Australian dollar deer in virus headlights

See the latest Australian dollar analysis here:

Macro Afternoon

Everything is levitating in vain hope that the virus will just go away. DXY:

The Australian dollar:

Gold:

Oil:

Metals:

Except for miners:

EM stocks are floating:

Junk too:

But Treasuries have puked the steepening trade:

Stocks are diving in Europe and have a terrifying double top chart in the US:

Data from Westpac:

Event Wrap

US preliminary September durable goods orders were solid with a headline rise of 1.9%m/m (vs est. +0.5%m/m, prior revised to +0.4%m/m from +0.5%m/m), with ex-transport rising 0.8%m/m (vs est. +0.4%m/m, prior revised to +1.0%m/m from +0.6%m/m). The capital goods component rose +1.0%m/m (vs est. +0.5%m/m, prior revised to +2.1%m/m from +1.9%m/m). The August CoreLogic house price index for major cities rose 5.2%y/y (vs est. 4.2%y/y). The Richmond Fed’s manufacturing index outpaced expectations with a rise to 29 (est. 18, prior 21) – its highest reading on record. Although employment was unchanged (at firm levels and with noted skill shortages), shipping and new orders led the increase along with capex and optimism for coming months. University of Michigan consumer confidence survey pulled back more than forecast to a still solid 100.9 (est. 102.0, prior 102.9), with a slide in expectations to 98.4 (prior 102.9) more than offsetting strength in the present situation (rose to 104.6 from 98.9).

UK October CBI retail survey reflected increasing Covid restrictions, reported sales falling to -23 (est. -1, prior 11). The CBI stressed the increasing restrictions and lower footfall (down by 30%), with fears that it will impact the Christmas period.

Event Outlook

Australia: A 1,400% rise in childcare prices and a lift in fuel prices will drive a bounce in headline inflation in Q3. The market and Westpac expect a 1.5%qtr and 1.1%qtr jump respectively (prior: -1.9%qtr). The trimmed mean should see a flat result however, with rents and the HomeBuilder grant weighing, and inflation elsewhere restricted by narrowly-focused consumption (prior: -0.1%qtr, market f/c: 0.3%, Westpac: 0.0%).

NZ: Weekly data points to the employment indicators posting broadly flat job growth in September (prior: 0.3%).

US: Wholesale inventories have been supported by durables and autos, though are still down 5.2%/yr (prior and market f/c: 0.4%).

Canada: The Bank of Canada is expected to maintain the current stance of policy at the Oct policy meeting. The Monetary Policy Report’s assessment of risks will be a focus given the recent rise in COVID-19 cases in the US and Europe.

The virus keeps marching on, straight through Europe’s light shutdowns and America’s no shutdowns:

But then why do anything when you can just lie:

The White House’s science policy office on Tuesday ranked “ending the Covid-19 pandemic” atop the list of President Donald Trump’s top first-term accomplishments, even as the country registers record amounts of infections and hospitals fill up again.

The US senate has shuttered. There is no stimulus coming:

So, markets are on their own as the virus guts the economy. Well, not entirely on their own:

And US elections usually add more bullishness

Though perhaps not if there is a coup instead!

No risk is priced into anything but it continues to mount skywards.

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. Pffft. Nothing to worry about – markets are perfectly capable of rallying without stimulus and Fed intervention …

  2. I always thought the idea that a deer caught in headlights freezes was a bit of a myth. Not so… I came upon one on my way home this year – I’ve never seen a wild deer in these parts before so I’m not sure who was more surprised- but I had to stop the car while the doe got her bearings and trotted off… fortunately I wasn’t going fast otherwise I’d have had a new hood ornament or worse, passenger…

    • I have the same issue with roos, I may suggest the headline to change from deer to roo, it matches with the AUD !

      • Roos don’t so much freeze in the headlights as wait until they see some coming down the road and jump in front of them.

        • Know IdeaMEMBER

          I really struggle to understand that tactic. With the benefit of experience I am getting better at missing the bouncing fur-balls. But they have an uncanny ability to unpredictably jump at right angles to their direction of travel at the worst possible time.

