Macro Afternoon

Markets are in a much better mood as the Christmas tariff surprise by Trump is alleviating shorter term concerns over the US/China trade war. Tonight however, the focus will be on Europe as the latest GDP print for the EZ will follow last night’s dreadful German ZEW Survey. In Asia today, the slump in Chinese industrial production figures saw the Aussie dollar drop lower while gold and other undollars hung on following the recent return to strength for King Dollar.

The Shanghai Composite has rebounded following the tariff abatement, closing 0.4% higher to 2808 points while the Hang Seng Index is putting in a scratch session, although is selling off going into the close, currently down 0.1% to 25265 points. This keeps it near the recent daily lows from last week, with the daily chart spelling a lot of trouble ahead if it breaks below 25000 points proper:

Japanese share markets did much better as expected as Yen sold off sharply overnight with the Nikkei 225 clawing back its previous losses to close 1% higher at 20655 points. The USDJPY pair is remaining firm here after last night’s breakout, still just above the 106.30 level but not advancing any further:

The ASX200 had a solid session, closing 0.4% higher at 6595 points, not quite able to breach the 6600 barrier. The Australian dollar has fallen back below the 68 handle after absorbing the latest Chinese industrial production figures, as the pair remains unable to breach last Friday’s highs:

S&P and Eurostoxx futures are up only 0.1% or so with not much confidence translated from the firmer Asian session with the S&P500 four hourly chart still showing significant resistance at the 2930 point level to clear to turn this dead cat bounce into something sustainable:

The economic calendar continues tonight with more big releases to watch, namely the UK CPI print for July, plus the 2Q GDP print for the Eurozone, plus we get the latest DOE oil inventory report.

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  1. … NEW ZEALAND … ANZ Bank …

    And what don’t we know ? …

    Valuation shows ANZ’s Hisco mansion sale under by $4m |

    ANZ may have given former chief executive David Hisco’s wife a $4.1 million discount when it sold a house to her, a new valuation suggests. …

    … concluding …

    … Jilnaught Wong, professor of accounting at the University of Auckland, said the house sale looked “clearly” to be a related party transaction and should have been reported as such.

    Criminal and civil penalties are possible if its found ANZ directors, including Key, gave false or misleading statements to the Reserve Bank.

    ANZ has also been ordered to get two independent reviews, after the Reserve Bank asked for assurance that the bank “is operating in a prudent manner”. A spokesman said those were under way. “We are unable to comment on the detail of the reports at this stage. However, a summary of each report will be published once it has been received by the Reserve Bank.”

    The bank has been under pressure for months, with a severe reprimand by the Reserve Bank and calls for Key and Hisco to leave or be forced out.
    Former ANZ CEO David Hisco’s St Heliers house was worth $11m – valuation … NZ Herald

    Second valuation of ANZ Hisco mansion suggests a $4.1m discount for ex-CEO’s wife … TVNZ

    • And what don’t we know ? …””
      Lots! And not just about local banking and politics!. Ol’Jeff may not be dead…

      “Prison worker’s 4Chan post 10 minutes before news of Jeffrey Epstein’s death hit media….
      Prison worker claims an unmarked van and unknown military personnel showed up at the Metropolitan Correctional Center Friday night where accused sex trafficker Jeffrey Epstein was being held in and “switched him out” with a dead lookalike….., based on widely circulated photographs, the nose and left earlobe/hole of the dead guy who was wheeled out of the prison Saturday morning does not match Jeffrey Epstein’s actual nose or left ear. By comparison, the man wheeled out on a stretcher is simply not Epstein.

      • interested partyMEMBER

        And now……all evidence, that was contested by very high level people wanting secrets kept and sealed, can and will be admissible, meaning all parties named are now open and exposed.
        Bring it on.

        Dead jeff or hiding jeff…..still the same.

  2. So, I got a lovely email from NBN Co. today informing me that the NBN is now available in my area. Funnily enough, having lived in this area and been connected via the NBN for that entire 15 months, it wasn’t news to me. But there was a link to help me select the right speed for my usage, which I of course clicked. Cue mirth!

