Macro Afternoon

A much more optimistic mood here in Asia today with almost all stock markets putting on gains, with the ASX200 advancing to a new record high. Pound Sterling continued to fall as the realisation of no-negotiating let alone no-deal seems to be de jeure for the Johnson hard Brexit, while the Australian dollar continued its own meltdown as traders await tomorrow’s FOMC meeting.

The Shanghai Composite came back stronger in today’s session, closing nearly 0.4% higher to 2952 points while the Hang Seng Index staved off another new daily low, climbing just 0.2% to finish at 28167 points. This puts it somewhere near but not above the recent support level as this market teeters for another breakdown:

Japanese share markets were much more robust, taking in the BOJ meeting with  Governor Kuroda soothing concerns on inflation with the Nikkei 225 closing 0.4% higher to 21709 points despite a slightly stronger Yen. The USDJPY pair fell back to the mid 108’s before the meeting but has recovered and looks set to have another go at the weekly resistance level above at the 108.90 level:

The ASX200 is loving the mood with no bears left to stand in the way, putting on a record high to close 0.3% higher at 6845 points. Here comes 7000 the uberbulls say! The Australian dollar is flatlining again, hovering just above the 69 handle before breaking below going into the City open and looking set to return to its 68.50 recent low:

S&P and Eurostoxx futures are down 0.1% going into the European session with the S&P500 four hourly chart displaying a possible double top pattern that could be morphing into a bearish rising wedge as price hovers just above the previous high near 3020 points:

The economic calendar has three big releases tonight, first its the German July CPI print, then US PCE core spending and Consumer Confidence figures, both important in dictating where Wednesday’s FOMC meeting will go.

Comments

  1. The fight against “bail-in” is on! The Morrison government has released for consultation a new law that bans cash transactions over $10,000. The pretext for this law is to crack down on money laundering and tax evasion in the “black economy”. This is a shameless lie! The formal recommendation to ban cash comes from “big four” global accounting firm KPMG, which is an accomplice of the world’s biggest money launderers and tax evaders. The real purpose for the cash ban is to trap Australians in the banking system, so they cannot escape negative interest rates or having their bank deposits “bailed in”.

    https://cecaust.com.au/media-releases/morrison-banning-cash-so-australians-cant-escape-bail-negative-interest-rates

    Martin North did a interview with some American lady that was a bit kooky, but kind of followed this line of thinking. She is a gold bug, so it’s hard to take too seriously, but still worth a watch. I know Leith thinks it’s a good idea, along with all the millenials, but going cashless is a surefire way for banks to suck the very last drop out of you.

      • Don’t get me wrong, I’ve got a lump of the shiny. It’s just the end of days mantra that they always seem to have.

      • For me there is a fundamental contradiction in gold bug logic.

        If they are buying gold because they think cash will depreciate under evil central bank manipulation and they’re looking for protection – ok, fine – but they are expecting to change back into fiat eventually when they want to spend it. So for these people it’s ultimately merely a trading strategy, and what’s more it could be wrong, and gold is bloody volatile so you could lose a fair bit anyway. I don’t quite count these people as gold bugs, just speculators. Apologies for any offence caused!

        If they are buying it as financial preppers convinced the entire financial system will collapse, i think gold is a bad choice. It’s hard to spend. Hard to break up into smaller bits. Easy to steal. And certainly vulnerable to the government taking it. Worst of all, it has no actual intrinsic value. If you think this scenario is likely you’d be better off investing in a bunker, canned food and ammo. They will have real value at the end of times. Whereas if everyone is starving, and you only have gold, no one who has food will be interested in a swap.

        Views?

      • I’m in the first camp. Bought back in 2008 after reading too much Schiff and Bill Bonner. It’s not doing too badly lately, so i’ll sit on it until I need the cash or it rockets and i’ll give it back to the Perth mint.

      • Anywho …. for those like the non ideological or non sales pitch unpacking ….

        I note that there is oftentimes confusion today when the gold standard era is brought up. The reason for the confusion when discussing this era is because the monetary system functioned in an entirely different way. The confusion goes two ways; both from the past to the present and from the present to the past. Austrian-style economists and gold bugs tend to project the manner in which the 18th and 19th century monetary system functioned onto today’s world. While more modern theorists tend to project the way that the monetary system of today’s world works back onto the system of the 18th and 19th century.

        I’m not going to lay out how the contemporary monetary system functions here. Sorry, Austrians, but you’re going to have to do your own work in this regard (try the Bank of England here). So, I will assume that readers are familiar with what might broadly be termed the theory of endogenous money creation and/or interest-rate targeting through Open Market Operations (OMOs) in a flexible exchange-rate system (or even, to some extent, in a pegged system). I will draw on a rather nice account that is laid out in Roy Harrod’s book Money. (Note that some of the discussion in this book is otherwise rather confused).

