Macro Afternoon

See the latest Australian dollar analysis here:

Australian dollar taken hostage by dramatic US election

Risk markets are slipping again, with Asia reacting to the falls on Wall Street from Friday night in a similar direction and magnitude. Fear about the economic impact of the coronavirus continues to spread with safe havens like Yen, gold and even Bitcoin – now above $10,000USD – pulling risk assets down in the main.

The Shanghai Composite is steady going into the close, up 2 points or so to 2877 points while the Hang Seng Index is falling much faster, down 0.7% to 27227 points. Price must hold above the low moving average level at 27000 points or this will become a dead cat bounce:

Japanese shares are continuing their selloff as well with the Nikkei 225 closing 0.5% lower to 23697 points as Yen selling moderated. The USDJPY pair remains steady below the 110 handle after almost breaking down on Friday night. Price is right on the 109.75 level as the point of control, where a fall below the low moving average would presage a wider risk off move:

The ASX200 stumbled into the close, down only 0.15% to 7012 points after earlier breaching below the 7000 points barrier. A higher Australian dollar that is bouncing off oversold levels is partly to blame for the earlier selloff, as it just gets back above the 67 handle:

Eurostoxx and S&P futures are flat with the four hourly chart of the S&P500 looking almost identical to that of the USDJPY pair above, with price unable to breakout above resistance at the 3340 point level, so watching the low moving average for any signs of downside volatility remains key:

The economic calendar has the usual slow start the week following the non-farm payroll print with a few Treasury auctions and some Swiss data to look at for the Franc traders.

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  1. here is bit of intel from inside China. A guy I used to work with came back from China on the last flight (this was about 5 days ago) – I am not sure what he meant by this as I think there are other flights available. He was there for CNY visiting his parents in a province where only around 80 people are infected to date. Him and his family are now staying in their apartment for 2 weeks to monitor if they develop any symptoms.
    He told me how their original flight got canceled and had to pay very high price in order to get out. He says that the Chinese gov is very strict in implementing the rules and everyone is working hard to contain the virus. Even in the province where he stayed most shops were empty and not many people ventured out.
    I am just not sure how safe would have been boarding that plane to fly out. You probably need only one infected person to spread the virus. Hope him and his family are ok.
    I was bit surprised that people from this flight were not send to proper quarantine as precaution.

    • Maybe the camera’s were focused for the Christmas Island show?
      Don’t you ever let a chance go by, oh no,
      Don’t you ever let a chance go by…..

      • he is really nice guy.. I hope they are ok for their own sake but also for ours. I can’t see how this is not being too risky – sending everyone home rather than to quarantine for 2 weeks.
        I would hate to be Uber or Taxi driver these days.

        • Arthur Schopenhauer

          Caught an Uber between meetings on Friday. Punjabi driver said the Indian drivers were avoiding the airport, along with Box Hill, Glen Waverly etc etc.
          Apparently they are all talking about it, and worried for their families in India.

          Two of the Singapore cases were taxi drivers.

        • Sorry mate. I’ve wondered if Christmas Island might’ve been more for show to calm the pleb. Considering other stories of rerouting from HK etc, I’ve been expecting more cases here already but maybe it’s just got a slow fuse that’ll take a couple more weeks? I hope you’re mates are ok too.

    • RE: Quarantine

      I work in a hospital. There are people presenting with the right symptoms who have returned from Wuhan with the right ysmptoms. they’re just tested and sent home and told to self isolate. while awaiting results. If they’re unwell obv thats a different thing.

      • What are you LOLing about? Thought you’d be happy, put a bag over their heads and keep plugging away.

      • Prices will soon be dropping at the relations parlours as what brave souls want to risk the corona for a

        • I walked past an Asian massage joint at the mall on Sunday, the owner was at the entrance desk coughing and sneezing…! Bet they don’t have many customers these days. (and any they do have, they won’t have much longer!)

      • I think if we hit pandemic proportions i’d move back to darwin and spend my time either at the noonamah or batchelor pub. Pretty safe there i reckon.

  2. 2020 continues its reputation for being the year of crazy by the best film actually taking out the best picture Oscar. What strange times we live in.

    • Mining BoganMEMBER

      This brings a tear to the eye.

      “[…] I have no desire to put myself in a position where I have a $2 million mortgage and have to work for the rest of my short life to pay for it […]”

      How can such a free spirit be left in this shallow world?

  3. CHINA …

    Factories in China remain shuttered as some regions extend shutdowns amid coronavirus quarantine efforts … CNBC


    • Last week, more than 20 provinces and other regions told businesses not to resume work before Feb. 10 at the earliest.

    • Some provinces and districts have now told companies not to resume work till March 1, according to officials.

