Macro Afternoon

Risk is taking a holiday here in Asia in response to the slump overnight on Wall Street with the USD gaining strength against most of the majors not providing the usual help. The RBA meeting also failed to ignite animal spirits with the Australian dollar largely unchanged.

The Shanghai Composite is the standout, up 0.4% going into the close and remaining above 3000 points at 3038. The Hong Kong Hang Seng Index is down a few points to be at 28938 points as it still tries to pull itself out of a near week long malaise after rising too fast from its recent trend line:

US and Eurostoxx futures are flat with a lot of caution reigning with the S&P 500 still depressed after last night’s volatile push lower. It seems that the 2800 point level remains too far a stretch and will act again as staunch resistance tonight:

Japanese stock markets were the worst performers despite a much weaker Yen with the Nikkei 225 falling nearly 0.6% to around 21690 points, almost making a new weekly low as a result as it continues to align with other risk markets instead of the usual inverse correlation with Yen. The USDJPY pair has found more strength, bouncing off the low moving average and almost getting through the 112 handle again. Note however, that a new four hourly session high as not yet been made since the Monday morning open:

The ASX200 finished just short of the 6200 point level, down 0.4% to 6199 points, not helped by the RBA hold or a lower Australian dollar. The Australian dollar fell before the RBA on the trade balance figures and then did nearly nothing post the meeting to remain below the downtrend from last week’s high:

The economic calendar continues with two major things to watch tonight, first its the non-manufacturing (services) ISM print in the US followed by the BOE Governor Mark Carney’s testimony to the House of Lords.

Comments

    • China PlateMEMBER

      man there is so much wrong with that article.
      they work illegally, what type of work environment were they expecting.
      and as for Emma Germano raise the wage of fruit pickers and her problem of no workers would be solved. OK the price of fruit may have to rise. let the free market sort out how far it goes up

      • but but but … muh vibrancy! look, it’s not about the f*cked up system that enables this, it’s about the poor farmers who now have no one to pick the fruit!

        I’m sure that ABC could make a veeeeery compelling and vibrant case for slavery if they thought about it for a few minutes.

      • The big supermarket chains pay pittance to the farmers and charge top dollar……because they can.

    • My sister invented the Tatura trellis,
      which if all that fruit was trained on the trellis
      could be picked by robots.
      Problem solved???

      • Lol, so you say your sister invented it, yet footsore provided a link to a dude that actually invented it, and now you say it’s up to him to do more research? Are you related to skip?

      • Lol finally everyone is starting to see through this LARPing bullsh1t artist
        I’ve been pointing it out for a while

        He’s 1a abd 1b with skippy : the former green beret turned tradie who also somehow used to work with Bill Black

        When the reality is they are a couple of sad old losers who’s lives are so devoid of worth or achievement that they get their kicks out of trying to seem worldly and omniscient to a bunch of young losers on an obscure Internet forum

      • Comming ….

        Nice of you to draw unsubstantiated parallels and run with them. Hint I never said I worked with Black et al, only that I have corresponded and shared information with. You must remember the time I pinged him WRT Mig about agency and Milgram was brought up.

        My experiences due to birth, military, education, work, and travel are what they are. Now if you think being a professional protective coatings applicator and manager is some how diminished in retrospect, have to inform you its a choice I made after hop scotching between my business degree and construction. I could not endure the politics or the ethical dilemmas in C-corps. Even then I’ve taken to local RE to minimize dramas, not to mention other aspects like travel [30min max], working alone in many cases, and enjoying the so called fruits of my own labour – especially in an industry where skill is downward sloping [following others].

        I actually take pride in my work and the money I make is just positive cash flow [6figures] without having to gamble for a living. Yet if we met outside that work you would have no clue of what I did for a living wearing Scotch and Soda driving the Benz with Persol sunnies on …. chortle …

        With your analytical framework you might find work with Larry and Co ….

    • That would have to be the first time in living memory something has come in on time and under budget. The MTR people must be kicking themselves not realising how to milk us like every other fvcker out there.

    • I’ve done estimates for those sorts of projects. They will do their own internal estimate and then load it up, plug another 12mths on the construction schedule. Works most of the time when you engage a competent contractor after screwing the price down during the tender process, unfortunately sometimes things go wrong and they get bedazzled by the lowest price ever by a contractor who does not really understand the scope of work. (Sydney light rail) Such load up practices are never tolerated by boards in the private sector like the mining companies, they will naturally add some contingency but never to the level the NSW government does..

