Macro Afternoon

Outside Australia, stocks have dropped across the region as the US/NK summit ends on a whimper, cut short with no agreement. Risk markets have bid up the USD and pushed stocks down as the latest Chinese manufacturing PMI comes in lower than expected for a third month in a row.

The Shanghai Composite is off nearly 1% going into the close, taking back most of the previous gains but still above 2900 points at 2936. The Hong Kong Hang Seng Index is down only 0.2% or so to be at 28700 points. The current rally remains intact , with prices remaining above the high moving average and the trendline on the daily chart, but the lack of a new daily high since the start of the week is starting to weigh:

US and Eurostoxx futures are pulling back on the risk off mood with the S&P 500 remains unable to break through the psychologically important 2800 point level that has been staunch resistance all week:

Japanese stock markets pulled back the most as the weaker move in Yen overnight did not translate into further slides today as the Nikkei 225 closed 0.8% lower to 21385 points, but still above previous key resistance. The USDJPY pair has retreated a little after last night’s sudden reversal, blipping just below the 111 handle and possibly setting up for further falls tonight due to the lack of a new session high:

The ASX200 is the only market in the green, launching on the good mood around the Capex figures and the lower Aussie dollar as a result, closing 0.3% higher to 6168 points, still well above the key 6100 point resistance level. The Australian dollar went through a spike and then a reversal on the back of the capex numbers and then the Chinese PMI prints and is hovering just above ATR support at the 71.40 level going into the City open:

The economic calendar has two major releases of note tonight, first the January EZ wide CPI print, then the 4Q US GDP print.


    • It’s been so long since this rollercoster has been on the up that I can not remember what dumpling’s name changed to… I still enjoy the ride 😜

      • I think it was Phoenix something or other. I’m approaching break even! Exciting. Hopefully the deal with Cameco will be a go.

      • Nah, I have been very busy.

        It looks all good for SLX if the restructuring of GLE goes ahead as announced. With the perpetual royalty stream still in place (which is on GLE revenue, not profits) the deal is as good as it could possibly get. Well done, MG. Hopefully that low-interest DOE loan option is still on the table. Keep your fingers crossed.

        Pity that the SLX volume was so thin while it was trading below 20c that I couldn’t add any meaningful position. I lowered my average cost base to its cash backing but I wanted to make it even lower. Alas, that opportunity never came. So the market was irrational for a while but not irrational enough.

        Damn BKL.

  1. 15min ago I got a call from Property Somethingmeaningless advicing that there will be RE seminar at Liverpool Catholic Club to help people understand where the market is heading and on how to obtain a home loan. When she asked me if I might be interested I adviced that I already receive reports from various sources and I am very much aware where the market is heading she cut it short by saying “oh well then you keep reading those reports and good luck..” or something to that effect.
    I also remember her saying “we are not selling you anything..”. Well if the seminar is funded by Real Estate groups how does she sees this as unbiased and educational seminar?

    • Stone the Crows

      And a hard earned thirst needs a big cold beer…………at the Lakeview.

      Let me know when you are free for a cold one Colin so we can give things a bit of a ‘nudge’…….

  2. The Penske FileMEMBER

    Any idea on what happened with YBR today. It looks like it’s entered a doom loop. Knocked back 9 cents a share last year and now it just looks cooked. Market cap is a joke.

  3. lmmao … philosophical 40 acres and a mule get sum freedom and let goat sort it out meets its inevitable conclusion … social head shrinking that makes Rwanda look like a sausage sizzle in retrospect ….

      • >A sleepless night on a pile of money with many beautiful women! boys

        Fixed that for you – after all – it’s Pell…

    • “no more than a plain vanilla sexual penetration case where the child is not volunteering or actively participating,”

      Isn’t that the very definition of rape? How can a lawyer say that and not expect outrage? The only good thing I can think to come out of that statement is that surely it would make an appeal futile when the lawyer has basically said, yes, he penetrated a young boy.

      • Richter a) had to proceed accepting the jury’s finding of guilt even though his client maintains his innocence and b) was trying (poorly) to point out there were no aggravating circumstances such as violence or premeditation. The submission was both badly worded (as Richter himself acknowledges) but also I think misconceived. The power and status imbalance between archbishop and choirboy is absolutely an aggravating factor.

    • Big white boomer … and where did you have to study to grant you with such wisdom and intellectual grunt again oo7.

      Yeah and what you didn’t see is the correspondence after the fact, off site, with people from various non mainstream economic views.

      What you really can’t wrap your head around is the dialectical style you present as your – own – individual thoughts, same goes for Sweeper, especially when its put into context with your public statements on this blog and yours for years.

