Macro Afternoon

Chinese bourses are dragging down the risk sentiment into a defensive mode given the late poor lead on Wall Street overnight, as the Brexit drama rolls on again. The possibility of an extension to Brexit to even early next year is providing a little bit of hope but both Euro and Pound Sterling are steady in early trade, as stock futures stumble.

The Shanghai Composite was unable to get back on track from the previous steady session and has fallen late in the session, down 0.6% to 2935 points, remaining well below 3000 points. The Hang Seng Index is doing even worse, down nearly 1% to 26525 points as it finally rejects resistance overhead at the 27000 point level:

Japanese share markets reopened after a holiday with the Nikkei 225 up 0.3% to 22625 points despite Yen strengthening throughout the session, with the USDJPY pair falling almost down to trailing ATR support and possibly breaking through the 108 handle soon:

The ASX200 remained steady, putting in a scratch session to close at 6673 points as the daily pattern starts to stall again. The Aussie dollar slumped early in the session and almost cracked through ATR support but has recovered somewhat to be below the mid 68 level again before the City open – watch the 68.20 level carefully:

Both S&P and Eurostoxx futures are down nearly 0.5% with the Brexit drama again spilling into the risk taking arena. The S&P500 four hourly chart is developing a nice short term bearish rising wedge with the inability to break above the psychologically important 3000 point barrier, as selling pressure builds:

The economic calendar ramps up with the August house price data from the US, plus the ongoing Brexit negotiations.

Latest posts by Chris Becker (see all)

Comments

    • Mining BoganMEMBER

      As soon as Lovey decides to go back to full time work I’ll break too. That’s the deal, because I enjoy semi-retirement and don’t need a house.

      #PigsMightFly should work here. She enjoys her spare time as much as I do.

      • That’s right. They will all fold, just like their predecessors did the time before. And theirs, the time before that.

        They will all fulfil their destinies.

        They didn’t believe me that in the standoff between supply and demand it was demand that was going to blink first. Now they get to see for themselves.

      • Ah no, buying a PPOR doesn’t count as capitulation, does it reusa?

        No, true capitulation means you buy one IP for each member of your family and 10 IPs for yourself!!

    • To be fair I’ve been trying to buy for 5 years. I finally capitulated as I had planned to move back to Melbourne, had the capital to do so without over extending and wanted some permanency for the next few years and renting another dump to save money didn’t appeal.

      Buying at the price I did meant I didn’t have to sell any toys to make it happen and now have more freedom to try a career change. So for those reasons I’m happier. I still want to see it all crumble. Since I have borthers and sisters that don’t own yet, but also buying and selling in the same market means a fall in prices makes my next upgrade property cheaper but also less stamp duty on top.

      I’ve given up trying to time the bottom, instead made a slight compromise and went for a home I like and feel comfortable in. I really think we need to see an Irish like correction but it could be another couple of years off and I wanted to own before I turned 40..

      I’m not sure what I’ll do now, bear porn just won’t turn me on the same lol..

      • Well, it’s been nice knowing you, Gav. I’ll drop of a bottle of whiskey when I’m in the area, or something.

        • I will still be here and even though I may have missed out on buying earlier because of MB advice on 1 hand. On the other hand MB advice meant heading via $USD put me up on the other side. I just got tired of winning on 1 trade but losing on another. I’d save another $50k and prices would jump $100k.

          Anyone with a potty mouth such as yours is welcome to come around and sink a few shots or a few too many shots. It would be fun even if my liver won’t agree.

          • Ah, a first, if awkward, invitation to a relations party… well done that chap! Well done, indeed! And going for the low-hanging fruit peach… well that’s shooting for the peaches stars… 👍👍😜

      • TailorTrashMEMBER

        Gavin ……you have done what you need to do at your point in life …….stuck your spear in the ground and said dammit here I stand ……….who cares what happens to house prices ……you now have a HOME …….that is what Dickhead strayans have lost sight of …”homes material …homes spiritual “. There is a real risk that one day they will be displaced persons with neither ……….I have seen it and lived it ………and it is not pleasant…..

        Now if a crash happens then your bricks and tiles should not move ……..and you and your family can watch the show from your front porch …….(hopefully floodlights and a semiautomatic not required )

        • That’s basically it, and I hope I will be healthier and happier for it too. Some things are more important than money, such as being happy where you live and your partner being happy and your own mental health and well being. I can now do things like install solar panels or water tanks – which I couldn’t do as a renter. So for me it’s not as much about winning on any trade or boating about capital gains. In fact it makes me sick to think a friend of mine bought in Bentleigh for $440k in 2004 and his house is probably now $1.2m.. if only I had done the same?

