Macro Afternoon

Share markets in Asia were mixed despite a very strong from overnight markets as traders weigh up the closed US session and the following NFP print on Friday night. The Australian dollar was the biggest mover today while other pairs are marking time as well, with the undollars Bitcoin and gold remaining strong against King Dollar.

The Shanghai Composite has declined slightly but is looking set to close just above the 3000 point barrier, still barely holding on to its early week bounce-back. The Hang Seng Index is putting in yet another scratch session to close basically unchanged at 28834 points, still unable to make good on the previous breakout but still holding on above the previous set of highs at 28500:

Japanese share markets bounced back slightly on Governor Kuroda’s comment as the Yen was relatively stable throughout today’s session, with the Nikkei 225 closing 0.3% higher at 21702 points, finally making a new session high.  The USJDPY pair has gone almost nowhere since last night, still testing the mid to high 107 levels and looking somewhat weak going into tonights session with a very tight high/low band of trade:

The ASX200 was the standout gain by rallying another 0.5% higher to 6718 points, its first time over that level in over a decade with banks and consumer stocks leading the way. This is despite a much stronger Australian dollar which continues to rally above the 70 handle with overbought momentum following the RBA rate cut:

S&P and Eurostoxx futures are up only slightly with US stocks closed tonight. The four hourly chart of the S&P500 shows the market wanting to punch through the 3000 point level as successive levels of resistance have been beaten in this way – way overextended rally:

The economic calendar is very quiet tonight given the July 4th holiday in the US.

Comments

  1. Bah! Train was late 15 minutes. Came on time for me, but the suckers which were waiting for the one 15 minutes ago, are now overcrowding this one.

  2. haroldusMEMBER

    I’m still giggling over this.

    Future policies should integrate people’s non-negotiable needs and wants, including a desire for ample space, privacy, quietness and livability. New urban housing design, including row houses and apartments, must provide sufficient space for families.

    Developers should be required to offer mid-rise buildings with affordable and sound-proofed three or four-bedroom units. Inner-city units should include multiple bathrooms, storage rooms and large porches where residents can keep plants and pets.

    They should also include enclosed communal front yards to ensure the safety of children. And communal spaces for adults, such as community gardens and barbecues, are desirable to sustain the beloved aspects of Australian culture in the inner city.The Conversation

    https://www.domain.com.au/news/youth-in-families-out-6-charts-on-the-inner-cities-of-brisbane-sydney-and-melbourne-854925/

  3. BrentonMEMBER

    1/ HK currency market coming unhinged. HK interbank lending rate skyrocketing (up 30bps tonight alone!) as money evacuates the system. M1 and M2 collapsing…happens every time before the system snaps.

    2/ Overnight HIBOR is up a staggering 84bps today. Something is very wrong the the rapidity and lawlessness happening in the markets now. Panic is setting in.its crucial to remember that HK loans reset against HIBOR monthly.300% private sector debt to gdp in KK.

    https://mobile.twitter.com/Jkylebass/status/1146650099495424002

    • Someone posted a video of a Kyle Bass interview on HK and what might happen if the extradition laws pass. It was an interesting watch. They have so much debt and such an insane housing market it has to crack someday. Wonder if it’s starting to unravel?

      Here it is, worth a watch, even if it’s wrong.

      https://www.youtube.com/watch?v=ZBl05xNq_AU

    • Like many others, Kyle Bass has previously underestimated the Chinese regime badly. Who is to say the PBOC won’t stand behind HKMA this time too? Hong Kong is very important as a financial channel for the mainland. HK goes bad could infect the mainland. Beijing isn’t going to want that.

      • BrentonMEMBER

        That’s the problem, the tighter the CCP embrace, the more likely HK will lose its special status. The US-Hong Kong Policy Act can effectively be revoked at a whim; it would certainly be lost if the PBOC took defacto control of the HK monetary system… never mind that the HK financial system would collapse in the face of such a messy transition. Panicked capital flight into a low liquidity environment with no reserves and a property bubble (worlds largest) that is set against 1 month HIBOR (quickly becoming a banking crisis -> feedback). Plus you’d almost certainly have contagion into the mainland.

      • Dunno about global, but asian/chinese and thus oz I imagine would take a big fat one up the bottom. Think BBC not Chinese winky.

      • proofreadersMEMBER

        The RBA happy clappies’ 4.5% unemployment rate target just a smokescreen?

      • john6007MEMBER

        “Did any of us actually believe that was the reason?”
        Well no for the 98 MB subscribers, but yes according to MSM and Bill Evans.

    • CBA bought out Bank West in 2008 and retained the Bank West branding so they could dominate the WA market. Just an educated guess.

      • If that’s the case any WA miners out there with loans with CBA would be cacking themselves. I remember during the GFC the CBA was ruthless in calling in loans, with the top knifeman at the bank getting articles written about how “effective” he was. I seem to recall they absolutely disemboweled Oz Minerals even though the project that Oz Minerals was developing and CBA was funding was far from marginal: the bank decided it needed to call in some loans and bugger its customers.

  4. For those that might have missed it –

    “The idea of exports as an immediate-term liability. I’ve tried to explain this to people who should understand, and got back, loudly, the Pollyanna response: Exports are Good because they earn money to buy Imports, and everything goes around because that’s what economics is.

    Except when things don’t go around. This happens in the world that Michael Hudson, and John Perkins, and you, and I, inhabit. I will particularly bookmark this quote:

    BONNIE FAULKNER: You also point out in Super Imperialism that mineral resources represent diminishing assets, so these countries that are exporting mineral resources are being depleted while the importing countries aren’t.

    MICHAEL HUDSON: That’s right. They’ll end up like Canada. The end result is going to be a big hole in the ground. You’ve dug up all your minerals, and in the end you have a hole in the ground and a lot of the refuse and pollution – the mining slag and what Marx called the excrements of production.”

    https://www.nakedcapitalism.com/2019/07/michael-hudson-discusses-the-imf-and-world-bank-partners-in-backwardness.html

    Then some are confused about the Larry Summers memo ….