Macro Afternoon

Its been quite mixed across risk markets in Asia today with Chinese markets and their satellites retreating while Japanese stocks put on gains as Yen weakened considerably in the afternoon session. Traders are positioning for a potential spike in USD on the February CPI print later tonight while commodity prices continued to come off the boil, with oil and gold falling.

The Shanghai Composite is just holding on above the all important 3300 point level, dropping about 0.2% to be at 3319 points going into the close.  The Hang Seng Index is doing about the same, down 0.2% at 31532 points, unable to make a dent into new highs as rolling ATR resistance above at the 32000 point level looms:

S&P futures are retracing from last nights mid sessions highs, where the 2800 point level remains the resistance area to beat:

Japanese stocks did well as the Yen sold off, the Nikkei 225 closing 0.5% higher to 21938 points, getting through its midpoint of control and ready to breakout . The USDJPY pair surged strongly this afternoon on the Financial Minister shenigans plus in anticipation of the CPI print with a strong bounce off four hourly support at the 106.30 level. The resistance to beat is quiet obvious here at 107 handle:

The ASX200 took back most of yesterday’s pretty weak gains, falling 0.4% or 21 points lower to 5974, still well shy of the 6000 point barrier.  The Aussie dollar is not helping here, continuing to advance against USD as it moves inexorably towards 79 cents against USD, almost hitting a two week high:

The economic calendar ramps up tonight with a big one – US CPI print for February.

Comments

    • If the market crashes before they put their money back into the market they’ll be singing their thanks to these developers.

    • MediocritasMEMBER

      I had this done to me. Classic. Didn’t hurt at all though because I pretty much expected it. Bought the place off the plan for a steal (120k, directly opposite the Perth Mint), carefully read the fine-print and noted that the developer could sunset the deal if 5% (as I recall) of the apartments remained unsold after an elapsed time.

      Surprise, surprise, the market ripped like crazy, the place was way up in price before any construction had even commenced and we all got sunsetted. I’ll bet that the developer simply held some apartments back and never listed them for sale, so that they could bust all the contracts and re-sell at the new, higher price.

      • Yeah but you’re clever in that you know the game at this stage, you’ve seen it all before no doubt in Europe, but look how many numpties don’t even know they have interest only loans, and how many do you think sign these things without reading them or getting legal advice? I’d say the majority… I feel sorry for some of them, simply because they want to move onto a stage in their lives and have to deal with charlatan’s like these.

        But every experience makes us smarter, I once had to take a friend to court over money. Big lesson learnt…. The amount of money involved was relatively small to me now (I was a student at the time), but taught me to trust nobody, that includes Real Estate Agents, The Media, Talking Heads, Mortgage Brokers, Banks, Car Dealers, Sales People etc… the list goes on… I lost about $1,000, my partner about $5,000 and another friend at the time lost $10,000 (which would have hurt and probably still does), all to the same person (hence the court date). But between my partner and I that $6k was a very expensive but important lesson that could have the ramifications of saving hundreds of thousands of dollars years later. So I wouldn’t change things given the choice now.

      • Doh, Gav! The golden rule is to never lend money to friends! And if you do, consider it a gift, cause you ain’t getting it back!

      • Timmeh too long a story, but the short version is it was money paid for work done on my car (engine work), my partner paid same person money to fix a car (as her first car) and was paying monthly installments, unknown to me at the time another person (who I met later) had paid same person $10k for work on his car.

        This person had started out reliable, like all good con men, but over time had become less and less reliable to the point where all contact was no longer possible. In part a drug habit was responsible for this behavior.

        Like I say, a good lesson and an important 1 to learn early on in adult life and will serve me well in future I believe.

      • MediocritasMEMBER

        Great life lesson there Gav, I tell my own variant of it to the young-uns (avoid doing business with friends and family). They generally listen except when romance is involved, then I just headbutt the wall.

    • I recall the NSW instances had class actions being taken against the developers. This was on the basis the laws were intended to give purchasers the option of rescinding, rather than giving the developer a free bet on whether property prices would rise.

      Not sure where those cases are at.

