Macro Afternoon

Asian stock markets are fighting poorly against a risk off sentiment with the fallout from the failed Brexit deal last night in the UK still reverberating. The Aussie dollar alongside the Kiwi has fallen while Yen remained firm with the latest consumer sentiment data locally hurting the Pacific Peso.

The Shanghai Composite is selling off slightly but still above 3000 points, currently down 0.4% while the Hong Kong Hang Seng Index is falling further, down 0.6% to 28752 points, unable to continues its recent bounce off trailing ATR support on the daily chart. The next level to beat is the former daily highs above 29000 proper, but a new daily high is required soon:

US and Eurostoxx futures are flat as markets remain cautious around Brexit – only 16 days to go! The S&P 500 four hourly chart shows a little hesitation here as it makes another attempt to get back above the important 2800 point level:

Japanese stock markets have turned over again due to a stronger  Yen with the Nikkei 225 taking back half of its previous gains to be down 1.2% to just over 21227 points, still unable to break free of its previous breakout point in early February. The USDJPY pair has been unable to get back above its own high moving average on the four hourly chart, pushing back down to the 111 handle as it tries to get back to the ATR support/resistance key level at the mid 111’s:

The ASX200 is the best performer in the region so far, down only 0.3% to around 6152 points with another poor reaction to a local release, this time the consumer sentiment print. Indeed, this is probably behind the reversal in the Australian dollar as it rejects resistance overhead at the 71 handle and gets back to its Monday gap high starting place:

The economic calendar continues tonight with the January durable goods order from the US, plus more Brexit shenanigans!



    • Being aboriginal land, it’s not leased AFAIK. The manager left and the community decided it was too hard I guess…

    • “We can’t cover the vast State unless we have the staff to do the job.”

      Oh noes… I see a blatant case of “aussies don’t want to do this job, better hire some vibrants”

    • That’s OK – that’s because they’re Russians… over here though – it’ll never happen…

      • GunnamattaMEMBER

        Quite simply it is time to move into Cubby station in particular and cotton growing in general and say enough is enough – the water belongs to the river, and natural environment and the far more sustainable (but still water intensive) fruit irrigators down the river.

        The only alternative I can think of, and this is where the RBA may be heading with its introduction into the climate change discussion – is that amidst a general global climate change mitigation investment strategy, we make a conscious decision to branch off into major geoengineering, and either do something to create more natural rainfall in Australia (and I have had it suggested to me that making relatively small mountains in the centre of Australia would have some effect) or we cast the ‘natural world’ aside and start really going hammer and tongs with desalination and create enough water to not just return meaningful rainfall to the Darling and inland Eastern Australia, but enough to have a very water intensive industry (as cotton is) in addition to that. Another alternative may be to tell the cotton growers they can continue to have their water, but they need to build deslaintion capacity to offset that and have it run down the system they are part of. And even then there would be an issue with all the extra hot salty water that desal plants produce (maybe it can be used in some way). And even then there is the issue with Australian soils (which are often as barren as a Morrison government policy process).

        Short of that I understand we could tell cotton to get over near the Ord River Scheme (although I gather there are issues with insects and pest there)

      • Gunna, Alice Springs is over 500m, and the Mac ranges top out at over 1500m. How much higher would be necessary? At what cost?

        I’ve also seen proposals for an ocean canal to fill Lake Eyere. Not convinced.

      • GunnamattaMEMBER


        Yeah I know, I once lived in Alice Springs for about 8 months while negotiating the single craziest enterprise bargaining agreement I was ever party to for the local town council and associated aboriginal mission stations.

        I am not saying build a mountain range, but maybe just sort of map out what could be done a bit more clearly. It was actually a CSIRO guy who suggested it would be possible to generate more rainfall with big hills – he suggested to the West of Alice Springs and was talking about along the WA border. But for sure you’d want to be fairly sure of what you were doing when you started building any mountains.

        I do think that when the geoengineering thing takes hold (and I do think global warming will take hold of the discussion) some of the global engineering responses will be pretty freaky. Though that said, the Aral sea is a classic example of what can go wrong.

      • The air is dry most of the time in central australia. building mountains won’t make dry air rain. Mountains tall enough to collect snow may be a different story, as from my very uneducated position this is one of the big differences betweeen central australia and the central US.

      • interested party

        Bill Mollison on swales in desert areas….

