Macro Afternoon

An ugly finish to the week here in Asia as share markets tumble in the wake of Trump’s Mexican tariffs and the growing discord in North Korea and the Chinese trade talks. It’s all about safe haven buying including Yen, gold, Bitcoin and Bunds.

The Shanghai Composite has closed below the critical 2900 point level in the wake of its steady PMI print, while the Hang Seng Index has fallen over 0.8% lower to 26894 points, unable to arrest the recent decline to make a new daily, weekly and monthly low. The daily chart had showed a deceleration pattern with a target at the 27000 point level but poor sentiment is weighing too much on this risky proxy market:

S&P and Eurostoxx futures are slumping, down at least 1% going into the European session with the four hourly chart of the S&P500 chart suggesting another new daily low to finish May tonight, still well below key terminal support level at 2800 points which continues to signal a major correction as the completion of a very bearish head and shoulders pattern on the longer term charts:

Japanese share markets are off the most in the wake of the Kuroda comments about US favouritism (all that pomp, big talk and hiding ship’s names for nothing Trump – hah!) with the Nikkei 225 slumping 1.6% lower to finish the week and month at 20600 points. It hasn’t helped that the bottom has fallen out of the USJDPY pair with a big slump below the 109 handle, as overhead resistance and risk-off avoidance is sending Mrs Watanabe to the domestic safe haven currency:

Australian stocks are in a bubble right now, avoiding the worst of the falls to actually finish in the green with the ASX200 up four points to finish just below previous support at 6400 points. The Australian dollar has blipped higher despite the poor sentiment, almos thitting the high moving average to get to the 69.20 level but overhead resistance is far too strong:

The economic calendar finishes the week with two big ones – German inflation and US core PCE (personal consumption expenditure). Have a good weekend!

Latest posts by Chris Becker (see all)

Comments

    • Mining BoganMEMBER

      I heard someone saying that to protect his mental health he’s selling off the business that destroys the mental health of others.

      Geez, he looks crook for 50 though. Looks a lot like the old country front rower that retired to a council job and public bar. Sir Frank and the Goanna only made it to late 60s. Jimmy boy needs to do something about his health to get that far.

      • TailorTrashMEMBER

        Something about Cranbrook boys ? ( I’ve met a few )
        …..can’t put my finger on it ….but expectations and the hardness of reality colliding seems to do damage …..and no ill will to James …..he inherited his troubles I hope
        he finds his place ….I think he is trying

      • TailorTrashMEMBER

        H…..the other variant….if you can’t get a girl
        ….,.get a Cranbrook boy ……..shocking I know …

  1. The Traveling Wilbur

    It’s true. Gentlemen do prefer bonds.

    I even like my Martinis shaken and not stirred.

  2. Tesla Model 3 is slated to be delivered in AUS in Aug 2019.

    A$66k is the minimum price of each one.

    https://www.whichcar.com.au/car-news/tesla-model-3-rhd-australian-specs-revealed

    The 2019 Toyota RAV4 hybrid range starts at $35,140

    Toyota Australia has been left gobsmacked by the level of customer interest in the all-new RAV4 hybrid model.

    “We’re only two weeks into taking orders, but the current order intake is at 65 per cent hybrid,” said Mr Hanley.

    https://www.carsguide.com.au/car-news/toyota-rav4-hybrid-orders-reach-unprecedented-levels-74778

      • Something about a car, oil, steel Mfg back in the day colluding to fob off electric trams by funding alternative bus service, then subsidizing it to undercut the tram costs, and then when the trams went broke jacked up prices. This went to court in the U.S. and the judge found the aforementioned guilty, then fined them I buck, being good corporate citizens and all, can’t blame a person for seeking profit now can we ….

        Now we have Uber et al ….

      • Or $66k – $35k = $31k and $31k buys a heck of a lot of petrol.

        And then the insurance on a $66k car vs the insurance on a $35k car.

      • @Jacob have you calculated cost per mile of a gasoline car? I’ll bet it’s much higher than an electric car.

      • Yeah, they almost went bankrupt twice already.

        First in 2008 and again in 2018.

        Tesla car sales in Hong Kong fall to zero when subsidies are withdrawn.

        Elon probably mistakes 3 years of pent up demand for annual demand.

        Here is a huge cover story in Wired Magazine about how insane Elon is:

        He had recently had a dream, people in the room recall him saying, in which he had seen the factory of the future, a fully automated manufacturing plant where robots built everything at high speed and parts moved along conveyor belts that delivered each piece, just in time, to exactly the right place. He said he had been working on such ideas for a while. “This thing will be an unstoppable alien dreadnought,” he told his colleagues

        The familiar pattern kicked in: Executives told Musk what he was proposing was unrealistic.

        Tesla was burning through up to $100 million a week as thousands of employees tried to build Musk’s dreadnought.

        Musk “would say ‘I’ve got to fire someone today,’ and I’d say, ‘No you don’t,’ and he’d say, ‘No, no, I just do. I’ve got to fire somebody,’ ” one former high-­ranking executive told me.

        https://www.wired.com/story/elon-musk-tesla-life-inside-gigafactory/

        So they almost went bankrupt because Elon had a dream one morning and tried to implement that impossible dream!

