Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian markets gapped lower and were bearish throughout the session until a surge in the afternoon saw many put in scratch sessions or mild rises. Currencies were mainly range bound with gold not showing much life but remaining above the $1700USD per ounce level.

In mainland China, the Shanghai Composite is up a little over 0.2% at 2899 points, while the Hang Seng Index is dead flat after being down more than 1% at the open, currently at 24254 points, holding here but not completely wiping out the chance of a breakout:

Japanese share markets were the worst performers with the Nikkei 225 closing 0.5% lower to 20267 points while the overnight reversal in the USDJPY pair slowed down as it approached the 107, with the potential for a snapback higher if the low moving average is not broken through again:

The ASX200 fell over 1% at the open and looked like staying there until an afternoon buying frenzy saw it eventually close 0.35% higher at 5421 points, while the Aussie dollar held on after its slump overnight, trading in a tight range below the 65 handle, still looking weak here:

Eurostoxx futures are still down 1.5% going into the London open while S&P futures are flat, still recovering from the big knockout overnight and hovering well below the 2900 point level:

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Comments

  1. As I mentioned before, if all things open by June,
    The economy might rebound.
    Roads and shopping malls are busy. No schools but just
    Like long Xmas break.. every thing emerge back after it.
    ScoMo may have pulled another one.. and jobkeeper will
    Definitely be slashed

    • yeborskyMEMBER

      I can’t help but think if all things open by June, we will have wasted the past two months and we’ll have to start again. I realise there are other significant priorities but it’s a tough balancing act.

      • A dollar A day

        Not really – young and healthy will be getting back to life with social distancing in mind while higher risk folk will likely continue to stay put – which is as it should be. The population will tolerate a casualty rate which does not overwhelm the hospital system. I think the bar to full lockdown will be much higher the 2nd time around.

        • Yah

          They’re trying to back away from the initial idiocy without losing any face

          • I always understood the Australian approach as suppression…..to avert any risk of health capacity being overwhelmed in the first wave a la New York, Northern Italy etc. The type of scenario where collateral deaths occur (such as health staff themselves) as the health system itself starts to collapse. Mission accomplished, it would seem, for Australia. NZ took the elimination approach. We shall see what the results of that will be, though I suspect it’s unattainable in a real-world sense. Your interpretation of the actions here seem imbued with your own ideology, rather than an appreciation of the obvious strategy employed here.
            Of course the second phase involves cautious relaxing of restrictions. I can’t imagine how rabid you would be at the prospect of a continuing policy of hard suppression would be; apart from the prospect of incendiary apoplexy being mildly amusing…from a distance.

        • The Traveling Wilbur

          Social distancing? Young people? Never. Going. To. Happen. Voluntarily.

          Good luck with that. And with not getting the lurgi if you decide to hang around other people.

        • We’re beautifully set up for a second wave
          – winter
          – more complacency than ever plus a bit of euphoria
          – people are not taking social distancing remotely seriously

          …..aaaaaand go.

          • The people’s attitude within my limited survey is that of a lotto winner , they dodged a bullet compared to other nations so they are invincible. Also the trust in the government lockdown measures in the doldrums

          • My parents and siblings are prime examples of ignoring social distancing, they have already visited the oldies with the grandkids, mums doing healing with her friend’s.
            Second wave imminent, not looking forward to it

        • Good luck with that

          Observations last few days show lack of social distancing en masse young and old

          The messaging is not workjng

          • TrooDohMEMBER

            A lot of people seem to think that we’re all in the clear now. Any bets on how long before restrictions are re-imposed?

    • I wonder if Nev Power’s 6 month $500k contract will also be shortened and reduced seeing that the crisis has effectively passed. (my guess is that even if it is shortened he’ll get an even bigger payout in compensation).

    • Dont count your chicken before they hatch. With winter coming and people becoming complacent on social distancing, there will be a second wave of infections. Let’s just hope the second wave won’t overwhelm the hospitals.

