Macro Afternoon

Stocks in Asia have pushed higher with the USD sold off against the undollars as traders readjust to the Fed’s dovish stance following Fed Chair Powell’s testimony to Congress last night. Gold is soaring above $1400USD per ounce again while the Australian dollar is having another push to get back above 70 US cents.

The Shanghai Composite is still unable to get traction, treading water to be up only a handful of points, currently at 2916 going into the close.  The Hang Seng Index however continues its come back with a solid 1% rise, currently at 28490 points, just below the previous set of highs at 28500 as it bounces off support at 28000:

Japanese share markets are doing well despite a much stronger domestic currency, with the Nikkei 225 lifting nearly 0.5% to be at 21630 points.  The USJDPY pair remains below the 108 handle after its swift reversal overnight, more on USD weakness than Yen strength following Powell’s testimony. The next target is last weeks lows at the 107.50 level:

The ASX200 has also bounced back by soaring above the 6700 point level for a record high, up 0.5% to 6710 points, with bank stocks largely laughing off APRA’s wet lettuce capital charges. The Australian dollar continues to bounce following the reversal last night, barreling in on the 70 handle and above last week’s intrasession low:

S&P and Eurostoxx futures are up with the S&P500 four hourly chart suggesting a break above the key psychological 3000 point barrier as the market goes all in on the Powell Put:

The economic calendar has a few ECB wonk speeches to watch before the latest US CPI print and initial jobless claims.

Comments

  1. ,,, CHINA …

    China Bracing For Another Annual Drop In Auto Sales | Zero Hedge

    https://www.zerohedge.com/news/2019-07-10/china-bracing-another-annual-drop-auto-sales-after-tumbling-2018

    The newest estimates out of the China Association of Automobile Manufacturers for 2019 are once again turning (even more) pessimistic, according to Reuters. Earlier in the year, the CAAM had thought zero growth for the year was a possibility, but now it looks as though vehicle sales will once again drop – even after an abysmal 2018.

    The sector contracted for the 12th straight month in June and sales were down 2.8% in 2018. … read more via hyperlink above …

  2. BrentonMEMBER

    Chinese steel futures and prices for steelmaking inputs such as iron ore have risen this year partly due to expectations that Beijing will provide more stimulus to avoid a sharper economic slowdown.

    The trader said he expected more stimulus after the National Day holiday in October. “Usually nothing big happens before that,” he added.

    https://www.reuters.com/article/us-asia-ironore/china-steel-iron-ore-futures-slip-on-slowing-demand-idUSKCN1U60GB

    Also from China today:

    China will not introduce another “giant stimulus programme” similar to the one seen during the 2008 GFC to offset the ongoing trade war with the United States and its weakening economy, says Beijing adviser.

    https://www.scmp.com/economy/china-economy/article/3018063/china-will-not-turn-global-financial-crisis-stimulus-playbook

    Not just Chinese futures traders that are praying for another tidal wave of fixed investment based stimulus. I hope ScoMo’s Hillsong congregation really got behind his new economic plan of the Chinese Miracle Mach 3.0, we’ll need their hopes and prayers if we’re to pull it off.

    • The logging guys in NZ didnt see this coming either …

      Port Taranaki resembles “ghost town” as export log prices drop 30-40 per cent … Mike Watson … Stuff NZ

      https://www.stuff.co.nz/business/114089504/port-taranaki-resembles-ghost-town-as-export-log-prices-drop-3040-per-cent

      A crisis meeting will be held in New Plymouth on Wednesday between harvesters, logging truck companies and exporters involved in the export log trade from Port Taranaki as a sudden price drop begins to hit local suppliers.

      Taranaki harvesting contractor Richard Dreaver said he had called the meeting after export log price values fell by between 30 and 40 per cent in the past fortnight.

      Dreaver, who employs 27 staff, including four forestry contracting crews, said his workers were stunned by the sudden developments.

      “Let’s see if we can get everyone working together,” he said. “The port (Taranaki) looks like a ghost town.” … read more via hyperlink above …

  3. BrentonMEMBER

    How bearish am I? I look at this and think end of cycle:

    SPX: All-Time High

    Dow: All-Time High

    Nasdaq: All-Time High

    US Economy: Longest Expansion in History

    Powell Testimony: Dovish

    Fed: Cutting Rates in 3 Weeks

    • I have no doubt everything is overpriced and will revert to some sort of mean. Much like housing though, assuming real house price need to drop 50% to revert to mean, does anyone know for certain whether it will happen by houses prices halving, wages doubling, a bit of both, or maybe wages will rise 10000% and house prices “only” 5000%?

