Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street’s rebound overnight translated into similar gains here in Asia as we close out the month/quarter/financial year.

In mainland China, the Shanghai Composite bounced back to recover most of Monday’s losses to be up 0.8% to 2984 points while in occupied Hong Kong the Hang Seng Index has barely moved, lifting only 0.2% higher to 24353 points and looking very weak here on the daily chart:

Japanese stocks did some window dressing with a modest lift on the Nikkei 225, up nearly 1.3% to 22288 points. Meanwhile the USDJPY pair was unable to build on its gains overnight, stuck just below the recent highs in a tight pattern at the 107.70 level as momentum on the four hourly charts retreats from its extremely overbought status:

The ASX200 had a solid end to the financial year with the market lifting more than 1.4% to 5897 points to almost take back its previous losses. The Aussie dollar found a little bit of buying support before being slammed again this afternoon, falling below its start of week position at the exact 68.50 level and ready to break below ATR trailing support:

Eurostoxx futures are down 0.2% or so with the UK looking to enact wider lockdowns while Wall Street is looking wobbly again with S&P futures off by 0.3% or so with the four hourly chart showing an inability to breakout to a new high from the previous two weeks of sideways price action:

Comments

  1. NEW ZEALAND …

    … as the Opposition National Party tears itself apart 2 months out from a General Election Saturday 19th September …

    National Party’s internal polling revealed as caucus springs another leak … Newshub

    https://www.newshub.co.nz/home/politics/2020/06/national-party-s-internal-polling-revealed-as-caucus-springs-another-leak.html

    Judith Collins not sorry to see back of Paula Bennett and slams Sir John’s ‘boys’ club’ … New Zealand Herald

    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12344247

    … Why has it degenerated in to such a mess ? …

    … Does the New Zealand voting public deserve this ? …

    • Narapoia451MEMBER

      I was wary of the hype around Jacinda at the last election, given the way Obama and Trudeau played out. Still very happy to see the end of National.

      It’s played out pretty much as I feared, the best policies taken into the last election being the first dropped or most spectacularly failed. Lots of talk and no outcomes.

      But at least the policies weren’t actively bad for the country like a lot of Nationals platform. So do the people of NZ deserve a functional opposition, yes, do they deserve a national govt, I’d argue not.

      • MMP does that.
        Ardern’s Labour wasn’t able to enact their most ‘controversial’ policies as coalition ‘partners’, NZ First, spat the dummy on several occasions. But let’s be honest. Labour was an outside shot to get in the last time, and I guess they ran with policies that weren’t likely to be put to the test – until they were! ( Kiwibuild etc).
        This time. Let’s hope for a clear winner. Labour – to finish what they wanted to start would be ideal. But National, on its own if needs be.
        It’s the minor party(s) that create a problem in a small country like ours.
        MMP might be good for Germany, but much less so for us.

        • Narapoia451MEMBER

          Very true re NZ First. Winston and that party would survive a nuclear holocaust along with the cockroaches. Hopefully Labour get enough votes to be able to enact some of the really good policy they took into the last election on their own. If they can’t do it in that situation then they will have to answer some hard questions.

          Problem with National – it’s never really on it’s own though. Always has ACT glommed on like that mutant in Total Recall, except instead of leading the resistance it pulls them to further off to the right.

  2. The ASX is about 15 points above where it was on 1-June, so not a spectacular month overall. Despite the hoopla about the V-shaped recovery, it’s also more than 11% down over the year.

    Given the increasingly bad Covid and economic news around the world, my view is that on 31-July it will be lower than 1-July. I see nothing coming down the pike that might suddenly make things good again. Of course, the game is rigged so QE and other can-kicking might prove me wrong but that’s where my money is going. Well, not going, because the risk and stupidity in the markets is such that I haven’t been playing since January.

    If anybody can make credible case that the boom will resume, I’m all ears.

  3. Sigh. I just wrote a long and learned (for me) dissertation about the state of the market, but it must’ve included phish or cumming or some such offensive word because it went into the bit bucket without making a sound.

    Oh well.

    • yeborskyMEMBER

      Ah, you subversive, anarchic types will never be accepted into the gentle, loving pool of peaceful, thoughtful and caring humanity that is the MB commentariat. You must change your brutal, self-opinionated ways to be welcomed within.

