Macro Afternoon

See the latest Australian dollar analysis here:

Australian dollar universally tumbles as exhaustion sets in

A mixed trading session throughout Asia with most stock markets slipping or putting in scratch sessions in response to the equally mixed and cautious run on Wall Street overnight. Gold is holding above the $1700USD per ounce level as the USD is reverting slightly going into the London open as oil prices start to pick up slightly on news of Saudi oil production cuts.

In mainland China, the Shanghai Composite finished off by a handful of points to close at 2891, while the Hang Seng Index slumped 1.5% to 24226 points, taking back its start of week gains and forestalling a chance of a breakout:

Japanese share markets basically tread water all session with the Nikkei 225 closing 0.1% lower to 20366 points while a minor reversion in the USDJPY pair has been mostly filled late in the session, holding well above the 107 handle:

The ASX200 fell over 1% in a very cautious session, closing at 5403 points, while the Aussie dollar initially slumped down to the 64 handle before a late recovery has seen it touch  the 64.70 level, but still looking weak here:

Eurostoxx and S&P futures are down around 0.4% going into the London open with the latter market still unable to breach the previous highs near the 2960 point level, as momentum remains well overbought from Friday’s session and looking to revert:

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Comments

  1. @ boom. Far out mate! Sorry to hear that! Did they schedule you for surgery?
    Don’t worry about the jobs, your arm and health are far more important, Hope you have income insurance? If not that’s
    Fine health and recovering comes first!

  2. I’m naturally bearish, but the international and domestic equities booms look to be running out of steam to me.

    Any stonks balls out there want to set me straight? S&P and ASX back to record highs by Christmas, etc? Same same for house prices?

    • darklydrawlMEMBER

      Betashares has just launched a new ETF if you want something more defensive. Might be of interest to some folks here.

      https://www.betashares.com.au/fund/betashares-global-government-bond-20-year-etf-currency-hedged/

      Fund Objective:
      GGOV aims to track the performance of an index (before fees and expenses) that provides exposure to a portfolio of high-quality, long-dated, income-producing bonds issued by some of the largest developed economies in the world, hedged into AUD.

      Fund Strategy:
      GGOV’s strategy is to invest in a portfolio of long-maturity bonds issued by governments of the G7 nations (USA, Japan, Germany, United Kingdom, Italy, France and Canada). To be eligible, bonds must be issued in the country’s local currency in the respective domestic market, and have a remaining term to maturity of more than 20 years. Securities are weighted in the Fund’s index according to their market value, with a cap of 25% on any one country’s dollar duration contribution to GGOV’s index. Exposure is hedged into AUD.

        • darklydrawlMEMBER

          Heh… It’s not likely for me I will admit. I would have to do a lot more homework on bonds and see what the pros and cons are on such a product. I like ETF’s for some things, but not sure bonds are one of them.

      • DD. Couple of days late I know. I read the header & it said INVEST in bond portfolio’s, which is all good – presuming direct investment. Then scrolling down I saw – Market Makers…..Susquehanna. Normally, Market Maker is a clanging bell as they’re usually holding the other side of a synthetic bet & They’re the Counterparty Risk (bucket shop), not the G7’s involved. I could be wrong (they could be some kind of Custodian), but if I were getting into it, I’d be clarifying that bit before committing. FWIW.

        • darklydrawlMEMBER

          Thanks Colin. Worth considering. I know many of the international ETF’s track the futures index rather than the actual index which can lead to some issues. They all have market makers (which can also be custodians). Generally the role of the market makers is to provide liquidity (so buy and sell) when there isn’t enough on the ‘natural’ market.

          I just wrapped up a webinar with Betashares that explained how the the 3 tier ETF structure works.

          Even so, your advice is sound and we should all do our homework before investing in such a product.

    • I’m naturally bearish too. So maybe this isn’t much help. But I reckon –

      – all possible good news is priced in already (perhaps too much so) except an actual cure. Actual data coming is all worse than expectations.
      – second wave of infections (or ongoing first wave) is a certainty for US and Europe as they reopen
      – some chance of a second wave here FWIW
      – numbers in India, Brazil, Mexico, Russia are going to be shocking (even if counts don’t fully reflect that) – And these are large and important economies even if not top-shelf material.
      – China – I don’t know. I think they will find a way to keep making steel no matter what, like even if the human race actually ceases to exist They will leave robots which will buy iron ore.

      So yeah. Stonks? Stinks!

