Macro Afternoon

Trump is causing a ruckus on risk markets across Asia today with just two tweets – someone take that phone off that madman! Chinese stocks collapsed as the potential for a stall or even abandonment in US/China trade talks firms while currency markets were all over the place as risk sentiment inverted completely.

The Shanghai Composite reopened and is currently down over 6%! Going into the close its at 2882 points, losing almost 200 points while in Hong Kong the Hang Seng Index is down nearly 1000 points or 3%, currently at 29160 points, wiping out all of the last two months gains and well below previous local support at the 29000 point level:

Confidence has also disappeared on US and Eurostoxx futures which are down significantly, with the four hourly chart of the S&P 500 looking showing the 1.5% plus gap this morning following the Trump tweets on China, well below support at the previous terminal resistance level at 2900 points:

Japanese share markets were closed for their final day of The Golden Week holiday, while trading in the USDJPY pair was volatile to say the least, with a 100 pip gap down on the open and then nearly half filled to remain just below the 111 handle. This is a clear risk off indicator and is likely to be even more volatile on the return of Japanese traders tomorrow:

Australian stocks are the best performers but that’s not saying much, the ASX200 down 0.8% to 6282 points. The Australian dollar gapped down to the mid 69’s before recovering slightly in line with other undollar assets, but is still just below the 70 handle going into the European open as traders position for tomorrows RBA meeting:

The economic calendar starts the week off slowly with some EZ retail sales and final PMI prints but not much else. All eyes on the Twit-in-Chief!

Comments

  1. The Traveling Wilbur

    And the German for Black Monday is… ?

    Minus 2% and counting on DAX futures. Open will be interesting.

  2. DominicMEMBER

    It’s called brinkmanship. He’s clearly not happy with progress so far, despite earlier public utterances to the contrary, so why not just tank their market and bring them to their senses? Every positive trade comment these past few months has come from either Trump or Mnuchin. But Lighthizer is the man that matters and he f#’n hates the Chinese. Stocks are overstretched anyway so are due a good pullback.

    • tonyddMEMBER

      This is about hegemony and its a massive struggle between the pentagon and the CCP. Trade is just where its playing out at the moment but this will morph into other spheres of competition, to prove my point, I believe US will start a worldwide recession and even be prepared to suffer on itself in order to cause the Chinese economy to unravel and with it the CCP and thus the USA’s only threat to world dominance.

      • DominicMEMBER

        That’s an interesting angle and certainly a way to hurt the Chinese, however, Trump really needs to secure a second term before tipping the US into the economic abyss so there are timing issues. The other way to hurt the Chinese would be to have the US$ strengthen — a lot. This would bankrupt a whole heap of Chinese corporates, break the HKD peg and lead to large capital outflows. Chinese FX reserves would disappear faster than a bowl of lollies at a kids’ birthday party and really strain CNY.

        Trump would almost certainly be re-elected if engaged in a hot war with China but not necessarily an economic one – that might be too painful. Farmers in the US are really doing it tough as the trade war takes it’s toll.

    • tonyddMEMBER

      Yes IR have been weaponized by the fed, Trump is merely acting (very well cast) the director are the warlords at the Pentagon.

  3. Absolutely zero chance of any rate cut tomorrow.

    $1.46 at TAB I notice. Money for free.

  4. Hugh PavletichMEMBER

    S&P Futures Plummet As China Said To Cancel Washington Trade Trip, All Eyes On S&P 2,890 … Zerohedge

    https://www.zerohedge.com/news/2019-05-05/sp-futures-plummet-china-said-cancel-washington-trade-trip-all-eyes-sp-2890

    Trade Deal Dead: Trump Says 10% China Tariff Rising To 25% On Friday, Another $325BN In Goods To Be Taxed … Zerohedge

    https://www.zerohedge.com/news/2019-05-05/trade-deal-dead-trump-says-10-china-tariff-rising-25-friday-another-325bn-goods-be

  5. ‘Today’s changes underscore the Government’s commitment to removing unnecessary, unproductive regulation and are in line with the recommendation of the 2006 Banks Taskforce on deregulation which found that the real estate framework “imposes costs on applicants and taxpayers, creates uncertainty, unnecessarily delays transactions, and creates distortions between domestic and foreign investors for little apparent public benefit”.’
    http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2008/107.htm&pageID=003&min=ceb&Year=2008&DocType=0
    Cris Bowen with some words on deregulating housing for foreign buyers according to the whims of the banks.

  6. Our favourite and most eminantly qualified Demographer is on twitter tonight complaining that

    GoT is not politically correct ,

    Me thinks the lady could benefit from a couple of units in Medieval Warfare.

