Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

It looks like the risk complex has had enough of buying, with all stock markets coming up against resistance and unable to push through, the catalyst today being the Chinese revision in official GDP growth targets, coupled with the clear death of freedom in Hong Kong. The USD continues to firm against all the majors as we move closer to a full risk off mood.

In mainland China, the Shanghai Composite is down over 1.5% to 2827 points having wiped out all of this month’s gains, with the Hang Seng Index falling nearly 5% in a big rout down to 23087 points. A clear breakdown of what was firm support at the 23300 point level, turning this sideways move into something more interesting:

Japanese share markets were the relative best performers, with the Nikkei 225 closing 0.8% lower to 20388 points, while the USDJPY pair is falling going into the London open, about to threaten the 107 handle proper as safe haven buying accelerates:

The ASX200 fell back below the 5500 point level in a mild selloff that gathered pace later in the session, falling 1% to 5496 points and putting breakout theories to the test as the economy re-opens. Meanwhile the Aussie dollar has fallen sharply down towards the 65 handle after its rollover last night:

Eurostoxx and US futures are down over 1% with the risk off mood darkening as we head into the weekend, with the S&P500 four hourly chart showing the inability to break above its weekly resistance level at 2960 points, which is required before a decent run up to 3000 – watch key support at 2900 points tonight:

Have a good weekend and safe trading!

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  1. I bought some USD ETF but not enough. Still I think I will be on the right side of this trade.
    Futures look really good but price of gold is heading in wrong direction.

  2. Untersberg Mountain

    Gees, just back from Westfield Parra – swarming with v%brants observing social distancing of about 5cm between people. You would think this COVID thing never happened. Just in time for the cold weather. Anyone who reckons we are not in for a second wave is just kidding themselves.

    • happy valleyMEMBER

      Well, if you came from a v%brants country with a billion or so people, their pro-rata social distancing measure is probably 5cm, so BAU for those v%brants. Nonetheless, I agree that life is almost back to pre-ScoVID-19 and next week, with NSW schools back full swing and the weeks after “party time” at pubs, cafes and restaurants starting to also head back to BAU and as winter approaches full on, let’s hope the government has enough of those ScoVID-19 test kits to cope with all the sniffles etc likely to arise. And let’s not forget Gladys (and probably SFM?) want all those foreign uni students to be able to experience in education what only Straya can offer, so let it rip says she(he?)?

        • They are looking to reopen. It’s imminent . A week ago measured forty pubs to establish max capacity 1 p / 4sqm. A lot of urban pubs and clubs have 160-200sqm in sports bar and about the same in Bistro area. This would accomodate normal day time patronage.

          Night time , I don’t think pubs should be open.

    • Mining BoganMEMBER

      Walked past a very busy hairdresser on the way back from getting Chinamen takeaway. Average size place, not that roomy, 6 young girls cutting or whatever they do, boss hovering, two people waiting for their turn and a random boyfriend hanging about checking out options. Not one person was more than half a metre from the next.

      Second wave assured.

    • CanuckDownUnder

      Today I got invited to a 50 person dinner at a restaurant during the first week of June… and I’m a complete shut-in! Got the invite before I even heard about the rules being relaxed. Someone pointed out in the group chat max group size is supposed to be 10 but has been booked in 5 groups and owner desperate for clientele so who cares, let ‘er rip! Too bad I have to wash my hair that night.

  3. – Momentum was already weakening in the ASX 200, Dow Jones, S&P 500 etc. in the last say 3 weeks. Whereas the NASDAQ was surprisingly strong. Don’t know what to make of it yet.
    – My current opinion is that we could see one spike lower in US interest rates before those start to go higher. (yes, I change my mind nearly every day).

    • “yes, I change my mind nearly every day).” – same. New intel comes about and makes one to see things differently. Nothing wrong with that. Few days ago I said I will keep NCM until they hit $38 but I sold them very next day at $32.

      • – I worry so much about (US) rising interest rates because of the socalled “Derivatives”. The overwhelming majority of those derivatives are “Interest Derivatives” and are meant as an Insurance against rising rates.
        – Up to now rates have continued to fall but once rates start to rise in earnest then the companies / banks that have written /issued those derivatives will have to come up with A LOT OF dough. And I am NOT convinced that those banks have enough money / reserves to pay those “Insurance claims”.
        – And our aussie banks (CBA ? NAB ? Westpac ? ANZ ?) seem to have issued those derivatives as well.