    • If we are through the worst of the virus stage and we do manage to reopen it won’t be like showing up to work after the Australia Day holiday. The government looks intent on winding back a lot of the financial support that it has provided. Austerity is the default response to government debt, and it is also the easy sell given that most people believe that the finances of the nation are just large households.

      The banks will probably stop the deferral of payments on loans. Those landlords and real estate agents that have done their best to either not, or provide the absolute minimum, of support for those that can’t meet their rental payments will go after what they are owed as well as begin evictions.

      Hopefully there is some empathy left in those who were touched by and witnessed the precarious nature of many for the first time in a long time, if ever. If it evaporates then we are in for a very difficult few years that will take longer to recover from than it needs to.

    • DominicMEMBER

      Tens / hundreds of billions of (future) taxpayer dollars have just been dropped into the economy — of course everything feels good.

      Just wait till it all dries up.

      • +1 Nucleus Wealth podcast talks about this. They think there will be much more stimulus and bail outs coming and it will go on for a couple of years.

        • DominicMEMBER

          Stimulus is like having another couple of drinks for the road – the hangover comes eventually.

          • Yep, and we will all experience the hangover. Except the protected class. They will end up wealthier than ever.

  2. Looks like lots of muppets decided to buy the little dip this arvo.

    I reckon they’ll all be poorer in a few days.

  3. NEW ZEALAND CORONAVIRUS RESPONSE: UNDERSTANDABLY, CONSUMER SPENDING COLLAPSING ..

    … with ‘control junkie’ politicians losing even more perspective, in oddly, giving police ‘unwarranted’ search powers …

    … Pity the (Imperial College) ‘panicked’ New Zealand coronavirus response wont work … while the sensible and science based Swedish model will …

    Unprecedented amount of credit card debt repaid as Kiwis tighten their belts … Rob Stock … Stuff NZ

    https://www.stuff.co.nz/business/121503292/unprecedented-amount-of-credit-card-debt-repaid-as-kiwis-tighten-their-belts

    New Zealanders repaid an unprecedented amount of their credit card debt in March as panic set in over the economic impact of Covid-19.

    The month saw a 5.4 per cent drop in total amount owed by credit cardholders to banks and other credit card issuers.

    That equated to the better part of $300 million of credit card debt repaid, figures from the Reserve Bank showed, and economists expect that to be just the start of a mass wave of debt reduction by households able to make extra repayments.

    The reduction was more than five times the size of the reduction in credit card debt in the immediate aftermath of the global financial crisis. … read more via hyperlink above …
    .
    .
    Covid-19 coronavirus: Controversial bill passed to enforce alert level 2 powers … Amelia Wade … New Zealand Herald

    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12331547

    A bill giving police sweeping powers to potentially enter homes without warrants while enforcing Covid-19 alert level rules has passed.

    The Covid-19 Public Health Response Bill was rushed through Parliament in time for alert level 2 but came under intense scrutiny from the Opposition. … read more via hyperlink above …

  4. Arthur Schopenhauer

    At the park this afternoon, along with half the surrounding suburbs, footy teams, dog walkers etc, etc, etc.

    Second wave? Two weeks max.

    • happy valleyMEMBER

      The CBA is having a laugh? They obviously forgot April Fools’ Day is 1 April?

    • With that analysis done, CBA should now reduce house valuations by 30% and adjust loan amounts accordingly.

    • truthisfashionable

      Yep, even my mum found it going around on FB. Seems a lot of people who are dealing with tenants in difficult situations are now questioning if they should offload the IPs.

      The trust in CBA analysis is what baffles me though.

      • DominicMEMBER

        My mother in law dabbles in stocks and has a CommSec account – she’s always quoting their research to me as though it’s fracking gospel. When her stocks are profitable it’s her stock-picking ‘nous’ wot did it. I just smile. Oh, okay, whatever.

  5. Glorious Taiwan

    I think it will take off again in VIC, NSW and possibly QLD, but WA, SA, and NT look in the clear more or less.

    • reusachtigeMEMBER

      Yeah, nah, it’ll just get them some time down the track and probably be way worse with all the extra cost gone into it.

    • Any thing to keep their headquarters in Queensland!
      Couldn’t they just hire all the staff to look after the gardens or something , I bet it’ll be cheaper than buying a company with 8billion debt!