        Building mountains will fail if all you do is create run-off and the inevitable siltation of existing water courses. Do what Mollison is looking at and get the moisture in the ground … absolute must in arid areas. Plant out the swales with local tree species and let time heal the place. Evaporation is the killer in these climates, as are hard hoofed critters.

        Where you see goats is where ground zero is for desertification. They are the last set of teeth to hit vegetation before it goes to ruin.

      • interested party


        Have a look at Pseudomonas syringae. They are bacteria that reside on tree leaves. They help contribute to inland rainfall by attracting moisture via needle like structures….hence the name. They rise into the atmosphere via transpiration and wind.

        Cut down the trees….lose this connection and the result is less rain. Look up oxygen isotopes for the difference in ocean derived rainfall vs vegetation derived rainfall. Quite illuminating.

    • Bugger. I had my fingers crossed for you Gav.

      Probably overpaid. Back on the market within a year when they lose their job?

      And never mind, there’s always another house.

      • If they struggled this much with finance I do wonder.. fingers crossed they are forced to sell at a time when there are literally 0 buyers. Not sure I can handle continuing to rent the place we are in, in Sydney though.

      • It’s a mudbrick and yes insurance can be expensive, especially because we don’t know who built it! Records are lost. Amatuer mudbrick builds make insurance companies nervous. But this didn’t look amatuer.

        Apparently Youi are ok with it.

      • I’d stay away. Also consider this story from a friend who owns a fibro house not far away from the bushes (in NSW). He wanted to knock down and rebuild. Recent legislation says he cannot rebuild unless he uses triple-glazed glass on windows and doors. The cost of the glass installation alone was around $250k+. It blew his budget to shreds and so he is sticking with his highly flammable fibro house.

        The point being the rebuild cost could be a LOT higher than the value the house is insured for, and it would also lower the value of the land if the next owner wanted to rebuild.

      • Freddy, that’s insane! That can’t be true surely? 250K just for glazing that the gov stipulates?

      • innocent bystanderMEMBER

        @Fred. Yup. A lot of that going on here on Perth outskirts. people buy blocks and then can’t afford to build. Applies to extensions too. And also renos (if they know). Wasn’t until recently that I saw it hit block prices tho – block was ad’d at half the going rate; under offer after about a month on the market. BAL 29/40
        Could be why existing homes are holding their price in these areas – they ain’t making anymore of em 🙂

      • It might have been more than just the triple-glazing but I am fairly sure about the $250k+ additional cost of compliance.

        ibs, what you are saying makes sense regarding the price of a decent existing house holding its value. There will come a time though where new buyers won’t want the old house and it will revert closer to land value.

      • It just so happens I like the old house (Mudbrick) but yes building new can be expensive. My mum built up at Kinglake after the fires and it cost $700k and she already owned the land!

        Perfect example here of a high BAL rating property, that would be impossible to build on.

        Same with this 1.

        And this bloke has had this property on the market forever. Think he was asking $300k+ so he’s at least dropped his prices.

        It’s also why my mum thought this place was good value for money (since she knows the cost of developing).
        But for me it was too much (maybe $800k)..

        If you ask me these BAL rating restrictions in terms of building legislation are ridiculous…

      • @Freddy that was the second property I was interested in, if I missed out on the mudbrick, but it sold before the mudbrick. I liked it also, but didn’t think it was worth the price it sold for.

    • You might have dodged a bullet with that one. It looks like it would be insanely expensive to heat in winter because of the way it’s built.

      • innocent bystanderMEMBER

        yup. I made that comment when Gav first posted it – orientation all wrong.

      • I was thinking more high wooden raked ceilings (leaky) with likely bugger all insulation, and to top it off, windows at the top to let all the heat out where it pools.

      • Apparently mudbrick homes are good for keeping warm in winter and cool in summer. I think there was insulation in the roof above the wooden beams.

        The house definitely needed some maintenance work. It did sell for $770k in 2017 (Jan) so maybe it will be back to that again soon.

        Vendors were greedy but in this case it worked in their favour, good for them. Bastards.

      • The mud brick might be good for thermal mass, but with the high ceilings and windows at the top would be atrocious for heating the joint in a cold Vic winter.

    • Was going to say that would cost a fortune to heat, plus if you get heyfever that part of Melbourne is a nightmare in spring, very different climate to Sydney where there is a sea breeze.

