Macro Afternoon

Stocks in Asia are mixed again with the return of Japanese stocks as the USD gains strength against most of the major currencies, particularly Yen, although Kiwi keeps on as its CPI print comes in as expected.

The Shanghai Composite continues its slow start to the week, falling 0.2% going into the close, currently at 2934 points while the Hang Seng Index is up 0.2% to 28599points, trying to maintain itself above the previous set of highs at 28500:

Japanese share markets reopened today and sold off immediately, with the Nikkei 225 closing 0.6% lower to 21535 points, despite a falling Yen throughout the session. The USDJPY pair has pushed back up to the 108 handle, almost ready to breakout of the bullish falling wedge pattern on the four hourly chart:

The ASX200 can’t gain any traction with another losing session today, down 0.2% to 6641 points, again mainly due to bank stocks with AMP the biggest loser. The Australian dollar has stalled out here, unable to continue its bounce from last week and is barely hovering above the 70 cent level against USD::

S&P and Eurostoxx futures are down 0.2% with the S&P500 four hourly chart showing a lot of hesitation here above the key psychological 3000 point barrier:

The economic calendar continues with the very closely watched German ZEW survey plus advanced retail sales in the US.

Comments

  1. The Traveling Wilbur

    AFP wanted fingerprints of journos involved in Afghan files reports?

    Jebus. It’s not paranoia if they’re out to get [someone] using techniques you have to explain to stupid people. Stupid as in uneducatable. As in couldn’t possibly not already know everything.

  2. The Traveling Wilbur

    In other news, is a building still eligible for a combustible cladding rectification bailout if it’s already burned down?

    • He goes on and on about the fed funds rate without talking about the reverse repo rate. There’s one very brief mention of repos, totally missing an elephant in the room.

      IOER goes hand in hand with the ON RRP, you can’t talk about one without mentioning the other. This is the pair mechanism that the Fed has now settled on as the primary liquidity provider for shadow banks. IOER is supposed to be equivalent to the Discount Rate (for the traditional system).

      http://econbrowser.com/wp-content/uploads/2017/03/fedfunds_mar_17.png

      The spread between IOER and ON RRP rate matters, as does the volume. In a calm economy with a narrow spread and small net allocation to ON RRP, the signals these rates give off aren’t that relevant.

      https://www.stlouisfed.org/publications/regional-economist/april-2016/interest-rate-control-is-more-complicated-than-you-thought

      Also, try to ignore all the BS about IOER being a “management tool”, that was NOT why it was established (ON RRP followed later). It was established as a compensation mechanism for financial institutions that were crying WHAAA because they panicked and dumped toxic assets to the Fed that subsequently came good, without a means to reverse the trade and regain the revenues. The Fed obliged by paying IOER out of their profits from non-toxic assets.

      ON RRP came later as a way to avoid this having to happen next time as it has much higher institutional resolution. Only after this all stabilised did they start talking about using IOER to manage institutional behaviour.

      • BrentonMEMBER

        Some rejoinders:
        – IOER effectively acts as the roof upon FFR, whilst ONRRP is the floor; the problem is not that FFR is trading below ONRRP, but that it is trading above IOER

        – Irrespective of the genesis for IOER, it is being used by the Fed to manage the FFR (by the Fed’s own admission).

        – If the FFR has inverted with IOER, why are financial institutions not withdrawing their reserves and lending them to other financial institutions at a higher rate? Remove all other considerations, just this mechanic alone is inexplicable.

      • Apparently it is made possible by free education, unions, not having a working underclass and providing a social safety net. Who’d have thunk it.

      • Mining BoganMEMBER

        Eh? You want poor people to reach their potential?

        Nah, potential is what rich kids soar past.

      • Fer fvck sakes youse mob, if everyone reached their potential then ScuMo would be deprived of his inspirationals. Keep people dumb and full of false hope then you get reelected.

    • He probably made no mention of immigration.

      What is the immigration rate into Scandinavia?

      The entire point of mass immigration is to destroy wages – Japan enjoys a shrinking population and an unemployment rate of 2.4%. In Japan, even grandmas are hired to deliver for Uber Eats!

      While grandmas in USA get bored out of their skulls.

      4 Jul 2019

      Uber Is Recruiting Grannies to Deliver Ramen in Japan

      The unions are a load of garbage – they seek higher and higher salaries for certain professions while people around them are paid $10/hour or less.

      19 Jun 2019

      Preschool teachers demand $100,000 salaries

      Independent Education Union seeking salaries of up to $101,767.

      • RecessionImminent

        Immigration to Scandinavia is very high. Maybe not Australian levels of quantum-extreme-super high though.

    • The Traveling Wilbur

      Well I was thinking about avocado on toast 21 times a week (self-smashed). But that seems 10-years too early.

      • I hear avocado oil is quite a good personal lubricant. And when you consider the stones, they look quite appropriate for uh… err… a ‘friendship bracelet’…

    • Bit weird that his scenarios didn’t add up to 100% but forgivable seeing he’s a one man band with his wife is in hospital and he’s pumping out daily content.

  3. Went out fishing a couple of days ago off Sunshine Coast- more dead fish than i’ve ever seen in the tidal channels. They (International war games) must be bombing the living squid out of the place. … was a pretty full on scene. If these foxxers want to talk about environmental impacts; this might be an adequate juncture.

  4. Here is a question for the board. Renting in 6021. Signed a 2-year lease, with 13 months to go. Owners moving back to WA and want to offer me rent reduction until the end of the year so I vacate early. If I don’t, they have to rent elsewhere for 8-9 months.

    Am thinking 20% reduction.

    Your thoughts?

    • haroldusMEMBER

      Well, I guess they’re not just going for no-fault eviction or whatever it’s called

    • Depends if you like them and if they have been good to you so far. If it was my landlord I’d tell him to take a long long walk off a very short pier…

    • C.M.BurnsMEMBER

      have rents continued to fall in perth since you last signed a lease ? Ie – could you now find an even nicer / better place for the same money that you’re currently paying ?

      If yes to the above, id consider:
      10% reduction in current rent, for the next 5 months,
      you get a 1-week notice period, effective immediately, so that you can actively look for a new place and manage the transition with minimal head-ache juggling dates,
      and they agree to pay for removalist costs (capped at say $2k) for you, as long as you move out in the next 5 months

      • Thank you all for input. Not in the market to fcuk the landlord, they are easy, but then again, fairly new house and no maintenance issues. No issues from my end, rent always on time, house clean, rental agent great, albeit young and impressionable. Reusa grade, I suspect. Rents moved to the lowest end recently, but not by much. 5-10% range. Just weighing my options, really, 5-10% not motivation enough. Weekly at 500, already 10% discount from asking a year ago. 3/2.5/2. But so sick of moving, rather stay.

        In Gav shoes, can buy outright, but can’t see value. Hoping to string it out another year or two, to see values come back to earth, but then again, have to live somewhere.