Macro Afternoon

Dead cat’s are bouncing everywhere as tensions between China and US ramp up again, with The Middle Kingdom complaining about the “little tricks”, sending Chinese stocks down and futures cratering for tonight’s open and close to the week. The upcoming federal election in Australia hasn’t dampened the risk appetite locally, helped along by a much lower Australian dollar.

The Shanghai Composite is falling sharply going into the close, currently down 1.5% to 2912 points while in Hong Kong, the Hang Seng Index is not doing much better, down 0.7%% or so to 28056 points and exhibiting the first of the dead cat bounce rollovers on the daily chartS:

US and Eurostoxx futures are falling back in the wake of the Chinese risk off trigger as the four hourly S&P500 chart shows an inability to close at a new weekly high, hovering well below the 2900 point level:

Japanese share markets are the standout, with the Nikkei 225 up 1% to 21278 points despite a reversal in Yen weakness. The USDJPY pair has rejected overhead resistance at the 110 handle and fallen back below its own high moving average on the four hourly chart after a breakout to the upside in the last 24 hours – not a good signal:

Australian stocks have done well despite all the noise plus the looming election with the ASX200 lifting another 0.7% to be at 6370 points going into the close. This is all really due to the Australian dollar which remains on a nice downtrend falling again to another new low and looking like finishing the week in the high 68’s:

The economic calendar finishes the week with the final EZ wide CPI figures for April plus the University of Michigan sentiment survey in the US.

Have a good weekend!

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Comments

    • The Traveling Wilbur

      Tomorrow when you line up remember one of your votes is for your local member, not a party, and you might be lucky enough to live in an electorate with a candidate worth voting for, independent or otherwise. There are plenty of them.

      And remember your other vote is for a field of candidate partys so diverse there is genuine choice on offer.

      The Westminster system – it’ll have to do until someone implements actual democracy somewhere.

    • The Traveling Wilbur

      Note: just realised that the above explains why I won’t be voting for the Whigs this weekend too.

      No Timmeh, this is not Whiggles related.

    • Ronin8317MEMBER

      Choice or not, each vote equates to about $2.7 dollar funding from the AEC. So your vote does matter!!

      • Good point Ronin. Mine won’t be going to any majors! Seriously, F’em All! The Righteousness is astounding……. Buncha Disappointing sellout Creeps!

    • Talking to people at work, some still think the greens are for the environment, labor is for medicare, low housing costs and pro union jobs and liberal is good for economic management. People have no idea, the young though are smarter than people give them credit for and are on the pulse with a lot of this bs.

      • Good to hear about the young Charlie – The more who are Woke the better! Most of my Xers & older are likely too set in their ways or vested by now……

    • If this kind of thing ever gets off the ground here, I suspect Sydney homes will be worth $250k for quarter acre blocks. We haven’t seen that meme in a while have we? Then everyone will get a free Toyata, and can lick the windows on their brand new cars like a bunch of tards.

      • Consider these memes resurrected!

        Anything to keep us occupied while we wait for the next 18 months to elapse…

    • The Traveling Wilbur

      Someone should petition the next Government to take off the books the financial crimes where jail is one of the punishments that we’re not actual enforcing (eg in the last 25 years no one’s done a day of porridge for any of them).

      At least that way average punters would know what they’re really up against here. Maybe. And Australia’s gloss of financial probity would be stripped forever.

      We might even get some extra tax dollars from currently Greek and Armenian registered internet providers of online trading and gambling services. When they relocate. Win, win.

      Well, not for their customers, but certainly for everyone else in Oz.

    • Depends if you like the Prophet, in a word no it’s an ugly area. My wife grew up around the corner and her father worked at the Ford plant and so did her mum for a brief moment. They area Greek immigrants. But the area is very Halal friendly (if ya know what I mean? ) and can be quite rough, people don’t mow their lawns etc..

      The Ford plant is huge and I’m sure it will become the next housing development, not far up the road is Cragieburn which is very generic, but in some ways nicer than this particular spot. It’s all edging the urban outskirts of Melbourne. Further up the road is Donnybrook which was the subject of a post from Martin North not long ago… It’s ground 0 for mortgage default I’d say.

      https://www.youtube.com/watch?v=Q6x1baLzMbA

  1. Coping it a lot promoting SAP and cutting immigration on my Facebook. Prompting even deletions by acquaintances (friends of friends) . Sometimes I wonder if it’s worth having friends that are that stupid and just follow the pack and greens propaganda, being a young millennial here.

    Other times I think maybe ignorance is bliss, and that I should stop researching, stop reading MB, stop following current affairs and just start a self absorbed instagram account like everyone else…

    • innocent bystander

      yeah but when you use that knowledge to choose careers wisely, buy a house at the bottom of the market and sell at the top, then they will think you are a genius. But they will still not be talking to you – cause no one loves a smart ass.

