Macro Afternoon

A mixture of solid advances and staid scratch session across Asian share markets as we start the week post US employment print on Friday, which should set the tone for the month ahead, but there’s so many other catalysts – and volatility measures like Trump’s tweets – that are pushing this once solid economic event aside.   Gold has hung on despite a largish selloff on Friday while the the Australian dollar continues to build above 68 cents as housing finance comes in much stronger than expected.

The Shanghai Composite is the best in the region, up 0.6% to firmly advance above the 3000 point barrier while the Hang Seng Index has fallen back slightly to put in a scratch session, closing at 26683 points remaining somewhat overbought:

 

Japanese share markets have done well despite a stalled Yen with the Nikkei 225 closing 0.5%  higher again to 21318 points making another new daily high. The USDJPY pair didn’t move on the normal Monday morning gap open and is settling nicely just below the 107 handle with a very tight trading band:

The ASX200 pause its recent solid run, putting in a scratch session to finish where it started at 6648 points despite much better housing finance figures, possibly pulled back by the ever stronger Australian dollar. The Aussie is building above the 68 handle as momentum starts to get a little overcooked:

S&P and Eurostoxx futures are barely moving however with the S&P500 four hourly chart still stretching like thin butter over toast to get to the 3000 point level again:

The economic calendar starts the week with the latest monthly GDP print from the UK.

Comments

  1. gold is at crossroads now. all indicators point down but it can easily go up as well. Sentiment is down but sentiment can turn up in an instant.
    My view is, all things equal, price to fall further unless there is an event that can trigger a hike.. There will be no deal between China and US as neither side will be willing to accept the terms of the other and that will be the next catalyst.
    In the meantime we need to keep an eye on twitter.
    rate cut by the FED will also trigger price of gold to spike as FED spends another of the very few bullets left.
    Long term only solid economic numbers from EU and US indicating global economy is recovering can force price of gold to fall substantially.

    • Some Fed cutting is priced. Will take proper bad news to send it up. I am waiting and if we get two weeks without bad news I’ll think about a buy!

      • The Traveling Wilbur

        Buy the rumor, sell the fact, has been the applicable adage for investment strategy since Clinton didn’t get elected.

        Shame trading that strategy is the last thing I’ll ever have the intestinal fortitude to do. Might help others. Maybe. (i.e. if buying in 2 weeks, don’t wait, get in early or BTFD)

          • that is how I think this will play out but I already started to build small stake in SAR. Tomorrow will add more if price dips below 3.35 and will try at AMI, SBM and PNR if prices drop at levels I think is safe to enter.

            btw – ALK – wished I did not sell. lol

          • The Traveling Wilbur

            Will see the price of what fall steadily? If bonds, agree 100%.

            And if it goes all wrong, blame it on RIO. 😋

          • The price of gold Wilbs.

            I agree bonds will also be a buy if yields rise steadily.

            Both of the above are based on the confident belief that plenty of new bad news is ahead of us, but I’d like to buy with a better amount of space to the upside.

            Or to put it another way, it’s speculative and I’ll probably wuss out anyway. (“Intestinal fortitude” lol).

    • The judiciary committee are gearing up to impeach, pushing a Watergate like hearings, that might push Trump to escalate

    • We are very sorry to inform you, but the Apocalypse has been cancelled for now. It shall resume soon though. Thanks for your attention.

  2. gold is at crossroads now. all indicators point down but it can easily go up as well. Sentiment is down but sentiment can turn up in an instant.
    My view is, all things equal, price to fall further unless there is an event that can trigger a hike.. There will be no deal between China and US as neither side will be willing to accept the terms of the other and that will be the next catalyst.
    In the meantime we need to keep an eye on twitter.
    rate cut by the FED will also trigger price of gold to spike as FED spends another of the very few cuts left.
    Long term only solid economic numbers from EU and US indicating global economy is recovering can force price of gold to fall substantially.