          But like you say we’ve lost track of what’s important and should treat houses as homes and shelter, not a speculative investment, I still strongly believe we should ban foreign investment or at least enforce rules around it, curb negative gearing and do something about the growing homeless problems. Watching struggle street on SBS made me realise life can be darn tough and if I have the chance to secure myself in someway I should take it. Since I honestly don’t know what is going to happen in the future with the value of fiat.

          I honestly don’t think anyone else knows for sure either. Hence I’ve made a choice and have to stick with it. I still am mber of the Affordable Housing Party and will be an advocate for change, even if it kills my net worth via lower house prices.

          1 reason I wanted a small mortgage was to pay it down so fast that the banks make hardly any money from interest off me. Since I don’t like them at all and hate giving them my money. 😁

          • We’ve started actively looking too. Our deposit is probably only 1/4-1/3 of what you had, but are planning on loading up the offset account from day 1 and can pay it down quick. Can’t see a move from the current low rate environment for at least 5 years so that will work in our favor

          • Yes I think rates are only going lower and staying there for 10 years. I’ve had $100k + worth of Euros in savings for the past 6-7 years and in Europe the best interest rates you could get on term deposits were 1%. It basically wasn’t worth it. I went backwards in terms of inflation and purchasing power.

            I see the same happening here in Australia for at least 5-6 years.

    • Ronin8317MEMBER

      It is a huge leap because now there is now a legislative requirement to comply with the Building Code of Australia. All those apartments build in the last 20 years don’t have to comply at all, they just need someone the developer pays to sign it off as compliant.

      Still want to buy an apartment now? :-p

      • But how opaque are the Australian Building Standards? I’d say pretty sh1t given the litany of failures.

        • The Australian Building Standards are in place, not for quality control of the buildings but for supply side restrictions.

    • To think Hillary is taking Sarah Palin’s shtick to a whole new level is absurdly delirious …. but then some marketing PR mob probably sold it to the DNC after they noticed how well it worked for Sarah ….

    • C.M.BurnsMEMBER

      Rather than confront the devastating absurdity of defeat before an ad-libbing game show host who was seemingly trying to lose – a black comedy that is 100% in America’s rich stupidity tradition – Democrats have gone all-in on this theory of foreign infiltration. House speaker Nancy Pelosi even said as much in a White House meeting, pointing at Trump and proclaiming: “All roads lead to Putin.”

      • C.M.BurnsMEMBER

        he saves his pithiest critique to the last paragraph, but that pretty much sums up the DNC now

    • It’s because they can’t believe their ‘neoliberal with feelings’ agenda has 1. been a total failure and 2. is hated by almost everyone.

      • ‘neoliberal with feelings’ – the old saw was Democrats ‘threaded fastener’ you with the lights down low and whisper sweet nothings in your ear, where Republicans do you in broad day light and laugh about it …

    • Presumably Tulsi Gabbard is a threat, then. Which is why she has no hope of securing the DNC nomination.

      But if she did, I’d be glad. Politics in the US is a giant pool of poison.

  1. The Traveling Wilbur

    Definitely missing the additional info on forthcoming Star Wars franchise releases I’d expect to be seeing around now. Any notable news CB?

  2. HONG KONG …

    China draws up plan to replace Carrie Lam’ as Hong Kong protests drag on …The Guardian

    https://www.theguardian.com/world/2019/oct/23/china-draws-up-plan-to-replace-carrie-lam-as-hong-kong-protests-drag-on-report

    China reportedly has plans to replace Hong Kong’s embattled leader, Carrie Lam, with an “interim” chief executive once protests have settled down.

    The news emerged as the murder suspect whose case prompted the original extradition bill that in turn sparked the protest movement in June was released from prison on Wednesday.

    Citing people briefed on the discussions, the Financial Times reported that Beijing plans to replace Lam next year. The chief executive has become a lightning rod for sweeping protests over the past four months, stemming from fears Beijing is tightening its grip and limiting the freedoms enjoyed under the “one country, two systems” principle enshrined when Britain handed Hong Kong back to China in 1997. … read more via hyperlink above …

    • Mining BoganMEMBER

      When the EU dissolves in violence everyone will realise all this Brexit talk has been a waste of time. Everyone is going to be on their own anyway.

      Re Brexit…all the old Italian immigrants in my area are cheering it on. They want Itexit bad and hope it will follow forthwith. They also hate what is happening to Straya. Very much.

      • Lmmao … the EU was a trade block against U.S. neoliberal corporate machinations, U.K. as poodle, EU is more Ordoliberal late stage Hayek, but hay its all about liberty and freedom …. chortle ….

