Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

by Chris Becker

Outside the ASX200, share markets are rising across Asia with S&P futures spiking on the back of the Trump nomination speech at the White House where he lied about well, almost everything, but markets hung on to the anti-Chinese comments for some reason. Gold spiked back to its start of week high at the $1945USD per ounce level but still looks weak here:

In mainland China, the Shanghai Composite is up 0.5% to 3367 points while in Hong Kong the Hang Seng Index is trying to catch back the previous session losses, up nearly 1% to 25500 points. Japanese stock markets are also moving higher, the Nikkei 225 up 0.5% at 23331 points, as the USDJPY pair launches higher on the risk on meme to a near two week high:

The ASX200 is the odd one out, down 0.7% currently at 6087 points as earning season looks ominous while the Australian dollar isn’t helping by making a new weekly high, almost hitting the 73 handle in a solid spike:

Eurostoxx and Wall Street futures are quite firm with the S&P500 four hourly chart indicating to buy buy buy as always – because nothing can go wrong here hey? 

Have a good weekend!

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Comments

  1. good afternoon all and hope all will have a good
    weekend. And smooth school run for you Chris

  2. I made $50 today.. trading SAR.
    Should have made lot more if I did not panic but I play safe so exited when yields spiked and gold fell.. did not want to buy when all gold miners hit the bottom even though I called it correct. It was too risky.. but if anyone bought SAR at $5 and sold about now..

    • Lol. And the best thing is the cost to the taxpayer is likely to be in excess of $50m.

      No cash available for repatriating honest citizens though …

    • Taking that criminal to Australia is the most stupid idea I have heard all year. It is even stupider than the home renovation grant.

      And Scomo is most concerned for what the victims families think about it:
      “most of all we are concerned about what the views of the families would be of those affected and we want to do the right thing by them”

      So lets take this a bit further.
      An Aussie in Saudi Arabia steals from a shop and is sentenced to have a hand chopped-off. Scomo is asked if the criminal should be brought to Australia to have the hand chopped-off here.
      “most of all we are concerned about what the views of the shopkeeper would be and we want to do the right thing by them”

      New Zealand is a different country to Australia.
      If a person commits a crime in New Zealand the person will be charged in New Zealand, convicted in New Zealand and sentenced by a New Zealand judge to a jail term in New Zealand. Any appeals will be made in New Zealand and any parole release will occur under New Zealand law as determined by New Zealand authorities at the time.

      It is outrageous to have a person kept in jail in Australia who has committed no crime in Australia and has no avenue of appeal in Australia.

      • kiwikarynMEMBER

        I’m against it because it opens the door to Australia sending us all current and future incarcerated New Zealanders. Currently Australia only deports them after they have finished their sentence, but any law change to allow you to send criminals doing time back to NZ to do their sentence would likely see far more Kiwi’s sent back to NZ than what Brendon Tarrant costs to keep in jail. Maybe Scotty has figured this out.

  3. How is it the self identified leaders in the private sector can just stick a “no comment” on their website after screwing up all by themselves, become invisible and prob sit it out at the beach house, yet a politician who is paid a fraction of the amount has to face journalism for 50 days and deal with libertarians. And then the libertarians whinge about the politician. Clueless.

    • pfh007.comMEMBER

      “..self identified leaders in the private sector can just stick a “no comment” on their website after screwing up all by themselves, become invisible and prob sit it out at the beach house..”

      I haven’t been following COVID-19 this week.

      Who are you referring to?

      I gather the politician you think is being given a hard time is Andrews. Well he seems determined to protect some idiots in VicHealth so that is to be expected. Possibly he is protecting them because he fears that if he dumped on them they would eagerly finger a paper trail right back to a few minister’s offices or perhaps his own.

      On the bright side if they have cured VicHealth of COVID-19 quarantine stuff ups, all his sins will soon be forgotten and he will be as popular again as Scott from Marketing in time for the next election.

      From what I can see the opposition in Victoria are a hopeless bunch so he will not have to try very hard to win at the next state election.

