Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian share markets have moderated their recent gains with gold and Bitcoin the only undollar assets to advance. Moody’s and Fitch spoiled the party with a negative reaction to the Aussie economy, particularly the banks on the coronavirus impact as Chinese authorities try to damp down the growing outrage surrounding the government’s response to the outbreak.

The Shanghai Composite is pulling back going into the weekend break, currently down 0.6% to 2849 points while the Hang Seng Index is also giving back some of its recent gains, down 0.7% to 27279 points, steadying here without a new session high that could still turn into a dead cat bounce:

Japanese share markets are having a small selloff as well with the Nikkei 225 currently down 0.4% to 23816 points as Yen selling moderated. The elevated USDJPY pair remains poised just below the 110 handle here in a very extended position that will support Asian risk assets until it doesn’t – watch the 109.75 level as the point of control:

The ASX200 is off half a percent, down to 7012 points and is likely to finish the week above the 7000 points barrier despite the Moody’s warning. This is despite a much lower Australian dollar that has now almost retraced all of its post RBA bounce, now at the 67.20 level and could possibly return to the start of week lows:

Eurostoxx and S&P futures are pulling back from their recent highs with the four hourly chart of the S&P500 indicating that the breakout above resistance at the 3340 point level may taper going into tonights NFP print, so watch the low moving average for any signs of downside volatility:

The economic calendar finishes the week with the key non-farm payroll January print in the US tonight. Have a good weekend and stay safe!

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  1. As time goes by, there is something increasingly odd about the Chinese data.

    The number of cases in many provinces is growing quickly, but the deaths are not. Some provinces with close to 1000 cases have not reported any deaths.
    Hubei has almost 20,000 cases with 550 deaths, giving a mortality of 2.75%. And there are many grim reports that there have been many deaths that have not even been counted in these numbers.
    All the other provinces combined have nearly 9,000 cases with 14 deaths, giving a mortality of 0.16%. So almost 1/20 the mortality outside Hubei compared to within Hubei. That is odd.

    That 20-fold difference increases further if the (unverified) reports of mass cremations and doctors being instructed to state another cause of death are true. I am not sure I believe these, but I don’t disbelieve them either. There are too many reports to discount without question. So if (and we don’t know this) only half the deaths were reported, the difference between provinces would become 40-fold rather than 20.

    It is even odder that the majority of these “extra deaths” in Hubei province happened in just Wuhan city. Hubei province has a population of 58.5 million. Wuhan city has a population of 11 million (only 19% of the province).

    As of February 3rd, there were 414 deaths in Hubei province, but 313 of these were in Wuhan. So a city comprising just 19% of the population of Hubei accounted for 75% of the deaths in Hubei.

    To put that in Australian terms, Wuhan : Hubei is very similar to Sydney : Australia. If there was a epidemic in Australia and 75% of the deaths occurred in Sydney, people would figure something was going on in Sydney.

    So what is going on? Why is so different about Wuhan city? There are many possible explanations, and it could be more than one.

    1. Maybe it takes quite some time to die. Some personal stories from Wuhan talk of being unwell for weeks before dying. So maybe they haven’t been infected long enough to die. As time goes by however, this explanation appears less likely.

    2. Maybe the high fatality in Wuhan reflects that the hospital system is completely overwhelmed and can not treat the sick. The quarantine of the city contributed to the failure of the health system as supplies couldn’t get through. So there is no doubt the hospital system is completely overwhelmed. I get that. So maybe as the cases increase in other provinces, their health systems will also fall into disarray and the fatality rates elsewhere will go up. The problem with the explanation is there really is not much effective treatment for severe viral pneumonia. “Supportive treatment” is about all we have – oxygen and assisted respiration and intravenous fluids. Thats about it. SARS and MERS (other Coronaviruses) each had a fatality rate > 10% (35% for MERS). Supportive treatment hasn’t got any better this last decade. Yet it is apparently working outside Hubei province. Anyway if this is the correct explanation, expect the mortality outside Hubei to increase as the number of infected increases.

    3. Maybe the fatality rates really are the same across China, and the deaths in other cities are being “hidden” from the statistics and not reported. Perhaps. But 9,000 cases at 5.5% mortality suggests 500 deaths. Even 2,000 cases a week ago suggests perhaps 110 deaths now. Can all these deaths really be hidden given the hospital systems are functioning and there is at least some social media operating.