      • It’s a rather meaningless headline. They conservatively load the estimate up and extend the construction program to avoid serious political problems of a project like this one going over budget or running late. If not the Premier or Transport Minister could be stabbed in the back and disposed of by their own parliamentary party members or worse loose a state election. Without question the headline spruike is picked up by the MSM and works 99% of the time for transport projects aside from the one running down George Street. Its a trick both sides of politics will play when in office.

      • There is certainly an element of that, but you find with a Metros because of the nature of the underground depth and dedicated corridor, there isn’t so much that can get in the way, whereas the surface level light rail project had to mess around with all sorts of street level services that weren’t properly documented. i.e you’re constantly digging and finding stuff that’s not meant to be there.
        What it really shows is that CBD light rail should have been a metro project along similar route but perhaps running under Oxford street.

  1. https://www.news.com.au/finance/economy/australian-economy/experts-share-grim-warning-over-australias-economic-future/news-story/e8393c8a51e19e8fcec17111ebd2ac54

    “In Australia every indicator is blinking red. It’s a house of cards. We’re highly dependent on China (we’re on par with the Congo for how reliant we are) and they are in a trade war. We have the housing market falling off a cliff, and this is happening from Vancouver to Auckland too.

    I dunno whether this guy is worth listening to really, but it seems accurate enough.

      • Nah, it’s the dude that runs Freelancer. Adams is quoted later on though.

        Oh god, Shane Olivers comments further down are farcical!

        And he said while the housing downturn would be “painful” for recent buyers, and that he expected further falls from “top to bottom” in Sydney and Melbourne to reach 25 per cent, it would only affect less than half of Australia’s overall population who live in our two biggest cities.

        “Unless unemployment goes up dramatically, it’s not going to turn into a generalised crash,” Mr Oliver said.

        Yeah, i’m sure unemployment will be fina and dandy Shane, when tens of thousands are underwater owing millions. They won’t be panicking and shutting their wallets at all!!!

      • How’s this bit…

        .”Oliver said there were similar “gloom and doom” predictions made when the mining boom ended, but that Australia had bounced back”

        By blowing a property bubble and huge private debt.

      • That’s exactly what I thought. The explicit response from the RBA to the mining downturn was to blow this bubble!

  2. Rob Richter, the atheist and social progressive George Pell chose to represent him, has ‘quit’ in disgust at the verdict.

    Yeah. Right.

  3. Well I for 1 am glad the RBA is sitting on its hands. Good guy Phil is saying we should take our medicine now. Not later.

    • Indeed. Phil does not want to cut. As long as the data doesn’t look absolutely appalling (and maybe even if it does) I reckon the probabilities are:

      -Won’t cut in April a few days before Budget.
      -Won’t cut in May a few days before Election.
      -June gets interesting but would still prefer to give the (new) government time to announce stimulus.
      -July – cut.

    • I’m all for this equalising the trade terms again. Countries like China took the absolute piss to take advantage of it. My biggest gripe though is that is was the US corpratists themselves that sold out their own people to move to cheaper production countries.

      • Forcing ours & others to race to the bottom too. For greed as much as for survival. It’s why global quality is in the sh1tter. I’m getting signals people are getting fed up with rubbish, but unless they’re prepared to pay enough for the makers to lift their game we’re going to be living in a low quality world & planned obsolescence while we’re lifting billions out of poverty at our own cheap & nasty expense.

      • Colin we are not lifting billions out of poverty. We are creating billions of slaves who don’t have any worker’s rights. We also pollute the environment in those countries as they don’t have proper environmental laws. It is all about profits.

    • I’m on the same page as Timmeh. Go Trump! Unlike our own politicians selling us out

    • “I’ve got this 97-year-old gentleman. He thought the property was worth $600,000, which was just a figure out of the air. It’s all about keeping the sellers informed as to the realty of the market.”

      Gee, I wonder where the old fella got his expectations from??? Because i’m sure that most 97 year olds are sitting around their house thinking about how much it’s worth…..

      • He’s thinking I’m 97 dammit. I wanna go out in style. $600k I’ll give $500 to the kids. Spend $100k on hookers and blow and really go out with a bang.

      • Gav,
        You’ve got it front-to-back.
        $500k on living it up.
        $100k to waste on the kids.
        Why, cause he’s not giving it away.