      • Yep. Especially if, by implication, you make them look stupid.

        Even more so if you make the effort explain to them (in simple words) that they ARE stupid, and why.

        Ingrates!

    • yes, i’ve carpet bombed every liberal labor greens uap, abc et al post with material from here

    • Everyone picks their own poison. As IB says just do what suits yourself pick your own. JB’s right too! I know oldies who are bitter/jealous because they didn’t do as good financially as others even though they had the same era to operate within…….. it came down to circumstance & personal choices….. & in some cases certainly, the start they were given.

    • DominicMEMBER

      It was splained to me that every party on the ballot is ‘racist’ apart from the Greens and the Labor Party.

      No really — recent BBQ conversation. Much agreement too. I was about to pile in with my take but thankfully I was only 3 beers deep. Any more and there woulda been trouble — and friendships trashed.

    • haroldusMEMBER

      On Thursday, Mr Morrison did not comment directly on the case saying: ‘[I] simply assure Australians that they are the processes that we undertake and these are the same security agencies that have thwarted 15 terrorist attacks’.

      FFS

      • And today I was told by someone at work that if labour wins they will let all the terrorists into the country.

      • Mining BoganMEMBER

        Too right they will Nikola. Two bloody million of them, all giving me the stink eye while I’m walking Jack or running in the parklands.

    • Pretty sleazy effort eh! I wonder how many other cockroaches are under their beds that we don’t know about?

    • C.M.BurnsMEMBER

      Please don’t tell me that Elton John is. I’m taking my Happy Clappy in laws and they’ll be heartbroken.

    • C.M.BurnsMEMBER

      A 10% drop in a single day. That’s exactly what I look for when I’m looking for a alternative currency to replace the USD. That’s so fast that you’d have counter party loss / mismatch during a single transaction.

    • DominicMEMBER

      Yup, that barrier at 7.00 is on borrowed time. The day it crosses the Rubicon watch out below.

    • Not surprised at all. Years and years of articles on credit, immigration, zoning, foreign buyers, NG etc. as an a priori false justification for the bubble is totally blown out of the water once you frame the topic correctly in terms of valuation (or mispricing v intrinsic value due to irrational expectation of CG)

      • DominicMEMBER

        So the bubble and wealth inequality have nothing whatsoever to do with monetary policy?

        Oh, okay then.

    • Joye does give HnH a hat tip but then says he’s too bearish and that the bears are wrong as house prices will correct but won’t crash. Seems a bit rough as HnH has been saying the same.

      But then again Joye gives the impression that only he is ever right and what’s more he called everything first. He doesn’t lack… ahem … confidence.

      • I think Joye is wrong because he takes contradictory positions: says it is a bubble but it won’t crash because prices can be explained by fundamentals. Well if the latter is true, how is it a bubble?

        And as Joe correctly points out, if it’s a bubble then it’s inflated by speculators and thus departing from fundamentals and supported by pure sentiment and greed, and it cannot avoid a crash once those supports reverse.

      • @ Arrow2

        Respectfully disagree with you.

        MB and HnH have been calling a collapse of the housing market for circa a decade.

        Told my kids to ignore the MB dreamers and to buy a property which they did. These properties have doubled in value.

        Had they waited till now they would struggle to get a decent deposit.

        I hope there will be a correction but cannot see it because of our immigration policy and government stupidity.

      • “MB and HnH have been calling a collapse of the housing market for circa a decade”.

        Yeah but for the wrong reasons.
        The run up post 2012 was totally different to the pre-GFC run up because it was completely driven by speculation. And prices departed all fundamentals.
        Yet there were all these articles; it’s a bubble because fundamental a & b & c.
        No it’s a bubble because current prices reflect expectation of CG not supported by a realistic forecast of cash flow.
        The speculative side really took off post 2012. This is when it did become a bubble imo.

      • Shylock. HnH used to call slow melt. That was wrong – it boomed! Now in recent years he is calling a large correction which bottoms out end of this year – he even says O/Os should get ready to buy a house. He says second leg down will happen when the next global shock happens. That’s basically the same as Joye.

        Personally I think UE is more bearish but he doesn’t say so outright. Anyway, the topic is HnH’s calls.

        Personally I think he has been right eventually on housing but the timing took a while. But macro implies a long term view. He has been wrong a fair bit on iron ore. Often right on which ASX stocks will go down, but sometimes not. Wrong on the AAA rating. Looks like he will be 100% right on interest rates, bonds, inflation, the AUD, US-exposed Australian industrial stocks, and US stocks. As an investor I reckon that’s the most important and compared to most his record is very good.