    So, for what I’d consider most normal households, in the near- to mid-future to need, the only real option is “Premium Evening Speed” plans, which offer “Typical busy period download speed should be: Minimum 60Mbps*”

    Right below this is a list of things that they claim will affect my speeds, being as follows:
    – The time of day, as high-traffic times like the evening can cause speeds to slow
    – The type and size of the content you are downloading or uploading
    – The number of people in your premises actively online at the same time
    – The provider, plan and speed tier you choose
    – The way your specific provider configures their network and manages traffic
    – The nbn™ access network technology available at your premises
    – How nbn configures the access network

    HA! What a list!

    There are basically only two things that physically limit the speed I can get.
    1) The nbn™ access network technology available at your premises, and
    2) How much I’m willing to pay.

    That’s it. Everything else is a product of those two things. Only one of them I have any control over. And guess what? The physical limitations of my FTTN connection over 830 m of copper is an absolute maximum of 54 Mbps which translates to a realised 46.5 Mbps under actual working conditions.

    What a complete f’ing joke.

    P.S. If you need me, I hear telegrams are becoming quite fashionable again, and I’m sure hipsters are going to be fully into DIY telegraph systems in the not to distant future. How good would that be? Ordering a deconstructed sushi pizza and craft beer in recycled antique mason jars over genuine copper from your local Uber Eats pedal-slave. Now you’re talking!

    • The Traveling Wilbur

      As (apparently) the only other person in the room who appreciates the maths and the effort in that (and the ‘original copper’ pun, apparently), thank you. +1. I just wish it was +43.5

      (mbps). For you.

      • Ours has made 39-40,on rare occasions.
        Currently running at 0.98.
        Telegrams looking exceptional.
        Not streaming a lot, back to dvds,played through x box.

      • The Traveling Wilbur

        You should film yourself doing that (having to watch through the XBox) and then upload it to YouTube so you can gener




  3. Eurozone Industrial Production SA (M/M) Jun: -1.6% (exp -1.5%; R prev 0.8%)

    – Industrial Production WDA (Y/Y) Jun: -2.6% (exp -1.5%; R prev -0.8%)

    Europe is in bad shape.

    • German 10y yields drop to fresh life-time low of -0.62% as German economy on recession course. GDP has contracted by 0.1% in Q2 2019.

      Germany is sucking wind

      • UK 2s/10s yield curve inverts for the first time since 2008.

        UK Q2 GDP contracted 0.2%

        Poms in competition with the Germans.


        Not one to leave the mother country hanging, the Yanks get onboard the 2s/10s inversion train.

      • The Traveling Wilbur

        Your training is complete, Skywalker. Join me, and we shall rule the Empire together.

      • The Traveling Wilbur

        DAX getting another rogering. Gorgeous.
        Aus 2yr-6yr differential: 0.000.


        fckn. Yes.
        And yes, Nikola, Yes.

      • 😂👍🏻

        Copper and Oil getting trashed too.

        It’s almost like Trump’s jawbone has been hit by an economic Mack-truck.

      • The Traveling Wilbur

        I missed the jawbone. At Ekka getting fat and happy.

        It would appear what I missed was a blip that wasn’t even worth registering. Which is how I hope to define his Presidency in 2 years. *mic drop*.

      • Yahoo Finance was story of a Danish mortgage with a negative interest rate … first in the world apparently. On my phone so cant copy link. Anyone? But the world seems increasingly upside down. Humorously the article said it wasnt all the borrowers way .. they have to pay fees and there is the risk of property price fall. Such a different tone to here.

    • BAML: “For the ten [2/10] inversions back to 1956, the S&P 500 topped out within approximately three months of the inversion six times (1956, 1959, 1965, 1973, 1980, and 2000).

      The S&P 500 took 11 to 22 months to peak after the other four inversions (1967, 1978, 1989, and 2005)

      Within 3 months sounds about right. With record treasury issuance and no foreign CB bid, equities (already treading water) will be starved of liquidity just in time for another historic September/October shake-out. Is the top in?

  4. Some anecdata.

    I just had dinner with an old mate who’s visiting town. I’ve known this guy for 35 years. He’s extremely smart and owns and runs a 50 man software company doing quant things for banks and insurance companies worldwide. Mainly in Europe but also in Australia.

    He knows lots of stuff and understands lots of stuff, and has made a very good a living from it and I respect his views in this area more than anybody else I know.

    His considered opinion that he offered quite casually was that Australian houses and foreign and domestic equities are both going to be much, much cheaper in a couple of years. He’s not at all bearish by nature….quite the opposite, so this was a pretty sobering thing to hear.

    Good news about house prices I guess, but the collateral damage is not gonna be pretty.