      Chortle/snicker/sigh…choose one

    • The Traveling Wilbur

      [Ironically this went to the sapm fliter on the first pass.]

      RBA… inflation… muzzle-flash suppressor… 400 yards… inflation… bull1ts cost more… angle of tangency… monkey falling out of tree… new Lowe… Hardly Normal… COVID… restraint of freedom… RBA… helicopter money… lampposts… revolting peasants… zombies… house prices… chainsaw sharpening… RBA… gold miners… succulents cuming up a treat… neighbours dogs… still keeping an eye in.

      That’s all I could salvage from the cache on a first pass. But I might be able to provide some full service data recovery; it’s only $349.99 per article recovery attempt. Lem’me know if you’re interested.

    • DominicMEMBER

      Who doesn’t love free stuff? Free money – even better. No point working any more. Just crank up the printers – it’s all good.

      When inflation comes the CBs will slow the printers down just enough that they skirt the line between inflation and deflation.

      No, really ..

      • ErmingtonPlumbingMEMBER

        I’d have to be getting $3000 per week, after tax, with today’s buying power to stop jetblasting peoples blocked sh!tters.
        Heaps of shyte I want that 3k per week doesn’t pay for.
        Even if you have 10s of millions ya Still have to do something productive for your community otherwise your just a Bum,… whether your a Bum on “Your” money or “someone else’s “ seems little different to me.

        • Ermo, I have to relate the story of my wife giving our young kids ‘wipes’ in their toilet many years back. Ended in disaster as you can imagine. Local plumber rolled up to attend to the inevitable blockage and my last image of him (and his young apprentice), several hours later, was them up to their shoulders in shyte. I never paid a bill so readily (or deservedly). I try to curtail my missus’ ideas as much as I can, but a couple sneak through.

  4. The Hugh Hendry video was interesting yet some PK’ers have been saying a variant of the same for some years, Pilkington wrote a piece on it which went much further and broader.

    In other news I see the TDS’urs are wailing about the TDS’ees … classic ….

    • DingwallMEMBER

      I struggled listening to that and made a comment that now I am also struggling to understand the underlying problem people are trying to fix. It seems like “we have a problem” … that is solved by ” throw as much money around as we can” (is the money thrown even real?) ……… “that’ll fix it” …………….. whatever “it” is…………

      • SweeperMEMBER

        His point is correct imo.
        For the last 10 years people have been saying the Fed is being over-adventurous, “printing money”, too activist etc. etc. when the truth is they have been very conservative.
        Yes their balance sheet has grown, but that’s only because demand for US dollars has exploded and because they’ve paid interest on reserves.
        Have they ever promised to buy bonds direct from Treasury, depreciate the dollar, implement negative interest rates, buy stocks, commence level targeting or most of all raise their inflation target?
        No, because that really would involve printing US dollars *in excess* of demand to raise the US price level or global price level through depreciation. They’ve been plugging holes. Even in March this year all Powell did was respond to a huge scramble for cash and dysfunctional bond market. He didn’t do anything reckless at all. As Hendry implies, by refusing to do the right thing (raise inflation) CBs chose the creditor class over society – all the anti-inflation cluelessness from journalism hasn’t helped.

        • DominicMEMBER

          “Have they ever promised to buy bonds direct from Treasury, depreciate the dollar, implement negative interest rates, buy stocks, commence level targeting or most of all raise their inflation target?”

          Sweep, the Fed is directly funding US Govt deficits. Treasury may sell the bonds to PDs but the Fed is buying them from there – the fact there’s a middle man creaming a basis point in the process is irrelevant. MMT has arrived already — it’s just not official (yet).

          • It does make a difference if they buy them from Treasury they are financing the deficit if they buy them from the private sector they are just lowering interest rates.

      • DominicMEMBER

        Your instincts are taking you in the right direction. The very idea that printing money can solve such entrenched and complex economic problems is absurd.

        Hendry, knows the ‘model’ is rooted and he sees social disintegration on an eye-watering scale. Given that’s it’s baked in the cake, he’s terrified and is therefore an advocate of handing out ‘money’ by the fistful to placate very angry and scared working (and non-working) classes.