        Under the gold (and silver) standard systems, as everyone knows, money was convertible into precious metal. The central authority set the official rate of conversion and the market adjusted to this. When the gold price, for example, fell in relation to money, gold would flood the public mint to be converted into money. The opposite happened when the gold price went above the value of money; i.e. money would return to the mint to be converted into gold.

        In a gold standard system the effects of new money issuance will be primarily on the value of the currency vis-a-vis the value of other currencies. In a floating system, however, the issuance of new money has its effects, in the main, on the rate of interest. All other effects that it has are purely secondary.

        This is not actually a question of theory. Rather it is a question of definition. In a gold standard system — that is, one in which all countries are in some ways linked to gold — all value is defined in terms of gold. Thus if your currency is unstable with reference to gold then it is unstable period. Gold is the central point of reference. But this is only due to a definition — or, more properly, an edict put in place by an agreement between members of a monetary system.

        In this regard, an example from the so-called Bullion debates in instructive. These arose in response to the move by England, in 1797, to a temporary fiat system of money issuance in response to growing military spending. When the move to the fiat system was undertaken the value of the pound fell in relation to gold. The Bullionists, like Ricardo, claimed that this was due to too much money issuance. They said that because the Bank had increased the money supply this had led to a fall in the value of the currency. This is today known as the ‘quantity theory of money’. The Bank, however, protested. They said that the value of money had not fallen at all. They said that, rather, the price of gold had risen.

        Let us stop here. The Bank were actually incorrect even on their own terms. I will not get into why this was here. Rather I want to sidestep this issue and discuss the fact that this entire debate was primarily about definitions. In this regard, Harrod wrote,

        The contention [by the Bank] is clearly open to a terminological rebuttal. We might say that, in relation to a gold standard, we define a depreciation of notes as a fall in their value in terms of gold, so that a high price of gold bullion was conclusive evidence of a depreciation; this could be reinforced by reference to the fall of sterling in terms of other currencies in the foreign exchange markets, and by the fact that the price of gold had not risen in terms of other currencies still convertible. (pp28-29) – snip

        https://fixingtheeconomists.wordpress.com/2014/05/03/why-the-value-of-contemporary-money-is-not-dependent-on-the-value-of-gold/

      • drsmithyMEMBER

        Views?

        Well at least they’re not as crazy as the people who think in the end times there’ll still be enough infrastructure running for their cryptocurrency to be useful.

      • I hope some noticed the reference to military engagements being a driving force for the shift and what that portends, considering say Hudson’s et al perspective, bond holders and property rights enforcement, from a globalist market paradigm E.g. making the world safe for corporatism to sail the seas in search of profit ….

        Then some wonder why some say there never is a lack of money for such adventures, yet then, austerity is always the solution to the debt incurred for such larks E.g. we don’t have a money problem …. we have a
        seniority problem in the decision making process in distribution and function of fiat aka our money …

    • The Beetrooter Advocate

      The millennials aren’t worried. They’ll just buy more BTC as required.

      Can’t see any problems with that strategy.

    • Golden Trumpet

      Meh – apparently construction is a vastly smaller industry than the Ford and Toyota factories ? They can start with half a million.

      The capital cities of this country are literally heaving with empty houses, empty apartments, some never rented, others land banked, holiday homes, second homes, city flats for the county folk, others occasional AirBnb – the numbers are staggering.
      Then there is the simple reality that every boomer in the country is basically sitting lonely in a 4 bedroom California bungalow overlooking the empty swings in the park next to the school rammed to the rafters. Why should they move. Its their home. Besides they only have the CBD apartment for going out for dinner and a few drinks so they don’t have to drive home.

      We could house people for a year without building a dam thing. If employment cracks and those only here for work evaporate – we’ll be able to house people for ten years.

      And if the economy goes, and things start turning pear shaped with “Vibrants rampaging in Collinwood and St Kilda beach” – well, who likes to holiday in Baltimore anyway.

      • When the vacancy rate goes above 5% and stays there for a decade we might have a healthy property market.

        Until then, there are too many chickens being counted at the egg farm.

    • ErmingtonPlumbingMEMBER

      No one Gives a Fk when it’s someone else’s job.
      I don’t know why but it sh!ts me to death every time I see a Hyundai police car.
      I even saw a brand-new large BMW saloon police car pulling someone over at the top of Stewart st and Marsden Rd yesterday.
      Gave me the Sh!ts even more!
      Why do I give a Fk?

      • Know IdeaMEMBER

        You are not alone in those exact thoughts brother. But I fear we are in the minority.

      • The Beetrooter Advocate

        Because you know how much better things could be if people would just stop being quite so stupid.