      • * high five *

        This market has uncovered so much about my mind.

        I’m busy trying to understand the markets, and I realise half the problem is that I don’t understand a good deal of my own thoughts.

        I sold a lot of stuff today, lol. Haven’t held this much cash for ages.

    • happy valleyMEMBER

      Saw an interesting chart somewhere the other day (MB?) showing that Microsoft on its own was equivalent to approximately 50% of the FTSE market capitalisation?

      Those FAANGs and Microsoft are effectively what’s driving the S&P?

      • Here’s another interesting one.

        Holger Zschaepitz (@Schuldensuehner) Tweeted:
        Just to put things into perspective: FANGMAN (Facebook Amazon Google Microsoft Apple Nvidia) mkt cap has just hit a fresh All-time high at $6.1tn, equal to the combined GDP of #Germany and #Italy.

        *he didn’t list Netflix, which is also included.

  4. The action on the S&P tonight will be fascinating. Will it reflect this sudden flattening of the recent bull market, or shake it off and zoom to optimistic new highs?

    I’d like to think the former, but as the soi-disant “markets” no longer have any connection to companies or the economy or such legacy concepts anything could happen really.

    Any thoughtful analysis, wild-ar$ed-guesses, divining of entrails?

      • Kilkenny first. Then an impudent little French Chardonnay with dinner, which my two fine sons are cooking. Then maybe some Square Bear on the rocks to finish off the evening.

        This is binge drinking according to current standards, where a half bottle of wine is a binge, but right now IDGAF.

        • Fark still nursing a Mumm headache
          Shocking .

          Anyway I can’t wait to rid myself of the Ewe Beaut – that stuff is an abomination (although good base in soup)

          Onto the ouzo now. Off to the Parthenon. Then off to JaPOW with Toki

    • Goldstandard1MEMBER

      Don’t think the market can blow off the escalating ChinUSA trade war. Everywhere the market is looking for optimism it finds it then goes to poop. Futures tried and failed this afternoon.

      • I was positioned for markets to break out – I thought they were going to have a go today and tonight…but, no, they whimpered fairly early on. Ended up selling heaps.

        Heck, they might still break out…likely since I just sold out of a lot of risk, slightly bruised.

        DXY seems to be back into its up-trend.

        Oh well. I will sleep better tonight.

    • thinking same and asking same.
      I did position for markets to fall and even gold price to fall but I have no idea if it plays out that way – for same reasons you outlined already.
      Only thing I am certain of is AUD goes down due to geopolitics. It looks like China is gearing up for trade war and it looks they know there is no other way for them.

      • darklydrawlMEMBER

        Fair call. The AUD has been a proxy for China for some time now. I would make sense it could take a hit if a trade war continues / ramps up.

    • happy valleyMEMBER

      Never forget, don’t take on the Fed – it is a widow maker? It will prop up the US market come hell or high water and remember Powell has hardly even started to emulate Kamikaze Kuroda when it comes to owning markets lock, stock and barrel.

      • – The FED can monetize EVERY T-bond & T-bill but the federal administration still has to come up with (tax payer) money to pay principal & interest.
        – And the FED FOLLOWS a fellow called “Mr. Market”.

    • yeborskyMEMBER

      You just reminded me (below?) how much I enjoy a Kilkenny and haven’t imbibed for some time, so off to Dan’s tomorrow for the purchase.
      I’ve been a share investor for a long time, only occasionally a trader. We’re in GFC territory now with not a level playing field in sight. I got through the GFC OK by hanging onto my quality stocks and selling the rest which is about my current attitude. I can only suggest you watch closely for a “blue chip” or two being drastically oversold and buy in at a level you’re comfortable with. And hang on!

    • I don’t think that idiot who was engaged in classic virtue signalling understands what “virtue signalling” means. He’ll tell you you’re “dog whistling” next, or maybe “gaslighting”

    • I did lol. Of all the things you can do with $60b, provide shelter for every single homeless person in Australia, infrastructure jobs for the unemployed, the focus should most definitely be on International Students and Art.

    • happy valleyMEMBER

      Sorry Shaun, we’re talking the LNP here. Who knows how the government came up with the original estimates for JK take-up/payout, but they made a number big enough not to look idiots on the underside, but that will allow them to shut down JK ASAP, so that Josh Rainbowberg and his mentor (SFM) can look like the best economic managers that the LNP so often shoves down out throat? And what have been the costs to the taxpayer, the environment and whatever else of all the deals that the COVID Commission and the LNP government have waved through/will wave through for their vested interests? Suspect we may never know?

