Macro Afternoon

A slightly positive result across Asian share markets today, with the USD weakening against everything except Yuan, which fell slightly due to the PBOC fix. Japanese stocks rose despite the firmer Yen, while the Aussie was helped by a surprise boost in consumer confidence, as local stocks finally stabilised.

The Shanghai Composite is up only a few points going into the close, currently up 0.1% to 2724 points. The Hang Seng Index is doing much better, up 0.7% at just above 26350 points, trying to find a bottom as it remains close to the previous low:

US markets were the weakest link overnight, with S&P and Eurostoxx futures up only slightly. The four hourly S&P 500 chart shows a steady sideways pattern after the breakdown last week, so watch for a 2890 point upside break:

Japanese stocks did better than expected with the Nikkei 225 rising 0.1% to 23498 points, barely holding on to daily support. The USDJPY pair remained in a tight range, just staying above the 113 handle going into the London session, where the pattern is now morphing into a bearish descending triangle on the four hourly chart:

The ASX200 has closed about 8 points or 0.15% higher to 6049 points, also barely hanging on to support as the daily chart suggests a fall back to 6000 points proper.   The Aussie dollar continues its rally, bursting through the 71 handle, which I did not expect this much upside, breaking above trailing ATR resistance. The next price level to beat is 71.60 or so, but momentum is well overcooked here, so I’m watching the lower timeframes for any suggestion of a reversal:

The economic calendar is relatively quiet again with a few speeches from Fed officials and some second tier UK data.

Comments

  1. Forests and trees and being able to see etc.
    Arrow 2 says Re losses for overleveraged punters into housing
    Not many are leveraged into stocks but many are leveraged into housing.
    So multiply housing losses by 5 – 10x to get the impact on wealth for those people.
    AND
    Many stocks are held by super funds but punters don’t necessarily know or count these in their personal wealth especially if retirement is many years off.
    WW Agreed.

    How about this.
    There are now more than 1.5 million people with 1 investment property.
    There are more than 770,000 with 2,
    There are more than 350,000 with 3
    More than 400,000 with 4 plus “investment properties”.
    The total value of Australia’s 10 million residential dwellings is now worth $6.9 trillion (Ch9)
    The mean price of the 10 million dwellings in Australia is $686,200.
    So to keep their heads above water the housing investors have to move assets with a mean value of 686k in a falling market.
    Total household debt now stands at a record $2.47 trillion, say $100,000 for every woman, man and child.
    Borrowing by self-managed funds has grown from $2.5 billion in 2012 to more than $24 billion 6 years later
    So who are gunna buy these 686K assets.?
    And then pay em off for 30 years.?

    The Nos don’t add up,
    We need a chainsaw and do a bit of clearing.

    Via HP X Bloomberg: An indicator produced by a Beijing-based Cheung Kong Graduate School of Business,
    in the style of the closely-watched purchasing managers index ,
    plunged , (really fell outa bed ) last month, the lowest level as the U.S. and Chinese governments rev up the trade war.
    “Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months,”
    Li Wei, the economics professor at CKGSB who oversees the survey, said
    For most, business has never been worse.”

    AND

    10 October 2018, 01:01 GMT+10 Updated on 10 October 2018, 07:37 GMT+10
    New Evidence of Hacked Supermicro Hardware Found in U.S. Telecom”:The discovery shows that China continues to sabotage critical technology components bound for America.
    A major U.S. telecommunications company discovered manipulated hardware from Super Micro Computer Inc. in its network and removed it in August,

      • Well if the intention was to start a trade war it worked
        but as i mentioned with the USS Jimmy Carter, the us spies on everyone,
        so that is how the game is played at high level.
        How about all those with info stored in the cloud.
        How safe is that. Not at all.

    • Andrew LeesMEMBER

      Yes, the “who is going to buy them?” question has been nagging at me for a while. It seems possible that it will be property based hedge funds a la the US model (or even the very same companies), but only after the carnage has occurred. That would result in a capital transfer into Australia, with attendant issues if the transfer is sizable.

      • That is good thinking cos
        as real estate collapses, so will jobs dissappear
        you cant pay a mortgage with no job, or even a pair of jobs now. (there is an immediate risk)

      • We are destined to become tenants in our own country either because:
        1. The Chinese buy everything and rent it back to us
        or
        2. Because in a collapse some hedge fund buys it up for pennies on the dollar and then rents it back to the person who previously owned it but was foreclosed on. Since they know the financial position of said “serfs” they will milk them for the maximum amount they can in rent. Mooo… Kind of like Westfields do when they want to see the books of businesses they lease to.

        Either way it’s ugly… we need sovereignty back.

      • Mining BoganMEMBER

        Sovereignty is gone Gav. It’s been disappeared. The only way to get it back is through angry people with weapons.

        We’re too fat and lazy to march down that road.

