Australian dollar thumped with stocks

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DXY was down again last night:

The Australian dollar was bashed anyway:

Gold is having another crack:

Oil was soft but the dip bought:

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Dirt was mixed:

Miners soft:

EM stocks tried and failed to fall:

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Junk jeez:

Bonds were bid as markets concluded Fed yield curve control was necessary to prevent a stock crash:

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Nasdaq ploughed through 10k but SPX fell:

And here’s the only chart of the fourteen that actually matters to the AUD for now:

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Data is still disastrous on both virus and economy. Not much point showing it all. It’s still irrelevant amid fantasyflation. Instead, here’s a chart on what the “v-shaped recovery” will most likely look like, from Pantheon:

That’s for Europe but the shape and trajectory looks about right for everywhere, if a little steeper in the US.

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It’s a v-shaped recovery to something like 90% of the former economy and all structural damage, output gaps, weak wages, no pricing power and squashed margins after that.

My base case is earnings have three-to-five years to run before they recapture 2019 levels.

The current stock/AUD bubble could end in five minutes or five months but, at some point, it has to reckon with this reality.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.