Macro Afternoon

See the latest Australian dollar analysis here:

Macro Morning

Asian stocks basically moved together today with solid gains across the region, save Australia as local stocks were pushed down by a higher domestic currency, while gold almost hit $1350USD per ounce.

The Shanghai Composite is tracking well, up 0.2% to close at 2761 points as its bear market rally continues. The Hong Kong Hang Seng Index has bounced back with a solid move higher, closing up 0.9% to 28470 points. This is a clear new daily high after clustering for awhile around the 28500 resistance level, so all the stops should be out for a continuation rally:

US and Eurostoxx futures are up slightly in line with other risk assets with the S&P 500 looking to build and break above the 2800 point level the target this week:

Japanese stock markets well taking the positive Wall Street lead higher, with the Nikkei 225 closing  up 0.6% to 21431 points, getting back above key resistance that had been broken briefly last week. This was helped by a much weaker Yen with the USDJPY pair surging up to but not through the 111 handle after a bullish, but see-saw session overnight. The next target here is last week’s highs and above trailing ATR resistance:

The ASX200 was the worst in the region, falling nearly 0.2% and closing at 6096 points, retracing back below the key 6100 point resistance level. The Australian dollar held on to the reversal from overnight, staying above the mid 71s as the risk correlation kicked in again. Note the series of higher highs and higher lows on each move in volatility in the last two weeks – the bulls are coming back:

The economic calendar continues tonight with the latest Eurozone consumer confidence figures and then the release of the recent FOMC meeting minutes.

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    • The Traveling Wilbur

      You’re quoting a ‘news’ source that can’t even spell “signed” correctly. In a URL? In the article’s tags? Unbelievable.

  1. Melbourne hit a new peak-to-trough decline record based on Corelogic daily index data.
    Melbourne peak was 157.21 on 25/11/2017 (thanks Ryan).
    Today’s index print of 142.26 is a 9.5% decline, eclipsing the 9.4% decline from 2008-09. Detail on previous declines here:
    At current quarterly rate of decline Melbourne should hit a double-digit peak-to-trough decline on March 2nd.

  2. What happens if a CAD nation, with no safe haven bid, goes into the deepest recession of its modern history at the same time as a global slowdown?

    Some people would argue that its existing exports would somehow perform a spectacular display of the impossible, offsetting the inevitable capital flight resulting from people panicing out of assets denominated in said country’s currency (especially her most ‘valuable’ asset by capitalisation, the bursting property bubble, and by dependency, her mortgage dependent banks). In the process of this awe inspiring feat, it prevents a significant depreciation of her currency and the effective monetisation of its bad debts. Possible? Yeah, nah.

    • I doubt there would be much of a depreciation induced boom in exports as all our exporters are integrated into the global supply chain so their boost in sales would be offset by an increase in costs. Fiscal stimulus would be the only game in town.

  3. This house has been taken off the market unsold this week after being for sale for a whole year (overpriced after passing in at auction).

    They kicked out the tenants before putting it on the market. Now it’s up for rent again at $985 pw.

    No idea if that is fair market rent but if we presume it is, the owner has lost around $50,000 in rent (ie a whole year vacant) in addition to the rates, gardening and all the costs of a failed auction and a year’s failed marketing.

    And in the meantime similar houses in the area have lost at least $100K in capital value over that 12 months.

    It’s an expensive business, being greedy!

    • At that amount of rent I’d move back in with mum lol.. my brother has. 😀

      Property I put an offer in on, the current buyers who offered $50k more than I have asked for finance extension, because they have been having problems getting finance. Vendors have said nah, come back to me, but apparently there is some interest from another party also (again).

      I’ve basically stuck to my original offer, may move a few $k if it means we get it, but I think they’re being greedy and part of me wants to walk and let them suck eggs. If they push for more money I’ll say people who are greedy get nothing. :).

      • Stick with it Gav… sounds like the typical agent BS to get you to raise your offer.

        Still an even chance neither of the other two “buyers” really exists.

      • Hey Arrow, well the other offer must be legit as the property was placed under offer after we put our offer in. As to the new buyer well who knows? The agent hasn’t lied yet (despite my trying to catch him out) but maybe he is lying this time?

  4. Elite capture
    The paper also recommended potentially barring politicians from taking up jobs spruiking for the Chinese, aimed a preventing Beijing’s well-used “elite capture” method, of giving lucrative jobs to former politicians who still wield influence in their parties.
    In Australia, former trade minister Andrew Robb took a $800,000 job with a Chinese billionaire closely connected to the Communist party, beginning one day before the 2016 election at which he retired from Parliament.
    In Britain, former prime minister David Cameron heads up a British-backed but private UK-China investment fund aimed at furthering Beijing’s controversial Belt and Road initiative.
    “The question of ‘elite capture’ by the CCP has not been closely examined. It should be, including the issue of how much time should elapse between government service and working for Chinese state or quasi-state organisations,” said Parton.

    • Its pretty disheartening our politicians sell us out so redilly. WW1 diggers would be rolling in their graves for the sacrifices they made to be sold out by the utter scum that is our political class.

    • “That’s how everyone was able to accumulate so many properties in such a short time. They bought a $500,000 investment property, 12 months later it’s worth $600,000, with that $100,000 equity you’re able to go and buy another $500,000 property. You can’t do that anymore, it’s in reverse.”