    • Yeah. Off the plan is a risky idea for buyers. Developers are carnts and buyers are naive / innocent / clueless / completely negligent in doing their own research, getting legal advice and looking after their own interests (take your pick).

      Pity Melbourne probably won’t crash fast enough to save these guys from putting down a deposit somewhere even crapper in desperation.

    • Why is it that just about everything revolving around real estate is just so sleazy? From phoenix developers, to Lebbo councilors, to shiny suit wearing, audi driving, cheesy grin on a bus stop advert real estate agents? Then we have a treasurer that lives and breathes it. It stinks to high heaven!

      • Basic greed and the primitive desire to have our own piece of land. What gets me is not that we are like this, but that this is still such a cowboy market. For something so necessary for well-being, of the individual, family and the community, you’d hope that it would be one of the best regulated and monitored parts of society. As we know, it is far from it and we all pay dearly.

      • Money and large sums of it is why, the used car scene is not much better, but the sums of money are generally smaller. A booming market is the worst time to try and do deals in Real Estate as I’ve found out the hard way, deals accepted and reneged last minute, gazumping, under quoting etc..

        Dodgy people are always looking for a way to make a quick buck and Real Estate is poorly regulated so it attracts blow flies like a bug zapper. 🙂

      • Large amounts of money attract sharks, and in such waters the least scrupulous out-compete the rest.

        I expect if you try being a scrupulously honest real estate agent (for example) in a highly competitive environment, you go out of business. The system rewards the shonky.

      • Footsore. Agreed, but it has been this way since millennia I guess. One only has to look at the history of the word landlord to understand how people like to f*ck their neighbours without as much as a reacharound.

      • Timmeh,

        It’s a bit crude, but perhaps a political party called ‘The Reach-Around Party’ could be a success. It acknowledges that the common folk are generally being rogered by business and the connected sorts, but at least they are going to try our darnedest to give something back.

      • LOL, I like the idea! The slogan can be “you know we are gonna f*ck you, but at least we’ll give you a reach around!” Be more honest than our current politicians!

    • Hmm…I’ll bet you $5 that Reusa read that as “Hom0 ownership” – not that there’s anything wrong with that.

    • Max, do you have a job ?

      Where is your superannuation invested ?

      In will affect everyone not just boomer retirees and the benefits will flow to foreign parasitic hedge funds.

      Great article in “Cuffelinks” MB lewsletter ( FREE ! ) on “Lets get the number right on imputation” from Graham Horrocks.

  1. hey macro team, do you guys have any data on emigration rates out of sydney/melbourne to other parts of australia for non-immigrant australian residents? i know you had an article about this a while ago with some graphs showing the rates of population movement out of the capitals to regional australia etc but i cant find it.

  2. For the latest in the BIS routine attempts to pass off private bank ideology / spruik as economics

    Central bank digital currencies

    https://www.bis.org/cpmi/publ/d174.htm

    The introduction of a CBDC would raise fundamental issues that go far beyond payment systems and monetary policy transmission and implementation. A general purpose CBDC could give rise to higher instability of commercial bank deposit funding. Even if designed primarily with payment purposes in mind, in periods of stress a flight towards the central bank may occur on a fast and large scale, challenging commercial banks and the central bank to manage such situations. Introducing a CBDC could result in a wider presence of central banks in financial systems. This, in turn, could mean a greater role for central banks in allocating economic resources, which could entail overall economic losses should such entities be less efficient than the private sector in allocating resources. It could move central banks into uncharted territory and could also lead to greater political interference.

    Considering the fraud, crookedness and asset price bubbles blown by the private banks over decades and decades ….. being less efficient than that would take some effort.

    Anyway no resource allocation by Central Banks would be involved as that would be handled by individuals with more pay left in their wallets as a result of the tax cuts on lower income earners enabled by full control over public money in public hands.

    Cue the BIS flying monkeys of private bank apologia in 5,4,3,2,1.

      • Thanks Tailor that was a good vid by Martin.

        At first I thought you meant Peter Martin!

        Lol – that was puzzling.

        I liked that he referenced the Norway CB – the banker boys are in the spotlight and they hate that!