    • migtronixMEMBER

      Oh noes!!! Face journalism? *gasp* I’m been doing it every day on twitter for years, being a libertarian and not an idiot it’s easy…

    • you were brave. I trimmed some of mine where I don’t think they will make me money. this thing is primed to crash and I am scared as hell as I do hold few really promising explorers who are due to announce assays in the coming days/weeks.
      IPT, TTM, RTR, REE and PXX.

      • Brave or stupid. I’ve dropped six figures on new positions this week, but quite diversified. Most are planned as short-term holds only. Next week will probably be quite good or quite bad…lol…(though I think kiddies will go and play now that Daddy Fed has said he will keep Mr. Nasty Rate Rises away).

        Thanks for the tips on those explorers, too – added to my watchlists.

      • SnappedUpSavvyMEMBER

        I cut back on Ree I don’t think they will do much for quite awhile, just halved my holding.
        I agree I think there is a massive correction coming which will sink all boats even gold

        • i still hold but I agree with you. The first two holes will not look good.. or at least the one at Bayleys. The one are Trundle Park I also think will miss the scarn but may test the porphyry below and I doubt will give enough clues on where the core is.
          However, 002 (the 300m extension) & 005 could be the ones that can make share price move in right direction. I am too exposed with REE but will hold.
          btw.. KCC raised $5m and are ready to continue drilling.

      • Fed balance sheet drop by $20b this week. pretty much plateau for a while. Not increasing their purchases but not unwinding either. Repos still at zero though

        • Yep, fair point — no more juice at this stage, with risks very asymmetrically skewed. I’d be raising cash and sitting tight with core positions. September approaches – typically a volatile month with VIX coiling at the lows.

        • if yields start spiking FED will start buying. They want to make sure yields will be low while official inflation runs above 2% and below 3%. That means unofficial inflation will be around 5%. These guys are worst than Chinese. I trust no one’s data these days.

        • However, by ‘juice’ I mean looking through inflation and not raising rates; and, as Niko said, buying bonds again if required to keep rates low. Juicy?

    • now everything is lining up for gold to go to $5k and it probably starts tonight. Only reason why I am not buying is that I still hold the view of another crash with a margin call that may present buying opportunity.
      However, if I miss it then I am sure that at least two of my explorers will make discoveries and all of them are – Au/Cu, Au and Au,Cu,Ag,Ni,PGE. If that happens I will make it on the other side with a big smile on my face. If none of them makes it I will take decent hit. If three or 4 make it I am looking at some serious money.

    • Personally, I’m looking forward to the day that the Dems take power and institute strict gun control laws, with all citizens required to hand them in.

      THEN, it’s on.

    • The same “they’re gunna tek er gerns” hysteria envelops the gun nuts every election cycle, and after every election it ends up being a big nothingburger, because no serious gun control laws are ever going to be passed federally.

      I am amazed gun shops haven’t learned to stock up big 6 months out from an election to capitalise.

  4. That statement from the Fed last night is huge. They have more or less abandoned inflation targeting,
    30 years of neoliberal orthodoxy and potentially the 38 year bull market in bonds is now over.

    • pfh007.comMEMBER

      But do you think they really mean it?

      They seem pretty happy with the rest of their bad ideas.

        • Yep, sweep’s getting excited about nothing.

          Just more QE, curve control, intervention in every market, printing out the wahzoo. Nothing we don’t know is coming.

          • you are confusing instruments with targets. this changes everything.
            eg. say the RBA announced an average target of 2.5% (averaged over 5 years) – what would that imply for policy this year v current annual target.
            It’s basically removing the 2% target which has been the orthodoxy since the early 1990s and is giving CBs license to raise annual inflation above 2%.
            By lifting the target they are making QE & money printing less likely because it will increase velocity – if its seen as credible.

          • Sweep, I think the reason you and I will be in perpetual disagreement is because I look at inflation from an Austrian perspective and you look at it from a traditional Keynesian perspective. It’s money supply increases versus ‘general price increases’ and while there is a relationship between the two it is vague at best – particularly over the short run. It’s a bit like Richard Dawkins and the Pope trying to find common ground.

