Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian share markets are set to finish the week on a better mood with small rises across the region. There has been some movement in offshore Yuan trading today despite the Middle Kingdom having a trading holiday with the PBOC governor indicating lots more room to move on any further deterioration in the trade war with the US. Read = more currency manipulation as the USDCNH pair wants to break through to the 7 handle:

Chinese share markets were closed for a holiday while Japanese share markets advanced firmly after a series of scratch sessions previously with the Nikkei 225 currently up 0.5% to 20897 points, now starting to build above the key terminal and psychological support level at 20000. The USJDPY pair is slowly coming back as well, pushing up to the mid 108’s but not yet above key resistance at the 108.50 level:

S&P and Eurostoxx futures are rising steadily with the four hourly chart of the S&P500 chart showing a desire to keep moving higher above terminal support at 2800 points and the recent downtrend line as confidence returns from the Fed put:

Australian stocks are having another field day with a nice surge to end the week, the ASX200 currently up 0.6% to 6425 points, easily brushing past previous resistance at 6400 points. The Australian dollar hasn’t moved around much stalling here going into the London session:

The economic calendar will be dominated tonight by the latest jobs figures from the US – the non farm payroll or NFP for May. Have a good weekend and safe trading!

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  1. Well, that didn’t take long:

    “The lower this rate is, the lower the hurdle to justify investing in risky assets and frankly, the risk free rate can’t get much lower. This doesn’t mean that we should consider shares and property investment on this basis alone as there are other factors in play.

    You wouldn’t happen to want to name which fūcktorsactors we’re talking about, hmmm?!

    • proofreadersMEMBER

      The pure maths seems to be that the banks have to cut their existing “generous” interest-bearing saver and term deposit rates by more than the 25 bps cut in the cash rate, as for some banks almost half their existing deposit base is effectively non-interest bearing (how good is Straya).

      So, the depositors that actually still earn something from our unquestionably strong banks have to enjoy something like twice the recent 25 bps cash rate haircut (and they had seen a decent haircut (a number 3?) happen anyway over the last few months, as the banks dropped their lending rates).

      Alternatively, the banks’ net interest margin shrinks and we can’t have that can we. Also, we have to burn for those people reliant on franking credit refunds and we should perish the thought if those credits ever disappeared for whatever reason. And let’s face it, savers/depositors are not really customers?

  2. That’s it. Core Logic must have got a door knock from the AFP. No daily index published yesterday, and today boom! +0.15

    • I’m not one for conspiracy theories but it does seem sus. Might ask them publicly on social media what’s up.

    • Settlement data has a two month lag. These must be the sales from April Fool’s day.

  3. Mining BoganMEMBER

    There was a comment today about daftdrop going missing. It’s only the Australian version, the Irish and UK ones are still up. Mike Martin is having videos discussing house price falls in Australia removed.

    So fellow cynics and conspiracy theorists, is this Scummo’s crackdown on social media trolls?

  4. The Traveling Wilbur

    And toenighte’s thought is:

    If Labor had wanted to win, really wanted to I mean, all they had to do was promise that bankers would face criminal prosecution as a result of following up on the RC’s recommendations – and they didn’t. And they didn’t (win). Existing law would have sufficied. They only needed to promise they would make (and fund) ASIC do so. And they didn’t.

    Every victim, their families and friends, and their home help would have voted Labor.

    But they didn’t.

    No one, except Bill, seemed all that surprised… just sayin’.

  5. No More Stamp Duty, Oh Wait! Why Are Shops Empty (Hint: Not Amazon)

    The reason you see so many empty commercial/retail properties? Because if they drop the rent to attract a tenant it means the banks re-evaluate the property value and that means the owner has to cough up more. So they are stuck in a financial straight jacket. Sounds like a nightmare to me.

      • Am relaxed ….

        Post GFC ABC show delving into specific cases where people got hammered by margin calls on non preforming loans. Specific case where hard working bloke bought country pub in zinc mining town, decades of performing books, GFC caused demand to go down in zinc, mine laided off 3/4 of staff from 6K, C/RE asset values take a big hit, loan now is non preforming, send in bank valuer, low balls it, bloke cant come up with the 250K, gets wiped out, bank sends in valuer again and gives in a high revaluation, buffs capital stock, sends in its own manger …. en fin

      • haroldusMEMBER

        Surely the answer is obvious.

        Vibrant convenience store and unfortunate fire.

    • Gav – this shows that the loan is secured against a property at an artificially high valuation which is not justified by market rent / yield. Both parties (owner and bank) are politely pretending the “correct” rent / yield is higher than it is because otherwise there is an inconvenient mark to market. Mustn’t have that now.

      What’s the bottom line? Commercial property values are unsupported by fundamentals. Bank loan books are polluted by excessive loans secured against inflated property prices. The reality is therefore that the bank commercial property loan books are stinking to high heaven. Just like residential property.

      No escape. The bubble has infected everything. Banks are f#cked, businesses are f#cked, households are f#cked, and it’s just a matter of waiting until we can’t all keep politely pretending any more.

      • The Traveling Wilbur

        Much as I dislike the wording (mine), it is the actual point:

        The reality is that the premises are not yet vibrant and/or subdivided enough.

        That will happen some more for long time before any rent is ever dropped.

        PS White guy doesn’t seem to be at 7-11 anymore.

        PPS ABC reporting that AFL has apologised to Adam Goodes for being forced to leave the game due to racism. So as a bunch of old rich white dudes dumb enough to like a game involving a Shearan said it [sic] so it’s indisputable now. As opposed to just blindingly obvious earlier.

    • ErmingtonPlumbingMEMBER

      “this shows that the loan is secured against a property at an artificially high valuation which is not justified by market rent”

      Well with residential rental yields at all time lows why did the banks keep loaning out the dosh?
      Anticipated Capital gains of course.
      If those ongoing gains are to be no longer realised then what percentage of residential mortgages need to be “called in” today.

    • Mining BoganMEMBER

      Nah, it’ll disappear once the boomers start dying off. The kids won’t get the good stuff.

      • The Traveling Wilbur

        Any boomer offspring with a brain would simply keep the shares in the parents’ name/s.

        Fortunately for the ATO and the taxpayer that’s a very limited gene-pool.

      • How would that work with the parents dead? Do you still keep your TFN and share accounts?

        Surely the ATO wouldn’t process a tax rebate for a dead taxpayer?

    • Sort of lol. Would be funny if this busted the budget. Sort of. Not really at all. But sort of.

  6. The Traveling Wilbur

    Peefect time to watch some smashing yellow balls on SBS.

    Edit: Nadal v Federerererer

  7. Hugh Pavletich


    Jobs Report: U.S. economy adds disappointing 75,000 jobs in May, unemployment rate holds at 3.6% … Yahoo Finance

    Job growth slowed more-than-expected in May, while the unemployment rate held at a near 50-year low, according to the Department of Labor’s Friday report.

    The U.S. economy added just 75,000 non-farm payrolls in May. This was below expectations for 175,000 non-farm payroll additions, based on Bloomberg-compiled estimates.

    The previous two months’ payrolls figures were also downwardly revised. April’s change in non-farm payrolls positions was cut to 224,000 from 263,000, and March’s new figure was brought down to 153,000, from the 189,000 seen previously. Following the revisions, job gains averaged 151,000 per month over the past three months. … view & read more via hyperlink above …

    • Trump needs to cut unemployment insurance to zero, and with the savings eliminate payroll taxes or reduce income taxes if he wants more gains now.

      There’s no reason the labour market couldn’t be run permanently hotly now that illegal immigration is under control and the fertility rate is below replacement anyway.