    • “That … is a major blast to the global value chain, not only for China, but the world,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis.

  4. It’s clear that the narrative about the coronavirus is being carefully managed globally to minimize the impact on global sentiment and markets. Authorities are well aware of the global economy’s extreme fragility, and so Job One for authorities everywhere is to scrub the news flow of anything that doesn’t support the implicit official narrative:
    1. The coronavirus is only an issue in China; it’s contained outside China.
    2. The coronavirus will soon be contained in China, and global business will quickly return to normal.

  5. 2 hours ago

    LAUNCESTON, Australia (Reuters)

    Structurally cheaper LNG should displace coal

    The spot price dropped to $2.95 per million British thermal units (mmBtu) for the week ended Feb. 7, the lowest price in records stretching back to 2010.

    down 74% from the peak price in 2018 and 86% from the all-time high from February 2014.

    Turnbull says push for coal is ‘nuts’ as Coalition divided again

    Coalition MPs are fighting once again over whether taxpayers should support new coal-fired power

  6. All we need to know really: Plutocracy/Oligarch vs surfs. Who really cares what the colour of the getaway car is. The vehicles (agency) are all parked in the garage ready to go in colours as diverse as political/economic thought. Out with the old…

    Steve Bannon: ‘Oligarch’ Mike Bloomberg wants to be ‘overlord of the Democratic Party

    Steve Bannon and Bill Maher Go Head-to-Head | Real Time

    What can the serf’s do? Scream it was a yellow green blue or purple vehicle’s (agency) evil paint-job that did it? Do you get the neotinglies?

    • The Traveling Wilbur

      Well if any of them were worth saving, they would have also noted the printing-plate number.

    • I can’t believe the state chief health officer says self isolation is all good because you can order delivery groceries and uber eats!!!! Surely any delivery driver in qld should be wearing hazmat suits as they have no idea which customer is potentially infected. What a way to spread infection, self isolation of people from ground zero immediately negated by having close contact with delivery drivers who also have contact with potentially hundrerds of others a day, everyday, for 14 days….

      • The CHO certainly appears to be having difficulty joining the dots. Anyone else getting a sense that the pandemic is being openly welcomed here?

        I would suggest Josh is attempting to balance the budget through a spike in Boomer death duties — but I’m not sure we have any? Perhaps it’s good for GDP? Who knows ..

        • There’s plenty of money to be made off a death. Post mortem, funeral, wake, endless legals, REA sells house & unlocks house wealth, inheritance to distribute & spend elsewhere or into another house which will likely need a loan to reach price threshold – ticket clipping creative destruction. And yes they’ve been conveniently & clumsily, tardily behind the curve for mine. Just like some lacking elements around the bushfires – imo.

        • Arthur Schopenhauer

          They might be that malevolent, but they’re not that bright.

          Queensland is doing better than Vic or NSW.

      • The Traveling Wilbur

        Enough for me to have to use two-hands whenever I pickup any of mine.

        That said, I have to use two-hands for a lot of things. Sometimes one or more of them is even mine.

      • TailorTrashMEMBER

        File under useful trivia ……

        The Good Delivery Rules for Gold and Silver Bars
        The entire Good Delivery specification is contained in the LBMA document titled The Good Delivery Rules for Gold and Silver Bars: Specifications for Good Delivery

        Bars and Application Procedures for Listing. The document includes specific requirements regarding the fineness, weight, dimensions, appearance, marks, and production of gold and silver bars. It specifies procedures for weighing, packing, and delivery. It also describes policies for ensuring refiners’ compliance with the specifications.

        The current edition of the Good Delivery Rules was published in January 2019.[2]

        Basic specifications

        Gold bars

        Fineness: minimum of 995.0 parts per thousand fine gold
        Marks: serial number, refiner’s hallmark, fineness, year of manufacture
        Gold content: 350–430 troy ounces (11–13 kg)
        Recommended dimensions
        Length (top): 210–290 millimetres (8.3–11.4 inches)
        Width (top): 55–85 millimetres (2.2–3.3 inches)
        Height: 25–45 millimetres (0.98–1.77 inches)

      • Better observation in physics … how much slower do you run per Kg of gold.

        Great old WWII film scene has rich sorts looking to depart the homeland with gold and baubles in the dark woods on a river boat – hint …. its a trap – lolololol

        • …. and a warning for anyone who covets gold, no doubt?

          That’s where the Venezuelans went wrong – they had too much gold when their economy hit the skids and the currency became worthless. As a result they were condemned to a lifetime of poverty. Or something like that

          • Silly me … I thought it was the external trade shock imposed through sanctions for not excepting the 2002 coup.