    4. Maybe the overloading of the Wuhan system meant only the very sickest get into the health system, and this very sick group would be expected to have a higher mortality (“selection bias” is the term used to describe different outcomes between groups when the baseline characteristics of the two groups are different). So perhaps this very sick group is the tip of the iceberg, and there is a much larger number of mildly infected patients, and the overall death rate in Hubei is much lower. I suspect this is at least part of the explanation.

    5. Or maybe, the theories of an engineered virus are correct. Maybe the virus was designed for a purpose. One purpose could be a biological war agent. However this Coronavirus doesn’t kill very well for a military grade weapon – very slow, and relatively low mortality (even if 5.5%). There are already numerous far more effective biological weapons, so this seems a strange thing to research. And if a biological weapon, it should be equally effective all over China. The other explanation is vaccine research. Scientists need to study these viruses to develop vaccines. Maybe this is a vaccine experiment gone wrong. Vaccines prime your immune system so that it is able to respond faster and more powerfully when exposed to a real infection. One of the problems with Coronavirus vaccines to date is that they prime your immune system too much, and you get an overly aggressive immune response – and this aggressive immune response is the thing that really damages your body. In other words, Coronavirus vaccines to date are not protective when subsequently exposed to the organism again, instead prior coronavirus vaccination makes subsequent exposure much more dangerous. In short, previous coronavirus vaccines have been hazardous rather than protective.
    So maybe James Lyons-Weiler is correct

    James looked at the genetic structure of the virus, explored 4 possible explanations,and concluded that a vaccine related strain was the most likely explanation.
    Maybe the Chinese were experimenting with a coronavirus vaccine, but with disastrous consequences.
    “The implications are clear: if China sensitized their population via a SARS vaccine, and this escaped from a lab, the rest of world has a serious humanitarian urgency to help China, but may not expect as serious an epidemic as might otherwise be expected.”

    This theory potentially also ties up several loose ends
    1. A significant % of the early cases of this Coronavirus outbreak had no connection with the wet market. Epidemiologists and contact tracers try to find the first cases of an outbreak as this gives the best clues where an outbreak came from. They have not been able to establish how these other people with no contact with the market got infected. Yes the virus did spread from the market, but only after it got there. How did it get there?

    2. Very early official warnings that this virus had already become more able to spread.
    “Chinese health experts warn that the ability of the virus to spread is getting stronger.”
    That comment didn’t seem to make sense at the time.
    Maybe it was just clumsy translation, although it a pretty important statement to translate correctly.
    Or was China trying to get in front of the the international puzzling observation that this was spreading much faster than SARS and MERS. Was China suggesting they had noticed the virus was getting stronger – and trying to prevent people concluding it has been string from the beginning.

    One thing for sure. The longer this disparity between provinces persists, the stranger Wuhan appears.

    And that BSL-4 lab in Wuhan is looking more and more suspicious.

    And maybe the wet market (which doesn’t satisfy the epidemiologists is a convenient distraction from that BSL-4 lab.

    And while this sounds a bit dar fetched and is stunning, at this point I see this explanation as the best case scenario.

    If deaths in other provinces start to increase, it will be telling if they are the 5 million from Wuhan who escaped before the lockdown (and who MAY be unusually susceptible), or are they from the wider population.

    What chance China announces another holiday extension after markets close for weekend.

    • Makes sense as nothing else makes sense that’s for sure. I don’t think they know how to stop the spread from the source which is why they shut Wuhan off. And seriously, the chinese have been zooming around the planet en masse until only just over a week ago, surely by now we would have seen some new hotspots emerge by now but it doesn’t seem so. I have noticed a lot of ppl are sick but not pneumonia sick so we are obviously dealing with it better. Never seen anything like this in my lifetime thats for sure.

    • Steve. Thanks for your comment. I found it rational and convincing. Forwarded it a friends (with due attribution)

      • James concluded it was NOT a bioweapon. He felt the strongest evidence was that it was a vaccine strain.

        I am not 100% convinced. But I don’t dismiss it totally.

        I completely accept the other explanations (lag time, and overwhelming of the local health system, and a selection bias to get admitted). All of these factors are probably operating.

        Bit as time goes by, it is looking odd.

        Wuhan had a high fatality rate early on before it was overwhelmed. At 1000 cases, Hubei province reported high mortality.

        We now have multiple other provinces which have exceeded or are close to 1000 cases. Yet the mortality is much lower than Hubei when it was at 1000.

        And that is before you discount all the stories that they have under-reported deaths in Wuhan. if you believe they have been unde-reporting deaths in Wuhan, the disparity is even more striking.

