Macro Afternoon

See the latest Australian dollar analysis here:

Australian dollar safe harbour holds as virus shock intensifies

The mixed mood on markets is moving to the positive side, outside of China, with most share markets here in Asia rebounding further than Wall Street did from overnight on the back of potentially more fiscal stimulus from the US congress.  The USD is in a very slight retreat after its big run against everything, with gold lifting slightly to the $1869USD per ounce level as most gold bugs try to forget a falling week:

In mainland China, the Shanghai Composite was down after the lunch break but seems to be climbing to finish with a scratch session going into the close while in Hong Kong the Hang Seng Index is off further, now down 0.5% to 23190 points. Japanese stock markets are trying to clawback some lost confidence, with the Nikkei 225 closing 0.5% higher at 23204 despite a small drop in the USDJPY pair as it rolls over following an exhaustive swing rally this week:

The ASX200 wins the gong again for the best in the region by surging 1.5% on the hopium, closing the week out at 5964 points, while the Australian dollar remains subdued here just above the 70.60 level, still looking very weak going into tonight’s session:

Eurostoxx futures are up 0.4% or so, with S&P futures also in positive territory, up by 0.2% with the S&P500 four hourly chart still looking very shakey here, requiring a solid bounceback tonight, specially above the 3300 point psychological level:

The economic calendar finishes the week with the latest US durable goods order print, plus a private oil rig count.

Have a good weekend!

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Comments

      • The Traveling Wilbur

        Copy and paste (for next time): Markets risk on, delusional, no one knows why. Irrational. MVA may be vulnerable. Trump is a looser and may be reelected. Forecast for showers. [Stellar gif to finish with please].

        Paraphrase as required.

    • The possibility of an agreement was enough to make me sell out of all my short positions today (fortunately for some profit)… I have no shares again…! Feels weird… but good at the same time.

      • if Dems internal polls show they will win if people are hurting there will be no agreement. As long as Dems can blame Trump for lack of stimulus. MSM (most of it) will be cheering for the Dems.
        If I can see what their internal polling shows.

    • Democrat House bill is 2.4 Trillion. Republican Senate bill is still 600 billion. Trump doesn’t have anything. It’ll take a miracle.

      • It’s a tough one for Trump – -he needs a deal well ahead of the election and the Dems know it. Markets will be volatile as long as there’s uncertainty. There are many Republicans dead against a large stimulus package. Trump is wedged – he wants a deal ASAP.

        A deal will be done – whether it’s this side the of the election, who knows.

  1. lol.. just heard another Macedonian girl won the bachelor show. we may not be known as scientists but when it comes to making love..

  2. I know everyone was hanging out for this – I got 88% on my ITIL exam.

    Took just over 15 minutes (1 hour allowed).

    Took longer to set up than do the exam.

    “Maria” did not have a “Maria” accent……….

  3. Home Covid Test:
    1. Pour a large glass of red wine, try to smell it.
    2. If you can smell the wine then drink it and see if you can taste it.
    3. If you can smell it and taste it it confirms you don’t have covid.
    Last night I did the test 19 times and all were negative, thank god.
    Tonight I am going to do the test again because this morning I woke up with a headache and feel like I am coming down with something.
    I am so nervous.

    • All good, money laundering legislation to be wound back next week and they’ll legalise armed robbery as long as it involves the banking system, the week after.

      • Theft from citizens was legalised ages ago when the central bank started steering monetary policy. That dollar you earn? It gets clipped a little bit every day:

        John Maynard Keynes Quote
        “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” JM Keynes … he knew it.

        • Keynes was paraphrasing Lenin there who was referring to the early hyperinflation in Russia from 1916 to 1923-4 after Russia left the gold standard in 1915-16.
          Note. he was referring to *hyperinflation* caused by abandoning a nominal anchor (in that period the gold standard) not to a stable controlled increase in prices as we have today. Which CB can’t even reach at the moment.
          He was talking about hyperinflation “debauch the currency”, which he saw as unjust as it is effectively a transfer from those who hold most of their wealth in cash (the poor) to those who hold or can switch over in hyperinflation to real assets (the wealthy).
          The equivalent today would be abandoning inflation targets and following MMT at full employment when bond yields are in double digits.
          Is anybody proposing that or is that remotely foreseeable?