  3. 1. Globalization hasn’t meant increased demand for U.S. exports of manufactures over time…
    2. U.S. exports of IP related services haven’t grown all that fast since the 1990s
    3. The dollar’s strength from 2000 to 2003 really hurt the U.S. economy—having a currency that rallies in a recession isn’t necessarily a good thing.
    4. Those who argue that imports from China simply displaced imports from the rest of Asia haven’t spent enough time playing with the detailed U.S. trade data.
    5. The big U.S. gains from globalization—setting aside the gains to consumers from lower goods prices, —have gone to those who own intellectual property that can be off-shored to a tax haven.
    https://www.cfr.org/blog/five-points-about-us-trade-over-last-thirty-years

    • SweeperMEMBER

      That’s a great article from Setser and just shows how much the claims re. globalisation and floating currencies have turned out to be a lie.
      There were always going to be big losers, that was known at the time but worse was the lie that the losers could have been compensated so globalisation would work in Kaldor-Hicks sense.
      The opposite has happened. The noticeable increase in trade has been between related parties in the same corporate structure. ie tax minimisation so the winners have booked their profits overseas in tax havens removing the ability of states to compensate the losers. And because capital has become more mobile (through “trade agreements”) governments have resorted to taxing labour and consumption rather than saving – so the losers lose further and the rich save more depressing demand.

      • Mining BoganMEMBER

        Wasn’t he the fat f#ck who wanted drug testing people kicked off NewStart if they tested positive? It was about the same time Barnaby was rolling into parliament drunk as a lord screaming about carp all the time.

        He’s got form with hatred of what he considers handouts. Grabs his own with both hands but.

        • A quick look at Falinski’s bio and the leaner’s nothing more than a product of the Liberal Party machine. Never worked a day in his protected life yet is happy to condem those who do.

    • I think the game here is maintaining enough capacity in government finances to bail out the banks when the time comes.
      If the feds spend the whole 130bn on Dole hider then there might not be enough left over for the banks.

      • There’s no limit to the government’s finances.

        The issue is some of the Libs have actually believed their own bullsh!t about how balanced budgets (or better yet, surpluses!) are good for the economy and debt is great for households but bad for government… they have believed it to the extent that they are now flirting with self-harm by actually considering following it…!

        Plus they just can’t get past the idea that no one deserves welfare (except possibly huge corporations) and so they just hate, hate, hate giving it out.

        • Jumping jack flash

          This!

          Although debt is neither good nor bad, rather it really depends on what is done with it

          Using debt to buy useless crap that does nothing eventually destroys the economy.

          Debt should only be used to increase productivity resulting in increased sales and then profit in excess of what is required to cover the interest payable on the debt.

          If the latter doesn’t happen, debt absorbs money out of the economy and it is transferred to the banks. Sure, they give a tiny, tiny fraction back into the economy but mostly it is used to make the bank richer and more powerful.

      • SnappedUpSavvyMEMBER

        Soooo according to our-lol ABC it’s just now assumed international students are here only to get PR and not to get a prized – lol Australian degree. What a fckn pathetic stupid country this is now

      • CCP Pure Evil

        Natasha the Indian — will have to go home to an arranged marriage and will lose face with her family for not coping. That’s an Indian culture problem not a problem for Australians. She should be criticising Indian values.

        “Natasha said visitors to India would be treated differently.

        “In my culture we treat guests as gods, that’s what we have been taught all our lives,” she said.”

        Give me a break. Tourists in India are treated by many locals as easy marks there to be scammed.

        • adelaide_economistMEMBER

          Yes, for a start a temporary visa holder is hardly a “visitor” in the traditional sense of the word. I’m happy to have “visitors” from anywhere in the world over a free meal and a drink; that doesn’t mean I want them living here permanently at my expense, nor making demands on me or my government to accommodate their peculiar characteristics or ‘requirements’. ‘Visitors’ don’t do that.

          And yeah, as for India treating visitors well… gosh, how soon the woke media forget the, um, unfortunate incidents involving foreigners in recent years.

    • Glorious Taiwan

      “Melo was in the process of applying for permanent residency when the shutdown occurred. He was stood down on March 22 and, four days later, paid $8000 to apply to stay in Australia forever. “That was all the money I had, but I was so afraid to not go ahead with permanent residency,” he says.