    • Mining BoganMEMBER

      Well something is happening. Young lass at the legal shop near work was telling me their real estate work dropped off like a stone after their xmas/new year break. This is a FHB/subcontinent area with average prices $550-650k. Maybe the carnage is finally moving out from the centre.

      It’s spooked the office that much she’s trying to convince her bloke that they don’t need an IP in the country, that they need to pay off their home first. The stuff coming from her mouth made me wonder if she visited these pages. Word is getting out.

      • >…Word is getting out
        Wait until they see the Excel … Them spreadsheets will truly pucker their sphincters.

      • Mining BoganMEMBER

        I told her to go search gumtree for the land for sale stats and see what’s going on. She said I’m weird but she’ll have a look anyway.

        Reckon she’s thinking it’s like stock tips from the shoeshine boy.

      • When talking at work today about the council’s plans to revamp an outdoor pool one of the young life guards asked if we’d get paid council wages not our current significantly lower private sector wages (despite working for a council owned company). Did the whole once wages go down they never go back, globalisation has been onshored with our current migration system settings etc best thing anyone can do is avoid large debt quick spiel and someone immediately piped up with housing will crash 40-60%. The 2 millennials and 2 gen Xers in the room agreed this country was rooted. Word is getting out.

    • Think of him what you will, you’d have to agree that he’s the perfect candidate for the greens and their current identity politics focused policies. Like Gerry or Highrise running for the Libs, or an ABC news/current affairs host running for the ALP.

  4. From the link above:
    “Ms Vanson said she felt “scrutinised” over her living expenses.”
    Poor lady.

    • ‘When Renee Vanson went to her bank, she thought she was in a strong position to refinance her loans.
      Much to her “disappointment”, she says her bank told her it could not help because she was “spending too much”.
      “If you’ve got no outstanding debts, you’ve got your insurance, school fees for the year, power, phone, petrol — and you’re still saving money as well — who’s to say that you’re spending too much,” she said.

      Um, no outstanding debts, but refinancing her loans? I think for their own sanity it’s time for the banks to come out and kill Bambi once and for all – it’s time to tell people that there’s no such thing as good debt and bad debt. Loans for housing count as debt, it isn’t ‘good debt’. People treat it like it doesn’t even exist. It’s a F noose that will strangle you in a flash if TSHTF.

    • ’tis only 10% maaaaate… ‘Straya’s going to be foine! We’re not a planned economy! We’ve got markets!

      • if they start offloading I doubt they will stop at 10%. May start with 10% and as sales stole again discounts will keep climbing.

      • Of course it won’t stop… but your dumb infestor will live in hope that it’s all “rational models” … you can’t possibly just ‘give it away™️’, can you?

    • The Traveling Wilbur

      That’s one developer that’s not worried. They know they’ll be able to sell all the unoccupied ones currently owned by Chinese nationals, again, for zero cost, in a few months.

  5. The Clock Runs Down on Mainstream Keynesianism – Paul Krugman’s macro framework is leading him astray.

    “I understand why this makes no sense to Krugman. The crude, IS-LM interpretation of Keynes demonstrates that, under normal conditions, an increase in deficit spending will push up interest rates and lead to some crowding-out of investment spending. There is no room for a technical analysis of monetary operations in that framework. For Krugman, the model is simple but useful.

    He used the same model to fight the deficit scolds, who were pushing austerity during the Great Recession. (And he deserves credit for being on the right side of that debate!) But his defense of deficits was always contingent on being in a depressed economy, where he argued that monetary policy had become largely powerless (a flat LM curve) due to the zero lower bound (ZLB) so fiscal policy needed to do more to help the economy recover. Now that the economy has escaped the ZLB, Krugman has returned to warning that “deficits matter again.” In his words:

    What changes once we’re close to full employment? Basically, government borrowing once again competes with the private sector for a limited amount of money. This means that deficit spending no longer provides much if any economic boost, because it drives up interest rates and ‘crowds out’ private investment.

    He then goes on to say that “by crowding out investment,” deficit spending “will somewhat reduce long-term economic growth.”

    This follows directly from his model, and these are the arguments I disputed in my most recent reply. Our differences derive from our different analytical frameworks: Mainstream Keynesian versus MMT.

    https://www.bloomberg.com/opinion/articles/2019-03-04/krugman-s-macroeconomics-is-no-match-for-mmt

    • I’m finding a lot of cars for sale “urgent sale”, “must sell this week”. etc.. not sure if normal, my cognitive bias or otherwise. Interesting none the less.