Macro Afternoon

The reaction to the US mid-term elections has been positive for risk markets in Asia, with stocks rising across the board while the USD floundered against the majors. The Kiwi has moved to a three month high while the Aussie is riding high on a wave of USD weakness.

The Shanghai Composite is up slightly going into the close, currently at 2646 points, still hanging on to key support at the 2600 level but unable to translate the recent swing gains into a proper recovery. The Hang Seng Index is doing better though, up 0.8% to 26361 points, finally starting to get some traction above the previous support level at 26000 points. The daily chart still has some upside potential but resistance at 26500 points is telling:

US and Eurostoxx futures have moderated a bit after last night’s surge with the four hourly S&P 500 futures chart showing a pause here as the oversold rally looks set to just consolidate here above the 2800 point level:

Japanese stocks have moved swiftly higher as expected and in line with US stocks overnight, the Nikkei 225 soaring nearly 2% higher to 22475 points.  The USDJPY pair has finally quietened down after some fairly wild volatility in yesterday’s  session, making some very minor gains as it remains well above the 113 handle. This has not yet breached yesterday’s high and buying exhaustion might be setting in here:

The ASX200 has continued its own little rally, albeit in the face of a stronger Aussie dollar to finish the day up 0.5% to 5928 points, finally getting back above previous support level at 5600. The Aussie dollar is still building here in the wake of a weaker USD and looks set to break the 73 handle, but I can see an ominous pattern forming here on the four hourly chart:

The economic calendar is relatively quiet with the German trade balance figures plus the usual US weekly initial jobless claims print.

Comments

      • It will be interesting to see if the link passes mod as it might put some peoples pet beliefs in question – especial when its related to ones back pocket.

        So how does the market price such information when its suppressed.

      • skip, I don’t care too much for TA. I just liked Timmeh’s metaphor.

        There are some very smart people making money using trading algorithms. James Simons comes to mind as the most successful. Whilst I highly doubt he uses TA specifically, he has made billions of dollars. The self-appointed mathematically geniuses who say the market is random and no money to be made, are not only ignorant, but also arrogant in believing that if they can’t figure it out then it must not be possible.

      • A commenter that has decamped by the handle OJ and I had a convo in the past about models and the propensity for unwashed to become slavish to them. This brings about a curious set of questions e.g. does the model represent reality or does it limit the scope of inquire due to the frameworks artificial restrictions on further introspection and by dint of that – creating irrational feed back loops by the force of the numbers of believers alone irregardless of the repetitive outcomes.

      • Agree the blind faith herd all lose money. Those who make the money have invested thousands of hours researching and ending up with subtle understandings that you will not find in any trading manual, youtube video, or expensive “trade secrets” seminar.

      • MediocritasMEMBER

        @skip: I spent years as a high-frequency trader before switching to a less stressful life in academia. I got deep into technical analysis and machine learning to predict market activity. Conclusion? It’s total BS. If you’re trading at maximum speed then all that matters is latency. Throw away all the models, fire all the quants, just cough up the $$$s for the fastest data you can afford and if you can’t afford to at least nibble around the edges where the big boys play then forget it as every order you try to execute will get front-run.

        You can’t trade momentum because order flows have no mass to them anymore and can’t be trusted (you can be whipsawed within milliseconds even in heavy volume stocks). You can’t trade based on book depth because almost all of the quotes are fake (hit them once and they vanish). TA based on volume no longer has any meaning as volume is mostly robots thrashing around and correlations between price movement, persistence and volume don’t hold anymore. Forget trading on headlines because a swarm of bots are trading off news sites and social media activities faster than you can blink, and often have access to information pre public release.

        Even longer term technical analysis is fundamentally broken because, to apply it properly, you need to set stops, but if you’ve peeked under the hood to see how modern markets function then you’ll lose all confidence in your stop loss strategy. Hedging no longer works properly as robots have inverted the relationship between quality and garbage. So much of TA depends upon where longer term traders have decided to set their decision points based on price history but that only works if the big players lack full visibility of their opponents’ strategies which, increasingly, is not the case as suckers trade within walled-garden platforms and the big boys employ AI to fill in the gaps.

