Macro Afternoon

An very positive day for risk assets here in Asia as the USD continued its retreat against the majors except Yen, helping domestic Japanese stocks while Chinese bourses finally played catchup and have lifted significantly, especially on the mainland. The potential news of the Chinese buying soybeans from the US has overshadowed the growing political case around the Huawei arrests.

The Shanghai Composite is playing catchup after a couple of uneventful session, currently up 1.6% to 2643 points, finally back above the previous support level at 2600 points.  The Hang Seng Index continues its rebound, up nearly 1.3% to 26539 points, maintain itself above the previous support level and the low moving average on the daily chart in what could be the start of a recovery:

US and Eurostoxx futures are up going into the London open, with the four hourly S&P 500 futures chart now above the weekly long downtrend but still needing to punch through trailing ATR resistance at the 2700 point level to make real ground:

Japanese stocks put in a solid day as well with the Nikkei 225 up nearly 1% to 21815 points but still looking quite sheepish on the daily chart so I wouldn’t call this a bottom yet.  The USDJPY pair however is poised to breakout once more, currently at the 113.40 level and looking to get back to its previous two weekly high :

The ASX200 is the poorest performer, up only 0.3% and still out of whack with other risk assets to be at 5671 points, but still above terminal support and building on its own nascent recovery. The Aussie dollar is slowly building here and maintaining itself just above the 72 handle in what looks like a classical V-shaped bottom pattern forming on the four hourly chart:

The economic calendar tonight is all Euro-centric with the Swiss and then the European central bank meetings.

Comments

    • “Dogbox developers burn in hell.”

      Yes … whats more economically efficient than demolishing something that has lasted around a 100 years and replace it with the RE equivalent of a cheap white good.

  1. Currently having an argument with a forum of people from my university that sprawl is necessary in order for housing to become more affordable. No first world city in the world has ever become more affordable by containing sprawl and building more density. They keep saying it is BS but I thought it was simple?! Restrict land supply and up goes land prices for new and existing blocks and even development blocks for new apartments.]

    Thoughts?

    • https://www.macrobusiness.com.au/2017/10/ponzi-turnbull-launches-sydney-decentralisation-distraction/#comment-2984540

      There are other alternatives to sprawl and no-sprawl.

      I and my family used to live in a small town in northern Italy. It was high density living. The apartment block was 5 stories high. But it looked out over an alpine river and the mountains. I could go walking in the mountains every afternoon.

      Is that better or worse than having a detached house in the midst of a sprawling suburb with concrete and asphalt as far as the eye can see?

      I think the answer is to “Think Fractal”. Maximise the interface between buildings and greenspace.

      But none of this can happen without a change to the system of government. Corrupt elective government in the absence of genuine Democracy will always work for the benefit of those close to the Rulers.

      More on the Fountainhead of Rent:

      https://www.macrobusiness.com.au/2018/10/gaslighting-grattan-spins-more-immigration-propaganda/#comment-3201317

      and “proximity bias”:

      https://www.macrobusiness.com.au/2018/04/enter-another-crazed-anu-immigration-booster/#comment-3086502

    • Do they have sound reasons on why it’s BS & apples for apples examples, or is it a safety in a groupthink echo chamber? Are they into hot swapping beds & 10/room?

      I like SM’s Fractal spacing idea.

    • The Traveling Wilbur

      @Dyllip
      Yep, all other variables being equal and cost being your only measurement, more land equals cheaper house prices. This blog has gone to endless lengths in a variety of ways to prove that a) the major input price to a new property is the land it sits on and b) that land banking increases the price of land that is available to put new property on. I think we can all do the logic exercise whereby if we assume these propositions to be true (and no one has ever produced any evidence to refute either of them) and we introduce more land into a closed system, we can then predict the effect of that on house prices.

      Trouble is, systems aren’t closed, so cause and effect such as yours cannot be observed – only predicted and/or inferred.

      However if you’re after a way to ensure lower house prices, just tell the uni-crowd the geographic area in question should adopt the RBA as its Central Bank. Might take a while, but will eventually result in much lower house prices!

      • I thought it was shown that Credit far out weighed supply in price dynamics and the shadow sector plays a larger role than retail banks. BTW not all land is created equal and pro rata dynamics is not applicable.

    • You can have both sprawl and high density : look at Sydney! We are building high rise dog boxes at 45 km from the CBD.

    • It has been shown that there has been a lot of underutilized buildings in Melbourne. Prosper Australia found around 80,000 using water usage. That shows that a lot of supply has been kept off market. Added to that is the land banking by developers who drip feed lots to market. So it isn’t just a case of freeing up more land but ensuring that what has been made available does not just sit idle. Just making more land available isn’t the answer if the way the system is set up encourages land speculation. And land speculation exactly is what Australia has actively encouraged through its many tax and planning policies over the past twenty plus years.

  2. Whilst I don’t disagree re: peacocking, what is wrong with going to the gym? We’re clearly fat here, so maybe we would be better for getting in shape? RE: Cars? Well I waste my money on cars, not to chase skirts but it’s a hobby. I agree money on housing in this country is wasted and unproductive however.

    • Of all my mates I know that are from Asia, they are f*cking useless at doing things around the house. Even changing tap washers. Guess when labour is so cheap in asia you don’t need to know how to do anything. Good luck to them paying $200 bucks for a plumber to come out and change a washer in oz.

      • ErmingtonPlumbingMEMBER

        My min charge has gone up to $165 inc GST
        Thats $100/ hr + a call charge + GST.
        But if its a quick and easy job and they make me a cup of tea or coffee, are not Tories….and most importantly if they are local, then Ill still go down to $100 inc GST

  3. Poland is a great place. Friends from North Germany are thinking of moving there, Mrs is a pole.

  4. Sunbury is looking very Polish these days.

    I must pick up some small goods next time I am passing through.

  5. LOL. Yes, until the last couple of decades of high immigration, Australian men never did stupid shit trying to impress women.

    And you don’t think men in Europe (or anywhere else) do the same ? Even more LOLs.