  3. Well despite all the rhetoric of prices going up, several properties I’ve seen have dropped price guides.
    I won’t share them all because some I’m still keen on, but here is 1 example we ruled out the other day.

    This was listed at $850k originally, passed in at $800k.
    Dropped to $720-$790k
    Now at $680-$740k
    Original URL:
    46 Ryans Road Eltham Vic 3095
    https://www.realestate.com.au/property-house-vic-eltham-129480990
    New URL:
    https://www.realestate.com.au/property-house-vic-eltham-131194902

    Mum looked at it this week on my behalf, said she wouldn’t buy it at $600k. Pass.

    I was using http://www.daftdropau.com/ to monitor price shifts, but it’s down. So now I manually record price for ones I’m interested in for later reference to monitor price changes.

    There was another site but I can’t recall what it was?

    • proofreadersMEMBER

      I love your work but how unStrayan are you? Miracle man, ScoMo, has only been in the seat 2 weeks tomorrow and miracles take at least 3 weeks until that congestion busting of red tape happens?

      • Sorry, I shall do three hail Mary’s and beg for forgivness by asking strangers “How good is Straya?”

    • Oldlistings used to be good but less reliable now. The Chinese one http://house.ksou.cn was very good but underwent a radical change and now only shows sale prices not all the list prices. I think they were got at…

    • Mining BoganMEMBER

      Oh my, passed in at 800 gorillas. Betcha that’s caused some marital disagreements after later developments and price drops. Owned it since 1979 eh? Carpet looks much older.

      • @MB – Apparently built in the 1950s, unknown builder. With Mudbricks insurance companies want to know who built them to determine standards since it can be expensive. My thinking with this place was to maybe renovate and make it more like this property I missed out on last year.
        https://www.realestate.com.au/sold/property-house-vic-yallambie-129469326

        I also thought there might be space at the rear to build a garage but the land slopes away at the rear so it would be challenging, but the bigger problem was the house has very small rooms and was very bland, my mum said even at $600k she wouldn’t be interested, as you really need to start over.

    • SweeperMEMBER

      the prices going up rhetoric makes no sense.
      If anything the media hype will just encourage more stock on the market as people think it might be safe to get out.
      Expectations have flipped, speculators have finally cottoned on that its possible to make capital losses. The media re-electing Morrison doesn’t change that.

      • Yes. All those who got a scare over the last 12 months are now looking to offload. As soon as the trickle of pent up demand is gone, market forces will drop an anvil on the sellers. I hope.

    • proofreadersMEMBER

      The clarion call is to assume the brace position in readiness for the RBA on Tuesday? Stiff upper lip and all that?

      • I suspect they’ll hold given the election outcome. Anyone know what the betting odds are?

  4. The Traveling Wilbur

    Some wise contributor pointed out today that the funnel of money for the ASX is coming to an end now that the really wrinkles are really going to be drawing down on capital.

    I, for reasons of self-interest only, decided to have a quick squiz at whether that’s happening now. Not so far. Prime superfund for wrinkly max value extraction shows assets under management growing by about 10 billion a year for the last three years. No signs of tailing off. Yet. I’m almost sad about that.

    Almost.

    Now time for my annual Gold Coast annecdata report. It is really grim up north. And the prevailing economic conditions are pretty cr4p too. Even more boats in harbour for sale. More than not from a quick view (no binocs) – even recognised some still for sale from last year’s visit. Shoppers? None. None that didn’t have a centrelink card. Oldies? Gone (almost). People buying RE? None. Shops? Extremely very closed down. Wierdly, it was mainly the cheaper asian (every kind) and chemist shops that were no longer with us. Even my favourite tea shop on Earth.

    Basically very empty. And still some construction going on. Even the bogans looked sad. Only really not grumps were the international students, who were happy, well off, not buying anything on the strip and not talking much to anyone.

    • Wilbs – after listening to Harry Dent (who is big on the whole demographic drawdown thing, ie US boomers retiring and withdrawing a wave of money from the stock market as they cash out) I was debating this with a mate who knows a bit. He reckoned in Aus super balances are growing pretty steadily as other workers keep earning, so this flow of money into the ASX should offset much of the effect. I have not looked at numbers though so I don’t know how it stacks up. There are a LOT of boomers after all.

      I do however think it is more likely to be a thing re. investment properties. Mainly because unlike stocks they can’t be sold down bit by bit but the whole asset needs to be sold. (The unspent capital may even be ploughed into dividend paying shares after sale, too).

      So a wave of boomer property hitting the market (say… about this September?!) may be a more meaningful phenomenon than in shares.

      • The Traveling Wilbur

        Wierd. I was just thinking about the effect of boom3rs pulling out of property while writing the above. Not to do with super, just effect on RE prices generally. But ScoMo and APRA will fix that. So I didn’t expand on that thought.

        PS Finally figured out why it’s called APRA. It’s totes aprapo.

        You may need to google po.

