Macro Afternoon

A very mixed end to the trading week here in Asia with mainland Chinese stocks advancing while the rest of the region stumbled following the impact of the stimulus from the ECB overnight.

The Shanghai Composite lifted 0.25% but has been unable to finish the week above 3000 points while the Hang Seng Index fell sharply, down 0.6% to 28407 points. This put it back below the recent set of highs at 28500 as the market moves back towards a more cautious mood:

Japanese share markets retreated despite a much weaker Yen overnight with the Nikkei 225 closing 0.4% lower to 21658 points. The USDJPY pair hasn’t moved in the Asian session since its huge breakout last night, still hovering at the 108.70 level with all eyes on tonight’s GDP print in the US likely to be a catalyst:

The ASX200 finished just below the 6800 point barrier by falling 0.4% in sympathy with overnight markets, closing the week out at 6793 points. The Australian dollar wasn’t much help despite cascading into the very low 69’s against the USD, treading a new weekly low that has unwound almost all of the previous rally:

S&P and Eurostoxx futures are flat going into the European session with the S&P500 four hourly chart still showing a wishy washya desire to break out above last week’s Friday highs and have another crack at the previous high near 3020 points:

The economic calendar ends the week with a big one – 2Q US GDP. Have a good weekend, stay safe and profitable!

Comments

  1. AUD heading towards 68 handle and gold going up. What’s not to like? Hope I wake up to $1500usd gold.

  2. … GERMANY …

    German economy in ‘freefall’ as exhausted Draghi loses his magic … AEP … UK Telegraph (behind paywall)

    https://www.telegraph.co.uk/business/2019/07/25/german-economy-free-fall-exhausted-draghi-loses-magic/

    German industry is in the deepest slump since the global financial crisis and threatens to push Europe’s powerhouse economy into full-blown recession. The darkening outlook is forcing the European Central Bank to contemplate ever more perilous measures..

    The influential Ifo Institute in Munich said its business climate indicator for manufacturing went into “free fall” in July as the delayed damage from global trade conflict takes its toll and confidence wilts. It goes far beyond the woes of the car industry. More than 80pc of Germany’s factories are in outright contraction… read more via hyperlink above (behind paywall) …

      • Mining BoganMEMBER

        Oh dear.

        My next guess then is that the hole in the ground will never find someone to build the stadium and it will all be sold off for poorly built apartments.

        Maybe it has all been planned that way…

      • The Traveling Wilbur

        Jeeeez. When did you get to MBA-level cynical?

        Give Jack a cuddle and have another beer? Stuff’s not that bad. Yet.

        Great point though nonetheless.

      • The Traveling Wilbur

        Never infer duplicity when stupidity will suffice.

        So sad. Yet so regularly true. And so often quoted (and ignored).

      • I have no doubt Sidoti did not want those apartments at Rhodes in 2017. And no doubt he wants them and more now. No duplicity inferred.

        If by any chance the new tender results in a $2b stadium or the idea abandoned altogether in favour of another 4000 apartments then I have no doubt that is what Sidoti and Libs believe to be the best option.

      • Not so much worried about apartment development. More the results of the arms length (chortle, snort) tender and the inevitable massive cost blow out.

      • Mining BoganMEMBER

        Canadian Club actually. Wish you could get the export version here. But that’s besides the point. Isn’t it the rodent’s 80th today? Leave the hole in the ground as a monument to his economic legacy.

      • The Traveling Wilbur

        Had to read that four f’ing times. Thanks. Brain hurts now. More.

        Know what you mean. Was introduced to Canadian Club in Indianopolis (or however you spell it). In a non-service bar. I knew not what either of those things were prior to that… and clean ran the pool table before finding out. Lucky the inner city locals didn’t mind. The walk home was trepidacious. But good, as neat CC in the US is gooood.

    • The Traveling Wilbur

      OFMD.

      Link of the fckn century.
      Thank you. So much.

      And on top of that I had to parse the world’s longest URL to make sure this wasn’t a spoof. Which it is not.

      Why did I have to do that? Because an anagram of the Sports Minister’s last name is Idiots.

      And he is. Biggest fckn sidoti in the entire fckn state. He just doesn’t know that. Yet.

      • Mining BoganMEMBER

        There was a time when not being seen at one of the common thief’s greasy spoons was a personal cost.

      • F’me dead I’m conflicted. On the 1 hand this brings immense joy, on the other hand I feel like shouting it’s a bit Fing late to grow a backbone now isn’t it? I mean we draw the line at wage theft do we? Of all the stuff this country has been through in the last 10 years. This is it, this is our moment…. I honestly was hoping for something a bit better..

    • That’s fvcken funny! The cvtns restaurants are called Jimmy Grants, the very people he was ripping off! Cop that young Jimmy!

  3. The Traveling Wilbur

    For those not playing at home… the yield spread between the 5y Aus Gv Bond and the 2 year has collapsed in the last 48 hours from a consistent .05 points to .021 now. Cometh the hour cometh the inflation ban.

    • Well I have been on two weeks’ holiday. Did I miss much? Any epic puns?

      Also, I’m confused, has the spread collapsed or widened (as you imply… but hey. As I have literally not been playing, and not been home, can you pls make it simple for me… 😁

      • The Traveling Wilbur

        Dear God captain, I’m an engineer, not a slide rule!

        But yeah, it’s right. They yield spread has halved. In 48 hours. Making a 5 year investment in bonds about as attractive as a 2 year. Anchient history for Europe. New territory for Australia.

        I.e. the premium being paid to investors (sorry, leaners) for longer term ‘investments’ is trending to swfa.

        The 003.5 effect. Bring your own lube.

      • Ok… I see … thanks! I had decimal points misplaced. (Or did they move?)

        Meaning people reckon we ain’t never getting no inflation?

      • The Traveling Wilbur

        If the spread is contracting, inflation is collapsing.
        If the spread is widening, investors aren’t a pile’in. (into bonds)

        But yields down usually means inflation is on holiday.
        Yield spread contracting means some central bank is busy cutting rates somewhere (and that the concept of inflation is dead, buried and cremated).

      • Ok – yes – good. Makes sense. I haven’t completely lost it then.

        Go you good thing.

      • Plenty of inflation if you know where to look. Central banks are blind. Wankers. The lot of em’… Stealing from the Prudent to give to the wreckless. A sort of reverse Robin Hood but with bigger guns and tanks.

        Question is? Is it better i.e safer to hold bonds, cash, gold or BTC or just spend it like a drunken sailor on hookers and blow?

        If preserving wealth is important I mean? Right now I’m long cash, some USD exposure via Equities along with $USD deposit and damn Euros. I think I might move the Euros. My $AUD holdings were because it seemed unflushable. But it seems the plumber fixed it..

      • Yes to that (inflation).

        Consumption is the only way to actually get full “value” for your money – problem is, I hate spending on useless sh!t!

        I remain long USD T bills (effectively cash) AUD bonds and AUD cash (for convenience). A few speccy equities but no point buying any serious equities at this point because they might just go down and at some point I’m going to have to spend everything on a house.