Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

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Stewart Island NZ 2005, Credit: Chris Becker photo

Stocks are being bid left right and center across Asia, although Australian traders should’ve had a long weekend since the ASX has had tech issues all day long, unable to trade. The USD has been largely weak against most of the majors although its coming back in afternoon trade, with Bitcoin having a nasty gap down this morning that is now half filled. Gold is still under pressure but is slowly finding some life, almost lifting up to the $1900USD per ounce level where its beginning to find resistance:

The Shanghai Composite is bouncing back sharply, up 1% going into the close, currently at 3313 points while in Hong Kong the Hang Seng Index is up 0.5% to be just above 26260 points. Japanese stock markets are the best performers with the Nikkei 225 climbing just over 2% to 25898 points not being helped by a stronger Yen as the USDJPY pair has given up more ground below the 105 handle:

The ASX200 technically closed 1.2% higher  – where it was in the morning before the shit hit the fan – closing at 6484 points while the Australian dollar continued its Friday night lift by edging closer to the 73 handle although its stalling a little going into the London open:

Eurostoxx and S&P futures are bouncing back strongly too with the four hourly chart of the S&P500 showing price wanting to beat the October highs as short term momentum goes extremely overbought:

The economic calendar starts the week with some Fed and ECB speeches, but also the latest US retail sales data.

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  1. NEW ZEALAND: SUBSTANTIAL LIFT IN AUCKLAND NEW DWELLING COMPLETIONS …

    In the 3rd Quarter 2020 there were 5195 completions … annualized 20,780 … in Auckland … with its population of about 1.657 million … indicating a completion rate per 1000 population per annum of 12.54.

    In the 12 months to the end of September 16,014 new dwellings were completed in Auckland … indicating a completion rate per 1000 population per annum of 9.66.

    Statistics NZ September Building Consents Report ( click … infoshare … industry … building consents ) … for the September year 9.2 building consents per 1000 population per annum for Auckland ( 8.9 Canterbury … 7.5 nationally ) … which suggests substantial consenting and completion rates per 1000 population per annum lifts for Auckland and nationally going forward …

    More than 16,000 new homes built in Auckland in 12 months to September. Auckland Council corrects its Code Compliance Certificate figures for July and August … Greg Ninness … Interest Co NZ

    https://www.interest.co.nz/property/107974/more-16000-new-homes-built-auckland-12-months-september

    New Zealand’s housing inflation has gone from crisis to disaster …

    … up 20% over the past 12 months nationally … because the government has failed to date to deal with structural issues (land supply and infrastructure debt financing further info http://www.PerformanceUrbanPlanning.org ) … as Reserve Bank governor Adrian Orr made crystal clear in a recent TVNZ interview with John Campbell …

    … essential viewing …

    Record house prices not caused by Reserve Bank – Adrian Orr … TVNZ

    https://www.tvnz.co.nz/one-news/new-zealand/record-house-prices-not-caused-reserve-bank-adrian-orr

  2. Probably late to the party but just started watching The Boys on Amazon Prime and it is quite good – capitalism (and lack of ethics) comes to the superhero business. Only up to episode 4 …

    In an alternate universe Reusa would’ve been a superhero – their fictional relations parties are up his alley!

  3. In relation to the Vimal Gor article and real estate prices. Can not comment on QLD or SYD but I watch Victoria closely – Geelong, Melbourne, Gippsland and high value tree change satellite towns.

    Fundamentally people have flooded the market with stock and are expecting the pre-covid prices. But here is the basic reality – almost 300,000 home owners have been wiped out – many are on mortgage holidays, but almost all will not be buying again for several years. All investment properties which have been failed are also “on market”.

    We also have NO foreign buyers purchasing online “sight unseen”, and we also have an annual shortfall of almost 200,000 net migrants – 100,000 new houses being constructed per year to meet that demand – GONE.

    There is well in excess of 200,000 LESS buyers than the market would factor in with new builds and existing sales.

    No matter how we spin this there is a massive conga line of people with financial hardships who absolutely MUST SELL – and that number is growing daily.

    The asking prices have not changed much – but one look at regional towns, suburban Melbourne and Geelong shows a huge number of properties

    “Owner says get it sold”
    “Must be gone”
    “Will sell November”

    Yes prices are not reflecting the huge drop in buyers and massive increase in supply – however the pressure has only just started to be applied. We never anticipated any pressure on the market until March at the earliest.

    Property developers I know and buyers have all penned in September 2021 as the time to buy – and this was marked down in March.

    You can flood the market with as much cash as you want at zero % repayment – but when there are no buyers and the market is flooded house prices fall – it really doesn’t matter what the government does – and that is happening right now and will absolutely continue through March 2021.

    • All sound points – the key is that the stimulus hasn’t ended yet and people are still plundering other resources to stay afloat. Even those that get new jobs are potentially not replacing a lost salary in full.

      It will be interesting to see what has happened 6 months from now — perhaps large regional variations in performance? Certainly QLD is humming right now as Interstate moves continue apace.