      Exactly. This is the slayer mechanism right here although I would amend the statement slightly to say ‘That’s how everyone was able to accumulate so many OF EVERYTHING in such a short time’. The consumer is going to be massacred.

  5. I could be wrong but I think Dutto and scummo are having a lend.

    Here is a bit from a recent article about how many most asylum seekers come to Australia by plane on valid visas rather than by boat.

    “The government has acknowledged the airborn numbers but said most of them are quickly put on return flights.
    In 2017-18, when close to 28,000 flew in, just 1425 protection visas were granted. The other asylum seekers were sent home.”

    But is that right? Are “most of them [] quickly put on return flights”? I reckon that is a really big fib being spread by “the government”.

    Firstly I would expect most onshore applications for protection would only apply once the visa they used to come to Australia is about to expire (so for a student that might be three or four years). Secondly, I would expect the processing of these types of application would be complicated and lengthy (likely talking of months or years rather than days or weeks). And thirdly, looking at these stats from the division in the Administrative Appeals Tribunal that handles appeals against visa decisions I suspect that a substantial proportion of asylum seekers who are initially refused a protection visa don’t go home but rather stay in Australia whilst they appeal the decision to refuse their application. As at the end of last month there were over 17,000 cases pending (the visa subclass is 866) and in the previous 7 months the AAT had recieved over 5,000 new appeals but had finalised less than 2,000 appeals. Like the visa processors the appeals processors appear to be fightng a losing battle, with the the backlog rapidly growing.

    google: MRD caseload summary by subclass – Administrative Appeals Tribunal
    and pick the pdf file that should be at the top of the list.

    • I hate everything about the taxi industry. Everything.

      Except how hysterical they get about Uber. I do enjoy that.

      • Hubert Horan has an exceedingly granular report on Ubers issues as a viable business, NC also has a series based on these observations. After those facts are reconciled its hard to understand your prospective Arrow2, especially from a capitalistic view.

      • My “prospective” is as a consumer, where Uber is excellent and taxis suck.

        So kinda like employers and cheap vs expensive labour ?

      • The main reason Uber is successful is because they provide a service the customers want and do it mostly very well. Taxis treat customers like dirt, which is normal because they used to have a monopoly so it didn’t matter.
        It’s not about price. It’s about bookings that work and suit the customer, rating drivers, rating cleanliness of cars, having drivers that will take you where you want, when you want.

        If taxis were any good then Uber would not be massively disruptive. It’s taxis fault. I have no problem with Uber obeying workplace laws etc.

      • Isn’t it weird that what consumers want actually makes a difference to the success of a business model!!!

      • The main reason Uber is successful is because they provide a service the customers want and do it mostly very well.

        The main reason Uber was successful is because it encouraged people to ignore local laws regarding hire vehicles and shifted most of the operating risk to its “employees”.

        (Not that I necessarily agree with the regulations and legal monopoly around taxis, but the fact remains that they existed and were actively ignored.)

      • Nope. That helps their profits but it isn’t why customers choose them.

        Customers choose them because they are good for customers. End of.

        Taxis were lazy and sh!t because they had a monopoly. They deserve all of it.

      • I suggested you read the Horan stuff –

        Horan started with four articles on Uber’s economics: Understanding Uber’s Bleak Operating Economics; Understanding Uber’s Uncompetitive Costs; Understanding False Claims About Uber’s Innovation and Competitive Advantages and Understanding That Unregulated Monopoly Was Always Uber’s Central Objective — today, he finishes (?) up with a fascinating Q&A with the commentators who’ve followed the series.

        To simplify just a bit, the Uber strategy was to (1) jumpstart rapid growth with driver pay premiums that would get lots of drivers to switch from traditional operators; these premiums were real but not as large as they seemed because drivers hadn’t figured out how to properly deduct vehicle costs to determine true take home pay, and by willful falsehoods (our drivers make $90,000) (2) gradually cut back driver pay once Uber was clearly a large established play by eliminating incentive programs and increasing the percentage of fares Uber retained; but drivers can’t do anything about pay cuts because they’ve locked themselves into car payments (3) At some point—and according to the study quoted in the second article in the series, it may have already happened—true Uber take home pay (after vehicle costs) is no better or slightly worse than what Yellow Cab paid before (4) Uber achieves industry dominance, drivers have no alternatives, and take home pay falls to (or even below) minimum wage level.

        Then some around here bang on about Ponzi’s, corruption, unethical or unlawful behavior, et al … usually by the same mob.

        Then they wonder how we got in this mess in the first place.

        PS. so you support entrapping subs to hive off responsibility and saddling them with debt at less than cost of living so you can have a cheap ride and call it capitalism…. not that Uber has ever made a profit let alone burn through investor dumb money on the hope of an IPO payday. Good to know.

    • More likely to experience a phone call about 10 minutes before the advanced booked time from an unknown number saying “Im far away. I’ll be there in 30 minutes”. Followed by a strange journey where the driver quietly whispers unsettling noises either to themselves or into a mobile phone for the duration of the trip. Oddly enough some become more quiet, or stop whispering altogether when the car is stopped at the lights and the petrol engine of the hybrid shuts down temporarily. Its best enjoyed when you are simply too tired to care.