  3. alwaysanonMEMBER

    I am about to capitulate after over a decade of renting and saving. Getting our unit inspected and being judged by a 22 year old agent for not cleaning the glass enough in the bathroom seriously is wearing thin. My wife and I are looking at a solid and recently reno-ed 109 year old terrace in inner-west Sydney ~4km from CBD. I figure no strata and they don’t build them like that anymore. I shudder at the idea of paying the $1.6 – $1.7 million for it I think it’ll go for though – but we are in our late 30s so if we are going to do it we are running out of prime income-earning years to do it.

    https://www.realestate.com.au/property-house-nsw-forest+lodge-131846198

    We’ve saved a good deposit, don’t have kids and are earning ~$350k/year before tax (I took a new very well paid job in tech a couple years ago but I am not sure how many more years I’ll pull that kind of income) but will still need to borrow a million after stamp duty etc. We went to the open house on the weekend and there were ~40 groups there with all the usual suspects – gay couple with two incomes and no kids, boomer parents with their little princess they’ll be backing or buying for, lots of boomer investors, a couple young families. It was a bit stressful seeing all the interest.

    The auction is in two weeks and it’ll be our first time bidding on anything. Anybody want to talk me out of it? I really don’t want to be the greater fool but ~14 years of renting in Sydney has worn us down. I am worried about being swept up at an auction into overpaying though. I just know that me buying will be me ringing the bell at the top of the market/bubble and I’ll feel like an idiot…

    • Your crazy you should have bought a few months ago if you were this close. Two at work just bought for FOMO believe it or not and overpaid nicely. I said why didn’t you buy a few months ago when they couldn’t give a house away in this area anyway and I got blank stares. There is massive herd mentality with houses, it will never ever flatline for long, either up sharply as in now or down sharply as in last year. This is not a rational market its filled with female emotions

    • Why not buy in a regional area using your cash , be debt free and have money left over after your purchase ? Then you can enjoy your life without the unnatural dictate of debt hanging around your neck.

      Finding somewhere with appeal in the regions will grow as white flight compounds the numbers of boomers and young families getting the fack out of Sydney to find a more fulfilling life of less debt burden, more space and a more compatible culture to enjoy for themselves or in which to raise their kids.

      I’ve avoided cities since the early ‘90’s and life couldn’t be better.

    • “ I just know that me buying will be me ringing the bell at the top of the market/bubble and I’ll feel like an idiot…“

      Yep that’s pretty much my position. That, and the fact that all the houses for sale in my area are pieces of sh!t at a million plus bucks apiece.

      What to do. What to do.

    • boomengineeringMEMBER

      W B . Money goes from the impatient to the patient. Why not wait a bit longer, you won’t have to for long. The end of this year will tell you everything.

    • lol, I had the exact same agent-tuttuts-shower-glass experience.

      not quite enough to get me to buy now though. 😉

      • Bah… had that, and I sent them the pictures of how found it in the entrance report. They went very f*cking quiet after that. Their tut-tut-ing was over screeens which were clearly miles cleaner than originally.

        Also, on the way out I emptied half a liter of hypochlorite and sodium hydroxide gel from Aldi on the walls in that shower… took care of all the lime deposits quick-smart. Same for the toilet. (careful with that thing though, it will chemically burn you if you handle it without gloves) …. spray on walls, leave for 30 minutes, rinse down/flush toilet, job done.

        • They should have kept your bond on environmental terrorist grounds! Being a scum renter, you should be scrubbing your fingers raw to fix these things!

      • Our shower doesn’t even have glass lol. Just a shonky $20 plastic shade lol.. when it gets ugly enough we turf it and replace it. I am wondering what the agent will pick at when we leave. The house is such a dump it’s gonna be quite a laugh.

    • ErmingtonPlumbing

      Mate you’ll get yourself a 54 year old house in Ermo for half a million less than that 109 year old sh!tter!…2 x newer!

      Once you move in I’ll introduce you around to the fellas up the Bowlo.

    • Apply for jobs in the US, a city like Atlanta, you can get a fully renovated house on a big block in a nice tree lined street a short walk to a train station within 5 miles of the CBD for <US$250K. I brought a couple houses there this year and have a highly recommended agent. Last time I rented in Sydney the landlord was going to withhold part of the bond for unclean mirrors, I went full schizo threatening legal action and that I'd smash a hole in the wall, worked well.