          But he hated deflation (which he saw correctly as a racket for bondholders) far more:

          “Deflation is even worse than Inflation. Both are “unjust” and disappoint reasonable expectation. But whereas Inflation, by easing the burden of national debt and stimulating enterprise, has a little to throw into the other side of the balance, Deflation has nothing”.

          “The wise man will be he who turns his assets into cash, withdraws from the risks and the exertions of activity, and awaits in country retirement the steady appreciation promised him in the value of his cash. A probable expectation of Deflation is bad enough; a certain expectation is disastrous. For the mechanism of the modern business world is even less adapted to fluctuations in the value of money upwards than it is to fluctuations downwards”

          “In the first place, Deflation is not desirable, because it effects, what is always harmful, a change in the existing Standard of Value, and redistributes wealth in a manner injurious, at the same time, to business and to social stability. Deflation, as we have already seen, involves a transference of wealth from the rest of the community to the rentier class and to all holders of titles to money; just as Inflation involves the opposite. In particular it involves a transference from all borrowers, that is to say from traders, manufacturers, and farmers, to lenders, from the active to the inactive”

          “Thus Inflation is unjust and Deflation is inexpedient. Of the two perhaps Deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier”

          Remember that Weimar survived hyperinflation. It didn’t survive Brunings deflation.

          • The Traveling Wilbur

            The equivalent today is not including house prices in the measure of inflation and allowing that to DOUBLE every seven years.

            Is anyone contemplating that you ask?

            Only me. Apparently.

          • refer to my comment to Dominic below.
            If the CPI is rigged why is the breakeven rate currently 1.6%.
            Do bondholders want to loose money?

            And including house prices in the CPI makes zero sense anyway, because it’s an asset.
            Should bonds be included in the CPI? Weighted by market size.
            eg. CB cuts rates, bond prices go up, CPI goes up, so the CB reverses the rate cut?

            You are effectively saying the CB should be targeting the same variable it is using as an instrument to reach it’s target (yield on assets). It is circular and illogical.
            They target the price of currently produced goods (consumer prices) by changing the relative price of currently produced v goods to be produced in the future (interest rate)

            eg. you are saying they should target the relative price (interest rate) by adjusting the interest rate.

            “Following developments in asset markets, at our board meeting today, the board decided to increase our target interest rate in response to a lowering in the market interest rate. Having no further business the meeting was then closed”

          • Sweep, you are what is known as ‘a true believer’.

            Hats off. I personally cannot fathom that an intelligent person could possibly fall for the bullsh*t you’ve just outlined above.

            Inflation: the reduction in purchasing power of every dollar earned by the working man. (Sounds a great idea! For corporatists)

            Intellectualise this all you want but look in the mirror and you’ll see an ideologue, incapable of original thought and prisoner to faulty economic theory. Josh Fraudenberg and Phil Lowe love your type. They preach and you swallow.

            No worries, chief — as along as I don’t personally suffer as a result of what you (and Skip) believe, it’s all good. Enjoy!

          • “Inflation: the reduction in purchasing power of every dollar earned by the working man. (Sounds a great idea! For corporatists)”

            The inaccuracy of this is just unreal.

            “every dollar earned”

            Inflation means inflation in earnings for those who sell stuff, including their labour including goods.

            eg. people who *earn* their living are unaffected by inflation.
            It’s those who don’t earn (but extract) their living that suffer. eg. the racketeering bondholders.

          • Whats your beef with Frydenberg? He is a true believer in Reaganomics and tax-cutism.
            And Lowe has basically returned us to the gold standard.

          • The Traveling Wilbur

            Last time I checked, a bond wasn’t one of those things most people consider a necessary of life. Like food, water, freedom of movement, the right to vote, free speech and association. You can buy all the bonds that you want. You can buy all the twinkie bars and tulips that you want too. You may as well have argued that tulip purchases shouldn’t be counted in inflation statistics.

            “because it’s an asset”. Jesus. Guess which contributes more to a person’s ability to spend LESS on a discretionary basis, the hyper-inflated cost of: tulips, bonds, or houses? Truly unbelievable. Now tell me why we should include the rising costs of Vegemite but not Apartments in inflation statistics.

          • The cost of apartments is included in CPI.
            The correct cost. eg. the current market rent. Or cost of current housing services during the year.

            The yield on the asset – incorrectly reported as a price by journalism – is not included as this reflects the cost of housing services today v cost of housing services in the future.

