Macro Afternoon

A strong start to the week here in Asia in reaction first to Friday’s US unemployment print but then Chinese stimulatory support and the lower volatility on currency markets. Risk proxies like the Aussie and Kiwi are up despite the fall in the USDJPY pair, while Chinese equity markets advanced but not as strong as others, it’s green across the board.

The Shanghai Composite is up around 0.4% or so at 2524 points as confidence continues to filter back , climbing above previous support at 2500 points.  The Hang Seng Index is up similarly, having made most of its gains on Friday, closing around 0.35% higher to 25828 points. This is just under previous support at 25600 but there is upside potential here:

US and Eurostoxx futures are up going into the London open, with the lack of bad news good news for now. The four hourly S&P 500 futures chart shows price ready to push higher after the huge gains on Friday night (3-4% plus across the main indiies), taking out significant resistance at the 2500 level and making a two week high:

Japanese stocks came back strongly with a very solid session, the Nikkei 225 lifting 2.5% to regain most of its previous losses to finish at 20095 points. The USDJPY failed to rally however, finding significant resistance at the 108.50 level, falling 40 pips and looking weak here unexpectedly:

The ASX200 gapped nearly 1% higher and stayed there throughout the day, closing 1.1% higher to 5683 points. The Aussie dollar also rallied making good on its Friday night gains, lifting to the 71.30 level against the USD, continuing its strong bounce from the recent flash crash:

The economic calendar starts the week slowly following Friday night’s NFP, so we get German retail sales final numbers and a few other releases before the US ISM non-manufacturing (services) print for December.

Comments

  1. Sitting in the bus overhearing someone on the phone giving advice about defaulting on an off the plan property purchase. The advice being given is to default and lose the deposit.

      • Probably ok if their only other asset is their brown couch and a prepaid mobile phone which they use to phone investment gurus on the bus. Not even worth the (bankrupt phoenixing) developer’s time to chase them for the rest.

      • C.M.BurnsMEMBER

        Martin North interviewed someone (a broker ?) last week and they explicitly covered this. In short, the initial buyer has always been liable for the deposit but during the boom it wasn’t worth the developer to pursue since they could keep the deposit and sell the property again for it’s full price; which was often higher than the settled price. So they win twice.

        In a falling market the broker expected developers to pursue hard.

      • Get on a plane and head home? And/or play exactly the same asset Phoinexing and personal bankrupcy game the developers and builders do?

      • But if your assets are not worth squat they won’t bother. And if you do have assets you have time to hide them!

      • C.M.BurnsMEMBER

        Arrow, that’s true if you can just get on a plane and head home, with all your assets back in your home country.

        I assume that hiding assets as an Australian citizen is significantly harder and only available to the already wealthy ?

      • Don’t forget the sunset clause. It worked for developers on the way up but now it will be a rush for developers to get the build to occupancy certificate in time.

      • The stupidly optimistic part of me thinks that sort of thing might simply stiffen the backbone of a righteous Royal Commissioner who is rightly appalled at everything he has learned about the finance industry.

        Yeah I know, stupid eh.

  2. ErmingtonPlumbingMEMBER

    Those who love listening to predictions of imminent economic collapse will love this little compilation,

    https://youtu.be/EHieYyi-vxY

    The blokes near the end third are the most depressing,…if thats what gets you off.
    Are we really heading for a bigger catastrophe than 1929?
    Another global War?
    What would a 21st Century “New Deal” look like?

    • Lol, only took 3 minutes for Perter Sciffe to turn up. I wonder how much he has lost in the last 12 years? I don’t think he’s made a right call as far as I have seen. But watching the first couple of minutes, you can’t deny that the CB’s have just made the problem worse since the GFC. Where it ends? Probably tears for us plebs and the bankers get richer as usual.

      • Schiff has made a fortune since the GFC losing other people’s money instead of his own.

        I will take a punt at where it ends. Cashless in a few years’ time -> unbounded NIRP soon after -> Debt Servitude -> Revolution

      • …that reminds me of this saying

        War is when your Government tells you who the enemy is, Revolution is when you figure it out for yourself.

      • Politicians abdicated their responsibilities to the economists that staff CB’s, as well. the advisors they are beholden too, as such, it might be a bit more accurate to question the dominate economic group during the neoliberal period and stop focusing on secondary organs ….. just saying ….