    • China PlateMEMBER

      “I’ve never seen a wild deer in these parts before”

      the great migration due to climate change

    • Wombats don’t move either. I was heading up the mountains one night and middle of the road. I was anticipating him continuing to move in 1 direction but he wasn’t gonna move. I had to swerve last minute. Thing is, it didn’t even turn to look at my direction. So I don’t even think it knows I was there. Haha.

      • Probably a good thing. I’ve been told hitting a wombat is like hitting a large chunk of concrete.

        • Like a solid rock. I would have destroyed the front end of my Nissan Stagea (import) and the front bar is unique and expensive to this model. He would have also destroyed the intercooler etc.. big mess and would have been expensive to fix. It’s always on the wet foggy nights and I was tired and nearly home to my folks place in the country so best time to relying on reflexes haha.

    • @Peter >fortunately I wasn’t going fast otherwise I’d have had a new hood ornament or worse, passenger…

      Or a dead or fear-ridden dying deer in terrible pain

      • Yeah, I try not to think about that… I don’t mind killing rabbits and possums on NZ’s roads but I avoid everything else. Last year I stopped on State Highway 1 to let a duck and her ducklings cross…

    • Imagine riding a motorbike down a nice curvy mountain road & a large Goanna just strolls out – fearless reptilian brain doesn’t care or perceive a thing & all of a sudden you’ve got a mobile slippery wet log roaming out in front of your 2 wheels….. straightened up enough to just run over the end of it’s tail & get around the corner – very untidy & very lucky.

  3. happy valleyMEMBER

    “The US senate has shuttered. There is no stimulus coming:”

    The GOP achieved in the Senate all that had to be achieved – get RWNJ Barrett up in the Supreme Court, because after all El Trumpoland is the home of RWNJs?

    • Does ACB’s confirmation to the SC really matter at all? And is the fact that Trump picked a Republican any real surprise?

      History shows nominations almost always go along party lines. I really don’t see the fuss – it’s like everyone’s getting uptight because the press is getting uptight.

      • It matters because the lefties are going to try lawfare after they lose. ACB was the 6000th judge appointed by McConnell in Trump 1. Fully a third of all judges appointed across the system.

        This way, when the arrests happen, the usual bulldust living will interpretation of the constitution does not fly.

        You can thank 0 and miss it’s my turn for leaving the judicial appointments untended.

        • I far prefer our system where the appointments are non-political. Justice should be decided along non-partisan lines.

      • Yes there is a difference between confirming a textual originalist to the SCOTUS and picking someone who you prefer cause you want the SCOTUS to interpret things from your new point of view.
        And the idea that a textual originalist will make judgments in the same way the GOP might expect them too is absurd.
        The way the Dems have treated Rep SCOTUS nominees is atrocious – going back all the way to Clarence Thomas. And Biden orchestrated that on Thomas too.
        If you want to know why Dems struggle to win the Senate (they aren’t far off as they deserve to be) – look at their behaviour and woeful understanding of three arms of government.

        • China PlateMEMBER

          “woeful understanding of three arms of government.”

          A-ha, now I get it …the dems have no idea or not much but you, you have a crystal clear understanding and see things that they – collectively – don’t.
          i’ll give you the benefit of hyperbole

          • If you followed the collective and individual expressions of drama by the Dems about the constitution, you could piece it together. Otherwise, I have given you more – as I said, their behaviour during confirmation hearing has been and is atrocious. Line of questioning is bigoted, completely personal and not on the subject of the law.
            Their desire to politicise and pack the courts completely misunderstands… it is their role as the (esp Congress) legislature to pass laws which the SCOTUS can only interpret.

        • Yes there is a difference between confirming a textual originalist to the SCOTUS and picking someone who you prefer cause you want the SCOTUS to interpret things from your new point of view.

          You mean “new points of view” like:
          * Slavery is not OK.
          * People other than white landowners should get to vote.
          * A president should have a limited number of terms.

          • @smithy textual originalism doesnt mean SCOTUS is blind to how society has developed thru the years, including what is currently accepted societal practice. This has been well explained by all the SCOTUS nominees of the past three years before the Senate hearings – while Dems want to demonise /ruin decent people, politicise the courts (and other things eg getting rid of electoral college), so they paint a completely apposite wrong-headed narrative supported by the MSM. Completely disingenuous.