    • If Kenneth Hayne saw Frydenberg today, he would not only refuse to shake his hand, I reckon he’d give him a bitch slap.

    • That little Joshie ehh ?
      giving that royal commissioner a bit of a slap arund.
      never forgets , never forgives
      Thats or joshie.

      • If you can’t beat ’em, join ’em. Think I’ll just load up on debt and take on a $1m mortgage. Even if things go tits up I’ll be given every opportunity to hang on to my home and on the hook for interest repayments.

      • happy valleyMEMBER

        I long ago gave up on ING for deposit accounts once they cut the 0.10% pa loyalty (which is a 2-way street) bonus for rolling over term deposits with them. UBank (NAB) are currently the only one providing a remotely above-market rate at 1.6% pa for at-call (what’s more) deposits through their combo USaver accounts.
        Anyway, come next month the RBA happy clappies will drop the cash rate to almost zero and then not long after that go negative. And Joshie is expecting us to keep our money with our morally bankrupt banks, so that we can lose it when they go full monte soon with their totally irresponsible lending, proudly sanctioned today by Joshie and your LNP gubmint. What does Joshie take us for? Joshie mate tell us how much money you have on deposit with Strayan banks to make us feel comfortable.

      • Gees, just looked at CBA offerings:
        3 months – 0.5%
        60 months – 1%

        Translation: “we don’t want, or need, your money, ch#nts”

        I guess there is always:

        Argentina Government Bond 1 year – 38.7%

      • Will be switching back to my ING Savings Maximiser after 4 months of AMPSaver at 2.65% which ends this month. It will be dropping to 1%. What a difference a couple of months makes these days hey? Good opportunity to join the 1% I suppose. Other option is joining the local rebels chapter and going for the 1% patch with them. After today’s announcement, I have my mark sorted.

  4. Is it culturally inappropriate to eat someone? Ie someone from a neighboring tribe? Asking for a friend.

        • Sweep, you’ve never worked in the industry, so allow me avail of some truths:
          – there is an over-abundance of legislation that demands that various entities mandatorily hold Treasuries (insurance companies, pension funds, banks). This amounts to trillions of dollars in demand
          – the US Dollar is THE reserve currency so almost every central bank in the world owns a heap of them.
          – the Fed owns $7 trillion of Treasuries
          – hedge funds and speculators own a heap. Why? Because they know the Fed will be buying them 4EVA as they conduct QE at indiscriminate interest rates. What relevance does CPI have in that case?

          • never worked in the industry. source?
            mate it makes no difference what fraction of the market the Fed owns or what regulation is in place.
            As long as 1% of the total stock is traded on the open market someone is buying that yield on a commercial basis. Bernanke made this point over and over to journalists during QE who didn’t get it either.
            You have yet to explain why this sophisticated investor with all the research behind them believes the CPI number and has done basically forever.

  5. Knights giving a preview of their traditional “knocked-out-in-the-first-week-of-the-finals” performance tonight.

  6. UNITED STATES …

    Are the massive and accelerating decentralization and dispersal trends adequately understood ? … consider recently updated http://www.PerformanceUrbanPlanning.org

    The Shift from City Centers to Suburbs: New House Sales Soar for 3rd Month, 46% YoY, to Highest Since 2007 … Wolf Street

    https://wolfstreet.com/2020/09/24/more-evidence-of-the-big-shift-from-city-centers-to-suburbs-new-house-sales-soar-for-3rd-month-46-yoy-to-highest-since-2007/

    But the median price declined. Households paying for office space to work from home? …

    … Median price declines, remains in same range since 2016.

    The median price of new houses sold in August fell 4.3% year-over-year to $312,000, and has been in the same range roughly for the past four years. The twelve-month moving average (red line), which irons out the month-to-month fluctuations, at $324,000, also shows that the median price has gone nowhere over the past few years:

    The median price is influenced by the mix of houses sold. A declining median price doesn’t necessarily mean that homebuilders are cutting prices – though it could mean that too. Builders could just be targeting lower price points to meet consumer demand, or sales could have shifted to cheaper locations (more distant suburbs or lower-cost states).

    The big shift. … read more via hyperlink above …
    .
    .
    The $88 Trillion World Economy In One Chart … Visual Capitalist / Zerohedge

    https://www.zerohedge.com/economics/88-trillion-world-economy-one-chart