Macro Afternoon

The tide may be changing with Chinese stocks rebounding to finish the week on a sweeter rather than sour note as optimism around the trade talks with the US climbs. The Australian dollar is inching its way back to the 70 cent level while Yen and other safe havens remain stable.

The Shanghai Composite has bounced over 3% to close at 2939 points, capping off a very volatile week. In Hong Kong, the Hang Seng Index lifted modestly, closing 1% higher to 28607 points, for now stopping price slumping right down to the weekly support near the 28000 point level, but still looking very weak:

US and Eurostoxx futures are up slightly with the four hourly chart of the S&P 500 looking to stabilise here after the recent series of lower lows as price remains well below the previous terminal resistance level at 2900 points. But that falling wedge pattern maybe signalling the return of the BTFD crowd:

Japanese share markets continued their falls, but it was essentially a scratch session with the Nikkei 225 only losing about 0.2% to finish at 21344 points. The USDJPY pair has stopped its free fall but is not finding much buying support, hovering below the 110 handle and yet not making any new session lows:

Australian stocks finished relatively unscathed for the week, with the ASX200 climbing 0.3% or so to 6319 points and remaining in strong position. No selling in May here! The Australian dollar is trying to clawback with a surge back up to and slightly through the 70 handle but so far this is a swing play only:

The economic calendar ends the week with a few important releases, namely the German trade balance for March plus the 1Q GDP print for the UK. Then in the America’s its Canadian unemployment and the latest CPI print for the ‘States.

 

Comments

  1. well someone has affordable funding, eh what?
    https://www.afr.com/business/banking-and-finance/macquarie-and-anz-ignore-rba-and-cut-rates-by-up-to-60-basis-points-20190510-p51ly6

    Its new three-year fixed rate of 3.69 per cent for principal-and-interest loans is the best of the big four. By comparison, CBA’s equivalent rate is 3.79 per cent. It is also cutting some “interest in advance” rates .

    wrt ANZ
    “Breakfree” owner-occupier and investor borrowers are eligible for discounts of up to 60 basis points across the principal-and-interest and interest-only range from two to five years.

    • proofreadersMEMBER

      If they have not already cut their depositor rates, something doesn’t add up – there are no free lunches and in the banking world, only savers pay?

      • Profits down heavily, probably trying to get some borrowers over then ratchet up the rates in future. Or they are cutting in advance of RBA to try and get a head start on the other big banks.

    • “benefit the economy”?

      William Bourke needs to get the fake Guardian to correct it and say “benefit the average voter by stopping the mass importation of cheap third world labour”.

      • proofreadersMEMBER

        When a country is going broke (the latest potential inductee being Straya?), the population ponzi is a useful diversion to the day of reckoning?

    • SAP is a wasted vote they need to change their name. Fix immigration, fix climate change, accountable politicians is to the point and will get way more votes

      • +1000000000000000000
        ‘Sustainable population party’ = seats in parliament.
        ‘Sustainable australia party’ = political wilderness
        In politics names matter. Just ask David Lyolnhelm.

      • @ Gramus
        Sustainable population party= automatically branded as right wing racist party. I know it makes sense to you and me but it will mean nobody with a slither of left wing politics will consider them. Yes it might get them a higher vote in this election but they are playing the long game. I have no inside knowledge, just my opinion.

      • SAP needs the word “Environment” in its name. Young people in Australia, rightly or naively, care about climate change as number 1 priority. The fake Greens are no longer about the environment and more about extreme and destructive policies and helping foreigners and disregarding the environment and the well-being of Australians.

        The fake Greens have no valid claim to the word “environment”. Rename SAP to Environment and Sustainability of Australia Party. ESAP.

        Change the colours and build a better website and logo from the hideous current stuff. It’s not that hard – kids these days
        or even a designer on Fiverr could do a better job.

        The current logo is eerily similar to the F*”K off, we’re full logo with the map of Australia in the middle. It’s not doing them any favours.

    • They only JUST got around to prosecuting someone for that childcare scam?? Jesus. Now go and prosecute the rest of them you slackers. It’s a common scam.

    • He will pay attention if you buy a subscription. Why do you think Wiley and Flawse have gone. Leith has disappeared them. You’re next.

      • I forgot about Skip. He could irritating but always had something interesting to contribute. Bit like R2M. Anyway I miss all those that have been disappeared and this site is the poorer for it.

    • proofreadersMEMBER

      A bit of happy clappy is probably in order ahead of shaking ScoMo’s hand?