          • @smithy textual originalism doesnt mean SCOTUS is blind to how society has developed thru the years, including what is currently accepted societal practice.

            What ?

            “Originalism” is, literally, the idea that the Constitution should not be interpreted in the context of contemporary standards.

            This has been well explained by all the SCOTUS nominees of the past three years before the Senate hearings – while Dems want to demonise /ruin decent people, politicise the courts (and other things eg getting rid of electoral college), so they paint a completely apposite wrong-headed narrative supported by the MSM. Completely disingenuous.

            LOL.

            McConnel has spent years stacking courts with hard right wingers and you’re whinging about the Democrats politicising the courts.

            Yous sure are thirsty for some fascism.

      • Ronin8317MEMBER

        It matters because she is the final vote to overturn Roe vs Wade, thus making abortion illegal again.

        • That’s fearmongering. Doesn’t work that way – either from the judicial perspective or from the Federal-State legislature.

        • China PlateMEMBER

          Do you really think it will be overturned, within the life of the new SCOTUS, fully overturned. Anything is possible but man that’s a big call. Chipped away at perhaps

          • The States that want to make abortion illegal have been forming an orderly queue, waiting for this to happen, for a decade or more.

            If RvW stands, it won’t be for lack of trying.

        • Abortion in the USA is overwhelmingly used by poor African American women, and poor women generally.
          If its illegal you’re going to get a crimewave and a welfarewave.

          The relegation of White America to minority ethnicity will be accelerated.

          Republicans should want to expand abortion, not criminalize it.

          • Republicans should want to expand abortion, not criminalize it.

            Why ? The people they’re making laws for will be safely ensconced in their gated estates, with easy access to abortion simply by travelling to one of the states where it will remain legal.

            The GOP don’t care if whitey is a minority so long as he’s still running the show.

          • ‘Republicans should want to expand abortion, not criminalize it.’ – And yet they don’t?

            Why don’t you look up who started planned parenthood. And why? It was a crazy eugenicist who wanted to reduce the number of black people in the US. This is why PP’s clinics are in black neighbourhoods.

            Then, if you really want to have some fun, look up who the eugenicists daughter was and what she means to the DNC. You know Kevin Spacey’s characters wife in House Of Cards – yeah, the daughter of the woman who started PP.

        • It matters because she is the final vote to overturn Roe vs Wade, thus making abortion illegal again.

          Strictly speaking it wouldn’t make it illegal, it would just mean that any state that wanted to make abortion completely illegal could (and almost certainly would). Obviously that also means states who wanted to keep abortion legal could.

          Multiple states already have overly restrictive (ie: unconstitutional) laws on the books waiting to trigger a legal challenge to try and overturn Roe vs Wade. After which you’ll get to see some real Christian Taliban sh!t start happening around abortion in those states.

          History shows nominations almost always go along party lines.

          Only for the last couple of decades as the system has become more polarised and partisan. For example, Ginsburg was a Clinton nominee and, as the kids say today, “woke”, yet confirmed by 96 votes to 3 (ie: nearly all Republicans supported her appointment) in 1993.

      • It matters I guess because Obama was prevented by Mitch McConnell from doing the same thing nearly a year, not a week, out from the election. Double standard pfft who cares…

        • Obama didn’t have the votes in the senate to confirm anyone. This whole, the president didn’t get to decide in his last year thing is made up nonsense.

          If he had the votes in the senate he would have pushed Merrick Garland through. He did not. Trump has the votes in the senate, so ACB got in.

      • Does ACB’s confirmation to the SC really matter at all?

        Not if you’re a wealthy white landowner like the Constituion was “originally” written for.

        • Such a tired, weak criticism. The text of US constitution is still great. Shows that flawed people can do decent things. Heck. I read this thread waiting for @smithy to say something half sensible.
          And your defense of yourself re “wealthy white landowner” is ridiculous. We all know thats a loaded statement.

          • Such a tired, weak criticism.

            Yet the only response you have is non-sequiturs and ad hominem.

  4. Goldstandard1MEMBER

    All the charts are pointing to everyone being confident about there being more confidence in the next 3 months. You can build an economy around that confidence!

  5. ‘Not if there is a coup instead ‘. Imagine Biden organising a coup…..maybe he should start with a chook raffle first.