Macro Afternoon

Another green board across Asian share markets today as the positive Wall Street lead kept risk buttons flicking on the on switch. Treasuries and sovereign  bonds remain less favourable in the wake of the ECB language regarding its QE program while commodities were relatively steady although the Brent/WTI gap remains wide.

The Shanghai Composite has put in yet another scratch session, climbing just a handful of points to close at 3116, where it started well but finished with a lack of confidence. The Hang Seng Index has gapped higher again, lifting some 0.6% and climbing well above the 31000 point level at 31463. This is looking even more unsustainable as it races ahead to the former high at 31700, a pullback to the high moving average is to be expected:

S&P futures are building here, now indicating a strong session later tonight (again, watch Tesla – up 9% since I mentioned it…cough):

Japanese stocks did a lot better than expected with a slipping USDJPY not supposed to support such a move, the Nikkei 225 closing about 0.8% higher at 22823, really building positively on the daily chart. The USDJPY pair has slipped back to the uptrend line, breaching the low moving average on the four hourly chart, now dicing with the 110 handle and potentially forming a bearish rounding top:

The ASX200 had a solid day again, lifting some 0.5% to finish well above 6000 at 6057 points, again not helped by banking stocks with materials and energy doing the heavy lifting.  The Aussie dollar seems to have peaked here, pulled back to the mid point of the moving average channel at the 76.50 level against USD. Even though it has surpassed the early week session high, this is to be expected, with a retracement as low as the 76 handle possible:

The data calendar tonight only has some mid level tier releases, namely German factory orders and initial jobless claims in the US.

Comments

  1. So reading all the doom and gloom on house prices, seriously does anyone really think the rba can drop rates though? Canada increased them on falling property prices and the g7 nations are all tightening conditions. If rba dropped we would make world headlines for sticking out like a sore thumb. International investors would think sh!t is getting real down under I better get my money out. Whaddayouthink? I don’t buy falling rates even though the powers that be would love them to fall.

    • Cyclone Ranger

      Yes. Me. And the proprietor of this site. And flawse. And 007.

      4, 3, 2, 1…

    • I know I’m reading interest rate drops everywhere but it looks like even EU might raise as Draghi is looking to teach IT a lesson. Hmmm funny if rba had to raise

    • RBA is stuck. Can’t raise (will crash housing market) and won’t cut (GDP too strong by the way, but more importantly wants to keep powder dry for actual crisis, doesn’t want moar housing debt). Would like to raise to reload the chamber but can’t.

      MB says next move is down but doesn’t set a time line for that – I suspect it will not be until crisis hits or real economic weakness is evident in employment, GDP etc. Could be a long way off.

      AUD is neither here nor there. RBA won’t mind if it goes down a bit – helps export earnings and inflation too.

      • Cyclone Ranger

        You keep viewing their potential actions through a lens of reason and logic.

        Remember when Australia had a manufacturing industry? Remember why it doesn’t?

      • CR I know there is a lot of hate for the RBA on this page but I think Phil Lowe actually gets it.

        Capn Glenn’s overenthusiastic rate cuts in 2015 are now seen as a mistake by everyone (except Reusa) which helps too.

      • CR do you really think Australia will ever have a significant export Mfg industry again cuz I want to know what your smoking….

        Hint Australia has always been a resource exporter from day one, only WWII provided the demand both external and internal to engage in broad industrialization. Once Asian and European capacity came on line it was over and done with, albeit the internal had some room to grow in infrastructure.

        Not every country on the planet exists on the same time line CR.

    • Even if they drop I don’t see it stimulating the masses into a property frenzy again. They have a couple of cuts left, what then? As Reusa would say lower teh rates to fix thing! But it won’t fix thing, it will do nothing. They can go to 0 but with tight lending standards nothing will change. I kind of hope they do, as my long USD and Euro positions will improve. 😁

      • Like you Gavin I am nicely positioned for a cut (AUD drops) or a hike (housing crashes then I buy one). Hence they will hold!

        And so we wait… 😁

      • Agreed
        If rba cut, I’m not sure banks would pass any of it on
        In fact they might raise them

    • Super Phoenix

      That’s what I have been saying all along. AUD will still fall with rising rates in the face of capital flights. If they cut it will be hello Zimbabwe.