    • No permabulls. Its going to be a long summer. India a real chance to clean-sweep an Australian tour for the first time. That is by no means certain or expected but it is not the zero chance it normally is. At least our attack can still take 20 wickets at home.

    • matthew hoodMEMBER

      Footsore, just spent a weekend at rep cricket, kids were getting told they could have no more than 3 dot balls in a row!!!!!! Didn’t matter if they were good or 2 foot down legside. Kids were clearing the front leg before the bowler had even bowled…..there is no hope only hackers.

      • The cricket equivalent of telling kids that housing always goes up and you need 3 IPs before you’re 24. The fundamentals are shot. No good can come of this.

  2. “Never Been Worse” – China’s (Non-Government) Business Survey Collapses As Trade War Strikes | Zero Hedge

    https://www.zerohedge.com/news/2018-10-09/never-been-worse-chinas-non-government-business-survey-collapses-trade-war-strikes

    As China returns from its Golden Week vacation, it is not just its currency and stock market that is collapsing…

    As Bloomberg reports, an indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show. … read more via hyperlink above …

    Alternative China PMI Gauge Says Business `Has Never Been Worse’ – Bloomberg

    https://www.bloomberg.com/news/articles/2018-10-09/alternative-china-pmi-gauge-says-business-has-never-been-worse?__twitter_impression=true

    Beijing Struggles to Keep Its Currency On Course – WSJ
    … behind paywall …

    https://www.wsj.com/articles/yuan-lending-rate-surges-as-china-struggles-to-stem-currencys-slide-1539073365

    • Murdoch holding puppet politician strings is too true to be funny. Sigh, I wish that man would die a painful death already.

      • The Traveling Wilbur

        Dude. That’s clearly happened at least once already. Shortly after he married Wendy would have been around the first time I would have thought. It’s clearly happened multiple times since. What impresses me is his continued ability to say one thing, mean another, and not betray even the tiniest shade of shame, regret or duplicity. That and his persistent ‘staying out of direct sunlight’ accomplishment.

      • Quite timely
        Appreciated.

        You understand you’re consistently barracking for the people trying to make this happen, and attacking the people who think it’s bad, right ?

      • interested party

        smithy……good grief.
        You cannot recognise that I am capable of adjusting my position? If information stated in a certain way come to light that shows that my thoughts may need possible adjusting, I should do it….yes?
        I have no stake in the ground so deep that it cannot be relocated to a more logical position.
        You should try it sometime.

      • A good, one-sided look at politics. Omits the splinter in its own eye to cast a very critical look at the other side. Sigh, thingy…

      • You cannot recognise that I am capable of adjusting my position? If information stated in a certain way come to light that shows that my thoughts may need possible adjusting, I should do it….yes?

        What more information do you need ? Modern Liberal democracy has been under sustained attack for decades. Trump and his cohorts (like Bannon) are merely the latest – more extreme – manifestation of that.

        I have no stake in the ground so deep that it cannot be relocated to a more logical position.
        You should try it sometime.

        To where ?

        A good, one-sided look at politics. Omits the splinter in its own eye to cast a very critical look at the other side. Sigh, thingy…

        Concur Andrew…

        LOL. Nothing constructive, just more whataboutism. How surprising.

      • “A good, one-sided look at politics. Omits the splinter in its own eye to cast a very critical look at the other side.”

        Non sequitur… Casts a political bias with out showing how you arrived at it, nor what it is, and then use that cudgel to infer diminished critical observation, on imo, an imaginary opposite political side e.g. light and dark.

        I would suggest you ponder the totality of neoliberalism and the term duopoly party’s.

  3. @Colin. FD Rx7 Spirit R Type A going to auction at Shannon’s with a guide of $60-$70k.
    https://www.shannons.com.au/auctions/2018-shannons-sydney-spring-classic-auction/AECH8IB2AO1BPDRM/

    On the topic of how classic cars are going. This Mazda R100 sold for $67k which is cheap. Many similar cars have sold for $110k+ recently.

    http://www.graysonline.com/lot/0006-7729701/motor-vehiclesmotor-cycles/1971-mazda-r100-familia-presto-rotary-gs-manual-coupe

    Either the wrong platform for this car or the punters have less money for toys..

    I am seeing more toys come up for sale recently. Some appear as good deals. Might be a few infestors offloading toys before having to sell properties.

    • Jeez that thing is ugly! Probably rx3 was the best styling. Certainly do miss the screaming of a 13b. Very solid drivetrains those things too from what I recall. Would hate to pay the fuel bill these days though!

    • So as usual, nothing gets done when aussies are being ripped off by our banks, but when new immigrants get ripped off sending money out of the country, suddenly it’s an issue? I feel like i’m living in bizzaro world where the politicians whose wages I pay are only interested in looking after citizens and corporations from other countries.