      A. I’m not a boomer and your attempts to pigeonhole me into your ideological framework is just another example of how some wish they could reduce everything to its reductive parts to vindicate the rote antiquarian ideological perspective. This is acerbated by Sweepers and others claims about cut and pasta when its obvious people are just regurgitating others thoughts e.g. yours and Rothbard, Sweeper and bastardized Keynesian [liberal free market sort with pangs of guilt – see Krugman].

      So again what say you about removing the structual NAIRU buffer [gold bug hyper inflation monster under the bed] be better ratchet up austerity [cuz it works – see history aka data] and Hudson’s observations about international neoliberal bond holder machinations [waves at neoliberal infested IMF] and then topped off with your claims about he ev’bal EU trading block forcing the U.K too punch out. Not that the U.K. is one of the original neoliberal ground zeros or anything and likes a bit of cakeism due to its FIRE sector machinations, must be why trumpo sent that gift card thingy.

      I digress…. its just so similar to an old timey baptist tent revival, must be quite confronting to engage with those that don’t just handover their mental facilities based on some vivacious threat about some imaginary after life, because you say you have special information.

    • Yes it is a very well thought out article.

      That copy and critique thing really isn’t a surprise.

      But where is the critique! Surely a bastard Keynesian like me who doesn’t understand the core theory and insight of MMT would get torn to shreds in MMT land.

      Instead its just more of the same. Loanable funds! Loanable funds!
      As I’ve pointed out 3 times now, Krugman doesn’t mention loanable funds once. He’s drawn an aggregate demand schedule He’s got output on the x axis, not qty of loanable funds, yet you guys launch into a critique of loanable funds.
      And the most amazing thing is he isn’t even using New Keynesian arguments he is using a standard old Keynesian model with a downward sloping aggregate demand schedule noted by Keynes in Ch 19 of the General Theory in what became known as the Keynes Effect.

      You are claiming the aggregate demand schedule doesn’t exist or is vertical (still yet to be confirmed) and this is the true Keynesian position. Well read the first sentence of Ch. 17:

      “IT seems, then, that the rate of interest on money plays a peculiar part in setting a limit to the level of employment, since it sets a standard to which the marginal efficiency of a capital-asset must attain if it is to be newly produced“

      And yes I agree that nobody invents their ideas in a vacuum. But if you are going to call people bastard Keynesians and claim Keynes said this and really meant that… maybe read and reference Keynes not some guy in MMT land.

      As far as Krugman goes, I actually stopped reading him when he attacked Sanders. But he writes clearly and isn’t stupid, and doesn’t suffer fools. And he has hit the nail on the head here. I haven’t regurgitated anything he said because I’ve had the same criticism of MMT for years. In fact I’ve already answered the last 2 questions he posed.

    • and he has hit the nail on the head with Calvinball as well.
      For example so far the argument has gone like this:
      Skippy says I don’t understand the theory
      Note why the theory is wrong
      Skippy calls me a neoliberal
      Note that MMT is perfectly compatible with tax demonising libertarianism
      Skippy says MMT isn’t a political agenda it is a theory
      Note where theory is wrong
      Skippy calls me a neoliberal

      • Neoliberals [TINA] in the U.K. have had a great time of cakeism and now cry poor yet still want a seat at the E.U. table, because some political high jinks went a bridge too far in keeping any traditional share of labour and power out of the mind … poor people might get the art dirty mate ,,,,

        BTW did you used to post as rusty penny lol …

      • Sounds like an MMTer then.
        Tax cuts for the rich.
        Hyperinflation and unemployment for the poor.

    • IS-LM w/ philips curve [anti Keynesian stuff] was just like GDP where Hicks developed a hypothetical metric to use as a stand alone metric to potentially inform various curiosities and some went the full stoopid Sweeper.

      Its the cornerstone to neoliberalism old boy.

      • The opposite is true – Rusty loathes NAIRU.

        I think he recognises MMT as simply the way the modern economy works. But he can speak for himself – he’s still around…

    • Cornerstone of neoliberalism is demonising / opposing taxes on the rich.
      Which is exactly what you are doing.

      • Nothing of the sort Sweeper, again its about how government funds itself, and the class war against Labour by elitists seeking rents in perpetuity by framing society as a market. MMT does not take a side in the ideological death match, only suggests options by which politics can work to enable what ever may come – socially benefiting or narrow distribution to the anointed ones.

        Its a administrative issue, sadly you seem to barrack for the elitists with the IS-LM Philips curve Taylor rule as goats own means of distributing manna from above.

        The oo7 thingy is a wee bit more than weird mate ….

      • “Odds are, if he did a couple of balance sheets on his own, he would see that the government cannot possibly pre-fund its programs in any technical sense of the word”

        A balance sheet is a static report of financial position at a point in time it tells you nothing about necessity to pre or post fund expenditure or assets

        “If he slogged through the workings of Federal Reserve and Treasury operations, he would see that taxes are not stockpiled in any material sense for future re-spending”

        Actually he would see that the governments deposit at the Fed always has a credit balance since it legally cannot go into overdraft.