      With no savings and no income, paying his rent became an urgent concern. When negotiations with his landlord came to nothing, he ended up putting his belongings in storage and moving to the hotel room above the restaurant where he worked. “I’ve never been through anything like this in my life,” he says. “I’m qualified, I’m sponsored because of my skills, I was employed full-time in a good job, paid well, but it doesn’t take long to run out of money. It’s a bad feeling.””

      He lost his job then punted $8000 on a permanent visa in the midst of a global pandemic.

      He’s not a victim he’s just stupid.

      • Mining BoganMEMBER

        Melo also seems to be a disgusting racialist arsehat.

        “Probably 80 per cent of any kitchen in Sydney is foreign people,” he says. “It’s a hard job, you work weekends, it’s physical. You don’t see many Australians.”

        He hates the people and wants the benefits. A prime example of our immigration system.

  4. migtronixMEMBER

    “. Currently eight people are in hospital, including four patients in intensive care.”

    2 have left ICU and 1 new one hospitalised.

    Are we there yet?

      • migtronixMEMBER

        What does that even mean? If our borders are shut and its been weeks since an outbreak was bad enough to require a lot hospitalisations, where is the bad bug going to come from? Healthy people??

        • SweeperMEMBER

          its been weeks *because* of the social distancing.
          like claiming a drop in car accident injuries means people shouldn’t wear seatbelts.

          • migtronixMEMBER

            You shouldn’t wear seat belts if your walking down the footpath – just keep your eyes and ears open.l

            How about that genius?

          • migtronixMEMBER

            Incidentally I never said anything against the earlier measures – just that we haven’t done anything with the data on hand.

            THE. DATA.

        • In 2 weeks we’ll know the answer mig, can you just calm down for 2 weeks?

          After all the business as usual behaviour we’ve all seen, on the news and in person, if we’re gnna have a second wave we’ll know in 2 weeks. After that date, no second wave – we can all rightfully blow up at any lock down.

          I do commend you for keeping it to one thread a day, instead of the endless cut and paste approach others have adopted.

          • migtronixMEMBER

            Man that dole sure pays for some haughty talk.

            I do commend you for keeping it to one thread a day

          • Grow up son. At least we can confirm maturity isn’t linked to taxable income, all I ask for is 2 weeks and you don’t have the patience. That’s twice now you’ve tried to give me a serve based on my employment status and twice you’ve got the wrong end of the stick. I may be interpreting this wrong again, as always, I am extremely drunk but at least I’m maintaining my decorum and not doxing myself (or more likely an enemy) like you when you have a few too many IPAs. I usually appreciate what you have to say mig but far out you’re a hard one to like. You are the same as skippy – as much as you rail against the marsupial.

      • ErmingtonPlumbingMEMBER

        It hasn’t taken off here like it has in the US, or other less fortunate places, and as long as we keep the international boarders shut and/or all new arrivals quarantined for a suitable period of time we wont see it taking off.

        Im with Mig,….its time to open the Fken Pubs!!!

        I stand with him and the young Adults!!!

        https://youtu.be/0WDtjknemIo

  5. CanuckDownUnder

    First day back at school for our youngest. Surreal scenes at drop off, most parents just hung out and chatted for a while. Even with a significant Celestial population (50%), I only saw one parent wearing a mask. Complacency level max, appeal to your favoured deity we don’t get hit with a massive second wave.

  6. CanuckDownUnder

    Ok first off I’ll admit Bryan Adams is a bit of a guilty pleasure, he was pretty much everywhere growing up in Canada. But anyway here’s a great example of media at work these days. Headline screaming Bryan Adams attacks China. First sentence of the story claiming he is attacking Chinese people. Now read his tweet and tell me where these specific attacks are:

    https://www.theguardian.com/music/2020/may/12/bryan-adams-attacks-china-coronavirus

  7. Now THIS is how you spruik property.

    https://www.news.com.au/finance/real-estate/buying/chinese-buyers-flooding-back-in-to-snap-up-aussie-property-as-prices-fall-due-to-covid19-crisis/news-story/c4c4d60d43ec8f52c404dd703d9a8dd3

    It’s all there:
    “Chinese investors are flooding back in.”

    “Prices in Sydney won’t go any lower.”

    “Enquiries from Chinese buyers only dipped 14% in the first quarter compared to 40% for local buyers.”

    “They can’t get enough of it. Clean air, clean food, great education, safe environment – it’s paradise for them,”

    “They have a lifestyle here, they have freedom and they can protect their wealth from the Chinese Communist Party.”

    “The Australian dollar is down 10 per cent against some of the currencies, so that’s a nice buffer which people can include in their budgets,”

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