  2. Brisbane corporate executive resigns after being caught doing a poo 30 times on the footpath:

    https://www.smh.com.au/business/companies/aveo-executive-resigns-after-being-identified-as-poo-jogger-20180607-p4zk1e.html

    It’s like living in the Third World.

    https://www.news.com.au/lifestyle/real-life/news-life/gps-data-will-be-used-to-catch-taxi-drivers-using-a-laneway-in-sydneys-innerwest-as-a-toilet/news-story/07e4e4fced45c25b7788518d36d54f7d

    So these executives not only want our wages to shrink to 3rd world levels but our footpaths to stink to 3rd world levels.

    • “In a statement, CCI chief economist Rick Newnham said it was positive news for WA’s economy, “finding its feet after transitioning from mining construction to production”.

      Yep. It’s found its feet, pity they are wearing concrete boots at the bottom of the Swan River.

      • Also, going from construction to production only benefits the company and the government. None of that money is going to find it’s way into the average punters pocket. Think the WA government will lower tax or electricity or anything? These wankers can say GDP is up until the cows come home, doesn’t help me in the slightest.

    • Hay timmeh…

      Can you tell me the point of this game please, you see America had a massive RE implosion that resulted in millions kicked out of their house, huge profit for foreclosure mills, blackrock became the biggest renter in America, and at the end of it all enabled the biggest wealth transfer upward in modernity…. oops forgot is back to bubble level in many places again….

      Whats the point of collapse if only to repeat it again and again…. is it some primitive emotional psychological issue – ?????

      Ohh and job – wages are still stagnate if not getting endlessly crapified by the sharing gig thingy….

      • Skip, by the time I have read and deciphered your posts I am usually too mentally drained to respond. I’ll leave it at that.

      • So I take it your hand waving away a considered response aka taking a bath because you for some reason wish to avoid talking about real world examples. Although I understand you bringing up your emotional state of mind, kinda denotes how critical thinking ranks.

      • No, I just prefer not to have a conversation with you. Nice try at goading me though.

      • I’ll bite… I’m not disagreeing with you Skip – I’m actually rather surprised how quickly that turd they call US economy turned over the other side. That being said – I also ask myself – how can this be fixed. We’ve sat on the fence for so long and the f*cking circus did a couple of rounds around the town, and we’re seeing the same wagons now. Now what?

      • Again you don’t wish to deal with hard data, environmental bias is my guess, which smacks of some wonky ideology.

        Hay when its your turn and you and yours get the wood chipper treatment I’ll just look the other way.

        You obviously deserved it.

      • Ino

        Why are we in such a financial mess today? There are lots of proximate causes: over-leverage, global imbalances, bad financial technology that lead to widespread underestimation of risk.

        But these are all symptoms. Until we isolate and tackle fundamental causes, we will fail to extirpate the disease. ECONned is the first book to examine the unquestioned role of economists as policy-makers, and how they helped create an unmitigated economic disaster.

        Here, Yves Smith looks at how economists in key policy positions put doctrine before hard evidence, ignoring the deteriorating conditions and rising dangers that eventually led them, and us, off the cliff and into financial meltdown. Intelligently written for the layman, Smith takes us on a terrifying investigation of the financial realm over the last twenty-five years of misrepresentations, naive interpretations of economic conditions, rationalizations of bad outcomes, and rejection of clear signs of growing instability.

        In eConned, author Yves Smith reveals:

        –why the measures taken by the Obama Administration are mere palliatives and are unlikely to pave the way for a solid recovery

        –how economists have come to play a profoundly anti-democratic role in policy

        –how financial models and concepts that were discredited more than thirty years ago are still widely used by banks, regulators, and investors

        –how management and employees of major financial firms looted them, enriching themselves and leaving the mess to taxpayers

        –how financial regulation enabled predatory behavior by Wall Street towards investors

        –how economics has no theory of financial systems, yet economists fearlessly prescribe how to manage them

        https://www.goodreads.com/book/show/6966814-econned

      • But HOW – I mean – all theory is good and great, how does it get put in practice? How do you wipe the slate clean? how do you remove all/most/enough the snouts from the trough?

        I fear that change of the system – whatever form that will take – is not for us, not even for the next generation (today’s 10 yos) but probably the generation after them, if I’m allowed to be unrealistically optimistic tonight.

        To me – it seems that if Neoliberalism took nearly 80+ years to infect the world, it would stand to reason that a similar amount of time will take for a new system (if not longer). Then you ask yourself – why does it have to be “The World Order”? Why can’t we ‘just’ be ourselves – not this larger than life thing… yeah … good f*cking question, eh?