        TL:DR; it’s….all….broken (by robots and crooks), but TA assumes it’s not broken.

      • Mediocritas…

        Yeah I remember the latency wars and the Starvin Marvin SP style episode space ship funding parallel.

        In other news….

        “As many readers will know, I am not the greatest fan of stock markets. I consider most activity on such markets to be exploitative because of the asymmetry of the information available to investors. Much of it, from the pay directors take to the actions of most market managers, I consider to be rent seeking. The idea that equities provide strong returns is pretty much an urban myth, in my opinion, based on selective reading of data in those periods between market crashes.” – snip

        https://www.nakedcapitalism.com/2018/11/stock-markets-not-create-value.html

        My point is it needs mopes to give it a thin veneer of people doing stuff and not just one ginormous private tax redistribution device. But hay… when people are denied a fair share of their productivity and the only recourse is to speculate on financial voodoo, then some wonder why social dysfunction keeps increasing or people vote with it in mind, and not more broad social concerns. Better yet some will say the fiat did it.

    • Having a solar system that does not feed in electricity, because the network voltage is running high might just upset people if they were aware of it. They may even load up on batteries and get away from the network altogether.

      Edit: Lower teh volts!

    • MediocritasMEMBER

      Privatised power companies pushing you more power than you need to fatten their profits even if it means blowing up your devices and costing you extra money on the side?

      WHOCOODANODE?!

  1. More From The Investment Manager’s Front Line
    https://www.youtube.com/watch?v=nkfa2BbKGsU

    🇦🇺Australia Real Estate WORST DROP Since 1990! Prices Down 8.2% In Sydney!
    https://www.youtube.com/watch?v=xtNdYYesqaU

    [Nevada Forensics LLC
    3 hours ago
    My wife’s brother in law is a bank manager. He says that “the big 4” (banks) were the real buyers of “the block” in order to maintain hopium in the market]

    [MA7
    9 hours ago
    not falling fast enough, I live in Australia and my wife and I both work, yet we cannot afford to rent or buy a place and have to live with relatives despite being well into our thirties and being both employed. I personally hope that the housing prices crash and burn so that the working class can actually afford a place before we are middle aged, my wife is pregnant and our child will have to grow up squatting in the houses of older relatives because we can’t afford to rent or buy. it a country with endless empty space and a tiny population the lack of affordable land is utterly disgusting.]

  2. Michael Hudson: Argentina’s New $50 Billion IMF Loan Is Designed to Replay its 2001 Crisis

    TheRealNews

    Published on Jul 23, 2018

    The recently elected neoliberal government of Mauricio Macri has decided to seek a $50 billion IMF credit line, which will only enable more capital flight for the upper class and greater unpayable debt for the rest of the population, says the economist Michael Hudson.

    https://www.youtube.com/watch?v=N5ZHD9-zdkQ

    The first 2 things they do is remove capital controls and borrow in a foreign currency.

      • I made a specific reference to an event and its ramifications contra to all the narratives being sold by ideologues [self serving imo].

        Now if you want to argue against what I said or would like to opine on what Hudson is banging on about, by all means cee, but, drive by comments without any gravitas are emotive jesturing and have about as much use.

        I mean what part about bitcoin inflation and RE inflation – due to pure speculation – that has no social capital formation behind it and then some bang on about earning it is confusing. How could mig hold two conflicting opinions at the same time, but when he thought his boat had arrived completely contradicted everything he said before.

        Look at the end of the day… moeny, banks, politicians, voters don’t have the broad social agency that Ideology has… so when considering the state of things I think its important to understand the Ideology first and foremost e.g. whom concocted it, why, and its agenda and whom it serves.

        With that in mind I think its a wee bit absurd that day traders provide momentum churn for the big dawgs, but lack the information for when the rug is pulled out, yet if they get lucky think their geniuses in a classic case of bias conformation.

