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Weekend Reading: 4-5 April 2020

Global Macro / Markets / Investing: Russia, Saudis Deny Trump “Expectation” Of 10 Million bpd Oil Production Cut – Zero Hedge Fed Panics As Foreigners Dump A Record $109 Billion In US Treasuries – Zero Hedge World stocks drift as wary investors expect grim U.S. jobs data – Reuters Economic fallout mounts, worldwide cases top

Latest posts

18

A new superannuation rort emerges

The Australian Government has inadvertently opened another superannuation loophole that enables people to simultaneously put money into superannuation and then withdraw it, thereby saving on income tax: When parliament approved the Coronavirus Economic Response Package Omnibus Bill 2020 last week, they put no new restrictions on how people could contribute into super. This means that

387

Macro Afternoon

Another down day for Asian stock markets as local markets erase the one-off blip on Wall Street overnight as oil prices come back slightly and USD strengthens against Yen and gold. Japanese and Chinese PMIs came in poor as expected with the PBOC weakening the Yuan significantly against USD to over the 7.11 handle. The

13

Streaming competitors feast on Foxtel’s carcass

Roy Morgan Research has released new data showing that Foxtel continued to bleed subscriber numbers in the year to February 2020, at the same time as every one of its online streaming competitors grew their subscriber bases: Netflix remains by far the nation’s most watched subscription television service, with 12.20 million Australians having access to

12

Decades of lax regulation leaves legacy of high-rise slums

A confidential leaked document suggests Melbourne’s high-rise apartments are riddled with construction faults: A confidential leaked document listing 15 Melbourne properties with faulty cladding that will get taxpayer-funded repairs also reveals the buildings are riddled with other construction problems… Inspections indicate more than two decades of lax regulation have left buildings with a range of

21

Stop press: Superannuation fund says super bailout a great idea

Via AFR: When AustralianSuper chief executive Ian Silk puts the case for possible Reserve Bank of Australia liquidity support for industry super funds, he points to the fact that the financial system is in unchartered territory. He says if the Treasury’s estimate of a $27 billion drawdown of super savings by millions of Australians proves accurate, the

20

MIT: Stronger pandemic lockdowns better for economy

Arguments around whether to implement harsh lock-down measures to curb the coronavirus’ spread typically centre around the trade-off between protecting human life and the economy. New research from MIT suggests that there is no “trade-off” and that stronger lock-down responses typically generate stronger economies: The study, “Pandemics Depress the Economy, Public Health Interventions Do Not:

29

Nev Power talks manufacturing boom nonsense

Via the AFR comes motherhood statements: Australia has an “enormous opportunity” to reboot its manufacturing sector by taking advantage of crippled global supply chains and a lower currency, says Nev Power, the man handpicked by the Prime Minister to lead an expert advisory commission. Former DowDuPont executive Andrew Liveris has been recruited to work with the

1

Caixin China PMI very poor

Via Caixin: China’s service sector continued to face challenging conditions in March, with the COVID-19 outbreak continuing to weigh on the performance of the sector. The declines in output and new orders were not as severe as those seen in February, however, when the country imposed stricter measures to reduce the spread of the virus.

15

Nearly one-in-five apartments sold for loss in Q4

CoreLogic has released its latest Pain & Gain Report, which reveals that nearly one-in-five apartments were sold at a loss across Australia’s capital cities over the December quarter: Just under one-in-ten detached houses also sold at a loss across the combined capitals. As shown below, the proportion of loss-making properties has fallen across all markets

24

English language schools face wipeout from international student crash

Last week it was first reported that Australia’s $2.4 billion a year English language schools are facing collapse amid the travel bans and collapse in international student numbers: Ian Pratt, the managing director of Lexis English, which has six centres in Australia and employs 330 people, said his business had suffered “massive cancellations”….  he said

62

Who will be COVID-19’s biggest f’wit?