    • Fascist China

      International students aren’t poor many are from wealthy families and even those that are “poor” here are wealthy by local standards in China, India, Nepal, Pakistan, etc.

      Poor people don’t have $15-20k to spend per annum on a degree. Australia’s working poor don’t have that kind of money for crying out loud.

    • It’s cold. BOM tells me that it is currently a frigid 23.4 degrees Celsius.

      The tradies were happily drinking at the pub I drove past this afternoon.

      Money doesn’t go as far in the rental market as it did a few months ago. My lease is up and I was offered 12 months at the same price. Last year I was able to threaten to walk away and they gave me a discount on the spot. Not so now. There are fewer places on market and they are asking for more. I guess that the jobseeker/keeper payments have pushed the rent up here.

      To speculate, Darwin may end up having a downturn post generosity and concern as many would see a loss of income.

      And, something non NT related, I’d say that real estate agents have somehow ended up with a worse reputation than before. I’ve heard stories from both tenants and landlords about how poorly the financial stress situations have been handled. The government making broad statements without providing clear guidance didn’t help.

      Finally, this is the best video clip I found this week.


      Alright alright everything is gonna be alright
      (It’s really alright)

      Sorry to be crude but fk there are just some dumb cnts

    • bzunicaMEMBER

      Still not sure that is right. When compared to the UK – UK deaths over last 7 days = approx. 2400.
      Sweden deaths = approx. 340. When divided that is just over 7. UK is only 6.5 times bigger in terms of population.
      If you go to a Swedish tracker of Swedish deaths, they are only reporting 228 deaths in last week.

    • Haha jumpy, quotes News from CNN from locked in junior reporter. Like the AFL, a global pandemic is a long season. Buy a membership and you can get better informed.

      • Don’t need trading tips and can fend for myself when it comes to national – international affairs.

        Point being is some about here using Sweden as a poster boy for their agenda, you might want to advise them the same next time.

  5. Goldstandard1MEMBER

    Wow! The forgotten warriors…….what if you’re borrowed more than you can afford? Surely banks keep paying for the construction of your new build if you lose your income????

    “ Common sense says banks would continue to provide funding. ”
    Actually…….no, common sense says you are farked!!!

    • I know an Indian fella, with a child and a house being built in Hoppers Crossing. Was made redundant today. House isn’t finished. Does he pay remainder on completion? Will banks still give the money if he’s become unemployed? I know he got a redundancy package. But not a position I’d want to be in when committing to a $600k house and land package. His wife has a new job apparently.

      • Goldstandard1MEMBER

        Well, as we all sign on the bank contract ‘if your circumstances change you are obligated to tell the bank’.
        So you are re-evaluated on the new circumstances. Simple.

        • I do wonder if he will leave the country if things get tough. Seemed a nice enough guy, he was my Mrs work colleague. Probably 1 of the better recent migrants.

  6. Arthur Schopenhauer

    Got to get a flu shot before school goes back on Tuesday.

    School back on Tuesday! How good is Australia 🇦🇺?

    Expect it to close again in 4 weeks.

    • I’m thinking the flu shot is wasted this year. The theory is that you don’t want to catch both the flu and Covid at the same time. In reality Covid much more contagious than the flu, and the social distancing for Covid has brought the flu numbers down close to zero.

      Especially for you Arthur. Didn’t you and your family already catch Covid?

      • Arthur Schopenhauer

        Yeah, I tested negative for corona along with 20 other viruses including Ross River etc. The whole family got the same illness and it took about three weeks to get over. The symptoms were almost the same as the subsequent accounts from New York and London. So I suspect we all had it.
        The flu arrives in our house every winter, and school is the most likely vector.

  7. something’s not adding up. Either Russia is using LOLogic to design another best in the world index to report on number of deaths or Russia really have found effective treatment and is not telling anyone what that is.

    • I often wonder if its that all these old sick people just arent around as much in places like russia, indonesia, africa. Heavy smokers drinkers etc, poor health care. They die between 65 and 70. Instead of wandering around as high potency WuFlu reservoirs.

  8. Untersberg Mountain

    Question for those smarter than I – back when the world was a bit more normal, the big fear about Aus loosing™ its AAA credit rating was that the interest on its debt would be higher. The UK (I presume still AAA) just sold bonds at a negative rate. How bad is it really for Australia to slip to AA rating in the current interest rate environment?

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