      • Separate point of contention…. when does everyone cower before the bond vultures or FX crushers.

      • Haha, is that what happened to Mig? He exchanged his ‘real’ currency for the dreaded ‘fake’ fiat stuff? A delicious irony

      • Brenton…

        Consider history and its results wrt this methodology i.e. why would a country borrow in foreign denoted currency e.g. its cheaper in the short term due to FX expectations which anyone with a long historical bent knows can be gamed – think Chicago School.

    • The same path as Greece
      Step 3) Pay off debt by selling assets to rich foreigners at firesale prices
      Step 4) Maintain levels of debt that can never be repaid
      Step 5) Go to step 3

      • Huh?

        Greece went to GS to spaghettifi its credit risk into the unknown so it could get into the EU e.g. no one forced that upon them – shades of Brexit.

        Greece had endemic levels of tax fraud, nepotism, money laundering, walled markets – etc…. Its a classic case of Chutzpah where the orphan cries poor after killing their parents.

        So remind me again on what philosophy enabled that risk to be spaghettified again – ?????

      • I am not arguing the cause. Although good to see you going back in time and identifying original causes rather than blaming johnny-come-lately short-sellers.

      • Don’t play semantic games with me please Freddy e.g. the short sellers were responsible for the mercenary shorts on the expectation of a big payday without regard to larger socioeconomic dynamics e.g. a clear cut case of Atomistic Individualism which IMO is a corner stone to neoliberalism i.e. there is no society only the market – survival of the fittest by price mechanics – do have a peek at my previous maths comment wrt that sociological outlook.

      • So shorts are responsible for shorting? and shorts share a neoliberals view? Which is bad thing… because reasons?
        Im not sure how that helps identify the causes Skip. Might want to check your projections and bias.

      • Hay cee its incumbent on you to unpack that, unfounded projections are not quantified.

        Aside are your even a capitalist – ????

    • MediocritasMEMBER

      Hey Argentina, I’ll lend you a billion bucks if you spend it all buying my “goods” and “services”. I get the money straight back, (with interest of course), you get a bunch of overpriced and constantly breaking garbage, (that you have to pay my boys to maintain), then when you complain about the deal, I’ll send in my jets in to blow everything to bits, or I’ll sponsor a little Colour Revolution, and we can rinse and repeat with the next government. Sound good?

  3. Startup Boom a “Dangerous, High-Stakes Ponzi Scheme”: Silicon Valley Investor
    by Wolf Richter • Nov 7, 2018 • 34 Comments
    “Startups spend almost 40 cents of every VC dollar on Google, Facebook, and Amazon.”

    Chamath Palihapitiya, CEO of Palo Alto-based Social Capital – a “technology holding company” – and an early Facebook executive responsible for increasing its userbase (he left in 2011 to found Social Capital), has been accused of being outspoken before. And after his excellent but, well, outspoken commentary in his firm’s 15-page first annual letter, he will surely be so accused again.

    As he lays bare how the startup and venture-capital ecosystem works – who ends up as “bag holders” is “not who you think,” he says – he steps on toes and says out loud what everyone is trying to keep quiet. Of course, these dynamics cannot last, and he says “It’s time to wait patiently as the air is slowly let out of this bizarre Ponzi balloon created by the venture capital industry.”

    https://wolfstreet.com/2018/11/07/startup-boom-a-dangerous-high-stakes-ponzi-scheme-silicon-valley-investor/

    So again like Plaza what philosophy enabled this dynamic of capital allocation… hint it wasen’t national socialists or commies… tho those dog whistles were used to drive the agenda to anyone that called it into question.

  4. The statement had been released after Ms Raper said Mr Foley reneged on a promise he made during a phone conversation with her on Sunday to resign as Opposition Leader by Wednesday.

    Isn’t that considered extortion? Isn’t it a crime?

    She was happy with the events of that night, as long as he resigns from parliament?
    Cui bono?

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