      • Not in a month of Sundays will QLD take on $8b in debt. The old Virgin will phoenix and the holders of the $8b in debt will be burnt.

        • Though I think they are proposing to use their investment fund and to only take a stake as part of a consortium.

          I see the news has awoken Creepy Pete from his crypt and he has gone into attack mode. The thing about Pete is he steers clear of feely touchy things like pandemics but if there is a head to kick he’s up for it. And au pairs.

      • DominicMEMBER

        You’re clearly not a restructuring guy. That $8bn of debt will be cut in half by any potential buyer (if they had a brain).

    • The Traveling Wilbur

      That’s not the funny bit though.

      The funny bits were when the other states were trying to entice virgin out of Queensland. I mean, when was the last time a virgin ever managed to leave Qld fully incorporated? So to speak.

    • TrooDohMEMBER

      Interesting to see REX go from facing imminent doom to now wanting to raise $200m to basically dislodge Virgin on city routes.

  6. SweeperMEMBER

    Never understand the flak negative interest rates cop from the commentariat on this site.
    Do people really want a depression v bondholders losing a bit of money?

    • I might be wrong, but majority of MB readers are savers who want higher interest rates

      • happy valleyMEMBER

        And in case you haven’t caught up with it, the banks have done another r.pe job on savers/retail depositors on term deposit and other rates.

        Thanks RBA happy clappies.

      • Or higher mortgage rates to crush the market.

        (Won’t happen … except bcnich says it will… look out!)

        • Just re-read his posts from this morning, what an insightful person bcnich is. Glad he’s back

    • Would love to hear your thoughts on the mechanics of negative interest rates sweeper

      https://www.boj.or.jp/en/announcements/release_2016/k160129b.pdf

      So just thinking out loud here, but negative rates would make bank reserves a “hot potato” that every bank would want to get rid of
      Which would in turn make customer deposits a “hot potato”

      In aggregate however, the banks with reserve accounts at the RBA are going to have to be paying the negative rate?

      Three ways that reserves can leave the system
      -In exchange for cash. Not going to be a meaningful amount
      -Taxation/government surplus extinguishes reserves. Not much chance of that, and would be very counterproductive
      -exchanging with the central bank for assets

      Seems like option 3 is really the only viable way for banks to reduce their reserves in aggregate. But the central bank is already taking assets in – why do the banks need more incentive to exchange with them?

      New loan creation would not alter reserves as far as I know – does anyone know if this is correct?
      So negative rates don’t create any incentive for more loan creation, other than it might allow them to shed some reserves on an individual bank level (if I initiate a loan with westpac, and send the created money to a customer at CBA that allows westpac to shed some reserves) but all a wash in aggregate

        • Hoping I might get an intelligent answer
          Sweeper is usually a good bet, but looks like he’s having an early night

          • DominicMEMBER

            Sweeper is not a good bet because his understanding of economics and finance are shaky, at best. However, as someone who sleeps very well at night I couldn’t give a rats, because I’m set, come hell or high water. If you really want to understand the financial system and economics (which are heavily intertwined in places) you are focusing on the wrong places — judging from your public out-pourings

          • Seems like you are emotionally invested in my opinions Dominic
            Of negative interest rates, and of you

            Why don’t you put in your 2c? That’s what you’re here to do – what do you think of my negative interest rate musings

            EDIT: By the looks of your speed posting tonight, it seems probable that you are fairly intoxicated

      • SweeperMEMBER

        The CB assets would have a negative yield.
        The negative interest rates wouldn’t necessarily be a problem for banks provided they maintain their net interest margin. That would depend on how negative they could set their deposit rates without a currency drain. Eliminating currency would be a good start.

        • Regardless of bank profit margins , it would actually DRAIN reserves from the system
          Which is the complete opposite of what they’ve spent the last 12 years doing

          And also means that banks are incentivised to create loans only when the new money is getting sent to a new bank
          It would actually be a weapon to use against other banks to benefit yourself
          Benefits smaller banks the most because they’re least likely to be the target of new deposits

          Creates a perverse incentive to have the worst possible conditions for depositors

          I don’t see how it can possibly work

          Also, if banks preserve their margins by having a negative Retail deposit rate , that will still reduce M2 will it not ?

