Macro Afternoon

The Asian session was generally upbeat today followed the positive lead from European and Wall Street overnight. The bottom fell out of the Aussie dollar as Governor Lowe indicated a “more evenly balanced” approach to interest rates – read: they’re gunna cut! Due to the Chinese New Year holiday only a few share markets are open, with the Shanghai Composite and Hang Seng Index closed until Friday.

US and Eurostoxx futures are lifting slightly with the four hourly S&P 500 futures chart showing a readiness to launch higher from the psychologically important 2700 point level, where traders are looking for a weekly close above the weekly downtrend line (upper black line):

Japanese stock markets are marginal again today with the Yen strengthening late in the session, with the Nikkei 225 closing about 0.1% higher at 20874 points. The USDJPY pair has pulled back from its Friday night bounce and has flipped back well below the 110 handle and the previous weekly highs. I”m watching that low moving average on the four hourly chart very closely tonight:

The ASX200 was helped along by a lower Aussie dollar with the market closing nearly 0.4% to build above the 6000 point barrier and closing at 60246 points. The Australian dollar has flopped right through the 72 handle after rejecting resistance at 72.70 overnight with more losses expected on the City open tonight in reaction to Governor Lowe’s comments. I’m expecting the January low below 71 cents to be the target here:

The economic calendar continues tonight with a few minor releases, namely German factory orders and the latest DOE oil inventory report.

Comments

  1. An anecdote re strata fees, a savvy investor at work was saying how when they bought their one bedder investment property the strata fees were $1,500 per quarter and have doubled between now and then. Fees for a 2 bedder must be significantly more.

    The building is a new build and the strata company said its due to increased maintenance costs. Strata fees like that and no capital gains, why’s the point. I reckon strata fees are the elephant in the room.

    • Wait wat. I thought savvy landlords could just automatically raise the rent to compensate!

      /sarc off

    • Ronin8317MEMBER

      This is why strata managers loves investor owners : they can double the levy since none of them bothers to turn up to the AGM to find out why the fee is being doubled.

    • So they’re paying $230 per week on body corporate fees? Say if they borrowed $500k to buy the unit they’d be paying say $570 per week in repayments. 800 bucks a week and counting on outgoings. Goodo. It’s all about taxes I suppose.

      The thing is that generally speaking buildings depreciate, land appreciates. I’ve looked at the sales history of a fair few units in the ACT and in the last decade none of them showed much appreciation. Lots of stuff don’t make sense to me anymore, this being one of them.

    • I have previously mentioned that all the recent buildings with majority investor ownership will not be able to vote out the strata managers, and will eventually get reamed with strata fees. In my apartment building (tenant) the strata managers took it upon themselves to lease all the visitor parking spots to surrounding businesses. The strata fees didn’t fall at all which means they just pocketed the profits.

      I also notice councils are starting to take a bigger cut.

      • China PlateMEMBER

        Fred that sounds sus
        Body corporate yes and added to the “sinking fund” perhaps but the strata managers, I find that hard to believe

    • So, $360,000 just in strata fees over 30 years.. not adjusted for future increases above and beyond inflation. A one bedroom unit itself in any city in Australia is not even worth that let alone the strata fees.

    • He was refused citizenship as he didn’t meet the character test. PR isn’t hard to cancel either.

      Point is, many Chinese do not get citizenship because China does not officially recognise dual citizenship. Many stay on PR because of the convenience of travel. So it’s not unusual to expect a lot to fvck off home when things start getting worse here.

    • TT – I’m guessing that he already had been granted a visa giving him the right to come and go and stay in Australia – permanent residence – and then he applied for citizenship (he becomes a voter and gets to travel on an Australian passport).

      I read that ASIO gave a negative recommendation. End of story. Application refused. Dutto or Scummo may have been briefed on what the decision was to be but if they had any sense they would have let the process run its course.

      • TailorTrashMEMBER

        Thanks T ….this is where I’m confused …..I thought you had to actually have citazenship to get an Australian passport …..or is PR and a pending application
        sufficient to get one ………I know we hand them out like lollies but surely only to fully accepted citazens …..??

      • I haven’t a clue, but is it possible he is now out of favour in Beijing,and the Australian government is actually doing their bidding.
        Some very prominent people on the wrong political side have been humbled, or facing serious goal time for corruption( and in a society where everything is corrupt, that kind of charge is political).

      • You are right: permanent residence is just another visa category given to foreigners who still have to travel on their home country’s passport. To get issued an Australian passport or to get consular assistance or to vote in Australian elections (or get a job as an Australian public servant) you have to apply for and be granted Australian citizenship. Becoming an Australian citizen is a massive leap from being a foreigner with an Australian visa.

        The thing is once ASIO decided that this bloke was not of acceptable character with regards his application for Australian citizenship that meant that he also failed one of the conditions of his existing permanent residence visa and so it was cancelled apparently.

        If this process has been going on for some time it would explain why the Chinese authorities detained that writer. The Chinese don’t have a sense of humour when it comes to this sort of thing. If I were an Australian expat in China I would expect to start getting hassled by local tax offiicals and business registration authorities.

        https://www.abc.net.au/news/2019-01-24/china-detains-missing-chinese-australian-writer/10744756

      • Js, I think you’re right, he got exposed so now his bosses are revoking his birth certificate. The Aussie govt was prob told not to get in the way.

    • Mining BoganMEMBER

      I trust that anyone who has had dealings with this suspicious character are at this very moment having their financial records looked at. Closely.

      Man, there’s so many politicians who leap to mind I don’t know who to wave at.

  2. https://www.smh.com.au/national/nsw/sydney-s-stretched-rail-network-in-store-for-900m-in-new-trains-20190206-p50w1l.html

    You just couldn’t make this stuff up.

    Hundreds of thousands of overseas students – approx 200,000 in NSW. Many working illegally, not paying tax, depressing wages, and sending money back home. From an economic perspective, this industry is as much an import as an export – it may even be a net import overall.

    We need $900M of new trains for our rapidly increasing population. Which we buy from China.

    200,000 less people in Sydney, and public transport and the roads would work much better.

  3. The RBA has the data knowing the AussieEconomy is in free fall, yet they do nothing. There should be a Royal Commission held by the newly elected Shorton Govt on the RBA incompetence?

    • proofreadersMEMBER

      Don’t fret as the RBA will be screwing savers up the anus again soon enough – because they know that’s the only honourable thing to do; and our “unquestionably strong” banks will pass the rate cut on in full.

    • Problem is the RC would say the economy is actually the governments responsibility, with the RBA only responsible for interest rates and nothing more.

    • Yahoo finance news says it the global economy forcing the RBAs hand. Ha!

      https://finance.yahoo.com/news/asian-shares-mark-time-trump-002747408.html

      The Australian dollar nosedived after its central bank opened the door to a possible rate cut in a remarkable shift from its long-standing tightening bias, a further indication of global economic slowdown.

      The policy shift caught some investors off-guard as only just the previous day the RBA had steered clear of an easing signal when holding its official cash rate at a record low 1.50 percent for the 30th straight month.

    • “Elias Haddad, rates and FX strategist, at Commonwealth Bank of Australia said that while there was a risk the Aussie dollar could test $0.70, a more pronounced downward move was unlikely. “As a bank we have pushed out our call for a 25 basis point rate hike by one year to November 2020 from November 2019,” he said.”