        • No, wrong. The EU was an attempt to stop Germany and France going to war every generation and destroying Europe every generation, just like they did in 1940, 1914, 1870, 1812, and countless times before that, before they were even called that…

          • Good grief have you ever read any of the white papers on the establishment of the E.U. pre and post unification, that’s not to say the monetary union was always going to be contentious in deflationary periods. The last thing it was about was continentals going to war and as I noted the U.S. interests required a more united front. Even so mainstream economics and monetary theory flow through all, hence austerity post GFC setting up all kinds of social dysfunction which the right wing likes to fat finger anyone but themselves.

          • Yeah nah.

            Basic idea was to wed the two European powers together economically so they would stop wrecking each other. All the rest is just method and details.

          • Look that might be your personal opinion arrow but nothing I’ve read or experienced even comes close to it. I would have to assume its just what pops into your head and would be unable to substantiate it.

            This is made even more absurd by those that supported Boris and Co way back in 2016 and their inability to formulate a structured deal and instead went with fantasy. Now that is blowing up in their faces they squeal about the E.U. not handing it to them on a silver platter, all self inflicted.

            Please provide any documentation that supports you claims from right field please.

          • It’s pretty common knowledge Skip.

            Let’s start with the EU’s own website shall we.

            “The European Union is set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. As of 1950, the European Coal and Steel Community begins to unite European countries economically and politically in order to secure lasting peace. The six founding countries are Belgium, France, Germany, Italy, Luxembourg and the Netherlands… ” etc etc.

            https://europa.eu/european-union/about-eu/history_en

          • Thanks for that its hilarious, reads like high school history, try reading the stuff about it from around the actual time and not some internet header page. I’m not talking about the Council of Europe or ECC I’m talking about the Maastricht Treaty 1992. Its similar to one talking about post WWI U.S vs post WWII U.S. because of the dominate economic views held at the time.

            Funny how the CofE was funded with monies from the Marshal fund, different time and place, then some took a hard right turn.

          • The fact that it’s written simply, doesn’t make it wrong (although I recognise that is the antithesis of your own posting style).

            I’m talking about the driving motivation behind the project. Your talking about the methodology. That’s all 😁👍

    • You gotta love the Remoaners. Rats insisting on staying on the Titanic.

      Thickest cvnts you ever met.

  3. probably nothing but I do get this feeling that tonight is the night for the markets to either go off to the races or into the abyss. just this weird feeling..

    • Off to the races this week (so I can get long gold again) and then sell off next week (or the next).

      That’s the plan.

      • hope for the same but not sure it will happen. futures don’t look good and gold wants to break and runaway. Base metals all in red.. it just feels something is going to give in.
        On the other side I still hold some gold stocks even though I did take more profit today on SAR and RRL.

      • Agreed. Haven’t had a bottle for a while but the Bernoota was always consistently good for the money. Shiraz/Cab blend.

        Taylor’s Jaraman Shiraz, d’Arenberg Footbolt Shiraz are reliable. For an el cheapo or something to give the plebs, Penfold’s Koonunga is OK at about $10.

        • SnappedUpSavvyMEMBER

          I buy so much lake breeze they made me a VIP 😁
          But for that style of heavy full bodied red there is nothing better for the money

          • I’ll give it a crack this weekend. Going camping with a big crowd. (No homos, Reus)

            I’ll let you know

    • The Traveling Wilbur

      I could tell you (but it would be pointless, as they are all locked in my wine-cellar (buffet cupboard)).

    • C.M.BurnsMEMBER

      Evans & Tate Cab Merlot
      Annies Lane Cab Merlot
      Craftsman Reserve Shiraz
      Craftsman Cabernet
      Running with Bulls Tempranillo

      all normally available at Dan Murphys and elsewhere

    • C.M.BurnsMEMBER

      and if you can plan ahead, sign up to the Pooles Rock membership, and buy cases of “the Legend” every time you’re membership obligation comes around. It’s the best $22 a bottle red wine you’ll ever drink

    • Wirra Wirra Church Block
      Nineteen Crimes
      Pepperjack
      Two Churches

      If you can find it, Four Winds Shiraz from the Canberra region. Fvck Clondakilla etc , Four Winds is my go to for a $30 treat.

    • Check out Dan Murphy’s cellar release section they have a few sub $20 reds.
      Saltram’s was always good value.
      Tar and Roses Tempranillo 2015 was great, 2016 was chalky, try the 2017 hopefully back to form.
      Bethany grenache is very easy to drink.

