Macro Afternoon

See the latest Australian dollar analysis here:

Macro Morning

Is it all systems go on risk markets again? Not quite, but it seems that sanity may yet prevail with potential relief from the trade war, albeit speculative that Trump may pullback some of the announcements. Stocks across the region rallied from relief more than anything with the USD still mixed against the majors

The Shanghai Composite put in a positive session – surprise, surprise, rising 0.3% but still well below 3000 at 2918 points. The Hang Seng Index did even better, rallying almost 1% but also below its own resistance at 30000 points and still below the long held lower trend line here on the daily chart:

S&P futures are up  alongside Eurostoxx, following on from the BTFD effort last night, but still nowhere near out of the woods:

Japanese stocks performed the best with the Nikkei 225 almost taking back all of the previous session, closing about 1.2% higher at 22555 points. This was all due to a selloff in Yen on the safe haven reversale with the USDJPY pair pipping back above the 110 handle, and getting back into the wide trend channel:

The ASX200 is again defying the odds, all on a bank short cover exercise really, finishing over 1% at 6172 points, holding very strongly now above 6100 again. The Aussie dollar has had a very small relief rally but is still a smidgen below the 74 handle with overhead ATR resistance at 74.30 or so the goal to meet:

The data calendar is again quiet tonight with US DOE oil inventory and existing home sales data the only events of note, although the ECB forum in Portugal is still ongoing.

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Comments

  1. Mining BoganMEMBER

    Just had RE agents knocking on the door. Told them I couldn’t be bothered talking to them because of the actions of one of their fellow offices. Why, they asked. Told them about not passing on offers to owners. Ooohhh…that office has been booted for that very reason, both sales and rentals.

    So these two are now my new best friends. We’re talking property markets. Threw a few numbers at them. Know what? They know. They know what’s happening. Dodgy auction numbers. Dodgy lending standards. Dodgy suitcases of money. Sales figures through the floor. They admitted it all. So my question is…

    Is the game in such trouble now they couldn’t even be bothered to try to bullsh!t? Or is the bullsh!t kept warm for only the weak and defenceless?

    • proofreadersMEMBER

      Nah. You’re meant to feel sorry for them, notwithstanding that for the last five years at least all they’ve had to do is to show they have a pulse to make a sale?

      • Mining BoganMEMBER

        But no, they knew from my initial reaction to their firm that I wasn’t gonna feel sorry for them even if an ambulance had to come to take them away.

        I reckon they’re picking on only the easy marks now. Too tough otherwise.

    • Thanks MB. While not coming close to your tour de force, I’ve also had agents open up with surprising ease about tough conditions, sales falling through, restricted lending, etc.

      I presume they have simply switched into full “lower the expectations of sellers” mode and are working their evil wiles at full pressure to unstick those sticky high price expectations and get sellers to capitulate. They need turnover or they don’t eat.

      • I think it will take some time for the sellers to capitulate. After all, all the talk about full recourse loans, BS as they are, should count for something.

      • “When things get tough, you have to tell the truth”… wait – that doesn’t sound right… Aaaah – dammit! Even that we got wrong!

    • arthritic kneeMEMBER

      The lease will on my rental was up and they wanted me to sign for another year. I wanted 6 months. They gave me grief but rapidly changed their tune when I lobbed in “because we are looking at buying, do you have someone in Sales I can talk to”
      Eventually got the call – asked about credit tightening.
      My new best friend told me it used to be about equity mate but now it’s about income. Apparently if I’ve got a good job I may be the same or even better off but if I have a dozen IPs maybe not so much.
      Tough times

    • To quote the big short

      “Why are they confessing” ?
      “They’re not confessing. They’re bragging”

    • You are what’s wrong with this country. Just live in your house. Be happy you have one. Stop worrying about what someone in the street wants to “offer”. Just live in your house. It’s what they are meant for.

    • Mate.

      House prices can never fall in Straya. Everyone says so.

      Well ok, but not in the major cities. Everyone agrees.

      Well ok, but not in the good suburbs. Everyone knows that.

      Well ok, but it’s only temporary and won’t fall far. We won’t have a crash. Every expert in the media has been very clear on that.

      (Australia you are here).

      • Old work friend, met him last week in Melbourne, tells me how he saw the US subprime crash and I said how I was in Ireland when it happened there, but he said it can’t happen here. Because in Australia people are asset rich but cash poor so the Government won’t allow it. I didn’t even bother to argue the point. Just said ok. 😀

      • I can see why you didn’t argue. His logic is impeccable!

        Irish and American Governments: “Our citizens are definitely cash rich so let’s stand by and allow our housing market to crash – wipe out the [email protected]!” Actual true history. Yep.

      • Gavin, assuming your friend story is true, it illustrates why markets are so often irrational.

        I saw enough insanity by now that my jaw didn’t drop.

      • It was a meet up with some folks I used to work with at Melbourne IT back in 2006. The consensus of the group was that I’m bearish on property and that a crash can’t happen here. It won’t be allowed. 😁 I didn’t want to get into house price debates since that’s how you spoil the mood. I was shown a bank account with $1.5m worth of debt but I have no idea what the debt to income ratio is.. another friend was bragging about how many properties he had that were worth about 3-4 times what he had paid. Told me of a house he owns in Brisbane and has never even seen it.

        They may afterall be right. I may be the loser but it reminded me of the big short. 😁

    • A classic example of PE at work. Milk the cash and hard assets, load the business up with debt then walk away when it gets too hard. DSE, Myers any one?