        And that’s making the assumption that a ‘good system’ already exists, ready to be put in place. That makes the assumption that systems are linear, that “friction force is 0”, that the ball is an ideal sphere… you get the picture. That makes the assumption that everyone will prostrate themselves singing praises to the new saviour, leaving habits and knowledge and history of a life-time in the dust…

        Yeah, nah! So, how then. Where do you start? How do you start?

      • “Skip, don’t pseudo-intellectualize me bro!”

        That is so old school and basically pins the tail on the donkey, crap I’ve not heard that classical missive for yonks.

      • ino…

        Firstly there is no perfect and never will be, tho what we can attempt is some semblance of balance and avail ourselves to new information.

        Don’t know about you or others but I’m getting a bit sick of living with the theoclassical remnants of the ages long past their use by date. If some wish to square that with vacuous opinions all I can say is why don’t they live the dream and stop attempting to force everyone else in accepting their dicta.

      • SweeperMEMBER

        Agree. The people who have profited the most would already be sitting it out in treasury bills.

      • SweeperMEMBER

        “But HOW – I mean – all theory is good and great, how does it get put in practice? How do you wipe the slate clean? how do you remove all/most/enough the snouts from the trough”?

        Crashing one asset doesn’t address the problem caused by a concentration in ownership of assets because it’s pretty easy to rearrange your assets if you’re wealthy. Especially when crashing that asset causes high unemployment.

      • jeez louise – going full whack with the obfuscation and the bully/abuse tactics at a flippant comment in a light-hearted and light-weight economic forum… mate you have problems.

      • Ino,

        Hope you found Skippy’s non-response and Sweepers agreement helpful.

        Dont expect anything useful from the Private Bank Apologists.

        Dont be sucked in by their crocodile tears and stories about the fall of Rome, these dudes are status quo index huggers.

        “..ino…

        Firstly there is no perfect and never will be, tho what we can attempt is some semblance of balance and avail ourselves to new information.

        Don’t know about you or others but I’m getting a bit sick of living with the theoclassical remnants of the ages long past their use by date. If some wish to square that with vacuous opinions all I can say is why don’t they live the dream and stop attempting to force everyone else in accepting their dicta…”

        LOL

        Big noting but do nothing talk in its purest form.

      • oo7…

        Can’t find anything in your comment to evaluate, its just banks banks banks…. and anyone that attempts to look at the whole picture in granularity is deemed a bankster apologist. Look just for fun we do your thing, what then, is all the corruption through out the c-corp and political system just going to stop. Your joking.

      • aj…

        Give it a brake. The comment was an obvious attempt to make out mine was rubbish because they could not be bothered to fire up a few brain cells and respond. Better to just do a drive by sledge and spew and then expect to be taken seriously.

    • Amazing we haven’t even seen any job losses yet. I remember 2008 they were sacking people left right and centre, I’m in construction engineering and major builders and financers? had their accounts frozen because banks couldn’t source the funds. Whole construction sites came to a halt until the govt stepped in as a lender of last resort. Gosh if this happened today… we aint seen nothin yet

  3. … and another franchise system apparently hits the wall. This article claims that the chocolate retailer, Oliver Brown, went into voluntary administration today, leaving 50 franchisees hanging. But I’m only getting this news from the one source, it seems not to have been picked up by msm yet (so it could be dodgey).

    https://www.msn.com/en-au/money/company-news/uncertain-future-for-50-franchisees-after-chocolate-cafe-chain-oliver-brown-collapses-into-voluntary-administration/ar-AAyjYVs?ocid=spartanntp

    deja vue all over again.

    https://www.hospitalitymagazine.com.au/oliver-brown-cafe-manager-fined-27k/

    • Typical. Wait for Pt Piper to get similar treatment. It’s not even nimbyism anymore, it’s “i’m f*cking rich and we have different rules to you scum”

      • Cyclone Ranger

        Oh, I’m soooo sorry Sir. We didn’t realise you hadn’t been paying attention earlier?

        Would you like sugar or honey with your daily gruel serving?

    • Ha. I’m thinking what we’re going to get is a lot more of ‘Yes in Your Back Yard’.

      YIYBY

    • Super Phoenix

      Strayans are so hopelessly spoilt – you cannot claim to have enough vibrancy until you have noise problems in 34 different languages!!!

  4. Super Phoenix

    Damn Global X. I have been generously offering to take their trouble off their hands at a reasonable discount to its cash backing before their self-inflicted deadline for their new index allocation is reached and yet it is refusing to accept my sensible offer.

    I guess I may have to make an offer they cannot refuse….