Australian dollar tumbles into growth black hole

The Australian dollar has been falling all day as weak capex data confirmed the economy has been sucked into a deep growth black hole:

Still, bond yields have stopped falling because…well…just because:

XJO is toying with a major peak to match 2008:

Dalian is soft again:

Big Iron is dead cat bouncing today. FMG near $8 is a genuine red hot short candidate:

Big Gas is enjoying the oil bounce:

Big Gold is consolidating its recent run:

Big Banks can’t run higher unless yields run lower:

Big Reality whores on:

The Recessionberg growth hole is very large and a few house price rises will not fill as bulk commodities fall away.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. That bond yield line has gone remarkably flat and stable.

    Would the RBA (Or anyone else) have any particular interest in keeping yields above a certain level? I can’t see why, but still…

    • From around Feb, draw a line roughly along the tops. Then do the same along the lows.

      You’ll find it is still guiding down the channel. Like has happened at various times over the current bull run, after a period of consolidation, it will eventually break lower to re-touch the lower line.

      We have not seen the RBA cut enough, or on the flip side, seen a meaningful reflation in the Australian economy for yields to rise.

  2. There is a real possibility of a short covering rally here if GDP comes better than expected.

    We live in times of AFP raiding journalists for questioning the government. Wouldn’t put past Frydenberg sending the goons to pay the ABS a visit.

    • I can’t see it beating expectations but bring on a rally (bonds or AUD). Just another buying opportunity.

  3. Sigh………… it WAS falling until you posted about it …………. I assume Europe saw your post and hit the buy button………….

    • Reckon the Reserve is meddling honestly.

      Its just so consistently being set and held at specific prices.

  4. Down, down, down it goes.
    Aud 60c to the USd by December or earlier?

    Like the Titanic.
    The SS Australia & SS New Zealand- both smashing into the iceberg of ‘North Asian trade’ dependency (53% – China, Korea, Japan etc).

    The third class compartments of both the SS Australia and SS NZ choked with a fetid overload of migrant guestworkers – no lifeboats, no buoyancy left in either as the cold hard waters of a long overdue and decade long recession rush in unchecked,,

    Down, down by the bow.
    As China & North Asia bow to the power of the reinvigorated US 🇺🇸Trumphiant👌🏻 superpower that smashes them into a new world order on trade.

    China has to fold to the US – or it will go into full revolt by the 128 million Chinese dependent on US exports.
    Nowhere else to export their junk to.

    Japan, South Korea,Taiwan also have to fold to the US – if they want US military protection against the fascist Chinese imperialistic expansionist threat.

    And the victims of all this?
    Our Australian & NZ commodity exports to north Asia.
    53% of our exports.
    Along with Indonesia, Brazil and Qatar & others who are also dependent on their commodities & energy exports to North Asia.
    Those exports wiped out & replaced with US plant, US Gas, US Ore, US Coal, US Food, US bio tech.

    Trump isn’t about reducing US imports from north Asia.
    He is about North Asia massively increasing by hundreds of billions their imports from the US.

    That’s the ‘trade balance deal’.

    And Trump is going to win in 2020 (an ECV majority of at least 65%+ up 8%) so China & North Asia can’t delay or hope the Democrats will get elected & then repeat fObama’s weakness in the his failed Asian pivot or trade imbalance.

    Donald Trump holds all the cards.
    Militarily ✔️
    Politically✔️
    Economically✔️
    And trade value✔️
    US exports in commodities to China are much cheaper than China or north Asia’s current suppliers.
    US gas for example is now 19% cheaper than Qatar or Australian Gas, even with the Chinese tariffs.
    US Coal & Ore is better & cheaper than Australian, Indonesian or Brazil Coal or ore due to automation & shipping costs.
    US food exports are better & cheaper than South Pacific food.
    US plant is better & cheaper than European or north Asian plant. US trucks & vehicles are equal to or better than north Asian & European product.
    US tech and Bio pharma IP is almost all US controlled and China eventually has to concede on their IP theft.

    There is nothing that Australia exports to north Asia that the US hasn’t got massive capacity to export to China and north Asia in a ‘trade balance’ deal – that is better, cheaper and less cost & distance to export.

    Poor little NZ is even worse.
    They only export 2 things – milk powder to the Chinese and & passport stamps to the third world to get into Australia on a SCV – so are even more vulnerable..

    So when the US forces ‘the deal’ with Japan, Korea, Taiwan in ‘more US exports for protection’ and then China in the forced US China trade ‘rebalance’

    The Australian & New Zealand exports – 53% of our exports will be savaged.

    Both Australia & New Zealand are already in heavy debt.
    Both countries will face a cost of living explosion as the AUD & NZD falls thru the floor.
    Both face mass unemployment – over 10-15%
    Both have a Housing market that is cratering / negative equity & an indebted mortgage holder unable to repay.

    -/-

    And so what will Australia & New Zealand do about immigration including the 6 million plus migrant foreign nationals on foreign passport (PR and TR or NZ equivalent) in both countries?

    That’s what we squandered our ‘resources & China trade boom’ on.

    6 million migrant guestworkers that suck up our welfare & Medicare, or work & live illegally.

    A $150 billion welfare & health care burden & illegals foreign run black market sub economy in tcountries. Paid for or subsidised by Australian or New Zealand taxpayers to these foreign nationals.

    Sort of like a crazy scheme of foreign aid to these 6 million third world migrants onshore in both countries.

    🇦🇺 SS Australia 🇦🇺
    🔻1.9 million PR – third world unskilled useless unassimilated foreign nationals Chinese Indian Middle Eastern – as a toxic economic and social burden – preying on Australia welfare & Medicare.
    🔻2.561 million TR / SCV migrant guestworkers on pretext visas living & working illegally. Chinese Indian Nepal Bangla Pak, North & South Asian, Middle East, African.
    🔻440,000 ‘tourist visitors’ – 5% of the 8.8 million estimated to be living & working illegally (DHA parliamentary submission) Indians Chinese Bangla Malays Middle Eastern.
    🔻65,000 Overstayers.
    🔹5 million third world non citizens- the bulk on temporary or visitor visas living & working illegally crammed into SS Australia..

    🔹 🇳🇿 New Zealand 🇳🇿 0.9 million third world unskilled migrants allowed in- with 280,000 then given a passport stamp to flow on into Australia on the SCV racket, and another 300,000 stacked up in the queue.

    ➡️ There is a decision point here.

    A. Both countries can immediately shut down immigration, cancel the visas of millions of migrant guestworkers – expel them as being in visa breach.
    Or simply ‘not wanted’ as a social & economic burden .
    That would be logical and commonsense.

    Or else (and is most likely..)

    B. Open the floodgates to even more third world migraht guestworkers as ‘they bring additional gdp and economic activity – each being a half or a third the Australian or New Zealand gdp average – lowering gdp per Capita, further destroying housing, services, employment, education and the standard of living.

    Until by osmosis – both countries become a mirror of the third world ghettos & slums this migrant intake was recruited from.
    Then the self imposed destruction of Australia and New Zealand is complete.