    • SweeperMEMBER

      “None that didn’t have a centrelink card”

      Aren’t Quexiters meant to be anti welfare, can do “aspirational”, get a go if they have a go types?
      If economics was a morality play the downturn would be concentrated in Queensland and they wouldn’t get a cent in Commonwealth assistance since they don’t believe in it allegedly.

      • The Traveling Wilbur

        Just because you live in Qld doesn’t mean you voted LNP.
        H3ll. It’s more likely to mean you didn’t vote at all.

  5. Why Sweden is encouraging citizens to become preppers.
    https://www.youtube.com/watch?v=YCAJofc4ajM

    Just watched this, the Swedes are worried the Russian’s may take an interest in their region. A lot of them are prepping for war and learning basic survival skills. I found it really interesting.

  6. The Traveling Wilbur

    VIX is about to blow 20.00.

    Thank. You. Donald.

    I’m almost beginning to appreciate his technique.

      • The Traveling Wilbur

        Weeeellllllll… no. But you do have to force yourself to profit from it. It really is exquisitely simple. Bad political times for Trump = market turmoil (when he says something even more outrageous – so the media forgets about all the prior behaviour – and even more when he follows through on it).

        Graciás grande tariffs Senór.

  7. CanuckDownUnder

    I know Bono can be a bit of a bellend at times but I really should go see U2 at the SCG.

      • @Harry – Early 2018 after my father had died. My sister and I were discussing funeral arrangements. We were talking about music he liked. My father was pretty absent, especially in the last 20 years. He had a lot of issues to deal with, but he buried those problems with alcohol. Anyway my sister and I have a fairly dark sense of humour, probably why I like MBers so much.

        We were trying to decide why music to play at his funeral / wake when a slideshow of his life was going to be played. My sister says “What about U2, still haven’t found what I’m looking for?” We both sort of looked at each other and laughed and then both started to cry uncontrollably, my eyes kind of well up now thinking about it again.

        Anyway, I have this strange love / hate relationship with U2 and their music. Some of their tunes I like, and some I just can’t stand and I really didn’t like them for years, but since my father died I’ve sort of changed my mind. I think because my father liked them so much and he was 1 of the first people in his group of friends to tune into their music back in the day, convinced all his friends they were worth listening to.

      • It’s ok mate, we all gotta die sometime. My father did the best he could, if I have kids I’ll learn from his mistakes. I try to focus on the good, not the bad.

  8. truthisfashionable

    Alright fellow sydneysiders, less than 4 hours until water restrictions begin, if you haven’t already, the driveway, street and gutters should definitely be housed off. No doubt you will get a little splashed in doing so, so better have a good old 30min hot shower just like they did in the 60s to 90s.

    In all seriousness though, Sydney’s storage fell 0.5% (basis points?) again this week to 53.5% from 54%.
    At this rate Xmas time could be interesting at <40% capacity, unless it's another hot summer and water use increases/evaporation increases.

  9. Mining BoganMEMBER

    The cricket world cup is underway. After noted [email protected] defender Ben Stokes went cricket crazy last night, tonight the West Indies have rolled the Pakis for 102.

    What’s Urdu for long competition?

  10. Hugh PavletichMEMBER

    China’s Economic Troubles Come Into Sharper Focus … Wall Street Journal (behind paywall)

    https://www.wsj.com/articles/chinas-economic-troubles-come-into-sharper-focus-11559286242

    May numbers may be the first reliable guide in a while to how bad things really are—it’s not a pretty picture … read more via hyperlink above (behind paywall) …
    .
    .
    China’s 8.34 million graduates fighting for fewer jobs as vacancies dwindle and gap years increase, survey shows … South China Morning Post

    https://www.scmp.com/economy/china-economy/article/3012635/chinas-834-million-graduates-fighting-fewer-jobs-vacancies
    .
    .
    The Migrant Workers Behind China’s Economic Miracle Are Miserable … The Atlantic

    https://www.theatlantic.com/international/archive/2019/05/china-migrant-workers-miserable/589423/

  11. bobalotMEMBER

    “Labor’s pensioner dental plan gained 10 mentions in this newspaper, while a $2.3 billion move to slash out-of-pocket costs for cancer patients got 21. Franking credits? More than 700 mentions.” – The Age.

    The media in this country is beyond corrupt. If there is a big economic crash, I hope these papers all go bust.

  12. Hugh PavletichMEMBER

    … BRITAIN …

    University agrees to pay £61,000 to settle case with graduate who complained of ‘Mickey Mouse’ degree … UK Telegraph
    … behind paywall …

    https://www.telegraph.co.uk/news/2019/06/01/university-agrees-pay-61000-settle-case-graduate-complained/

    A graduate who sued her university after claiming she ended up with a “Mickey Mouse degree” has received a £61,000 out of court settlement.

    Pok Wong, 30, launched a legal action against Anglia Ruskin University complaining that its prospectus “fraudulently misrepresented” the business course she enrolled on in 2011.

    After a two-and-a-half year legal battle, Ms Wong and the university have settled the dispute.

    The university agreed to pay her a £15,000 settlement as well as make a £46,000 contribution towards her legal costs.

    The case could now encourage other students to use the courts to ensure they receive value for money for the thousands of pounds they pay in tuition fees. … read more via hyperlink above (behind paywall) …