Australian dollar flies as stocks price to infinity

See the latest Australian dollar analysis here:

Macro Afternoon

It’s all fun and games into the news void today as the Australian dollar flies:

Bonds are bidly:

Driving XJO wild with delight:

Big Iron is flat:

Big Gas is charging:

And Big Gold:

Big Banks have driven most of the two-day news void rally but have gone nowhere in reality:

Big Chunt has no listings but it has drooling buyers:

XJO forward PE is now at a nosebleed 19x without any earnings support:

Priced to infinity, all things are possible.

David Llewellyn-Smith
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Comments

  1. > XJO forward PE is now at a nosebleed 19x without any earnings support:

    HOW THE HELL IS IT STILL RISING?!!?!?!?!?!?!??
    WTF?!

    Super’s being raided, earnings are routed, companies are going under, unemployment is to the moon, geopolitics basically posing a double sovereign risk.

    WTF is going on?!

    It can’t all be the fed.

      • MB are forecasting the the ‘herds’ lose faith in the Fed & fiscal at some stage..? How are those sidelines looking now..?

        • As I say, it’s an excuse not a reason. The market will be confronted with terrible earnings and a gloomy outlook for growth in due course. Then we’ll see how this “permanently high plateau” in prices fares.

          At the moment it’s just buy the void.

          • Wonder how earnings season will play out? Make dire forecasts and outperform those……Market Pump 101.

    • DingwallMEMBER

      The really crazy thing is our bourse has zero connection to the US and the Fed. The US markets believe the Fed has their back….. and in turn the ASX seems to think the Fed has their back too……. LOL

    • Asset prices are almost entirely a function of M2

      All this time and effort spent analysing and gleefully anticipating the collapse are for nothing, if you don’t at least try to understand monetary mechanics

    • DominicMEMBER

      The Fed have done a Draghi — “whatever it takes”

      Translated: We’ll print every dollar we need, to keep asset prices propped up – don’t even doubt it.

      Gold isn’t doubting it — last year there were commenters on this blog saying that gold was cactus and that they’d consider buying if it dipped below $1,000. Wheeee …..!! (I sure hope they don’t manage money for a job 😉 ).

  2. I’ve resided to the fact that if this crisis does not reset the debt driven asset value cycle to some form of real free market capitalism, I will take any financial discipline I have enacted over a 15 year financial career and toss it out with any logical thought on risk mitigation. Joining the ‘herds’ on their march towards their local brokers to leverage as much as I can into every accessible asset class available and sleep soundly, knowing that the governments and printing presses will continue the great fake monopoly game for all. Tell me I am wrong..?

    • You’re right somewhat, until solvency matters and comes knocking, and threatens th debt system…that is when the powers that be decide whether there is still sort of a market, and if debt matters; what’s left of the market will wait to see if debt matters after the powers make their decision, or until a major geo-political event occurs.

      Until one of those occur, I hold more risk assets than I have for ages.

      Sigh.

    • two plus twoMEMBER

      Could it be the ultimate bear trap?

      But yeah, with you on those sentiments…

        • Goldstandard1MEMBER

          We all have theories and scenario planning and great discussion going on here, but at some point you have to place your chips and see what happens. My chips are maintaining a “stay away from decoupled markets” position. It is litterally like betting on black over and over again with all your winnings at the moment, but red must come up eventually. Bit like property really…… Just have to watch some opportunity costs go begging short term. It’s hard but this where my chips are no matter what happens for now. Could be wrong.

        • DingwallMEMBER

          Bull trap or you mean bear trap (ie rising prices yet prefacing some serious falls) … either way

          I hold more risk assets than I have for ages.

          You are braver than me…

          • “more” being the main word – I haven’t held much at all for a while. All the reflationistia nonsense has had an affect on me – ‘go with the price action’, so I am, but will be jumping in and out, taking profits where I think I can – I don’t have a lot of faith in the reflation, frankly…

        • DominicMEMBER

          Burb, a word of (humble) advice. In the lead up to the Great Depression, the US was on a gold standard (of sorts) which meant the Fed was not free to print endless money. This time really is different – central banks can print as much as they want. That doesn’t mean markets won’t crash, but it means the timing is way more uncertain and the crash isn’t likely to as deep as you think. Not a time for big bets. Despite the massive rally (and unprecedented over-valuation) sentiment indicators are not pointing to a major correction at all at this point. So, limited upside from here, large downside, but sentiment (bearish) largely supportive. Once sentiment swings to bullish the danger increases.

    • DominicMEMBER

      It sounds sensible — but at this point, that’s a lot to risk if you’ve been conservative all this time. I’d just ignore it all for now — there’ll be other good buying opportunities. The Fed cannot print profits.

    • I tend to agree, which is why I don’t hold much cash. It’s also why I’m glad I bought a house and started this mess lol. I’d be very frustrated right now waiting for debt bubble to bust. If a pandemic doesn’t do it. I don’t know what will

  3. Fascist China

    How are all the heroes with BBOZ and YANK going this morning?

    Heroes have been licking their wounds for two months now.

    Take their punt and are never heard from again.

    • Many have swallowed their losses, bought risk, and are clawing back some of the losses.

      No need to be smug. We all learn differently.

      Big rally on the back of crap economies means rightful skepticism; fighting the Fed is a lesson to be learnt.