          • SweeperMEMBER

            It wouldn’t fundamentally change banking. As long as they apply a greater haircut to deposits v their assets. Yes the balance sheet would naturally shrink as it becomes self amortising, but on the other hand interest rates are negative so credit demand would be pretty strong.
            The net effect is savers would be hurt. But they deserve. Why should you get interest for putting money on deposit?

          • You’ve pretty much glossed over everything I’ve written about exactly why it WOULD fundamentally change banking

            As far as “savers” go – there’s a huge difference between getting 0 interest and negative interest
            Fundamentally the winners will be asset holders eg rentier capitalists , who are far more despicable than savers

            And it’s an inherently unstable and perverse system for the reasons I’ve mentioned (As all central banking probably is positive or negative rates)

            Zero interest rates I could certainly get behind, and direct monetisation of government debt

      • I’m just glad I put my money into a home. Because I don’t like where things are heading and capital preservation is not something I think i could have managed through all the turmoil.

        Negative rates is the end.

        • Yes buying a PPOR probably the most sensible thing anyone can do provided your personal situation is fairly stable (and if they scrap stamp duty you won’t even need that proviso to make it sensible)

    • DominicMEMBER

      Sweeper, negative rates don’t exist in real life — anyone who’s economically literate can confirm that.

      Anyone in possession of an ounce of logic can work it out.

      • SweeperMEMBER

        What do you mean?
        Every perishable good has a negative interest rate
        A commodity in backwardation has a negative interest rate

        • DominicMEMBER

          Time Preference. Look it up.

          If you don’t understand what interest rates are after reading up on that, there’s no point.

          • SweeperMEMBER

            Oh dear. Time preference theory of interest rates doesn’t imply negative rates can’t exist. They can exist, it would just imply people have a negative time preference. ie value future consumption more than current consumption so will effectively pay interest on the savings.
            Negative interest are perfectly normal in theory and in the real world. It’s just that currency places a zero bound on the money interest rate.

          • I’ll just put it out there that zero is reality albeit forced positive or negative is quasi monetarism via IR.

          • DominicMEMBER

            Righto, this is pointless. Like Richard Dawkins debating some Christian fundamentalist.

          • SweeperMEMBER

            Yeah you’re right the fundamentalist would resort to emotion, rhetoric, unsupported claims to wisdom, and pointless analogies.

        • DominicMEMBER

          If you think it’s logical for people to want to PAY interest on their savings you’re an intellectual f#ckwit — and I say that politely.

  7. @haroldus, just wondering if you know of the situation of boom’s surgery. Wrote Replies to him when he posted @ me regarding full snap of the tendon but no answer. Hope you don’t mind sending him best wishes. Cheers Harry

      • I’m sure he has some cress to spare, he (Harry) has a green thumb (metaphorically)

      • haroldusMEMBER

        Well I had a delicious alfalfa, cherry tomato and mozzarella salad today and began sprouting the radish and red clover.

        I’ll let you know how they turn out.

    • DominicMEMBER

      Skip, how can you and I disagree so much and yet, still enjoy George Carlin together?

      Or perhaps you dislike most of his material?

      • A. Atomatistic individual cult that traded in its intellectual ethics for a stipend with benefits, think more than a few times I noted all my U.S. recovered contacts found out the hard way as they moved up the value chain that it was a sham.

        B. Money crankery e.g. its like the pit in N.E. America where dug down to 1400 BCE and found Clovis man and then “pronounced” that is where Humans arrived to the continent, sadly latter some dug further and found earlier evidence of human occupation.

        D. I have a few decades of wrangling with AET sorts and take that as a whole when dealing with individuals due to shared characteristics this GT of everything promotes within its flock. Lest we forget Thatcher and Raygun and how its played out over some decades.

      • Too put it another way …. where AET and AnCaps et al promoted behaviors in the market and then when they screw society claim no part of it.