  5. The Traveling Wilbur

    Today is a red letter day.

    Just showed the missus her first ever Macro Business page. That cartoon is the best thing CB has ever published – gold.

  6. Well I have 2 interviews this week. Hopefully a job out of them… But these are interesting times.

    ATO approved my Super withdrawal. Weee…

    And I am happy to see Dan lock down Victoria by targeting the worst parts of Melbourne. My sister is in Keilor Downs and was tested today. I’ve been getting a lot of mileage out of stirring her about 4 weeks of lockdown. Ha.

    • DominicMEMBER

      Yep. They won’t thank her for it either. Ze Germans are suffering WWII guilt methinks.

      Europe is doomed — the Germans should take their medicine and GTFO. Now.

      • ErmingtonPlumbingMEMBER

        What’s your view on The cancellation of Germany’s debt in 1953 Dom?

        https://www.cadtm.org/How-Europe-cancelled-Germany-

        Yet It wasn’t until 31 December 2006, Britain made a final payment of about $83m (£45.5m) and thereby discharged the last of its war loans from the US. By the end of World War II Britain had amassed an immense debt of £21 bIllion.

        What were the “Allies” fighting for/against again?

        As for Germany leaving the Euro
        What kind of hit do you think that would have on their manufacturing and export sector considering their Deutsche marks would become the most overvalued currency in the world.

        • War debt is a slightly different prospect. And probably a good idea.

          The issue is the German taxpayer is already on the hook for over $1trillion of debt racked up with Club Med.

          Think of it like this: my wife does the spending in our family and the faster she spends, the more I save, but it works because love and family commitments (children) etc.

          The Germans don’t have the same connection with their fellow Europeans and why should they sign up to paying their bills from now till eternity? The German people don’t have any real representation in the EU (and nor do the taxpayers of any other country). The EU is just another vast bureaucracy who pay themselves handsome salaries to do fundamentally fck all.

  7. haroldusMEMBER

    About Dan’s new lockdown:
    1) Where are the “community leaders” encouraging full cooperation with the authorities?
    2) How long before everyone else cracks it when there are no consequences for disregarding social distancing?

  8. Question without notice: if ASIO is recruiting 500 ‘cyber-spies’ – should we presume they’re not going to be subcontinentals or mainlanders?

  9. https://www.smh.com.au/business/markets/is-the-fed-about-to-nationalise-financial-markets-20200630-p557kd.html

    Long-term increases in the volume of money circulating in the world’s most important financial system and economy and an indefinite extension of negligible borrowing costs would extend the financial repression savers have experienced since the financial crisis, increase wealth inequality and encourage more leverage in a world already over-burdened with debt.


    And..

    That will act as a brake on economic growth and generate a continuing distortion of financial markets, which might be good for investors, permanently removing risks, but further disconnecting financial markets from any direct relationships with real economies. The notion of efficient markets driving efficient allocation of savings and productive activity would be lost.

    Couple the evermore pervasive involvement by central banks in their financial systems, markets and economies with the fracturing globalisation, and the new economic and financial market environment that is emerging could be radically different to the one it is displacing — one in which central banks and governments have a far larger role than ever before.

    But don’t worry kids. The Adults are in charge.

    • Jumping jack flash

      Slowly but surely their system is revealed for what it is.
      As it is revealed, the solutions are too.
      Their actions over the past 20 years are eventually seen for what they were really performed to do.
      Everything we have been told for at least the past 20 years is a lie. Everything has been done to put the banks in charge, expand debt, and make the banks richer.

      Taking control back from the banks is impossible, rather a parallel system needs to be created that is more attractive than theirs. This isnt too hard if governments got a clue and thought outside the box. But politicians are the laziest people on the planet, with few exceptions.

        • Jumping jack flash

          possibly you are correct.

          The entire system needs to be reworked to remove the necessity for people to take on such enormous quantities of nonproductive debt. This will require some strong leadership and some lateral thinking. The banks purposely created this system and then convinced governments to protect and nurture it so the banks’ product of debt would be as essential for people to buy as food, energy and water is.

          Governments need to take the lead on this though, and this seems very unlikely.

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