      • So a Government that has forwarded decades of free markets [tm] and spreading freedom and liberty …. gotcha freddy …..

      • Really difficult to discern philosophy masquerading as an external reality, especially when its proponents then attempt to manage it thus. How wealth bought government is construed as a failure of government seems more than a bit wonky… if you know what I mean.

        Especially after all the crowing pre GFC from every ideological organ imaginable – Nobels and freedom and liberty medals.

      • ” How wealth bought government is construed as a failure of government seems more than a bit wonky… if you know what I mean.”

        Skip…. no one fvcking knows what you mean..

      • Skip…. no one fvcking knows what you mean..

        A handful of really rich people lobbying and bribing to have laws created that are very favourable to them (generally implying very unfavourable to everyone else) is not a failure of “Government” as a concept, it is a failure of those particular members of Government (and perhaps/more likely the system) that allowed it to happen.

        Come on, that was an easy one !

      • Smithy ….

        Neoliberalism is an ideology rewarmed over from what was rocking before the Great Depression and as Hudson clearly points out has no dramas with – controlling – society to meet its aims come hook or crook. I’ve supplied more than enough historical foot notes to show exactly where this agency comes from, so, those that attempt to say its all governments fault are actually peddling the neoliberal line e.g. a core feature is it’s fundamentally anti democratic.

        They actually go after the one thing that could give people recourse, that the so called market has a grip on information, which might enable people to utilize government and democratic processes to change the dominate ideological paradigm – is more about environmental biases and one eyed romanticism about the past e.g. stuff was better when I was young and ignorant – inexperienced or a bit older and benefiting from the system.

        I mean how many libertarian memes does one have to observe imploding only to have the prepared strawman ready to deploy.

  3. C.M.BurnsMEMBER

    some anecdotes from the sydney rental property market (or at least the small corner of it we’ve been investigating). In short, it seems to be much slower and much more of a renters market.

    We attended an open house for a 3 bedroom house (generous, as it was only a courtyard) right near Australian Technology park (Erskinville). We were one of only four parties that showed up to inspect in the 30 minutes. We were there for much of that time. Speaking with the agent, he said that the last 3-4 months of last year were really quiet and there was a lot of stock on the market.

    Inspected another place in Dulwich Hill (also 3 bedroom house, but also only a courtyard). We were one of only two parties to show up to the inspection. That agent also confirmed lots of stock, slow couple of months.

    Was speaking with old building managers from Wolli Creek in the supermarket (we moved but still close by). They have numerous empty apartments. Many owners have been forced to drop rents by up to $50 in order to secure a tenant.

    We’ll be doing some more inspections across inner west over next few weeks and will keep updated.

  4. https://www.theroar.com.au/2019/01/07/the-liebke-ratings-australia-vs-india-fourth-test/

    “The selectors, meanwhile, dropped Mitchell Marsh and recalled Peter Handscomb, whose technical deficiencies in the first two Tests had been completely sorted out by a swashbuckling 70 in the Big Bash.

    A crucial blow to the Australian side’s overall Marsh quotient, one might think. But, in fact, not, as this exclusive analysis reveals.

    Australian XI analysed by MARSHness:

    MARcuS Harris 5/5
    uSMAn kHawaja 4/5
    MARnuS labuscHagne 5/5
    shaun MARSH 5/5
    tRAviS Head 4/5
    peteR HAndScoMb 5/5
    tiM pAine 2/5
    pAtRick cuMminS 4/5
    MitcH StARc 5/5
    nAtHan lyon 2/5
    joSH hAzlewood 3/5

    Solid side.”

    • It really wouldn’t surprise me. Nothing does now. I think bitcoin is worthless really, but the world i’ve watched for the last 12 years I just can’t be sure of anything anymore.

      • I would actually consider buying 1 or 2 cheap enough as a “f you money” play. But I’m not that bullish. My best mates brother is a full on believer. Even through all the bear market of the last few weeks. He’s stayed course and believes in it long term. I’m actually almost convinced at times he is right. But I’m a bit risk adverse.

      • I’d waste some cash on it if I had a few million as play money. But for everyday punters, it’s just that, punting. You may as well go down to the TAB.

    • Read the first three paragraphs and gave up in disgust. Firstly, using values like 2.8% over a whole year? WTF? How do they even come up with this sh1t. The ratings agencies are just a bad joke. A mouthpiece for the banks to fool people into whatever crap the banks are selling.

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