    • innocent bystander

      I am worried about being swept up at an auction into overpaying though.

      well, that’s the easy bit.
      you set your max price before auction.
      even write it down on a piece of paper and put it in an envelope and take with you.
      then, just don’t go past that.
      besides, your max limit is set by your max loan, but in reality it should be set by what the property is worth to you.

      on the other hand, I think your nuts spending that sort of dough on a terrace (attached?) but then I thought Sydney was a rat race when I left, and that was in 1975

    • China PlateMEMBER

      Unfortunately history shows, in Sydney at least, that in time you’d be ahead. Even if you purchased at the height of the last boom things are looking to be moving in your favour now. Under water yes but perhaps not for too many years going forward.
      When it comes to Sydney property the old adage “bite off more than you can chew and chew like mad”. It seemed to have worked over more than a five year time frame, time and time again. The above I say with a heavy heart

      • I’ll remind you of a well worn Herb Stein saying: that which isn’t sustainable will stop.

        How do I know when it will stop?! (I hear you say)

        Well, there are some clues: like zero rates, negative yields. A world so abnormal it’s a wonder people aren’t running down the street screaming in terror. The time to ride the bubble was ages ago.

    • hard to say….very small house.

      we have 975k cash looking to buy in brisbane atm…up to 1.3 buy still balking tbh

      i would still rent and wait it out. why live in sydney? imagine sydney in another 20 years? ! If you move within the next 1-2 years it will cost 10% purchase price by the time you look at stamp duty etc etc

    • robert2013MEMBER

      Maybe you could instead negotiate with a landlord to get the cleaning done by a professional such that they take up problems with the cleaners and not you. What’s the end goal? I think most happiness comes from a good family life in a good community of people who care about each other. If the house gets you more of that , then it’s worth it.

    • SnappedUpSavvyMEMBER

      Get the place, enjoy it, and in 10+ years it’ll be worth more then 1.7

      BUT check for rising damp, that’s an absolute bitch in those old terraces and hard to kill

    • Hindsight is a wonderful thing. I’m in the same spot, and about to capitulate to fomo. Should’ve listened to reusa and bought months ago. Didn’t predict the libs win and the crazy surge up, it’s gone up 10-15% in eastern melb in the space of 3 months, and mainlanders are back outbidding everyone. [email protected]#$ this country.

    • Make an offer before auction, of the most you’re willing to go to. If they reject it move on. Don’t go to auction, they are crazy. People lose their friggin minds.

      Might be good to get a buyer’s advocate to find a house meeting your needs and with your budget in mind. You can close a deal on properties before they hit the market.

      Personally I don’t see the market booming for long this time. Seems some expect rates to be below 0 soon and are bidding accordingly, but I think that’s foolish.

      I hate renting, but… It’s not so bad when you really think about it. I’d leave Sydney before buying at these prices. In fact I am leaving. I’m done with it. Yes the harbour is nice, but outside of that it’s dead in the water.

      Like you I’ve been earning gold in IT for 10 years, but not sure how long that will last. It all changes so fast that you have to keep relearning or you’ll be out on your arse again.

      You can always rent it out I suppose if you can’t afford it and move in with family in the short term if you have to?

      I am also looking to buy, I’d offer to go to auction with you for advice, but you don’t need a bear in your ear. Hah.

  4. NEW ZEALAND: Following the effective burial of the idiotic Kiwibuild, Prime Minister Jacinda Ardern is still oddly confused about housing affordability issues. Why ?

    Prime Minister Jacinda Ardern, against Treasury’s advice, sees KiwiBuild as the ‘biggest lever’ the Government can pull to improve housing affordability … Jenee Tibshraeny … Interest Co NZ

    https://www.interest.co.nz/property/101598/prime-minister-jacinda-ardern-against-treasurys-advice-sees-kiwibuild-biggest-leaver

    Prime Minister Jacinda Ardern says KiwiBuild remains the “biggest lever” the Government can pull to improve housing affordability.

    Treasury in July advised Housing Minister Megan Woods against making KiwiBuild her priority.

    Asked by interest.co.nz in a post-Cabinet press conference on Monday whether [in the absence of a capital gains tax and the version of KiwiBuild Labour campaigned on] the Government needed to take more drastic action to lower house prices, Ardern said: “It [KiwiBuild] is our biggest lever on the affordability front.

