Macro Afternoon

With no progress to report on the US/China trade talks and Trump thankfully still asleep (or his staffer’s have taken away his iPhone) there haven’t been any catalysts to upset markets on the open here in Asia today. The Yuan is depreciating sharply due to the PBOC trying to head off the tariffs while Yen remains relatively stable alongside other undollar assets, with Treasury yields slipping.

The Shanghai Composite has closed 1.2% lower to 2903 points, not a good start to the week given the rout previously. In Hong Kong, the Hang Seng Index is closed for a holiday.

US and Eurostoxx futures are down, the former off by 1% while the latter only slightly with the four hourly chart of the S&P 500 looking very weak here and quite volatile following the Friday session. The key resistance level to beat to turn this around is previous terminal resistance at 2900 points:

Japanese share markets continued their falls, with the Nikkei 225 falling 0.7% to close at 21191 points. The USDJPY pair remains poised here, not making any new lows but also not advancing as the bullish falling wedge pattern has not yet paid off:

Australian stocks start relatively unscathed for the week, with the ASX200 taking back Friday’s session advance to finish 0.2% lower to 6297 points but still remaining in a strong position. The Australian dollar however gapped down immediately on the Monday open, taking back all of Friday’s advance and then declining almost to the previous week’s lows in what looks like a risk off move in response to the poor housing loan data. Watch the 69.60 level closely:

The economic calendar starts the week slowly with a small spread of Treasury auctions and not much else as markets focus on the news and Tweets surrounding the US/China

Comments

  1. Chris as always appreciate your excellent presentation each evening. Is there any chance the A$ may hold on until we know latest employment numbers later in the week? More importantly , regardless of the election result the A$ will bounce as uncertainty of government is resolved?

    • I tend to think employment numbers may start getting interesting this month, but as for whether AUD will hold until Thurs is unknowable – depends on Trump, Chinese data, all sorts of things.

      If the latter effect (election etc) was consistent and tradeable, then it will already be priced in.

    • BoomToBustMEMBER

      I mentioned this yesterday after reading about it in the age on Sunday, its funny how the narrative changes weekly, lets see if I remember a few – foreign buyer do not effect house prices, prices always go up, permanently high plateau, prices have leveled out, prices might go down around 5%, prices might go down up to 10%, prices might go down 15%.

      Please feel free to add the classic’s i’ve missed.

      • “Houses in good school areas are always in demand.” “The reality is the market is highly divergent.” “Pricing data is consistent with what we are observing based on over 80 million searches.” “Offshore buyers is cooling off, foreign investors are still actively looking for properties.” “Generally, across Australia, the premium market is holding up better than more affordable locations.” “In Australian property (we continue to see growing numbers of Asian property seekers looking in all capital cities, except Sydney and Adelaide), however they are not transacting.” “The likely outcome over the next six months is continued moderation of pricing in Melbourne and Sydney,” and “On the positive side, the Australian economy is very slowly heading back to growth mode and as the development pipeline has slowed dramatically, particularly for apartments, this means less property will be available to buy.”

  2. Does anyone know where you could get monthly or weekly total sales from auctions data? I want to plot a graph and compare it to house price data but can’t find this anywhere. I think it would be much more useful than clearance rate graphs.

    • It’s amazing what people will steal. I know a guy who owns a restaurant, he has had hundreds of those little rest things you put chopsticks on stolen. They are worth about a dollar each…… I guess a bit too easy to sneak into the pocket, but the thought process is interesting as it’s quite a high end restaurant. So you pay a hundred or two for a meal, and then steal an item worth a dollar?

    • TailorTrashMEMBER

      SA could now be seen as a wasteland ….,it has failed to embrace the vibrancy injection ….and so it struggles ……never mind … ponzi economics will save it ..,,,,until it doesn’t

      Having been a frequent visitor in its best years have to say Adelaide is a wonderful little city on the edge of a huge bigly big desert……….it would be good if it could come to know it’s place .,,,,,,,,,

    • Maybe the restaurant steals wages?