          • Agree, the Austrian School (Roman Catholicism) predates the more modern and scientific Keynesian school.

          • Indeed , Sweep, but perhaps an illogical comparison. One religion is much like another – just with variations. Keynesian economics, on the other hand, is a relatively new ‘innovation’ — maths replacing human behaviour as the basis for economics. Doesn’t pass the common sense test, does it? Baffle with bullsh#t is the general strategy there. Still, on the bright side thousands of people with useless degrees have secured jobs as a result – so it’s got that going for it.

        • Agreed.

          I also think the Fed is implying to the market that it doesn’t need to worry about rates going up, so just keep playing…and if you start running out of puff, we’ll give you more pills, so just keep dancing, driving playing…

      • yes. they can’t make a statement like that unless they mean it. the loss of credibility would be too significant

        • pfh007.comMEMBER

          What I mean is that inflation is not rising because of Central Bank policies to date where they demand balanced budgets, compliant labour, NAIRU and an economy run on private bank debt.

          Those policies reflect ideological convictions that go beyond inflation.

          Just because the Fed abandons a target doesn’t mean they can deliver inflation.

          If anything I assumed they were abandoning the target because inflation is a dead duck in this neoliberal wonderland where the pricing power of labour has been permanently destroyed.

          Now if they got on board with your idea of nationalising the banks then that would be a different story as effectively credit policy would then be effectively fiscal policy. Plenty of mates would be lining up for credit along with all those national building projects being flagged through for loan approval.

          I prefer allowing a 100 capital allocation flowers to bloom but we have to disagree about something don’t we.

          https://theglass-pyramid.com/2020/08/13/myrba-letting-100-monetary-flowers-bloom/

          • They haven’t wanted higher inflation. No major CB has raised it’s inflation target post the GFC.
            All the new tools and the balance sheet expansion has been *because* they haven’t raised their inflation targets, so interest rates have stayed at zero and money demand exploded. All they’ve been doing is meeting demand. This is exactly how Mervyn King described it btw.
            The out of control CB’s thing is just a libertarian meme. They have been incredibly conservative.

          • pfh007.comMEMBER

            “.. They haven’t wanted higher inflation. No major CB has raised it’s inflation target post the GFC…”

            They haven’t hit their existing targets so raising them would have been silly but I don’t see how abandoning those targets will make a difference.

            Unless of course they deploy a bunch of tools designed to drive inflation.

            Let me know when that happens because that would involve a massive change of mindset amongst our crispy dry central banking crowd.

          • 007,
            they haven’t hit their inflation targets because their inflation targets are too low to reach the equilibrium real interest rate when the nominal rate is stuck at zero and there are political limits on negative nominal rates.

          • if you look at market pricing for inflation, it has been basically spot on the target, and real interest rates have been 0 to .5% in the US which says that the inflation target is too low to get to a real interest rate which would create full employment and inflation.
            In other words the market has believed the inflation target, it’s just been way too low.

          • pfh007.comMEMBER

            What exactly do you expect that Central Banks will do differently if they adopt a higher inflation target?

            I would like to know what to look for.

            Or are you arguing that merely adopting a higher target will be a self fulfilling prophecy?

          • you would see it in the breakeven rate going above 2.5-3% (which has more or less been capped at 2% for the past 10 yrs)

    • GunnamattaMEMBER

      I agree in the main.

      But I do think that here in Australia there is a real risk that in 5 years time we will have 10% plus unemployment, crashed real estate market, the retail and services sector face down in the pool and the electorate generating ‘security concerns’ based outlays on policing and intelligence gathering……….etc etc etc

      But we will still have the RBA banging on about having inflation under its 2-3% target and expecting to get there next Hour, Day, Week, Month (delete not applicable), with a wages explosion also due any minute.

      • happy valleyMEMBER

        And by then, the RBA happy clappies will have implemented NIRP to give themselves something to do and keep the great Strayan bubble afloat, having been one of its pre-eminent creators under Captain Glenn?

      • Hey gunna what do you mean by this?

        “electorate generating ‘security concerns’ based outlays on policing and intelligence gathering”

        You mean general disgruntlement?