    “The goal of KiwiBuild continues to be to use the scale of the state to increase supply, and also try and bring down – by building en masse – the price of housing. VIEW & READ MORE via hyperlink above …
    .
    .
    Back late March New Zealand’s Labour – led government had this to say …

    New Zealaned (then Housing) Urban Development Minister Phil Twyfords speech to the New Zealand Initiative Members Retreat … New Zealand Government / Beehive

    https://www.beehive.govt.nz/speech/speech-nz-initiative-members%E2%80%99-retreat

    … extract …

    … In our view there are three big challenges that have to be addressed:

    1. A broken system for financing infrastructure

    2. A planning system based on urban containment

    3. The failure of governments until now, both local and central, to actively work with the private sector to enable urban growth and expansion. … read more via hyperlink above …
    .
    .
    Access extensive background information via …

    Performance Urban Planning

    http://www.performanceurbanplanning.org/

    The Kiwibuild nightmare is over … but let the dream continue … says the PM Jacinda Ardern.

    Was Jacinda Ardern’s failing government elected in late 2017 to be confused dreamers ?

  5. GunnamattaMEMBER

    Maybe someone in ALP land has the message………

    ‘It will be deeply uncomfortable’: Mark Butler calls for ‘ruthless’ review of Labor
    https://www.theage.com.au/politics/federal/it-will-be-deeply-uncomfortable-mark-butler-calls-for-ruthless-review-of-labor-20190909-p52phg.html

    my comments on HnH’s post from a week or so ago on the same

    The question in my mind is not about whether the ALP is going into opposition for 20 years, but about the very existence of the party as a coherent political entity.

    The ALP has been central to:-

    The ultra debt propagation burdening ordinary Australians mainly though housing/mortgage debt. When in power the ALP has never done anything about banks and their behaviours, when out of power it has only been when the weight of public experience was so profound that it couldnt be ignored that they even started asking question. They have been complicit in turning what was once a world leading superannuation system into a tax avoidance scheme for the more affluent. They still dont get that and maintain the need for an increased contribution rate when it is obvious that even with the increased contribution rate [against the backdrop of ever more people not owning their own homes in retirement] a very very large number of people arent a hope in hell of funding a retirement, and that superannuation (as it currently works) simply makes no sense for anyone under the age of about 50-55.

    The Free Trade Agreements which have offshored value adding manufacturing jobs and complex service and tech jobs, and the complete abandonment of trying to craft an Australian economy which meaningfully engaged with the rest of the world in any way other than Australia as a quarry, Australia as a tourist destination, or Australia as a low value ‘education’ destination selling citizenship through University courses. All of which undermines the ability of Australians to service the debt they have taken on or been forced to take on.

    The setting up of the budget as an outlay side only spectacle, ignoring the raft of concessions, negative gears, and generally lightly examined concessions to people making deductions – all primarily to support ever rising house prices and to reward debt. Beyond that they have been equally complicit in the trashing of the public sector and the staffing of SES levels of the public service with a range of pointy headed ideologues for political point scoring purposes. All of which completely misallocates the national bequest in favor of the mainly aged present (and its beneficiaries who are all too often wealthier) and against the future of Australia, which is increasingly held to ransom for non tradable inflation items now, is facing a future in precarious short term jobs, and has asset prices (notably houses) priced out of their reach, while needing to tax the living shit out of them to support those entitlements in the short term future, for those aged Australians not in on the great national economic redirection, and which they themselves arent a hope in hell of ever getting.

    The population ponzi which has been used to give the appearance of economic substance in place of the above, and the whittling of Australia back into little more than a quarry with some nice beaches and tourist spots, which is the genesis of our infrastructure own goal. The population ponzi clicked into gear in 2006 (Vanstone was Minister) but then was turbocharged by Rudd as Prime Minister and has seen Australian Net Overseas Migration jump from a 30 year average of about 80k per year to running endless ponzinomic intakes of 250k per year, all backed by an ALP imprimatur to suggest anyone questioning the above dynamic is racist..

    The complete trashing of a once well respected education sector in the name of providing a ponzinomic backdoor, which is at the same time central to the only means ordinary Australians have of making themselves more globally competitive, but which has instead – on the back of the worlds most expensive university degrees, been used to make them ever more debt burdened, and ever more likely to be educated (expensively) in some field which is a national misallocation of resources at a policy level and an embittering disaster for too many at a personal level.

    The complete and utter trashing of any suggestion that binding Australia to a narrative where China is our major destination for commodity exports, while increasingly becoming a strategic threat, may have downsides for the national interest.