        At this point it’s kind of irrelevant who was right on housing in 2012. It matters who is right NOW. No one has a great record. All the bears were wrong for quite a while. Now all the bulls were as wrong as f#ck in 2017 and 2018 and i think they are still wrong in 2019.

        It’s not really helpful to say “should have bought in 2012” because it’s not 2012. What should you do now is what matters.

      • Slow melt thesis is a good example. How can you have a slow melt following a bubble? losses following a bubble are self reinforcing. It makes no sense.
        The prediction and timing thing is less important to me than whether the thesis is internally consistent and saying there is a bubble because immigration, zoning, interest rates, credit, foreign buyers NG etc. etc. and the bubble will correct via a slow melt, is just a very internally inconsistent argument which can only predict something by sheer coincidence.

      • Well yes, fair enough sweeper. I can agree with that when you put it that way. As noted above I think Joye is wrong for similar reasons (he just picks different “fundamentals”.)

        I suppose I am in the “it’s a bubble and will eventually crash” camp but I don’t know if the crash is now irretrievable or if the powers that be can get it going for a few more years now with IR cuts and stimulus, or not. They might. Sentiment is not smashed yet. The classic bubble chart has the bull trap in it. Maybe that’s coming and takes two years to play out. That said I don’t think the other classic housing busts (Spain Ireland US) had any such respite. Could be once the feedback loops get going, there is no stopping it.

  2. Time was up for poor old Hawkie – although I think he led a full life….. Whether he won in his day or not, Malcs & lil’ John would’ve introduced Atlas Shrugged or whatever it was called regardless, it was a global syndicate coming of age as they got in, & they got told……. I & other manufactures were sold!

  3. The Traveling Wilbur

    Not one (other) Charlize Theron fan? Not one?…

    or maybe y’all just don’t remember you are…

    • With films like Monster, Atomic Blonde and Fury Road how could one not be a fan of Charlize Theron?

      • haroldusMEMBER

        Did you see Scarlett Johansson in Lucy?

        It is difficult to watch her, such is her beauty.

      • If I had to pick my three favourite Scarlett Johansson films they would be Under the Skin, The Man Who Wasn’t There and Lost in Translation. I threw on the Lost in Translation soundtrack the other night and it still stands up. It was a bit of a throwback when it was released, being centered around MBV and JAMC, but Sophia Coppola made done did good with her track selection.

        I just saw that she has done voice work on Her and Isle of Dogs. So, my quickly revised SJ top three would be Under the Skin, Her, Isle of Dogs. Her work in the trashier element of the film spectrum Black Widow is blown out of the water by Charlize in Atomic Blonde. I’m sure they’d make a kick @ss duo if the right film came along.

  4. If anyone else is sick of the empty cliches served up by journalists today, here is at least one honest appraisal from Guy Rundle:
    “All of that was abandoned to hand over society to the market with some backstop. Inequality yawned wide, wage power fell. The second round of tariff cuts destroyed inner-city working-class worlds, privatisation created the competition-free rapacious oligopolies that give us the highest service charges in the world. Keating let Rupert take over The Herald and Weekly Times and here we are in the Murdochracy… The country after Hawke and Keating is one now so individualised in form, and so Murdochised in content, that even the most modest and sensible social democratic programs struggle to get a hearing”

    People can talk about Medicare, but the bigger picture is that the Hawke-Keating government marked the end of class politics that is genuine politics and the triumph of consensus that is capitulation.

    • @Colin sort of makes the same point above. I agree, but I think the cycle is coming to an end…of course will take longer here in TuAo.

      • I don’t think they had to do it. And it would have been far better for neoliberalism to be rolled out by the conservatives. Labor had to self immolate itself – weaken the industrial strength of the labour movement – largely through the accord, in order to carry out the program. Ironically the conservatives would have been less successful as it would have been more antagonistic like Thatcherism.

      • Yeah I wonder if the Liberals could have pulled it off.
        I was too young at the time to really remember (and we didn’t have a TV!), but so far as I know something had to be done…the industrial base was clapped out, and the unions were too strong. Maybe I’ll search out a history to read.

    • DominicMEMBER

      I’ve decided: I think it’s time you read The Road to Serfdom by Friedrich Hayek.

      I dare you.

    • DominicMEMBER

      It’s fake news this time but it’s coming, irrespective of which party is in power.

      Death taxes and Super. Wealth to be plundered.

      • And who do you think the taxes will be redistributed to?

        Poor immigrants.

        If you wanted to do it equitably, track all welfare – including the aged pension – against the individual, like we do for HECS. Then, make it a debt on the estate at death. With the savings cut income taxes.

        You will actually have a good incentive to not go on the pension!

    • Regardless of the validity of the claim, it strikes a chord. People don’t want to pay tax through life and they want as much to go to where they think it should go when they pass away. Find an equitable balance while people are living and then the need for final calculation is diminished.