        • GunnamattaMEMBER

          Well the Gunna hypothesis is that at some point the natives are going to get a touch feral, and governments will spend (in complete agreement with the ‘elites’) on ‘managing’ that restlessness.

          To rework P.G. Wodehouse I would suggest that if they are not exactly disgruntled, they may not be as gruntled as they had been at some point in the dim and distant past.

          Or maybe to put things more in tune with the vibe of our era…

          Gruntlement may underperform forecasts, or disgruntlement may outperform.

          The Gunnamatta Gruntlement Gauge or G3 – which will be waited for and traded off by millions when it is released on the last Friday of every month – will be the one to watch.

          ….’and In Australia today, a surge in G3 readings over the past month has traders going long on baked bean canners, ammunition vendors, and gold bars.

          G3 for the month came in at 17, down 34% after, Prime Minister Peter Dutton announced sweeping changes to the UBI which will see an estimated 32 million Australians living in poverty be forced to account for any high sugar or high fat grocery purchases, and asked to ensure their energy consumption is curtailed on specially designated ‘system instability’ days notified by electricity retailers. Police have been accorded powers to search and short the properties of those suspected of flouting the new regulations……

          ….and after the break Mardi will be back with the weather…’

          • My shutin lockdown opinion is the natives are already at tipping point, and just looking for a decent spark (to mangle analogies).

          • GunnamattaMEMBER

            Your shutin lockdown opinion is much the same as mine. I hope ScoMo doesnt announce corporate tax cuts anytime soon

      • They won’t be able to do that anymore. average target changes everything.
        eg, say the RBA adopted an average inflation target like the Fed but adopted its annual target (2.5%) as the average. Phil Lowe would have to hit about 7% inflation this year to meet the average target over the past 5 years because performance has been so bad. Otherwise policy is relatively tight v US – assuming the Fed aimed to return to average this year (averaged over a five year period)

        • Yep – I say it’s a licence, a signal, to everyone and everything to just go wild: we’ve got your back AND we won’t raise rates. You basically can’t die.

    • They are just stating the obvious. To get out of the debt mountain they created they need inflation and lots of it. Zero interest rates didn’t work. Begging for CPI inflation won’t work. Nothing will work until the debt deflation does what it has to do.

        • I thought we’d discussed this Arthur: higher cost of living with no increase in wages.

          Inflation and wages increases are not tied at the hip — in the same way that inflation deleverages debt, inflation also diminishes real earnings.

    • people are still working out what actually means. Looking how yields, gold and futures were/are moving all day, people are still guessing. But gold to da moon in USD first and then in all fiats.

      • As a wise man opined quite recently in response to the recent gold rally:

        … the sector is now entering the “recognition phase” – the stage at which the investoriat-at-large realizes something is afoot …

        Couldn’t have said it better myself. In the meanwhile, hysterical ‘experts’ claiming gold is in a bubble. OMFG.

          • Hard to disagree. The valuations of both are being driven by the same economics i.e. the relative abundance /scarcity of one good versus another. If the number of USDs is increasing at a rate of 30% per annum while gold supply is increasing at a rate of 1.5% per annum then it’s only natural that gold in USD terms would increase sharply – it’s possible, in fact that gold hasn’t increased enough base on that math – but there are other factors at play here, of course.

  5. migtronixMEMBER

    “one man in his 80s, two women in their 80s, five women in their 90s and three men in their 90s.”

    • *****10000 (seems they stopped allowing the plus sign in posts)
      dont forget that case of 27 or something that we never got to know the background of the medical condition

      • I’ve been spammed repeatedly by this ad on Twitter (“Young mum ‘completely incapacitated’ by COVID”). It was released on August 10 and ends by saying “After filming, Sarah unfortunately returned to hospital. We’re all wishing her a safe recovery.” As a propaganda video it’s amusingly crude.

    • Obviously worthless individuals that are a drain on society with no family that cares about them. I’m surprised they were even in hospital or a home. They should have been left to die on the street.