    The white hot iron up the anus of ordinary Australians embedded by our gas pipeline monopoly and liquefecation for export policy combined with our electricity generation and transmission policies. The ALP was the genesis of of policies designed to give the (cheap electricity creating) gas unused in Southern Australia over to exports. It should share the blame along with the imbeciles in government, for the fact that Australia currently has the worlds most expensive domestic gas, while it is the worlds largest gas exporter, in a global market awash with gas. Leaving the only real beneficiaries as the amortizing tax avoiding builders of white gas plant elephants in QLD.

    The trashing of Australian respect for Australian political process with an endless bipartisan array of politicians obviously in the game for the moolah and the post politics sinecures. Sure the LNP has the lead with Bishop et al, but the Conroy, the Fergusson, the Dastayari (and on and on and on) has anchored into the minds of the electorate that politicians are a batch of self serving psychopaths regardless of their branding.

    This isnt a party going through a rebuilding phase – it has been doing that for a generation. It is a party looking for a merger partner and at playing games in in far flung exotic locales away from the main supporter base, packed to the rafters with self serving psychopaths – again a different brand to the LNP self serving psychopaths but self serving psychopaths they remain. My overriding suspicion at the moment is that the Albanese version of the ALP are are thinking that if they tank a few issues then maybe they’ll get some draft choices and public sympathy. They are socio economic frauds.

    Ordinary Australians need only ask themselves – does the ALP look like the answer to Australia’s malaise, or is the ALP only going to add to Australia’s malaise if it comes to power and feed us the same specious pap the LNP is already feeding us?

    …………………………………………………………

    I didnt vote ALP last time, and havent voted ALP in 21 years. Every time an election has come around I have found myself wondering if the ALP is genuinely serious about doing something serious to help ordinary Australians. Not something specious like facilitating giving them more debt, not something tantamount to complete bullshit like Free Trade Agreements signed sight unseen, not something designed to juice stats like more population ponzi, and not a distraction for most Australians (no matter how important – and ‘right’ for some) like same sex marriage. But something serious, meaningful jobs, which have a realistic chance of enabling Australian working types to be competitive in a global sense. Meaningful tools to further that competitive position like an education system which provides skills for ordinary Australians first, and provides payoffs for Universities or foreign students second. Like energy prices which take something which could easily be deployed as a strength which could better the competitive position of Australians – but under policy which has been aided and abetted by the ALP has become a noose around the neck of Australian employers and their employees. Water usage policies which guaranteed water for producers and consumers of meaningful economic contributors such as farms and inhabitants of towns down the Darling and Murrumbidgee, and the environment – not policies which had had become a plaything for speculating Argentine billionaires or tax avoiding Australian politicians.

    If there is 10 watts of sentient thinking power anywhere inside the ALP squaring up to some of these types of issues should be a key part of any ‘review’ of the outcome of the last election.

      • As an MB poster, reading ZH comments is similar to hanging around with a full blown alcoholic. It’s a good way to trick myself into believing that I don’t have a problem.

        • The Traveling Wilbur

          ROFLd.

          Though doubly funny for me as I’ve spent the last couple of weeks contemplating that I’m drinking waaaaay more than usual, probably in part thanks to MB, but had also been congratulating myself on steering away from the increasing number of ZH links being posted here.

          I wonder which would go first. What’s left of my brain that’s still able to comprehend and process ‘normal’, or my liver?

      • To paraphrase Gene Spafford: Zerohedge comments section is like a herd of performing elephants with diarrhea — massive, difficult to redirect, awe-inspiring, entertaining, and a source of mind-boggling amounts of excrement when you least expect it.

    • innocent bystander

      I often think Boris is like Trump – appears to be a bozo but just might get some things done.

      also, how can you negotiate with the EU unless they think you might do a no-deal exit?

        • Sheez …

          Again the U.K. triggered A50 on a political lark to keep Corbyn from getting elected, then proceeded to make demands, when that blew up in their face they threatened to become an unfettered tax haven. Why the hell should the E.U. give into the bad faith actors that are the ultras that throw their toys out the play pen for its bases consumption and then say its all the E.U. fault …. sigh …

          And it one wants to square that the U.S. has a long record of being a rather domineering negotiator aka our way or the highway, lets see how that rolls when a no deal leaves the U.K. without any leverage to bargain with … eh …

          Lest we forget post GFC the U.K. has enforced austerity as the solution to all ills whilst privatizing more and more of its social goods …