        “If he pondered them for just a minute, he might start asking some different questions about government deficits and might understand that the government’s deficit by identity equals the nongovernment’s financial saving”.

        If he studied the balance sheet of McDonald’s he would discover that the world (excl. McDonald’s) net financial saving is the sum of McDonald’s debt and equity. Which says absolutely nothing.

        “And because there is no discussion or analysis of bond markets, primary dealers, the role of the Fed as market-maker for bonds”

        Probably because it is a critique of an alleged economic theory not institutional banking/financial markets quarrel

        “the benefits of anchoring the value of the currency in labor power (something I thought would resonate with Henwood)”

        That just means absolutely nothing in a Marxian or any other sense.

        “I would say that Henwood (like other “tax-the-rich-to-pay-for-progress” lefties) is tethered to the wealthy by an imaginary umbilical cord that holds his progressive agenda hostage to his oppressors”.

        Imagine a biscuit representing claims on the productive *potential* of the world economy. 1% of the population have a claim to half the biscuit. In order for the 99% to increase their claim to more than half the biscuit, the 1%’s claim needs to fall to less than half the biscuit, regardless whether global assets return the worlds productive potential.

        “Whereas it is the current pump-priming bastard-Keynesian model”

        Pump priming is now “bastard Keynesian” wow.

        What a silly article.

      • Sweeper,

        I thought you might have been exaggerating when you described it as a silly article.

        You didn’t.

        “..Henwood does not acknowledge that one of the most effective ways of engaging in this struggle is to render the wealthy obsolete — as in, we will stop pretending that we need them to pay for the good society. In a world with a sovereign currency and modern monetary and fiscal institutions, we never really did, and we sure don’t now. And the public needs to know it. That’s the MMT message…”

        Render them obsolete?

        Stop pretending we need them?

        If only they could be just imagined away.

        I suppose at least they are a modest bunch

        “..Henwood may think MMT is a distraction, but the record stands. We have done the heavy lifting to bust formidable, decades-long myths about government spending, to help shift the Overton window and pave the way for today’s bold and unapologetic programs that reclaim the state. The real distractions are those, like Henwood, who, hoping to influence the public conversation, cling to sclerotic visions of public finance..”

        Reading articles like that (that display the paw mark style of the toxic marsupial) confirms that it’s worse than “not helping”. These guys will end up discrediting any response to neoliberalism for decades.

      • Silly comment oo7 …

        Considering your statements about Brexit, and Greece in the past, Yanis and Co did set back the anti neoliberal agenda 10+ years due to wonky thoughts about hard operational facts vs magic solutions. You’ll get that from some econ depts that assume a thing without ever popping their heads out of some model and reconcile reality.

        This is exactly why the MMT Group is more informed about how thing actually work contra to ideological preferences being imposed on everything. Like Wray said, is Bill Black some sort of fire sector maven … chortle …

        Anywho I think its been quite instructive to have watched you twos past scraps only to embrace each other when faced with MMT getting more public viewing … seems somes narrative dominion is threatened by all this more than what a thing is or is not …. wail~~~~~

      • While I cannot speak for Sweeper

        “..only to embrace each other when faced with MMT getting more public viewing..”

        MMT is getting more public viewing because of the expansive statements made by its “fan boi”.

        Those Magical Money Tree statements not surprisingly are attracting lots of enthusiasm along the lines of “Santa is coming”

        That the “fan boi” then roll out the caveats, qualifications and plenty of butt covering “that is not what we mean” when pressed is being missed by the new converts.

        There are going to be a lot very unhappy people when they find out that MMT is a weak tea rationalization of the status quo and Santa may not have as much in his sleigh as they think..

      • Yeah let’s all just imagine the rich don’t have half the biscuit.
        These people are now in the process of brainwashing Ocasio-Cortez. Could they be anymore destructive?
        And what it is in it for them? Apart from the ego trip in telling the economics profession they are wrong and no one understands their stupid “theory”
        Cortez was making real inroads against the neoliberal cornerstone of tax demonisation. Now these quislings have got to her.

      • And thats why I hate MMT so much. Not because it’s self-evidently wrong.
        But because it is a political agenda and a toxic one for the left.

  4. The Traveling Wilbur

    So Mr ImaDealMakerIMakeDeals is now batting 0 and 3 from the three most recent events he himself engineered.

    (China FT, NK and his big, beautiful, wall)

    Plus his lawyer.

    Thank you you mighty US Constitution. Thank you.

    • I despise Trump as a person, but i’m thoroughly enjoying the sh1t he is stirring up. It’s made everyone go a little crazy and is a nice distraction from the absolute disgrace of Australian politics.