  4. How good is it to be a home owning pensioner couple with bank shares in Australia ?……..can’t wait for the Pension loans scheme to be administered at a negative rate like those mortgages in Denmark……….this on top of the excess imputation credits creates a nirvana on this side of the looking glass.

    • C.M.BurnsMEMBER

      dont negative rates kill bank margins ? So yes, they can operate as a high volume, low margin business, but those aren’t the kind that justify $70 per share valuations AND high dividends

  5. SnappedUpSavvyMEMBER

    Talking to a fellow car nut today, on car sales, he says, 40 odd Ferrari 458 and 488’s have suddenly come up for sale, he’s telling me Bentley’s are getting flogged, the 2 door spiv type, even told me to check out what’s happening to planes and 40ft + boats, carnage apparently, construction bust must be in full swing I’m guessing

      • SnappedUpSavvyMEMBER

        this guy is based in Sydney but he spends his days on the internet drooling over shyt he cannot afford all over the country

      • SnappedUpSavvyMEMBER

        no worries mate, I checked out some of his claim before posting, the Ferraris bit was right on, and the Sydney spiv wanna be successful developer car of choice too

    • Thanks, can’t say I’m seeing it with aircraft. Stock is low. High end boating activity seem very quiet though. Not much activity out of the large marinas on the Gold Coast, even on the weekends. Second hand jetskis on the other hand……

      I was more of the opinion that top end toys (e.g. aircraft) were doing well. But I’m not so sure – plenty of mixed signals. The top end restaurants at the northern end of the GC were packed for the last week and a half I was there and that was every night.

      • Good info jimbo

        The last convulsions of a corpse I reckon. The aircraft side of things is equity financed, largely so there’ll be delay in the downdraught there. Early days.

      • SnappedUpSavvyMEMBER

        i wouldn’t have a clue about the small aircraft he’s been watching, but I know the 40ft cruiser market is farked in Sydney, a relative of mine whose into that kinda thing backed this up

        also, high end spiv car prices have definitely come down, even porsches which are more your eastern suburbs wankers choice

    • High end cars have been stagnant for a while, but cheaper Gen X / Y classics have been powering on. Hagerty insurance talked about it a while ago.

    • Wonder if your mate might have seen a data blip from the outcome from this years personal tax returns? Update from the accountant that negative gearing does not work at all when real estate prices have not moved up. Friendly reminder that some are now or closer to paying principal + interest.

      Does he follow and track number-plates by any chance?
      For the right price this gem might be of interest.

      https://www.afr.com/content/dam/images/h/0/2/o/2/z/image.related.afrArticleLead.620×350.h02l0p.png/1515055530686.jpg

        • The Traveling Wilbur

          Yep. He was the first to set rules that allowed for the creation of masess and masses of new jobs. Thereby growing the workforce massively.

          Shame each new job meant all the existing jobs started to erode in salary vs cost of living terms over time. But you can’t have everything can you.

  6. nanutarraMEMBER

    I’ve been working on LNG tankers out of Dampier for over 20 years running gas to Japan ,China and South Korea . Lucky for us the Sua / Mua made an agreement when the project started , We’re still there , We are the only deep blue ships that still employ Aussie seafarers. It’s a final showdown to destroy unions .

    • They’re all playing the long game. I haven’t seen a cadet in about 4 years, and about 2/3 of the guys I work with will be retiring in the next 5-10 years. You can see how it’s going to plan out – ‘There’s not enough seafarers. We have to get guys from overseas’. Labor/lib will be happy to oblige and then that’ll be the end of it.

  7. A question for those in the know. If I work locally for a 3rd party logistics company that supplies gold mines offshore, how recession proof is my job?

    I know there’s a lot of variables but this is the first time I’ve worked for a company that derives nearly all of its business/income from a foreign source and I’m very pessimistic about where Aust. is headed so thinking forward before accepting a full-time contract. Bonus points for answers that differentiate between Aust only recession and global recession.

    cheers

    • Congrats on not having to work as a cook any more!

      logistics company that supplies gold mines offshore

      No idea what you mean. Are the mines in AUS or another nation?

    • I was going to say that AUD and Gold prices are the biggest variables. But I think the biggest variable is actually your role in that company. If that company decides to cut costs then is your job really required? Especially as a new starter you will have less IP than other workers, and cheaper to make redundant.

    • No idea really about the specific sector, but in both a global or local recession the AUD should crash, making an Australian based logistics company cheap for the foreign company to use, so they should keep the contracts coming. All good.

    • C.M.BurnsMEMBER

      Just about every macro analyst I read / listen to / watch, agree that gold increase in value from here, relative to pretty much every major currency.

      The gold price on a global level will, more than anything, determine your mine(s)’ future and therefore the companies that service them.