          • Yes, Frosty. Just enough that you can keep up an acceptable pace but not too much that the buggers catch you. 😉

          • Skip, who cares what caused the initial economic malaise (although I suspect you’re wrong on that too) — the currency was trashed by the authorities who printed it in vast quantities to pay their bills – same old playbook as a hundred other instances going back a thousand years. When this happens, you own gold over cash. Even a recently boiled bat understands that.

            This is why the West is fast approaching a crisis — using the rate of debt accumulation as a proxy for debasement and accepting that this is about accelerate rapidly (MMT, UBI, QE Turbo etc), sensible people would be wise to prepare for the worst. ‘Sensible’ being the operative word.

  7. reusachtigeMEMBER

    Just saw the 7.30 Report on the new housing boom. How ace is this new super boom! Awesome stuff and great to see the boom never ending. How’s that bich guy’s tea leave readings going huh? LOLOLOL

  8. The Traveling Wilbur

    You think now is good? Just wait until the next Lowe-rate cut.

    It will be super-awesome-happy-face-super-power-most-honourable-discount-for-bills-paid-by-cash time for everyone!

    Edit: every good-looking one.

  9. blindjusticeMEMBER

    Coronavirus poses a serious and imminent threat to public health in the UK, the government declared as it introduced new powers to forcibly quarantine people for their own safety.

    Health secretary Matt Hancock said the tougher regulations were “an effective means of delaying or preventing further transmission” of the illness.

  10. blindjusticeMEMBER

    The number of confirmed coronavirus cases in Britain has doubled, as four more people have tested positive.
    Across Europe, there are 14 cases in Germany, 11 in France, three cases in Italy, and one each in Belgium, Finland, Spain and Sweden.

    There are no confirmed cases of the virus in Ireland.

    FYI – Ireland, far flung westernmost island in Europe is testing people in its own most far flung places:
    The Department of Health has said there have been 15 suspected cases of coronavirus tested in the National Virus Reference Laboratory. However there are still no confirmed cases in Ireland.

    A mother and a young child presented with symptoms consistent with the deadly coronavirus at Altnagelvin Hospital in Derry on Thursday.
    It is believed the mother and her baby boy recently returned to the city after visiting Hong Kong.–74327be6-76a0-4c08-b44b-de8a60b18297-ds

  11. blindjusticeMEMBER

    Employees at the Irish offices of online recruiter Indeed have been told to work from home this week amid concerns that a staff member may have been exposed to the coronavirus.

    The company, which employs more than 1,000 people locally, said one of its employees in Singapore who visited Dublin recently may have been exposed to the virus.

    “While there are no confirmed cases of infection, out of an abundance of caution for the health and safety of our employees, we have asked all employees in Singapore, along with anyone who has recently visited our Singapore offices, to work from home until February 17th,” Indeed said in a statement.

    “Since some employees who visited Singapore have recently visited our Sydney and Dublin offices, we are asking all employees in the Dublin and Sydney offices to work from home until we have received confirmation. Business continues uninterrupted across the globe,” the company added.

  12. blindjusticeMEMBER

    More good news

    Experts have blamed a form of systemic inflammatory response syndrome called “cytokine storm” for killing some novel coronavirus (2019-nCoV)-infected patients who were not very sick in the early stage of infection but eventually died of multiple organ failure, according to Chinese media reports.

    • Welp, I reckon SmoCorona will declare this an indubitable success of his ‘Migrants To The Bush’ program and roll down the ‘mission accomplished’ banner. Job Done! I’d like you to argue his government doesn’t deliver…. in spades!

    • Maybe, but would be surprised.

      Most respiratory viruses have an incubation period less than a week.

      MERS was a mean 5 days, usually between 4-8 days, min 2 days and max 14 days.
      SARS was typically 2-7 days, but could go to 10 days and max was 14 days.
      The graphs (histograms) for incubation periods of both dropped off significantly after about 10 days, and 14 days was a rare maximum.

      Based on this, presumably 14 days was deemed a fairly conservative (= safe) estimate for this coronavirus (understanding that unreasonably long incubation periods in an attempt to catch the very occasional case beyond 14 days may decrease cooperation with quarantine and overall do more harm than good).

      So 24 days seems very long.
      Not convinced reading this.
      They looked at 1,099 infected people up to 29 January (i.e. no data after that date). They then tried to work out when they got symptomatic and when they think they most likely were exposed in order to calculate their incubation period. . That sort of research is fraught.
      Anyway 29 Jan. That must have got sick at least a few days earlier than the 29th in order to get diagnosed and get int this study on the 29th. Then take off 24 days, which puts us back near the beginning of January. There were only a handful of cases way back then. Unlikely they found something very uncommon in such a small group.

      Anyway, maybe its true. But I doubt it.