      • It’s worse when you see our w4nker politicians getting out of a BMW. Good onya Tony and Joe you fvckheads. I’m getting to the point where I just don’t give a sh1t anymore. Noone else does, it’s all about “getting ahead” of your fellow economic units. You just have to be more “aspirational” Ermo!

      • “how much better things could be if people would just stop being quite so stupid”?

        That’s like wondering how much better things would be if all the problems in the world solved by themselves – not gonna happen.

        People as a whole are stupid and that is not gonna change. In fact people are quite ingenious in finding new ways to be stupid, which I must admit to be pretty impressive…… I mean, just look at the sushi pizza thingy below!!

  2. Something to ponder ….

    “Prof. Philip Mirowski keynote for ‘Life and Debt’ conference” [ https://www.youtube.com/watch?v=I7ewn29w-9I ] — you can jump ahead to minute 35:00 or so or if you have a short attention span jump to minute 49:00 and the slide “Proof of Concept Underway This Year” — shows one solar-radiation management stratospheric [SRM-S] proof of concept, which Mirowski discusses in his presentation.

    The slide at minute 35:00 of this presentation:

    “Neoliberal Biopolitics
    1) Short-term holding action: Global warming denialism {agnotology}
    2) Intermediate term: Immobilize more direct carbon emission abatement through elaborate carbon trading schems.
    3) Long term utopian: Foster entrepreneurial attempts to restructure and re-engineer Nature through commercialized segment of scientists under science fiction scenarios of planet geoengineering.”

    suggests the danger of planet geoengineering.There’s too much potential profit there and so many ways to make things — bad as they are — much much worse.

      • Kudos on taking the time to evaluate the perspective, regardless of previous positions, alas its information – you – decide.

  3. Did anyone catch the triple J hack program that’s just finished? I missed it but apparently it was going to be on the crumbling apartments. Could of been good.

  4. … RETAIL FOOD TRENDS: Where local government costs and performance allow it …

    Dinner dash: The convergence of supermarkets, restaurants and takeaways is gathering pace … UK Telegraph (behind paywall)

    https://www.telegraph.co.uk/business/2019/07/30/dinner-dash-convergence-supermarkets-restaurants-takeaways-gathering/

    Supermarkets have been stealing lunchtime share from fast-food restaurants as more people swap to cheaper meals out …

    If you’re ever in China, it is worth popping into a Hema store, tech giant Alibaba’s hybrid shop.

    You can eat food cooked in front of you – delivered by robots to your table – pick up your click and collect order in-store or do a regular grocery shop while staff roam around filling bags with online orders to be delivered, along with takeaway dinner, in 30 minutes to postcodes nearby.

    It is a good benchmark, albeit more advanced, for what is happening in the grocery and takeaway arena at home. The line dividing them is increasingly blurred as shoppers become more demanding. … read more via hyperlink above …
    .
    .
    … The above won’t be happening in the inaccessible and excessively expensive Christchurch’s former central area … The Bureaucrats Bog…

    Christchurch’s CBD is still struggling, businesses say | Liz McDonald | Stuff.co.nz

    https://www.stuff.co.nz/the-press/business/the-rebuild/114084571/christchurchs-cbd-is-still-struggling-businesses-say

    … extract … ( just one horror story of many … ) …

    … “The costs in the central city are horrendously high. Rates cost a hell of a lot. It’s very hard work for these guys getting established.” …

    … High land values and that rating differential bring central city business rates up to about $60 to $80 dollars per metre annually

    This equates to as much as $20,000 a year, of $400 a week, for a medium-sized 250sq m store or cafe. … read more via hyperlink above …
    .
    .
    … with the accelerating ‘flight to affordability’ for both residential (check 2019 section http://www.PerformanceUrbanPlanning.org ) … and commercial, as they strive to lower costs and enhance performance to meet consumer demands … knowing that if they don’t, they wont survive …

    https://www.macrobusiness.com.au/2019/06/links-13-june-2019/#comment-3367563

    Have you checked our Christchurch New Zealand commercial rental trends lately ? … read more via hyperlink above …

  5. HILDA shows that neoliberalism continues to kick goals; more mental illness, more poverty, more stagnation, less welfare.

  6. The Beetrooter Advocate

    Well. At least last time I got a “Bye bye maggot.”.

    It’s the personal touch that counts you see.

    • Lol. Amateur is right. Stealing paintings from an office!

      You’re meant to wait until you’re in power yourself. Then you steal the whole office block.

      (Have it rezoned for apartments, sell it to foreigners and get yourself an Order of Straya for good measure.)

  7. Big US consumer confidence print, would be nice if AUD keeps tanking. No FED rate cut would be hilarious.