    • yeborskyMEMBER

      “Youi, we get you”. I remember a few years ago when I used to visit a car blog occasionally Youi had just got done by the authorities for signing up folks to products without their approval. Basically, a fee for no service issue. A great thread (and commentary) ensued entitled “Youi, we got you”. 🙂 Avoid them if poss.

    • C.M.BurnsMEMBER

      i know you can remote / wfh a lot with your work Gav, but when you did have to go into the office, what would the commute time be into Melbourne CBD ?

      • 10 mins to Hurstbridge station, then 1 hour train to city. Mum has a house in South Melbourne I can use also. So if I needed to be in the city for work I could use that house during the week or a couple of days. Mum also has a house in Kinglake, so that’s why location kind of makes sense.

  1. US Celebrities and elites involved in college cheating scam

    The years-long, $25m scheme to pump the children of dozens of wealthy Americans into elite schools, revealed on Tuesday, alternated between the elaborate and the almost comically basic. Beginning in 2011 William “Rick” Singer, who the FBI has charged with racketeering, would variously photoshop the faces of non-athletic, but wealthy, students onto the heads of actual athletes he had found on the internet, and have the director of a private college preparatory school stand in for other students in SAT tests.

    The forging of athletic heroism was just one tool in Singer’s kit.

    He offered a second, more complicated service where children’s grades would be artificially inflated. According to the court filing, Singer would have the children “purport to have learning disabilities”. This would allow the students extended time to take their exams, and allow them to sit the exams at “an individualized setting”.

    Singer would then arrange for the children to take their exams at one of two exam centers where he had bribed test administrators. At the center a hired tutor would either take the test on the child’s behalf – the filing details how one parent sent Singer an example of their child’s handwriting so the stand-in could attempt to write in their style – or doctor their answers once they were done.

    • And Adelaide is still going up! Typical housing associations putting hands out for gov money and incentives. If they didn’t kill off manufacturing in Adelaide maybe people would have jobs that weren’t completely reliant on a housing ponzi.

      • I’ve got no evidence other than my gut but I reckon all these odd markets – Adelaide, Hobart, whatever – will all head south at rocket pace the moment the Syd/Melb bust pushes Australia into an economic panic. This “markets within markets” rubbish will not hold up once unemployment spikes and the R word (that’s recession, not Reusa) stalks the land.

      • Agreed, i’m waiting for Perth to accelerate again. Terrible economy despite sending most of the country’s exports to China, Yet housing really hasn’t come down that much and from what I see, a lot that has come down is due to it being a subdivided block. It’s amazing how much housing has been demolished and subdivided around my area. It’s really quite astonishing.

      • Which area are you in? I visit my parents in 6018 from time to time and every time a few more nice family homes are gone, replaced by brick oven subdivided houses with black roofs, no eaves, two or three to a block with a concrete patio for a garden. Ugh.

      • Near curtin Uni. Very old suburb that did actually have a lot of very old fibro homes, but on good blocks. Now it’s all like you say, subdivided, no eves, no yard, fake lawn, cars on the verge because theres 5 uni students to a house and you should see the sh1t that gets thrown out every hard refuse. It’s like these people just empty the entire house every six months.

    • C.M.BurnsMEMBER

      he’s playing like a man who knows he is on the career green mile. Warner coming back and he won’t see the team again. Darcy Short and others will be banging down the door by the time Warner retires (or is kicked from the team for good).

      Did you watch game 4 ? Holy crap Ashton Turner. Despite the doubters, Langer is doing a great job at bringing his underdog WA players up to international level.

  2. There’s a lot of “government” adverts popping up on sports radio. The LNP are shameless. Please have the election over by the beginning of the world cup.

    • China PlateMEMBER

      Give him a break. He won you that cup and gave you the following day off. Fair dinkum

    • “Sources say Hawke and d’Alpuget have bought an apartment in the One30 Hyde Park development on Elizabeth Street, which is due for completion later this month.

      The apartment’s purchase price remains unknown, but one source close to the development said it would have been about $3 million. Settlement will confirm that price.

      The 38-storey tower was developed by Hong Kong-listed developer Aoyuan Property Group in a joint venture with Ecove, the developer behind the disastrous Opal Tower building at Olympic Park.”

      Could be a dud apartment if the developer is true to form. I suppose it does not matter – Hawke is loaded and can buy another if this one develops Opelitis.