  2. TailorTrashMEMBER

    Was in Aldi to day ….chap in front of me had as his total order a pack of $3 snags .. which he paid for in cash ….
    …. got to love the discerning shopper …..and sure he agrees the strayan economy is world class

    • – Take ~30% to ~50% off the prices and only then I am willing to START thinking about buying one of the three houses.
      – How deceptive: I have to scroll down to see the price (estimate).

      • Where do you find the price estimates? In Victoria they have to include 3 comparable sales, but in NSW it seems they don’t have to and most listings say “contact agent” to keep you in the dark.

    • – Just open the link and scroll down to about the half of the webpage. There the words “Loan amount” pops up. I know, I know it’s NOT a (asking) price or any other price. But it’s “Loan Estimate” and still VERY revealing.
      – One other thing: these kind of (property) websites do have to have some kind of (hidden ?) price estimate / Loan amount. Otherwise you wouldn’t be able to search the website with a price (range). I assume that the “Loan Amount” is here used as the price estimate.

      • I have heard that agents put a default price in when they list (punters can’t see it) to guide search results, ie so if you search for $1.8-$1.9m range then a house with a hidden default value of $1.85m will pop up even if it’s only listed as “contact agent”.

  3. haroldusMEMBER

    Was in Ikea Tempe for my sins this afternoon, was delighted to be confronted with 2 enthusiastic ROP adherents on the mats, facing the asteroid and doing the whole submission thing.

    What an ornament to diversity, I mused as I walked into the carbohydrate based canteen.

    • What sort of sins get you sent to Tempe Ikea? It’s really more purgatory than hell (there is a canteen after all), so nothing too Reusa-esque I suppose…

      • haroldusMEMBER

        Had to look after two seven year old girls (daughter and school friend).

        I tried to get out of it (the traffic will be really bad on the way from Newtown, not sure if the Decathlon trampolines will be free, etc etc) but was met with disappointed howls of protest.

        The friend’s mum gave her 20 bucks, so I got both of them a panda each (25 bucks) plus a panda brush (dish brush) and some cork pot stands that were needed for some panda-related activity that I forget now, but was absolutely necessary at 7pm.

        Also got one of these (https://www.ikea.com/au/en/catalog/products/10246469/) which for 40 bucks is excellent, quite strong and stable.

        Ikea’s not too bad on non-weekend time.

      • You got out cheaply, well played. IKEA is ok, it’s got some good stuff and it’s not hell (unless you have a family member who won’t leave plus a bored 2yo…)

    • Diversity indeed! Productivity in IKEA Riyadh (etc.) must be pretty intermittent if the staff all have to go sub on the mats 5 times a day. Unless the customers join in of course, didn’t think of that before i started typing.

      • haroldusMEMBER

        Sorry, wasn’t staff, was a couple of guys in a moving van who decided out the front of Ikea was a good place to submit on mats.

        Not as good as last Easter when a couple of them thought it would be a good idea to get on the mats on the artificial grass outside the front of Scenic World in Katoomba (if you have ever seen how busy that gets, you know how much contempt they have for anything else).

  4. Trump / China trade deal.
    It doesn’t bode well for Australia.

    🔻No trade deal, China continues to falter, low growth, our exports reduced.

    🔹Trump China Trade deal – Australia, NZ, Indonesia & many others face major loss in trade exports if Trump pulls off his US / China ‘trade rebalancing’ deal.

    The Trump China Trade deal is not to reduce the Chinese exports to the US, but to massively increase US exports to China.

    By say $250-300 billion a year over time.
    So just say ‘hypothetically’ a 10 year US to China $2 Trillion export deal.

    ▫️Who are the winners & losers?
    ▫️What exactly does China import today?
    ▫️Who is impacted by China switching to the US as a supplier.

    First, Trump holds all the cards on fixing trade and the corrupt Chinese trade practices and manipulation.

    128 million Chinese live directly or indirectly off china exports to the US.

    China has 3 major insurgencies underway, Tibet, Mongolia, Urghars, plus HK & others in rebellion.

    The China One Belt Road has failed, lost in corruption and hated by surrounding countries frightened by china’s empirical ambitions.

    The Chinese communists have lost face as Trump backed Taiwan to block any ‘One China’ invasion, and China lost their South China Sea claim – US navy ships steam thru.
    The Chinese Pig industry just collapsed.
    African Swine Fever, 100% mortality, the Ebola of pigs 🐖🚫 has now spread all over China & now into all of Asia.