Australian universities made the early running with their community-destroying people smuggling. But there are now several major contenders. Transurban is one: Australia’s largest toll operator is under pressure from federal and state governments to reverse price hikes, as it stands accused of making an “unforgivable” decision when road transport is regarded as crucial for essential

3

US jobs preview

Via Calculated Risk: Important Notes: 1. The BLS reference week includes the 12th of the month. Massive COVID-19 layoffs started after the reference week (although there was a pickup in layoffs during the reference week). 2. Watch for Special Notes in the release. There could be some important announcements on how the BLS will be handling unemployment

2

Westpac mulls dividend cut as APRA grovels

In Australia, the bailed-out get to decide where the money goes: Westpac chief executive Peter King said the bank is considering its capital position and whether it may be forced to suspend dividend payments, while also crunching the numbers on bad debts caused by coronavirus relief measures. On his first full day in the job, the

16

If Virgin fails will Qantas become a monopoly?

Virgin Australia CEO Paul Scurrah has dismissed suggestions that the struggling airline is seeking a federal government bailout. He argues that the $1.4 billion loan facility that Virgin is seeking would have to be repaid eventually. Scurrah also warns that Qantas could emerge with a long-term monopoly in the domestic market if Virgin collapses. The

10

Stockpiling fails to rescue retail sales

Annual Australian retail sales growth plunged further in February, despite recording a decent monthly lift: While retail sales rebounded by 0.5% in February, they collapsed to just 1.8% year-on-year. Due to the impacts of COVID-19 on retail trade, the trend series has been suspended by the ABS. Therefore, the trend series has not been updated

7

People movements plunge 75% amid self-isolation measures

Roy Morgan Research has released data (here and here) showing the massive drop-off in people movements across Sydney and Melbourne amid the coronavirus lockdown: Roy Morgan has partnered with leading technological innovator UberMedia to aggregate data from tens of thousands of mobile devices to assess the impact of new Government regulations on social distancing designed

17

Saxo: Stocks about halfway down

Via Saxo: Summary: With all the major central banks expected to be effectively zero bound in 2020, the scope for returns in bonds will be low for years to come. Equities have hit multiple speedbumps since 2008. But every time, they came back to new all-time highs fuelled by endless policy action, mostly from central banks.

12

ASX surges on oil stupidity

The AUD is up as usual in Asian trade: Bonds are pulling back on oil: XJO is up: Tracking Big Iron which still looks like a sitting duck: Big Gas is running with El Trumpo’s oil rumourtage. His mates no doubt front ran the supply cut drivel: Big Gold is yawning again: Big Banks are

27

Household financial confidence destroyed

Via Martin North: The latest edition of the DFA household surveys, up to 31st March 2020 reveals in painful detail the impact of the current health emergency. Not that confidence was particularly strong beforehand, thanks to the high costs of living, and flat real incomes for several years. But the shock of the economic freeze,

3

High-rise construction collapses across Australia

The Australian Bureau of Statistics (ABS) this week released its dwelling approvals data for February, which recorded a modest trend rebound in apartment approvals: However, apartment approvals remained 41% below their June 2016 peak. Today, I want to focus on the high-rise apartment segment, which has driving the apartment bust. The next chart shows the

12

States launch $15b stimulus

While all of the focus has been on the $300 billion of economic stimulus deployed by the federal government – equivalent to some 16% of GDP – it is easy to forget that the state governments have launched stimulus packages of their own. The Grattan Institute has done the sums and found that the states

34

Let the universities collapse

Via The Guardian: Tanya Plibersek has called on the Morrison government to provide low-cost loans and guarantee universities’ funding, warning some are at risk of collapse due to falls in international enrolments during the Covid-19 crisis. Ahead of the education minister, Dan Tehan, taking a support package to cabinet to be announced as early as next

4

Macro Morning

By Chris Becker  Last night saw the return of risk despite another record blowout in unemployment claims in the US, where daily deaths from COVID-19 are now well over 1000. Its was all about a supposed phone call to oil producers Russia and Saudi from Trump that is supposed to result in production cuts, the

54

Winter is coming for SloMo

SloMo has done better since last weekend when the entire nation was heading in a different direction. Stimulus attempt IV, DoleHider (JobKeeper), was the key policy shift but there is more. The discredited Brendan Murphy has disappeared in favour of SloMo’s daily briefings. And yesterday we saw free childcare for essential workers (which presumably includes