      • It is definitely a binary situation- either all the oldies are sacrificed or the economy crippled and the youth cast aside.
        There is no scope to adapt. None at all.

    • I still don’t see your point. You are pointing to a low death rate – which is a measure of success of of the lockdown (which libertarians said can’t work anyway, until it does work every single time) – and saying the lockdown is the wrong policy?
      Like saying we should abandon fluoridation because tooth decay isn’t a major problem.

      • migtronixMEMBER

        I’m old enough to remember when we had to flatten the curve so people don’t die in the corridors between the wards in hospitals. None of these – and I had no idea we even had this many 90 year olds – were in hospital. I’ve never met a 90 year old and zero interest in it so how exactly am I danger to them lockdown or no lockdown? Your not very bright, probably cause journalism

        • how does whether you want to meet a 90 year old have any bearing on the success or otherwise of lockdown policy?
          far out. why can’t libertarians separate the personal from the analytical.

          • migtronixMEMBER

            Far out why can’t the obsessed see obvious consequence? 90 year olds don’t rock in the same circles and there’s not many of them and they spend half their time at the doctor or chemist – maybe try taking care of that and leave the rest of alone. Instead of punishing 5 million people because you won’t take care of a couple of thousand…

          • creating a precedent to abandon the old isn’t a great idea (even from a libertarian standpoint) because most people grow old.
            eg. will you regret it when you’re 80?

          • *sigh*
            We ‘abandon’ the old every year. The weak and frail cannot or never can be realistically protected. We have just found a cruel new way to ensure their last days are awful, isolated misery.
            2017 was a bad flu season in Australia. 1255 people died. Surely our base threshold for acceptance of Covid deaths before we bat an eyelid is at least that even though we’re currently half their tally (ignoring died from/with covid debates). If not, why not?

    • I can tolerate lockdown, what is giving me the irrites is the debate over let it rip vs lock it down.

      Yes old people are impacted, but that’s because it’s got into nursing homes and young people are still at risk and have long term health issues.

      If we let it rip, we’d be in a lot worse position right now. Besides Covid-19 may actually cause some positive change in our economy.

  6. That guy in the US of A was watching his wifey having relations with the pool kid…and he is bible college headmaster LOL Lol

    • “Seven boss James Warburton has labelled CA ‘the most incompetent administration I have ever worked with’.

      Gloves off!

      • TailorTrashMEMBER

        Get the feeling quite a few “ journalists “ in straya are starting to get a bit uneasy and are repositioning themselves … just a tad ….don’t know if it’s an each way bet …but interesting…
        …..

      • Check the DHHS of vic. It says close contacts do Not need to isolate while someone is waiting for the test results :/

        • Here in QLD all identified ‘contacts’ have to isolate for 14 days mandatorily — even if they test negative while quarantining.

          Anastasia is one mean Mfker. Don’t mess!

  7. Are people still noticing ridiculous asking prices for gear / toys e.g. sports etc on gumtree? So much for a downturn. Haggling just seems to lead to aggro / insults / threats / suggestions to engage in unlawful acts with a camel

    • Yes

      Road bikes on Bike Market

      No discounting at all apart from say wheels stems posts

      Framesets still $$$

      After an sworks Sl6 tarmac or R5 Cervelo or canyon or bmc

      • Mining BoganMEMBER

        You’re not wrong. I’ve been going to trade in the SL01 on something with less miles but prices are ridiculous. Doesn’t matter though, I’m having fun tooling around on the 30+ year old Nishiki. Heavy as an anchor but geez 80s bikes ride well.

    • Mining BoganMEMBER

      Yep. First it was super money but reckon it’s really taken off since the announcement of the extension of ScoMoney to March.
      If it’s not your money it doesn’t matter how much you pay. See houses.

        • 😂😂 was thinking the same is haggling only related to mid East peoples??
          That poor camel though attached to them

          • As a matter of fact it was for an item (home gym equipment) located in Mona Vale that made the camel suggestion, so I think some personal fetish not cultural.

            List used gear at 95% of current new retail price at A-Mart and what do you expect?

            That’s it, I am steering clear of that site for 12 months.