    Titania McGrath

    Where are you?

  7. SweeperMEMBER

    God that was a lightweight interview from Sales.
    Is it really so hard to land a blow on a government with 1 fraudulent policy (tax cuts will create jobs), whose economic mismanagement has led to record net foreign debt, record gross debt, flat wages, 3 years below target inflation, opposed the bank royal commission, doesn’t care if the planet burns, drenched in scandal and is trying to get elected through free advertising from the media and preferences from bigots?

    • I read that one last week.
      A few similar ones have been posted.

      The countdown to the World Cup has led to a lot of nice pieces appearing across at ESPNcricinfo.
      I really want NZ to win this one.
      WI second.
      Jason Holder holding the cup would be a great sight.

  8. From AFR: https://www.afr.com/real-estate/residential/westpac-broke-law-261-987-times-asic-20190506-p51ke6

    Westpac broke law 261,987 times: ASIC

    Westpac breached responsible lending laws more than 250,000 times by throwing away customers’ self-reported expenses and using a frugal measure of household expenses, the corporate regulator alleges. In 2017, the Australian Securities and Investments Commission took the big four bank to the Federal Court, alleging it had breached responsible lending laws between 2011 and 2015 when it used a benchmark instead of the actual expenses declared by customers in assessing their ability to repay their home loans.

    ASIC and Westpac tried to settle the matter, with the bank agreeing to pay a $35 million fine last year, but the matter is back in court this week after the court refused to rubber-stamp the settlement. In addition, Westpac faces the allegation it breached responsible lending laws 154,351 times by failing to assess customers’ ability to meet the higher repayments when interest-only periods expired.

    The case is significant because it will clarify what steps banks must take to meet responsible lending requirements.
    All the big four banks have since moved away from solely relying on the household expenditure measure (HEM) benchmark. Now they use the higher of the HEM benchmark or the customers’ self-declared expenses.

    • You have to wonder when the insanity stops with banks drowning people in debt. No doubt our pissweak regulators will let them off the hook again. I think the only hope is the class action. Though haven’t heard much on that recently.

  9. triageMEMBER

    Professor Margaret Gardner – there’s a name worth remembering when the pitchforks are being handed around… the 4 Corners show on the university sector rorting the student visa program was limited in scope but still so depressing.

    • DingwallMEMBER

      Bill Shorten kicking butt …… LOL never thought I would hear that … was he up against himself or a few plants in the audience?

    • …not many undecided voters watching QandA… By definition it’s the politically engaged …

      • The undecided are the politically engaged.

        90% of the population just vote pretty much the same way every time.

        10% of the population to enough to produce huge landslides.

        That is why News limited froth at the mouth about the ABC, they know lots of the ‘engaged’ watch it.

      • I disagree Pfh007. People interested enough in politics to watch QandA have long made up their minds. They are watching for sport.

        The swinging voters who matter are largely disinterested. They are not the stupid or the extreme fringe, they are just cynical and dislike politics and will make their decision in the last few days before polling, on gut instinct and maybe a few bits of policy they might have heard of. They are not the engaged.

      • Pfh007MEMBER

        Arrow2,

        The people you are referring to are not swinging voters. That type don’t care and vote the same way / randomly.

        Swingers are interested and pay attention.

        They may not watch Q&A but they do watch political stuff like the debates and current affairs show on the commercial channels.

        This engaged group is quite small but they decide the elections.

        A lot of them watch the ABC and that is why conservatives hate the ABC because they know it is very relevant to election results.

    • SweeperMEMBER

      The way he dealt with the inane LNP reframing of every issue by the white haired bloke impersonating a balanced journalist was great.
      Don’t answer their questions. Pick them apart. Word. By. Word.

    • SweeperMEMBER

      This sham that you can’t speak to journalists as though they are political players themselves with their own biases and dutifully have to take their stupid questions at face value and just answer them while they interrupt. What a load of …
      If someone asks the short term economic cost of carbon reduction, they as a political player are saying 1) They don’t understand how long term expectations drive current investment 2) are ok for the planet to burn 3) don’t understand opportunity cost.
      Or asking why retirees should pay more tax when they are paying no tax but are receiving a *shareholder welfare payment* don’t understand 1) that shareholders and companies are separate entities 2) don’t understand that a tax is paid to the government and payment received from the government.
      Why answer these idiotic questions. Just tear them apart and attack the implicit position of the person (not journalist) hiding behind their title which is that they are fine with out of control global warming and shareholder welfare payments and underfunding of hospitals.