    In China, up to 148 million pigs dead (19% of their 780 million pigs) from African Swine Fever – read this Time article.
    http://time.com/5580126/china-swine-fever-pork-industry-spreading/

    China eats 55 million tons of pork.
    It’s the poor people’s staple protein.
    There is literally not enough fish, beef, chicken in the world to make up the gap.

    The US economy is surging and forecast to grow further / even if China dumped its US holdings & bonds, they would be quickly snapped up by the rest of the world.

    China has a collapsing stock market, faltering economy, massively in debt, rebellions, and faces a hundred million unemployed Chinese in their cities, and No PORK BUNS..

    => Rivers of blood & civil war unless the communist party regime folds.

    🇺🇸 Trump holds all the cards👌🏻

    🔹The Winners & Losers in China import volume & priorities.

    #1. Plant. US plant : replacing North Asian & Europe plant, some small Australian.

    #2 Energy. US gas / replacing Qatar, Australia & south east Asian gas. US gas is 19% cheaper (with current tariffs) than Qatari gas. The US is poised to be the world’s largest gas exporter in 3 years, overtaking Qatar & Australia.

    #3 Coal. US thermal & metallurgical coal / replacing Indonesia, Vietnamese, Australia & Brazil coal.

    #4 Ores. US replacing Australia & Brazil & other suppliers Ore.

    #5 Chemicals / plastics etc. US replacing a variety of Asian, European suppliers.

    #6 Food – that would increase in imports in the pending China meat / protein crisis. US has everything in surplus, meat, grain, along with South Asia, Australia & NZ also.

    #7 Vehicles, heavy vehicles & consumer – replacing European & North Asian vehicles.

    #8 Services: replacing Europe, north Asian, Australian etc services.

    #9 IP, patents, copyright royalties in both IT & Pharma, China stops theiving & pays royalties. Mostly to the US.

    #10 Milk Powder, supplements, vitamins, US taking share from NZ, Australia, European products.

    -/-

    It doesn’t bode well for Australia.

    🔻No trade deal, China continues to falter, low growth, our exports reduced.

    🔹Trump China Trade deal – Australia, NZ, Indonesia & many others face major loss in trade exports.

    And what do we do with the 1.019 million Chinese foreign born that include 750,000 Chinese mainland communists now in Australia?

    ▫️256,000 Chinese HK, Malay, Indonesian & then later Chinese mainland communists now with citizen grants.
    ▫️423,000 mostly mainland Chinese communist PR who remain in Chinese passports but are here for the Medicare & Welfare.
    ▫️340,000 mainland Chinese communists TR – part of the 2.561 million TR / NZ SCV influx. Foreign students, NZ SCV rear door entry, skilled & sponsored, etc.

    That influx is likely to compound & accelerate with even more Chinese economic refugees flooding in on the various visa pretexts & alibis.

    Maybe we should sell off the South Australia aka the old Multifunction Polis scheme?

    China can then more easily dump their elderly & unskilled into Australia & we can relocate the Chinese nationals & TR from our main cities into that zone, and that would formalize the colonialisation.
    Sell off South Australia to China for say 1 trillion. ($1000 billion)
    Australia is worth about 5.8 trillion (ABS) – so its fair value, and return that as a $58,000 cash dividend each to all Australian born (say 17 million) as our own Australian born ‘future fund’ and protection for hard times ahead.

    • Thanks for your post Mike, they’re always worthwhile and well supported, if sobering [depressing].

      • Here is an interesting animation of every country in the world population age demographic – now and over the next decade.
        Just published by Axios May 12 2019.

        Maybe Leith would like to include this is some of his articles & commentary.

        https://www.axios.com/world-population-distribution-countries-future-0cfebfd5-1d13-496a-b562-edf9dd0c76a2.html

        Australia isn’t too bad – it has one of the lowest best balanced population stacks of the OECD.
        Something finally conceded in the ‘Inter-Generational Report’, Australia did not need to import millions of ‘young migrants’ (who are a high net economic & welfare burden) or raise the pension age.
        We have in fact one of the better balanced population stacks & one of the lowest ratios of pension outlays per Capita in the OECD..But we do have one of the highest outlays for migrant intake, migrant unemployment & migrant welfare with tens of billions now being sucked up by migrant PR & dual passport holders overseas.

        Now have a look at China
        1.4 billion in a decade & the age pyramid literally explodes at the top.

        Or India (select by country) remembering India goes from 1.3 billion to 1.6 billion.
        Again remember scale & numbers – 15-20% aged Indians is 320 million.

        And that’s the pipeline to try & enter a western oecd country for healthcare & welfare.