      There was a petrol station in Vic that paid $16/hour wages in 2010. A guy quit because the salary is so bad – the next guy worked for $16/hour but stole stuff.

      Got to make a living somehow!

      I bet the restaurant either steals wages or loves the mass importation of cheap third world labour.

  3. Good to hear on Macquarie radio Tom Elliot not buying the latest bubble prop policy today saying this was the sort of policy that led to the GFC as well as Ross Greenwood having Martin North on obviously not buying it either.

    • SweeperMEMBER

      It’s not getting panned by journalists. Starved of oxygen in the Canberra bubble and not having much idea about anything of substance to begin with lets face it, they are all hyper excited how clever the politics and “optics” are.

      It’s getting panned by all the non-journalists commentating in the media: eg. Economists, Grattan Institute even the IPA.

      Which further goes to show imo that journalists (people trained / and interested in journalism) should not be allowed to work in the media as they are not up to the job.

      • Multiple abc journos panned it but honestly who cares about these Canberra bubble journos? There will be more people getting their news from YouTube than MSM within 2 years.

      • The Traveling Wilbur

        Farming news in New Zealand’s primary delivery already is.

        EweTube.

      • Agree with this Sweeper. Journalism is now populated with those who grew up with sound-bites; worse to come with the more modern tweet farcebook etc that passes for analysis. It is not just generational too – the lazy among those old enough to know better are sucked into this dumb orbit. It was an honourable profession – schooled in the classics, well-read upbringing, thorough, investigative, all gone in favour of shallow instant gratification ‘look at moi”.

      • SweeperMEMBER

        I think it is part generational.
        eg. compare Leigh Sales with Kerry O’Brien.

        They seem to be empty people uninterest in public policy and just attracted by the celebrity and proximity to power.
        They have no idea about context which is why they can’t weigh the importance of different issues. They have no clue on the effect of any policy they report on – eg. the 2014 budget which was reported as gutsy and necessary before the adults took apart the detail. If you relocated the press gallery to a green room in Siberia their reporting wouldn’t change it would be equally as bad. Journalists interviewing journalists on who “won” the week in “politics”. Dinner time with politicians.

        I just think the media attracts the very worst people from a generation who as a tendency have a deficit which is filled by online self promotion. With predictable results.

      • Sweeper, I’d change one thing,

        “I just think the media rewards the very worst people…”

        It isn’t an excuse for the poor quality, which I agree with you on. My take is that the people who would be good journalists, the ones who can understand, explain and challenge, aren’t able to gain traction in the field.

      • Sweeper,

        The content of most “media” courses is not much more than a lot of PoMo identity politics.

        It is truly awful stuff.

        No surprise that the graduates avoid substance like the plague.

    • TailorTrashMEMBER

      Nothing shows up Scomo for the real estate stooge that he is like this “policy”………pathetic doesn’t even begin to describe it……..accidental PM ……total fcukwit
      …..to think he is even in with a fighting chance to win re-election says how far down the gurgler the country is ………and Shorten pandering to the migrant and their parents ….grandparents ?……is not much better …………Clive is incoherent ….Pauline is silent …………..need to lie down in a cool dark room before Saturday….

      • Clive is silent on mass immigration!

        And he does not pay his workers.

        Cory blocks LNP legislation more frequently than Hanson does.

        All this while Portugal is allowed to have a shrinking population.

  4. SweeperMEMBER

    I texted @frankelly08 right after the #LiberalLaunch that if labor was smart they would match the lib first homeowner policy. Two hours later it’s matched – Patricia Karvelas

    Can we please put a 1 month moratorium on ABC journalists doing journalism (as they understand it) before they completely wreck the country. 1 month of Antiques Roadshow would be better for democracy.

    oh Labor are so smart!!!