      • Correct Skip. That is why I run our own S/F with blend of investments.
        I still have the scars from Macquarie Infrastructure (MIG) and my parents were suckered for $300K in an unlisted property fund by a ‘trusted’ adviser.

  2. Didn’t like the look of Pauline on the TV tonight….. I think she is going to cave on the tax cuts tomorrow….money talks.

    • If this is what I think it is, it’s that scene in the big short where your man from the investment bank is eating at the restaurant taking about the way they package up sub prime shyza as grade A stuff.

      https://youtu.be/A25EUhZGBws

      • I’ve been intending to watch that film. Best reserved for when the missus is out of town. She doesn’t like old school sci fi like that. I on the other hand love it. She fell asleep during Space Oddysey 2001 lol.. but I love watching that stuff. Makes me a bit nostalgic and is more thought provoking than the stuff made these days. I really like all the Alien clone like movies that were made also. The old practical effects etc.. kind of creeps me out along with the horror films of that era. Something about CGI never quite sits right with the brain, but the old props feel more real.

      • That was the first sci-fi i saw as kid.
        I see every sci-fi that comes out at the cinema now.

      • Yes. I am an ultra low frequency trader after all. SLX derives its income in USD, and hopefully in GBP as well, while its expense is in AUD.

  3. With more local tariffs, cheap shit from china costs more, but wealth distribution to local manufacturing employees is increased.
    Resilience to external economic shocks is increased.
    In the ol’ days with big tariffs, everyone and their dog had a job.
    The only losers are the china importers that fund and lobby LNP/Labor.”
    Globalization without tariffs is just a race to the bottom exporting jobs to countries with the least regulation, wages, and job conditions.
    Tariffs are the “globalization tax” you pay for engaging another nations’ labour at the expense of your own.

    Being at the coal face of small scale manufacturing, i could have bought a factory shed years ago and expanded if property was at sane prices. Instead, i have stayed small scale and not hired anyone.

  4. NEW ZEALAND: Queenstown pod like a ‘big coffin’ … Otago Daily Times

    … New Zealand new Labour – led government … where is the action to abolish urban limits and properly debt finance infrastructure ? …

    Queenstown pod like a ‘big coffin’ | Otago Daily Times Online News

    https://www.odt.co.nz/regions/queenstown/queenstown-pod-big-coffin

    “It was like being in a coffin – a big one,” Finn Heenan says of moving to a Queenstown accommodation pod two months ago.

    “It wasn’t too great to be honest,” admitted the 18-year-old builder, who will next month turn student and study adventure tourism management.

    While staying at Jucy Snooze Queenstown, the teenager from Clevedon said he felt enclosed and his health suffered.

    “There were no windows or fresh air and it was a bit like being in a spaceship. It cost $45/night. The air was so dry that every morning, I’d wake up with a sore throat.” … VIEW & READ more via hyperlink above …

    … New Zealand’s idiotic construction costs … check comments on thread …

    Latest QV Costbuilder report shows average cost of building a home in the main centres rose 3.4% in the year to April; Christchurch followed by Auckland are the most expensive places to build | interest.co.nz

    https://www.interest.co.nz/property/94378/latest-qv-costbuilder-report-shows-average-cost-building-home-main-centres-rose-34

    … check out … recently updated …

    PERFORMANCE URBAN PLANNING
    … refresh / reload if necessary …
    http://www.performanceurbanplanning.org/

    • INFRASTRUCTURE NEW ZEALAND 42 MEMBER DELEGATION TO SELECTED UNITED STATES METROS …

      Enabling City Growth: Lessons from the USA (pdf) … Infrastructure New Zealand

      https://infrastructure.org.nz/resources/Documents/Reports/Infrastructure%20NZ%20USA%20Report.pdf
      .
      .
      … Wellington Presentation Event … WED 27 JUNE 2018

      Infrastructure New Zealand – WELLINGTON – WED 27 JUNE 2018 EVENT: Lessons from the USA – Planning, Funding and Enabling City Growth

      https://infrastructure.org.nz/event-2932846

      Infrastructure New Zealand – Home

      https://infrastructure.org.nz/

      • … San Francisco Bay Area Update … … CBS News …

        Home price insanity: $2.6 million for 900 square feet … CBS News

        https://www.cbsnews.com/news/home-price-insanity-2-6-million-for-900-square-feet/

        If you’re looking for homes in Palo Alto, Calif., our sympathies to your bank account. In the most recent example of home prices gone bonkers, a two-bedroom, one-bathroom cottage has been listed for $2.6 million.

        At 900 square feet, that means you’d be paying more than $2,800 per square foot — an eye-popping number more typical of a luxury penthouse in Manhattan than a suburban neighborhood. The cottage has a detached garage, but only outside basement access for the laundry room. There have not been any offers yet, though realtor Laura McCarthy says she had a number of showings.

        “If you look globally, London has remained strong. New York has remained strong. We have a lot here. We have people coming in from all over the world,” McCarthy told KPIX.

        The median home price in the U.S. rose 8.7 percent to $215,600 in April compared with a year earlier, Zillow reported last month. In San Jose, Calif., home values rose 26 percent in April to a median $1.26 million … VIEW & READ via hyperlink above …

    • It was never meant to do anything … Just a dog and pony show so that Hockey could say he was doing something and 1 Chinaman had to sell a blue chip property. Boohoo.