Macro Afternoon

Asian stock markets are generally positive or putting in mild scratch sessions with Japanese stocks ending the day slightly lower after the US seemingly eases up on sanctions against Huawei. Risk sentiment is swinging back to positive while USD remains very firm as the Australian dollar rolls over below its pre-Monday morning gap.

The Shanghai Composite has bounced back above 2900 points, currently up 1.2% going into the close, while the Hang Seng Index is putting in a scratch session, down 0.1% or so to 27776 points making another new daily low and still confirming the dead cat bounce:

US futures are up 0.4% while Eurostoxx futures are gaining, up 0.6% with the former four hourly S&P500 chart showing a potential bounce here off trailing ATR support at the 2830 point level. The upside target to beat is the series of lower highs at 2870 or so:

Japanese share markets have retreated the most, which is not much actually, with the Nikkei 225 closing 0.1% lower to 21272 points as the weaker Yen kept poor sentiment away. The USDJPY pair has come back after a mild retracement yesterday, getting back above the 110 handle but still not making a new session high:

Australian stocks continue to advance with the ASX200 cracking the 6500 point barrier, closing 0.4% higher. This is most likely due to a lower Australian dollar which has rolled over on the RBA minutes release to pop straight through the 69 handle and seemingly on its way back to the Friday session low:

The economic calendar contineus tonight with more central bank speeches, mainly from the BOE but also we get US existing home sales and the OECD outlook on Europe.

And who is a good boy? My favourite scene from you know what, now that’s what I call bittersweet – you can always trust your dog/direwolf!

Remember, go turn your Foxtel sub off now!

Comments

  1. Well. Today I feel like the Australian housing bubble has entered a new phase. Up until yesterday the powers that be were pretending everything was fine. House price declines were “orderly” and the economy was awesome. There was no real policy action. Just complacency and a fair sprinkle of denial. All good for us bears.

    Now it feels like battle is joined. APRA, RBA and government (maybe) is mobilising. They’ve realised the pop is on and they are trying to save the bubble.

    On Twitter both sides are already claiming victory. The bulls are smug that the next boom starts today. The bears assert that the crash is now unstoppable, measures will fail and the end is nigh.

    I still don’t know what to think.

    But it’s a new phase that’s for sure. Interesting times.

    • proofreadersMEMBER

      The bulls have the miracle man and reusa on the same page. How good is that, Straya?

    • I think the next 6 months will determine what happens next. If property starts to grow again, they will have won, but given the falls so far, it’s going to be hard to reverse it. I feel like momentum has been building. Leading into summer we will see more stock on market.

      I keep thinking to myself, nothing falls in a straight line, even if they manage to give the market a reprieve it may be like BTC and worse is yet to come. The confidence is lost this time around I think, in 2015 there was still the confidence and faith in the market. This time more have been burnt and the Global economy looks shaky. Not exactly the time to convince yourself of taking on loads of debt. Then again, our new Jimmy Grants may not look a gift horse in the mouth.

      • It really all comes down to unfreezing credit and lowering requirements for credit. They do that and lower interest rates BOOM here goes the housing market taking off again.

      • proofreadersMEMBER

        Nah – prices to the moon. We have miracle man, reusa, the RBA, APRA, ASIC, the banks, mortgage brokers, FHBs, IP specufestors etc all on the same page – all the planets (read players) are in alignment? Only ones MIA are the foreign investors?

    • Ronin8317MEMBER

      It feels a bit like 2016. Prices were falling before the election, then went back up after the Coalition was returned to government. Two more interest rate cut,5% deposit, and it’ll be to infinity and beyond!!

    • J BauerMEMBER

      My thoughts are that.
      1. Attracting marginal borrowers to get loans by lowering the assessment bar will mean a new wave of people will be diverting money from the broader economy to paying off a mortgage. Further, People don’t realise how expensive home ownership is. Eg apartment Strata fees can be $500 a month, remedial work for dodgy building. For houses, If you’re buying a doer upperer, you can easily drop $80k on leaking roof repairs, then there’s tree roots in the plumbing etc etc.

      2. The above will impact the job market, people may start to lose jobs for real.

      3. CCP capital controls.

      4. Baby boomers are done, they’ve had a scare, they’re not going to gear up any further.

      5. The AUD, imported stuff is going to get more expensive.

    • I expect LNP to adopt the Greens’ policy of socialising the cladding replacement costs.

    • This was always going to happen. I think these measures will arrest the falls for a while maybe even increase them a bit but at the end of the day interest rates are almost at rock bottom, lowering rates plus US China trade war *should* drop the AUD further so we will have higher inflation and possibly $2 petrol instead, and the Chinese buyers are gone and probably won’t come back. To me this looks like throwing the kitchen sink in desperation. Imagine when a financial crisis like last time reoccurs there will be no sink to throw either.

    • I reckon a good, solid bull trap of some 6-12 months, or so…

      Just give in – it helps.

      Then be pragmatic: if you can, find more pay, or increase you $/hr rate (if you work like that) – I’ve just done that, and will strongly consider doing it again if I see more maniacal cash flows, particularly if infrastructure gets surging and/or I see retail recovering (a real sign, since it’s so sick at the moment…).