        So we started down this road with M-C-M, where you start with money, invest it in commodities, then sell them for more money. Those commodities often include labor power. Of course, nowadays, the dominant flow (the one that determines others, not the one most of us actually engage in) is more like M-iM-M, in which you start with money (capital), invest it in imaginary money, then try to convert that back to real money before the imaginary money melts down like the Wicked Witch of the West.

        You used to work a trading desk, where I used to hang with sorts like Bill Gross and the 1%ers of the west and some east coast. Per se just one afternoon BBQ in L.A. would have the who’s who of C-corps and a hand full of state – national politicians.

        I did not study economics until after all my other studies and had a firm base in experiance, then I studied the entire scope of the discipline, back to its earliest days, continued on with human history and anthropology. It was only then that I came to agree with the post Keynesian methodology in the scope of what constitutes economics these days – furthermore that many are calling for a reformation in it.

        Lmmao for a long time economics has been a credential based degree, think of Mankiw, Mercatus Center, et al, knowledge went the way of the dodo after it was monetized. I’m against Marginalism – Supply side economics and the Bernays sauce poured all over it and all the aberrations that have grown out of it.

        Quite clear of where AET was during all these decades and their part promoting it … lest socialism or communalism would lead us all down the path to totalitarianism.

        • DominicMEMBER

          Gee, skip, if you’re hanging the 1% ers no wonder we don’t get on. As an aside the top bananas hate AET as they’d rather get rich through rent seeking activities.

          Say hi to Bill for me 😉

          • Is that the best you can do Dominic – insinuate?

            I responded to your comment in that somehow “sharing” a perceived notion on your part about Carlin, some how translates to matters economic, especially in regard to doctrinaire schools of it.

            Next you completely refuse to go anywhere near my first comment and then some how arrive at the conclusion that because of my past experiences – I’m somehow tainted by them or worse on board with what goes down. Contra to that supposition I left it all behind on ethical grounds alone, Bill was an affable bloke in a social setting and could be quite gregarious due to his wealth, as his whims dictated, but, something he did to one of his own kids was just too much – having said that he does suffer from Asperger syndrome.

            Again for myself …. in the discipline of economics I find Post Keynesian the most lucid and intellectually rigorous, so quips about Marxist leanings or being pro renter says more about you than it does about me.

            Now moving on to your claim that AET hates rentiers, hate to break it too you but AET was funded by them as a Bernays PR marketing pogrom to fight the ev’bal socialistic tendencies of Keynesianism back in the day. All imported from Europe during the time it was view it was sliding into socialism [gateway to totalitarianism] and America was the last bastion of “free markets”. Look its public record that the Powell memo was to weak by the Koch’es et al and there needed to be a more aggressive response in shaping public opinion to advance this ideological agenda. To the point that it necessitated using money to set up academic schools and departments to get kids before they had a chance to study anything else, let alone comparative study and make up their – own – minds.

        • DominicMEMBER

          Chillax, skipster, I was pulling your leg. We can have a laugh every now and again surely?

          • I was friends with Jen, that he tried to buy off her boyfriend to save face after her accident for a paltry million and tell him that he could get his jolly’s on the side, on the QT, just so his reality day calendar was not inconvenienced is some heavy duty homo economics fkwithery. This is after the boyfriend took a year off University to look after her, after that he abandoned the whole thing due to it.

            Yet AET sort of lore will tell you back in the day Parxeology …. rim shot …

  8. Is it my imagination but does Jared Kushner look like the love child of Potato Pete D and Bronwyn Bishop? (sorry Tones)

    The botox looks like it is getting a good workout to hide the wrinkles.

    • If you mean he looks like a scumbag piece of sh1t with the charisma of two week old road kill then yes.

    • He looks like a guy way out of his depth (by marriage) though completely unaware of it. He also looks like a man getting very, very rich due to amazing and coincidental market moving insights.

    • DominicMEMBER

      Such good news – and long overdue.

      Any retailer, big or small, who doesn’t use this opportunity to re shape their lease arrangements is a dunderhead. This is the moment to strike.