      • BrentonMEMBER

        The best idea I’ve come across is to do a defacto debt jubilee. Move private debt onto the government’s sheet, get the Central Bank to buy up all the government debt, and then write it all off. Currency will likely be cremated, maybe even requiring a new currency, but at least the impossible debt burden is removed.

    • Strange times indeed. I really don’t know what happens when you can’t cut rates anymore. Reusa never told us what happens when you can’t fix thing with lower rates?

      All I know is I’m long cash ($USD, Euro and $AUD), some exposure to US Equities (about $18k worth) and ready to buy a house…

      Seriously considering moving out of Euro though and into $USD, may even buy a BTC just for the hedge and hoping the world won’t end. 🙂

      • BrentonMEMBER

        @Gav, I’m similarly positioned, though I’ve also got Yen (heavier on Yen), GBP and gold. I have some short equity exposure too.

        @Asura, I don’t think anyone’s saying the world will end, but debt/business cycles are real nonetheless.

      • AUD will stay where is it now. Play with something else.
        The game is rigged. That’s for next 10 years. After that we’ll see.

  4. https://www.smh.com.au/national/nsw/it-hasn-t-worked-premier-admits-sydney-s-building-industry-is-failing-20190710-p52601.html

    “As the state opposition called for an immediate response to the growing number of building defects emerging in the city, Ms Berejiklian said she wanted to “assure the community that we know there’s a problem.””

    So we sill set a review and talk about it for the next 5 years whilst peoples lives are ruined due to the deals councils and state government did with dodgy developers.

    • Who did your building compliance review?
      Er… a guy from Chabuduo Limited… they were pretty good, not a lot wrong they found.

      • The Traveling Wilbur

        Thank you for that prompt. It just triggered a whole: how did we get here and who is responsible for fixing this sketch to playout in my head, possibly with John interviewing himself as a reporter and an interviewee from the construction realms called Nigel. It was beautiful. Thanks.

        Not as good as he’d do. But beautiful.

        “If they knew this was going to happen, why did they decide to go through with it, with these approvals changes I mean?” – “That’s a good question, I’ll have to get back to you on that one.” was in there somewhere.

    • Mining BoganMEMBER

      That was a quick change of mind.

      https://www.smh.com.au/national/nsw/state-government-gives-emergency-funding-to-mascot-tower-residents-20190623-p520fw.html

      “The Minister for Better Regulation has denied there are widespread problems in the city’s high-rise residential housing sector, saying “I don’t believe there is any great cause for alarm for other apartment buildings across Sydney”.”

      But yeah, nothing will be done while the spivs are taking in the cash. That’s the Strayan way.

      • The Traveling Wilbur

        And possibly a second, parallel interviewee from the professional real estate realms named Sebastian who answers every question by explaining the tax advantages associated with repair and maintenance work.

      • haroldusMEMBER

        I don’t want to read the article as I am at risk of a rage meltdown but this cannot be serious – “Minister for Better Regulation”????

      • And vale John Clarke. Made hay when politicians were sprung defending the truly indefensible. No shortage of material.

    • Reflects what a Australia has become; a cheap, shoddy rip-off that’s slowly becoming uninhabitable.

    • Mining BoganMEMBER

      Can anyone else get Outline to work?

      I fear it became too well known and suffered the fate of all legendary freedom fighters.

      • Had problems with it lately too. Seems to be the articles with lots of random letters at the end.

      • It’s definitely less effective than it was MB.

        Like Lowe it has been told to pull its head in!

    • Jumping jack flash

      It makes no sense and I’m completely puzzled.
      Surely the RBA isn’t that stupid? Surely they know that the problem is the insane amounts of debt that everyone has that’s sucking the life from the economy. I mean, they hinted at it just recently. Surely they know there is no magical link between interest rates and anything driving the economy – except through taking on more nonproductive debt and spending it, and then praying that it trickles through to higher wages and more fulltime positions – which it won’t, because of the debt gumming up the system.

      The US saying they may cut soon is probably a clue as to why this is happening I think.

    • The Traveling Wilbur

      The same Rip Torn that liked taking too many drugs on purpose and attacking people with hammers?

      Maybe not missing him all that much myself.

  5. The Traveling Wilbur

    Well, we’re there… first official sighting of spiv meets hipster. Not pretty. So to speak.

  6. https://youtu.be/4KyJeVHM7x8

    Poor Mandurah. It’s quite nice in spots. Love their counting of for sale/lease signs. I’ve actually thought about doing that going down Hay St in Perth. RE sign making is the only booming business in Perth at the moment!

