Macro Afternoon

The Asian session starts the week in a strong position, stocks bouncing after the coming and going of Friday nights US unemployment print, which saw a general advance in the USD. Australian macro news was not good today, sending the Aussie lower before tomorrow’s RBA meeting while offshore trading in Yuan was quite volatile due to the mainland Chinese holiday and lack of a fix.

The Shanghai Composite was closed as a result, while the Hang Seng Index advanced about 0.2% to be at 27990 points, stabilising somewhat here on the daily chart after last week breaching the e previous false break high above 27100 points:

US and Eurostoxx futures are flat with the four hourly S&P 500 futures chart showing an anchoring at the psychologically important 2700 point level that is dependent on continued good earnings, with solid support at 2660 or so below:

Japanese stock markets have risen due to the much weaker Yen with the TOPIX up near 1% while the Nikkei 225 is up about 0.4% going into the close at 20862 points. The USDJPY pair has continued its Friday night bounce and is now coming up against the previous weekly session highs at just below the 110 handle:

The ASX200 was a little voaltilie today, opening lower before recovering as traders position before the Royal Commission report into banking is presented this afternoon, with the market up 0.5% to just below 5900 points. The Aussie has fallen back towards the 72 handle again after failing to make a new high on Friday night against the general USD strength and the poor macro figures today – watch 71.90 as the key reversal point where the shorts will pile in again:

The economic calendar starts the week relatively quietly as it usually does post the NFP print, so not much to watch out for tonight except continued speculation about Brexit and the upcoming BOE meeting.

Comments

    • Yeah 🙁

      At least we got this:

      Hayne’s report will land with a thud at National Australia Bank Ltd.’s headquarters. Hayne blasts Chief Executive Officer Andrew Thorburn and Chairman Ken Henry, who testified during the Royal Commission’s final round of hearings.

      “Having heard from both, I am not as confident as I would wish to be that the lessons of the past have been learned,’’ he wrote. “I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do.’

    • And white collar criminals like Ian Narev get away with blatant criminal actions again, $43mill pay over seven years, there is an incentive to destroy peoples lives.

  1. And the results are in:

    The final, overriding take-away for all ………

    “DOES NOT RECOMMEND CRIMINAL CHARGES”

    Nobody goes to jail.

    None of the parasites ever do.

    • ChristopherJMEMBER

      This was one of the features of 08. Australia is part of the BIS. A condition of our membership is that if executives commit fraud to benefit their employer’s bottom line, can’t prosecute offenders. If commit fraud to benefit self personally, different matter.

      Bonuses and so on, yeah, but that was the essence of it. Plus, to get people to tell truth at RC, they generally get immunity in exchange for their admission of guilt, whatever that might be…

    • It has met expectations as usual. The snouts in the trough briefly snuffled today then went back to feasting.

  2. reusachtigeMEMBER

    I’m extremely happy and relieved that the banks have been protected in the royal commission report. This is an important decision to make sure our housing market booms again soon, which everyone wants.

    • past the point of no return there, I’m afraid.

      be thankful individuals who’ve participated in criminal conduct destroying the lives of thousands and costing many, many millions, will not be arrested and tried.

      unlike joe blo, down the street, who picks someones pocket of $100 and goes straight to lock-up.

  3. Nothing is going to happen. Bank shares will rally tomorrow. RBA will hold.

    Property will still go down until election, then it’s immigration to 11 and fraudulent loans to the races.

  4. TheRedEconomistMEMBER

    Thornburn and Kevin Henry torn a new ar$ehole by Hayne. page 411 I am led to believe.

    Fried burger talking platitudes and sh!t right now

  5. Contradictory comments from Hayne?:

    “In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit, but also by individuals pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business. Providing a service to customers was relegated to second place.’’

    And later:

    “Enforced separation of product and advice would be a very large step to take. It would be both costly and disruptive. I cannot say that the benefits of requiring separation would outweigh the costs.’’

    • Not entirely contradictory. He has identified that this is a cultural issue that can be addressed with cultural change that doesn’t involve enforced separation, rather enforcing standards of behaviour (see Part 4.4 on Culture, governance and remuneration).

  6. New regulations on mortgage brokers commissions wont take affect until July 1 – 2020!!!!!!!!!!!!!!!!

    and then be subject to review in 2023!!!!!!!!!!

    Cop to bank robber: “Mate, you’ve got 1 hour to kill everybody and loot the place, after that time, if I’m back and you’re still here, you’re done!”

