluntary time on these issues during my retirement … as an independent advocate.

        I was a commercial property developer, industry advocate and leader in my previous life (nothing to do with the housing industry whatsoever).

        The brief bio is accessible at the end of every Demographia Survey. Note the schedule at my archival website http://www.PerformanceUrbanPlanning.org .

        I cover these and associated issues within AN ADVOCATES TALE recently …

        http://www.performanceurbanplanning.org/definition-of-affordable-housing.html

      • Good one Hugh ……keep advocating ……..this housing situation in Aunz is toxic and a cancer in our societies ….and while some may feel rich they are the poorer for it ……they just don’t see that …..yet !……

      • Hugh….

        Yes and the whole shebang is premised on unregulated – deregulated land release, like your constant examples of Texas as your example of not only RE, but also ideologically. I’ve unpacked this all before, anywho….

        “Senator Bob Day of the Australian Senate calls the economic consequences of present land use policies “devastating,” in his introduction to the 12th Annual Demographia International Housing Affordability Survey. Noting that governments and central banks have been too quick to blame unprecedented housing affordability losses on demand factors and missed the “real culprit,” the refusal of governments to provide an adequate and affordable supply of land for new housing stock to meet demand” (typically urban containment policy). Calling the crisis “wholly contrived” Senator Day calls it “a matter of political choice, not geographic reality”, adding, “It is the product of restrictions imposed through planning regulation and zoning.” This year, Hong Kong has the least affordable housing (Median Multiple of 19.0), followed by Sydney (12.2), Vancouver (10.8), with Auckland, Mlebourne, San Jose, San Francisco, London, Los Angeles and San Diego all exceeding Median Multiples of 8.0. In each of these markets, housing costs relative to incomes are triple or more their pre-urban containment levels. Many markets with liberal policies remain affordable, with Median Multiples of 3.0 or less.” – demographia

        disheveled…. not a good look Hugh…. nor is the refusal to use all the data and flog just one mule….