        Back on 20 January, Hubei province had 258 cases. That shouldn’t have overwhelmed health systems in a province of 60,000,000 people. Yet Wuhan city alone had 6 deaths from less than 258 cases.

        So where are the deaths in other provinces who have 1000 cases?

      • It’s not manufactured. Just like AIDS it’s from people f*cking monkeys (or bats). That’s why they call that place in Wuhan a ‘wet market’.

    • Longer lag on death than initially thought. The whistleblowing Doctor took nearly 4 weeks to die

      • Mining BoganMEMBER

        That’s what I’m wondering. Those nice doctors first became concerned about this thing back early to mid December and the first death was the 10th of January.

        Is Death playing a long catch-up game?

      • Yes there are several clear accounts of people being ill for weeks before dying. So maybe it’s a time thing.

        However, there are more deaths in Hubei now than there were cases on Jan 20. Looked at from that perspective, it doesn’t seem that slow.

        The only deaths outside China were from Wuhan.

        We don’t know about the background of people who died in other provinces. Only the province where they died. But it is accepted that many (perhaps 5,000,000) escaped before Hubei was locked down.

        Bottom line. It could be a time phenomenon, with Wuhan exposed much earlier on. Or it could be geographically based. Only time will tell.

          • Maybe.

            But it’s hard to think that a respiratory pathogen that is fairly indolent for weeks (and maybe longer than this), and then suddenly overwhelm you. Offhand I can’t think of one that does that.

            If deaths do increase in other provinces, China will know if from Wuhan. I doubt they will release that information however.

        • Simplest explanation seems just to be that the numbers / data are all wrong.

          Some badly measured. Some not counted. Some covered up. Some just wrong. No particularly complex conspiracy theory required.

    • Shut your pie hole you are a disgruntled moron hang your head in shame and stop your scare tactics they did to them self its us or them now go way play with your toys before you get thourly good spanking old. Chap

    • reusachtigeMEMBER

      77. Paying 100 bucks a week rent each, that’s almost 8 fkn thou a week for a 5 bedder sh1t hole in rural Tassie. plus 20 bucks a day each for transfers. What a fkn wet dream!!

  2. By vaccine, I don’t mean an injectable. That news would have got out.

    More likely an aerosol like one of those mist cooling spray things they use in summer, and population had no idea.

    Bit like the radiation fall out studies indigenous Australians were unknowingly enrolled in.

  3. CHINA …

    Meet China’s 113 Cities With More Than One Million People … Nick Routley … Visual Capitalist

    … The One Million Club

    According to Demographia’s World Urban Areas report, there are now 113 urban areas in China that surpass the one million population threshold. In comparison, North America and the EU combined have 114 urban areas that surpass one million people.

    Below is a full breakdown of China’s one million club: … read more via hyperlink above …
    Demographia World Urban Areas

  4. TailorTrashMEMBER

    Years ago in another life I would spend a few weeks at a time in China …(where after a day of people I would need solace ….only to be enraged to find the hotel corridor boy out side my door …( modern day version of the Hall boy )

    ….gimme some space for fcuk sake …poor chap could never understand my hostility…..and for that I apologise)………..then I would fly back on a Qantas plane home over the vast pristine unburnt northern forests of NSW … a quiet suburb of Sydney ……….an exquisite life to be sure
    I will not be around to see the full effects of the alternative being built .
    ………but you can have it ………

    • The difference between a positive, actionable response verses the sniveling pack of money grabbing parasites we’ve become in Australia.

    • TailorTrashMEMBER

      From a far near corner of the empire ….such good sense for their own ………….Garn Straya !

      • TailorTrashMEMBER

        Edit …..
        1200 Chinese students at QUB ……….Now that is a University that understands brand protection ……
        Sydney University is going for Walmart degrees ………getitintaya straya!

    • I did wax lyrical to Mrs Swampy about working in Ireland or the Uk….

      It’s super good access to the Alps for snow and cycle and they seem to have their priorities in order vis a vis Coronavibrance

  5. blindjusticeMEMBER

    It is not uncommon for a person to become ill with a cold that is caused by a coronavirus and then catch it again about four months later.

    This is because coronavirus antibodies do not last for a very long time.

    Zhan Qingyuan, director of pneumonia prevention and treatment at the China-Japan Friendship Hospital, said even people who have recovered may not be immune to the virus.

    “For those patients who have been cured, there is a likelihood of a relapse,” he said in a briefing on Friday. “The antibody will be generated; however, in certain individuals, the antibody cannot last that long.”
    Not something that you want doing the rounds with the normal wintertime coughs and colds