      • Sounds like he might be on the same page as Steven Keen.
        Not sure I accept 7.10 at face value. Where is the FOMO variable? …Some of these could well be non-linear.

    • “For the latest in the BIS routine attempts to pass off private bank ideology / spruik as economics”

      Banks are just a reflection of mainstream economics oo7, you know the one that had zero functional model of monetary systems or finance.

    • The first point on commercial bank deposit funding is probably true. But then how is it any different to withdrawing your deposit into currency?
      The second point is rubbish. The only way I can imagine the CB could be a less efficient allocator of capital than the private sector would be if they solely bought crypto. Which you and Mig would probably support.

    • Not a terrible paper from the Eurocrats.
      -Negative interest rates and banning high denomination bills is included in the discussion.
      -Possibility for commercial banks to be forced to deleverage.
      -Lot of disruption potential for payments networks. Good – the payment friction is too damned high.

      Bring it on.

      • Cee,

        Not sure that the BIS are that keen on the idea. They probably share Phil Lowe’s view that Central Banks should keep out of the way, sit back and do SFA.

        Which is just how private bank apologists like it.

  3. The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the pre-supposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that “water runs uphill,” no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores.

    James M. Buchanan in Wall Street Journal (April 25, 1996)

    On the elicitation of preferences for alternative therapies.
    McNeil BJ, Pauker SG, Sox HC Jr, Tversky A.
    Abstract

    We investigated how variations in the way information is presented to patients influence their choices between alternative therapies. Data were presented summarizing the results of surgery and radiation therapy for lung cancer to 238 ambulatory patients with different chronic medical conditions and to 491 graduate students and 424 physicians. We asked the subjects to imagine that they had lung cancer and to choose between the two therapies on the basis of both cumulative probabilities and life-expectancy data. Different groups of respondents received input data that differed only in whether or not the treatments were identified and whether the outcomes were framed in terms of the probability of living or the probability of dying. In all three populations, the attractiveness of surgery, relative to radiation therapy, was substantially greater when the treatments were identified rather than unidentified, when the information consisted of life expectancy rather than cumulative probability, and when the problem was framed in terms of the probability of living rather than in terms of the probability of dying. We suggest that an awareness of these effects among physicians and patients could help reduce bias and improve the quality of medical decision making.

    https://www.ncbi.nlm.nih.gov/pubmed/7070445

    disheveled… now what would happen if laws and regulations and their makers which administrated both markets and the public spheres lived in a complete fantasy universe….. ummmm….

  4. Taibbi’s new piece is up over at Rolling Stone. This one looks at why it is farcical to criticise Trump for wanting to chat with N.K. due to America installing and removing despots at its convenience for the last 70 years.
    https://www.rollingstone.com/taibbi-normalizing-trump-human-rights-abuse-foreign-policy-china-korea-w517779

    “The real measuring stick we use when it comes to determining whether a foreign regime is irredeemably monstrous or an important ally is whether the leaders we’re talking about are our bastards, or their own bastards – puppets, or free-lancers.

    Dictators who take the throne with our backing get weapons and cash. The ones who do it without our backing usually find themselves getting a nice healthy dose of regime change sooner or later.

    Sometimes the offender starts out as an American lapdog only to leave the kennel and instantly become a Dangerous International Human Rights Offender.

    Manuel Noriega was on the CIA payroll until 1988, but later became disobedient and found himself holed up in a nunnery listening to invading American troops blaring “I Fought the Law” (the Clash version, in a nice detail) as they waited for him to surrender.

    Saddam Hussein was another friend-turned-target, as was Diem and a few others. The line between friend and pariah in our foreign policy is incredibly slim. It really has nothing to do with anything beyond the political utility, to America, of the regime in question.

    This is why the debate over Trump meeting with Kim Jong-Un is so absurd. The crime here isn’t meeting with a dictator – we snuggle up to worse creeps all the time – the crime is meeting with an out of pocket dictator.”

    • Taibbi is right but not first to reach that characteristic of US foreign policy. The paradox is that since experts determined US policy ( before 1945 almost no one had a degree) coupled with parochial ideological objectives ( some vision which resonated in the US) the ethical contortions are more complicated.