    Straya is a JOKE

    • I think a lot of punters will be voluntarily abandoning brokers after this anyway. It’s like buying a flammable high rise apartment. People will still do it, but only the very stupid.

  7. Banks must be happy with that wet lettuce leaf. Where’s the restriction of mortgages & personal debt to 3x income? Boring.

    • A special edition signed copy would be nice. Imagine Richie and Tony trying to sell those during a drinks break.

    • So when has that been different?
      Sorry guys. What a letdown. Just when it looked like we had turned the corner, we had but we saw the same road ahead. (Or it’s like that film where the rugby team cashed in the Andes, and apart from eating each other, those that tried to hike out always came over the high peak they’d just climbed to see….another valley and another peak)

    • This is much bigger than what you think. Customers are unknowingly paying $10k-$20k+ in Trailing Commission. There is no way they will pay that up front.

      A mortgage broker friend told me he will shutdown his business if Trailing Commissions removed. I should add that this is a very successful mortgage broker.

      • C.M.BurnsMEMBER

        can’t believe you’re friends with a mortgage broker. how frequently do you end up in a verbal shouting match with him/her ?

      • Anna Bligh is calling this change extreme and not in the best interest of “customers”. That is how big the change is.

      • CMB. It is a relative actually. I didn’t want to shame my entire family by mentioning that. On the flipside, it is not a personal choice. He just sometimes decides to turn up to extended family dinner at XMAS.

        We don’t argue. I like to ask loaded questions with a straight face. Questions like:
        – XMAS 2018 – Will the removal of Trailing Commissions affect your business?
        – XMAS 2017 – Do you think your company will still exist in 10 years’ time?

        The 2017 question was a ripper. He was adamant his company will exist perpetually for his young son to take over, and then confronted me as to whether I think it would exist. I said that the services he offered could very easily be automated, and that his massive fees will disappear some day when all financial records exist electronically.

      • C.M.BurnsMEMBER

        well, a family member is easier to explain. You don’t get to choose your family 🙂

        but I do love the straight-faced trolling via innocent enough questions

    • Using a mortgage broker is like getting someone to help you get finance to buy a used car. Except the guy is paid by the car yard so it’s almost guaranteed that he will be working in the car yards best interests not yours, and he also gets a cut of your loan repayments as long as you’re paying off the car.

      I started to use a broker once, then woke up to myself.

    • proofreadersMEMBER

      Nah – all good – apparently, no individuals to be referred for possible charges and thus, face the risk of some comfy prison-farm (as hard as it gets for corporate crime here) time? That’s all that mattered? Move on.

  8. Mining BoganMEMBER

    It was probably best not to listen to the Hungarian. LABOR! Didn’t really discuss the findings at all. LABOR!! Waffled around the edges and mumbling stuff about keeping credit available. LABOR!!!

    • Yes, Chris Bowen is part of the problem. Not the solution.
      He is a special mate for all the banks and powerful people.

  9. Lord, give me strength.
    “Josh Frydenberg has just been asked if he was wrong to so strongly oppose a banking royal commission.
    He attacked Labor and Opposition Leader Bill Shorten for failing to clean up the financial sector when in government, six years ago.”

    • Probably not. HEM has all but been abolished so the credit squeeze is still on. And the abolition of trailing commissions by 2020 means that if you’re saving for a deposit, that’s an additional $10-20K upfront cost to the borrower. Kinda puts a dampener on the demand side of things.

      • That’s only if you go through a mortgage broker. Also, HEM days will return, just in another form (hail hydra!). The commission recommends no change to the NCCP act, just implementation of the law. Who ensures implementation of the law? APRA. Oh that’s right, it’s ok because there is a new body watching APRA now. However, that body will have no significant powers. APRA will turn a blind eye when the time is right.

      • Those cnts are not worth $10k, so they will not be earning that going forward.

        Maybe the good ones will command $500-$800. The service isn’t worth any more.

      • “Maybe the good ones will command $500-$800. The service isn’t worth any more.”

        As someone who has emailed my broker all hours of the morning and night, often receiving replies well outside of business hours and knowing the sh#t they go through dealing with the various banks and other property professionals as part of a transaction.. I beg to differ.

      • Joseph – of course they do under the current model.

        Once trailing commissions are banned they won’t bother with all that.