  8. 2 weeks Woolies missed to deliver the bananas. Today they dropped someone else’s order. That’s way I shop at Woolies.

  9. Abstract

    COVID-19 causes cardiac dysfunction in up to 50% of patients, but the pathogenesis remains unclear. Infection of human iPSC-derived cardiomyocytes with SARS-CoV-2 revealed robust transcriptomic and morphological signatures of damage in cardiomyocytes. These morphological signatures include a distinct pattern of sarcomere fragmentation, with specific cleavage of thick filaments, and numerous iPSC-cardiomyocytes that lacked nuclear DNA. Human autopsy specimens from COVID-19 patients also displayed marked sarcomeric disruption and similar fragmentation, as well as prevalently enucleated cardiomyocytes. These striking transcriptomic and cytopathic changes provide a roadmap to understand the mechanisms of COVID-19 cardiac damage, search for potential treatments, and determine the basis for prolonged cardiac morbidity observed in this pandemic.

    https://www.biorxiv.org/content/10.1101/2020.08.25.265561v1

    Achoo … Gack … thud …

      • A chance to get close and personal with a girl you fancied — at a mate’s party. Those were the days *sigh*

      • Doing fine, thud is for the so called pragmatists, curious projection considering its rather narrow views and how they are arrived at …. maybe the rational [tm] agent buddy can resuscitate – ????

        In other news just landed a big job for the business two houses up from the one I was just working on and expanded the client base with the one I’m on now through their networks.

        • call a spade a spade Skippy. there is nothing remotely pragmatic pretending an advanced society can function without a well resourced State managing (fixing) private sector coordination failure (selfishness)

          • It is interesting to see the increasing failures in the legacy neoliberal countries where atomistic individualism property rights, concentration never mind, leads to 3rd world like social dynamics …. but yeah … freedom …

      • Sweep, in order to understand libertarians you need to understand this:
        They tend to be pragmatists … not romantics.

        I think that’s the simplest way to describe the difference between libertarians and, er, others.

        Libertarians see what’s possible in the real world while the Left just project the world they’d like to live in.

        • Libertarians see what’s possible in the real world while the Left just project the world they’d like to live in.

          A perfect example of Libertarian Opposites World.

          • I’m crossing fingers for skittle-sh1tting unicorns and fluffy bunnies … just for you smithy.

            Hopefully it’ll happen – some day.

          • Libertarians spend most of their time trying to come up with ways to project their greed and selfishness onto everyone else’s behaviour, and the rest of their time blaming Government when reality contradicts them.

      • no not really. it’s possible to do both.
        someone once said “heart on fire brain on ice”
        I don’t agree with his politics but he definitely had a brain.

      • Thought you meant librarians there for a minute. While undoubtedly red-blooded, these days they tend to be data-savvy SQL merchants.

  10. https://www.smh.com.au/business/companies/it-s-a-tsunami-pandemic-pits-retailers-versus-bully-boy-mall-owners-20200826-p55plb.html

    Is it just me or do these sales figures not seem right?

    veteran retailer Peter Sheppard’s eponymous upmarket shoe store at the entrance to Westfield’s Pitt Street mall in Sydney was thriving before the pandemic hit.

    Shoe sales in the Sydney store are down by $2.8 million.

    Over, what 3-4 months? Say 100 days, that’s $28,000 per day. Even split into just 60 sales (approx $450 a sale), that’s still a closed sale every 6-7 minutes that the shop is open!! That just does not accord with what I had seen in CBD retail stores pre COVID, albeit I have never been in that joint. Even a sale every 10 minutes would be a stretch. Or maybe I just don’t know shoes.

    • It has to because its still stuck in the inflation targeting (ceiling) paradigm.
      remember it took 12 years for the RBA to start targeting long-term rates after the rest of the world, so in 12 years time when the RBA finally abandons inflation targeting maybe it will be a good time to sell.

    • Can’t go overseas, so can’t blow your cash in Bali.

      Can’t get into the country on a student visa, so can’t drive Uber and send the proceeds back home.

      All along we still keep selling Iron Ore.