      Freddy above does make a valid point though to also consider your specific role’s long term viability and, the company policy on last in first out etc

    • Thanks for the responses, good insights. There’s been an unexpected explosion of transport/logistics/warehouse jobs on offer here in Brisbane lately and I was surprised as I expected the downturn to continue. Not sure if the abundance of choices is going to continue but I’ve found that I have many options and have to weigh them all up.

      End of the day, stoked to have a job I like and reluctant to chance my hand with another job that relies purely on domestic input/output. For better or worse I’m rolling the dice with the current mob, saving the money and planning to finish my uni degree in the next 2 years and get into that public service racket again.

      • I agree with what was said about many analyst’s views on the medium termfuture of gold. Plus if the AUD drops then internationally we should remain competitive. In addition Australia still has a great reputation for being one of the best jurisdictions for mining and while the mines your new employer services aren’t in Australia that rep is important as it includes ancillary services. Good luck and let’s hope the office politics gods smile on you! 🙏

  8. 4 hours ago

    Good news about immigration.

    The government has also made changes to the parent category visa, including a much higher income test and a cap on the number of parents that can come in.

    https://www.stuff.co.nz/national/politics/116823574/arranged-marriages-caught-up-in-immigration-policy-changes

    “I would just say to the activists from the Indian community, tame down your rhetoric, you have no legitimate expectations in my view to bring your whole village to New Zealand and if you don’t like it and you’re threatening to go home – catch the next flight home.”

    Is that what Scummo has done? Allow high income immigrants to bring the grandparents over for 3 years at a time and disallow the $10/hour immigrants from bringing the grandparents over?

  9. “Trump impeachment odds soar” yeah they soared as soon as he sacked that war hawk and pulled troops from Syria. If the Donald pulls any more troops home they may even charge him with war crimes.

  10. Speaking of recessions… I went for a walk through Crows Nest for the first time in a little while. Lots of “For Lease” signs on former restaurants, a long term “establishment” gone. Not what I would expect from a rapidly growing area with many new highrise apartments built to take advantage of the new light rail station.

    • crows nest has always been over supplied with very average restaurants. Whilst the mums have had their lattes at 11 and stressed hubby a rub and tug at 5; there’s simply not enough cash left for overpriced pizza or chinese.

    • It’s been a very slow but steady closing of restaurants in the area, very noticeable now on the highway in particular. There has been a couple of new places open above the new Woolies and the development at the round about, will be very interested to see how long they last.

    • TailorTrashMEMBER

      “Some of the empty shops, according to signs in their windows, were in the process of being converted into coffee shops, and many of the coffee shops, judging by their level of custom, looked as if they weren’t far off becoming empty shops again.”

      Bill Bryson …observations on Eastleigh……The Road To Little Dribbling ..

  11. I recommend watching this recent presentation from Danielle DiMartino Booth. The charts on false bond ratings, and the effect of share buybacks are enlightening. Video: https://www.youtube.com/watch?v=gh16UlreKfo

    A story in the video about Price Discovery. Tiffany Co founder selling a diamond pin to JP Morgan.

    Being the astute jeweler that he was, Mr. Tiffany knew that Mr. Morgan had an acute affinity for diamond stickpins. One day, Tiffany came across a particularly unusual and extraordinarily beautiful stickpin. As was the custom of the day, he sent a man around to Morgan’s office with the stickpin elegantly wrapped in a robin’s egg blue gift box with the following note:

    “My dear Mr. Morgan. Knowing your exceptional taste in stickpins, I have sent this rare and exquisite piece for your consideration. Due to its rarity, it is priced at $5,000. If you choose to accept it, please send a man to my offices tomorrow with your check for $5,000. If you choose not to accept, you may send your man back with the pin.”

    The next day, the Morgan man arrived at Tiffany’s with the same box in new wrapping and a different envelope. In that envelope was a note which read:

    “Dear Mr. Tiffany. The pin is truly magnificent. The price of $5,000 may be a bit rich. I have enclosed a check for $4,000. If you choose to accept, send my man back with the box. If not, send back the check and he will leave the box with you.”

    Tiffany stared at the check for several minutes. It was indeed a great deal of money. Yet he was sure the pin was worth $5,000. Finally, he said to the man: “You may return the check to Mr. Morgan. My price was firm.”

    And so, the man took the check and placed the gift-wrapped box on Tiffany’s desk. Tiffany sat for a minute thinking of the check he had returned. Then he unwrapped the box to remove the stickpin.

    When he opened the box he found – not the stickpin – but rather a check from Morgan for $5,000 and a note with a single sentence – “JUST CHECKING THE PRICE.”