        Or maybe yours will for a $10K fee but when the bloke next door is offering a lesser service but charging $500, I don’t think many people will be sticking with the first guy.

      • Hayne specifically recognised that the upfront fee is likely to be capitalised into the loan amount.

      • @Denis – more than half of borrowers with the Big 4 and most of the borrowers from second tier lenders go through a broker.

  10. What a waste of time.
    Grand total of 8 pages dedicated to the “core business” of banks “direct lending”.
    Nothing mentioned about LTI ratios
    Nothing on LVR ratios
    Nothing on IO loans
    Nothing mentioned on mortgage stress calculations and repayments
    Nothing on Refinancing

    • Always happy to encourage someone else to give money to a charity.

      Also he’s putting a homeless person out of a job by doing that!

      Is he Australia’s biggest cvnt?

    • Mining BoganMEMBER

      Some PR type obviously thought this would be a good idea but seriously, could there be a worse look than hanging onto charity’s coat-tails when your dirty linen gets hung out?

      • I thought it was so painfully obvious what he’s up to, he looked quite feeble in The Big Issue outfit. It’s funny how we judge people based on their uniform. But he looks twice as slimy in a suit I suppose.

      • I hope Alcohol was involved. My cousin has 2 playing cards tattoo’d on his upper thigh, I was like why those cards? He said it was the hand he lost and the bet was he had to get a tattoo with them if he lost. LOL. True to his word he’s still got them. Looks horrible.

    • Google says he earns $6.1m per year.

      Let’s generously assume he works 12 hours a day, six days a week. Four weeks holiday. That’s $2112 per hour before tax. Perhaps he could have donated an hour’s salary instead.

      Unless he can sell more than 422 copies in an hour and leave the charity better off that way?

      • proofreadersMEMBER

        Arrow2 – With that sort of in-depth analytical prowess, it appears that you could be very good at assessing credit risk which is supposedly what bankers have done (albeit largely outsourced to finance brokers in true capitalistic fashion) when they have been doing all that “responsible lending” in recent years?

  11. Recommendation 2.2 is a crock – plenty of financial services companies are already breaching s923A by claiming they are independent (as defined in that section) when they are not but ASIC isn’t prosecuting them. How are they going to enforce something more difficult?

    The law should be amended to require that a financial adviser who
    would contravene section 923A of the Corporations Act by assuming
    or using any of the restricted words or expressions identified in section
    923A(5) (including ‘independent’, ‘impartial’ and ‘unbiased’) must, before
    providing personal advice to a retail client, give to the client a written
    statement (in or to the effect of a form to be prescribed) explaining
    simply and concisely why the adviser is not independent, impartial
    and unbiased

    • Nah, more like what he found only scratched the surface. I’m sure he was pissed at the time frame and narrow terms of reference. Guven those pressures, I think he’s done fantastically well. If nothing else, ASIC and APRA are on notice to do their fvcking job.

  12. All over, red rover. Non-event. Now, let’s back to the real issues and watch what happens next in MAFS.

  13. Just read quickly the first volume of the final report. Bankers will be high-fiving and laughing all the way to the bank! Some limited further bad news to be stage-managed over the next 12 months, to be sure, but let’s see: kill off the mortgage broker channel (ka-Ching!), gee better find some bankers with “agricultural” experience to deal with farm foreclosures (oh the woe!), yep gotta fix this “kulture” problem, a few tweaks to exec remuneration scheme design, and hey presto let’s party,

    Honesty, I can smell the cigar smoke wafting out the front door of the Melbourne Club from here already!

    • Cue mainstream media articles about how harsh it all is. Go back to sleep punters we’ve fixed everything!

    • Boils down to:
      “Oi, ASIC, do your bloody job.”

      Haynes solution to police corruption: ask corrupt cops to start enforcing the law.

  14. 4 corners right now, talking about Saudi Arabia. Such a great culture. Best torture and rape women without any second thought. What a place..

    • FFS, they gave her what she asked for. If she was surprised maybe she knew what she was asking for was too much.

      • Yes, I tend to agree… however they shouldn’t be dolling out such nonsense to young people with no hope in hell of paying it back at those rates.

  15. When one considers the fact that the Royal Commission into Child Abuse had 6 commissioners and went for 5 years, this RC with a single commissioner lasting for one year was severely under-resourced by the design of the Liberal government.

    • How many of the recommendations from the RC into child abuse actually got implemented? If you are going to ignore the findings anyway, why bother wasting all that money?