      • Mining BoganMEMBER

        Oh yes, they love the place. My fìrst experience with Mandurah was a Dutch guy at the fish and chip shop telling me where all the no go areas were if on foot. There was a lot. Then I landed at the pub on Thursday Night Karaoke!! Stay classy Mandurah.

        Haven’t watched the video through yet but there was a flash apartment development down near The Cut golf course that was ground zero for prices being smashed around five-six years ago. Prices had halved back then. And nobody at Mandurah stopped at one property…

    • innocent bystander

      dog, they make dreadful vids. tuned out at the drive by of for sale/lease signs (which wasn’t that out of the ordinary to my eye).
      comments were interesting tho. lots of converted there.

    • On Thursday, ANZ told mortgage brokers it would lower its mortgage assessment floor to 5.5 per cent.
      HOLY SH*T
      That is the kitchen sink right there.

    • haroldusMEMBER

      “Hey missus, MB’s been talking about you again!”

      “You do what you think is right, darling”

    • The a quick analysis of the survey results.
      – There are 47 shut ins.
      – Every state and territory apart from Tasmania has one.
      – At least three have VPNs as results also came in from Kuala Lumpur, London and New York.
      – Most are not very nice people.

      • I voted at work.
        I thought the international votes reflected the cosmopolitan subscriber base.

      • Hey i thought about being nice but this is the internet, you’re not supposed to be nice, AND it was Gav’s own idea which most people seem to have validated which could be construed as a nice thing to do , as obi wan said “from a certain point of view” (disclosure I’m very nice irl)

      • The Traveling Wilbur

        OK So how many of them are running Chrome, Mosaic, IE, Safari and Netscape?

        And what’s the IP address of the bunny who coded ‘Why would you want to know?’ into their browser version return string?

        And how did you not spot that nearly 90℅ of the returns nominated Putin for President?

      • I can’t believe how much mileage you lot are getting out of this, I’d probably find it funnier if it wasn’t my own junk on the line. :). I reckon 20 of the votes were disgruntled vibrants and the others were probably not a fan of the Church of The Flying Spaghetti Monster.

        All is fair in love and war I guess.

  7. … UNITED STATES …

    Skyrocketing home prices fueled by increase in land cost, says Harvard University study – Washington Times

    https://www.washingtontimes.com/news/2019/jul/9/skyrocketing-home-prices-fueled-by-increase-in-lan/

    Skyrocketing U.S. home prices, which have surpassed bubble levels of 2005-06, are being driven by a dramatic increase in the cost of residential land, according to Harvard University’s Joint Center for Housing Studies.

    From 2012 to 2017, the median price per acre of residential land for existing single-family homes nationwide jumped 27%, from $159,800 to $203,000, researchers say. Such increases are fueling an affordability crisis for first-time home buyers and renters, with new home construction struggling to “barely keep pace” with the number of new households.

    Compounding the sluggishness in housing construction is a tight labor market, excess housing supply built up in the boom before the Great Recession and “most significantly” regulatory constraints on development, according to Harvard’s “State of the Nation’s Housing 2019” report.

    “These [regulatory] constraints, largely imposed at the local level, raise costs and limit the number of homes that can be built in places where demand is highest,” said Chris Herbert, managing director of the Joint Center for Housing Studies. … read more via hyperlink above …
    .
    .
    Definition Of An Affordable Housing Market – Performance Urban Planning

    http://www.performanceurbanplanning.org/affordability.html

    2019 15th Annual demographia International Housing Affordability Survey

    http://www.demographia.com/dhi.pdf

  8. Let me be the first to say … Go the kiwis! …. (if there was ever a stage set for Maxy it was today, but the big show was a no show. Sad.)

    • haroldusMEMBER

      Have to agree. Maxi was my favourite player, but drop him forever. He had a whole world cup to work it out.

      What are we gonna do? Lose more games without him?

      Carey captain, choose your players.

  9. The Traveling Wilbur

    You know people aren’t feeling themselves when something like this introing a comment doesn’t get attention. Must be the economy…

    “The logging guys in NZ didnt see this coming either …”

  10. My landlord recently switched management from a big agency to a local boutique. They seem like typical boutique tossers but the real gem was in the tenant handbook they casually left on my doorstep (in the rain, not in the letter box, or more environmentally friendly – emailed!!) – “Please pay your rent on time!! If you don’t your landlord won’t be able to make their mortgage repayment on time”

    Ridiculous.

  11. The Traveling Wilbur

    Couldn’t be happier, unless England are all out for 223. Of course.

    Or 224. And then it’s a count-back on penalties.