      Position investments accordingly. Heck, I even gave in a bought some bank shares this week, and they are doing OK already; I’m looking to sell them into a good rally, hopefully after some half decent, quick gains, easy $$ for nothing, like a dirty speculator…I’m still long bonds and USD, but I think there is some candy $ to be had…I could be wrong, though, so make up your own mind.

      My 2c

      • Mining BoganMEMBER

        Steve and Paul couldn’t put out the fire in the Glass Tower until they let some dynamite go on the roof.

        I was getting greedy see. Thought I could watch it all burn to the ground. No, a proper movie has the flames start rising again until the big explosion scene. Steve and Paul knew.

    • Oh boy, I suddenly feel very very crowded on my little platform.

      The contra-contrarian space isn’t big enough for all of us. If you boys don’t wash those hoof marks off yourselves (h/t pfh007) and go back to where you came from, I’m going to have to leave myself.

      Maybe I’ll set up a little tent on the outskirts and hang out a contra-contra-contrarian shingle…? Dunno.

    • Given the lack of iron ore in Britain, one wonders if Britain can be competitive in steel production.

      It makes sense for Gupta to make steel in AUS because AUS has iron ore and coking coal. It probably takes no more than 1 hour of labour to make 1 tonne of steel.

      News from 20 hours ago:

      Jaguar Land Rover posts record £3.6 billion annual loss

      carmaker hit by weak Chinese market and falling diesel sales

  2. Someone was discussing a move too Austria around here of late.

    “Kurz’s FPOe deputy, Heinz-Christian Strache, stepped down as vice-chancellor and party leader on Saturday after recordings published by German media showed him offering government contracts in return for campaign help to a fake Russian backer in a villa on the Spanish resort island of Ibiza.”

    https://www.sbs.com.au/news/all-austrian-far-right-ministers-resign-in-corruption-scandal

    Freedom Party … eh … is just me or something, becuase those that wrap themselves in freedom and liberty branding seem so mired in fraud and corruption, not that they are ever mentioned.

      • As bad as Bush Jr, Obama, Trump.

        I guess it all depends if they feel confidant enough to take the mask off and the response, will it be Brazil.

      • GunnamattaMEMBER

        I completely agree.

        But I must confess i think it is the appalling result Australia may need to have,

        ………..unless I have been living in some form of economically stoic, self imposed hair shirt, style belief in economic justice and data backed rational decisionmaking which is not really reflective of the world in which I am apparently living, and for which I should almost certainly be taking serious drugs.

        Because I dont think my homeland is remotely interested in learning any other way.

      • SweeperMEMBER

        Bad not because of what the government will do.
        Bad because of where this will leave Labor. Demoralised, disoriented and returning to neoliberal lite after tentatively and briefly looking to return an agenda based on fairness.

      • SweeperMEMBER

        I see no silver lining here. It is very sad tbh. Politics briefly became consequential and interesting. Any downturn will just make matters worse. Downturns always lead to more right wing support. Possibly then we will transform into Brazil as Skippy says.

      • drsmithyMEMBER

        Bad because of where this will leave Labor. Demoralised, disoriented and returning to neoliberal lite after tentatively and briefly looking to return an agenda based on fairness.

        +1

      • Sweeper I share your despair on this. I am just trying not to dwell on it. I am hoping Labor doesn’t think that serious reform is off the table, I think most punters agree on negative gearing, I think many agree on the franking credits, the Environment etc.. but the dumb stuff like the parental visa’s and the lack of trying to tackle population growth got them unstuck. It all depends on how they read the tea leaves, but I hope this doesn’t kill negative gearing reform for the next 20 years.

      • Instead of $2.76 per vote, it should be $27 per vote.

        As for banning corporations, is Clive a corporation or an individual? Is Gerry Harvey a corporation or an individual?

        If we have a system where 80% of the funding comes from the AEC and 10% from the unions and 10% from sausage sizzles, that would be almost perfect compared to the puppetry we have now – car dealers giving money to the ALP to continue the grey import ban. Not to mention all the psychopathic billionaires giving money to the ALP to keep mass immigration going.

      • Wait! What? You’re blaming the ALP, which hasn’t been in government for 6 years and won’t be for at least another 3 years for the way electioneering is currently funded? What’s happened to the Greens? I thought that according to you the Greens, who’ve never actually formed a government anywhere, were to blame for any of the ills of our system (???).

  3. Fascinating that the news that an inevitable interest rate cut likelihood has needed to be shifted sooner has caused Australians and business to be happy and delusionary positive when in reality it should be seriously concerning.

    How good is Australia?!

    • Mining BoganMEMBER

      Meh, I’ve tried many a time to explain the reality of the Rodent’s quote about interest rates and liberal governments.

      Shouldn’t have wasted my time.

    • It’s sickening.
      They say all are equal in the eyes of the law. Try him as if he is an indigenous youth whose extended run of property damage has accumulated to $500,000. I’d suggest beginning by assuming he’s guilty and locking him up immediately. The white collar prison is full, so just toss him in with the violent offenders. They are all crims, so it’s not like it matters.

    • Told ya’! First morning in ages that he hasn’t pìssed in his slippers thanks to the ScoMo happy-clappy semi he got!