      • I know of at least 4 families from my local primary school that are moving to QLD.

        Heres the thing about Aussie Property – none of them have a clue of whats going on.

        “Theres a boom on – low interest, massive tree change !!”

        Thing is – no one could move in Victoria until last week – so HOW has there been a regional boom ? How have Victorians been moving to QLD ?

        They haven’t.

        The only one who is moving is a developer who just bought the block unseen and knows what he is doing.

        The rest are buying unseen – insanity. But heres the kicker – ALL OF THEM are planning on buying – and then selling their Melbourne pad.

        And this right here is what drives the crash – divorces, buying before selling, deaths, job losses, etc – when you HAVE to sell into a massively over saturated market – you start dropping the price.

        And thats where its at now.

        See Geelong – I would honestly say every 4th house on Domain.com.au is a flipper – a renovation job the tradies do with their trophy wives while they work on the building boom from point cook through to Torquay.

        Prices are insane – but for every house sold at LEAST 5 are listed.

        Older properties are now getting desperate – saw a house with a pool on 1200 sqm in prime position but an old 50’s joint for around $700k – bonkers.

        While new and renovations are asking $1-1.5Mill – totally broken market.

        Same in Melbourne – outer suburbs filled with crime – $1 Million – leafy inner suburban areas like Carlton, Clifton Hill, Fitzroy crashing HARD – places selling for $800k – ridiculous.

        It really is happening already.

        • To clarify, interstate migration to QLD got into top gear back 2018. We’ve been getting a lot from NSW — if I use the vehicles they drive as a yardstick I’m going to say from the less salubrious parts of the conurbation. Anyone from Melbourne has been allowed in here providing they’ve been willing to go into mandatory quarantine.

    • GunnamattaMEMBER

      One part of me – my head actually – agrees completely with the points you make.

      The punterariat has massive debts, hasnt had a pay increase in a decade, the University sector has had its nuts blown off, restaurants and cinemas will have about 1/4 to 1/3 capacity looking forward to what they had looking back, and a retail sector which had electrodes attached to its nether regions last summer looks like an extra from the cast of ‘Night of the Living Dead’. The insolvency laws are still suspended, JobKeeper has turned into a dead business colostomy bag, and austerity loving government is ladeling out largesse for the end of town which will leave the envelope in a drawer for a while before spending it. Foreign buyers have curled up their toes on geopolitical tensions or a simple inability to be present.

      I know in my heart of hearts this means that real estate prices should slump…….at some point.

      But, my current experience is this – I am in Geelong. In recent weeks the real estate agents have gone ape dropping cards and envelopes into my letterbox, suggesting a boom is underway. A couple of recent sales in nearby streets have apparently gone for more than expected (both circa 600k) and trying to rustle up a tradesman for anything is still pretty tough.

      I tend to the view that the JobKeeper extension has added buoyancy to the mindset if not the underlying fundamentals of an economy I personally see as bound and trussed and being hoisted over the fire, but babbling insouciantly about ‘now’s the time to get ready for the next surge’

      I know its crazy but thats what it sort of feels like.

      Fortunately I have a wife and daughter in Russia keeping me to date with the Russian Real estate scene………

      https://ryazan.cian.ru/sale/suburban/238426050/
      250 grand Australian will get me this joint with 2 pools (inside and outside) and 2 saunas (why? who knows?) on 1800 metres about 5 minutes drive from Ryazan (circa 2-3 hours from Moscow)

      the same amount will get me this joint about an hour from Moscow
      https://ramenskoye.cian.ru/sale/suburban/237822871/

      a touch more will get me this joint – a 640 metre behemoth on 2800 metres, about an hour out of Moscow.
      https://ramenskoye.cian.ru/sale/suburban/237000268/

      Part of me is wondering if I should sell out of any surge in Oz RE and simply bail. I dont actually need to be in Moscba, one of those joints would do me fine. The only thing that would drive me crazy would be Russian drivers and the weather over winter.

        • GunnamattaMEMBER

          My wife and daughter are in a flat in Moscow – safe and sound. We are still sussing out when/how to get flights back. Thanks for asking!

          I do freelance editing/writing work out of Russia remotely from Geelong (after doing a day gig here), and think I would have little trouble getting work there. Nothing big, but work would roll in for sure I suspect/think.

          I think for the most part, for me, Russia is fine – though the roads terrify me, and the winter grey skies drive me insane. That said I am not protesting for democracy or anything. It is as corrupt as all getout (though I think here is too, and the US, and UK etc).

          • ErmingtonPlumbingMEMBER

            I hope your not thinking about leaving Gunna
            You belong to all of us here at MB!
            Your family must come back to you, not the other way around.

          • Shades of MessinaMEMBER

            9 months in Russia and 3 months on a beach somewhere sounds like a good compromise !.

            Imagine having to only spend $250k on a half decent house….

    • Gee Jackson, not happening south of Geelong/Otways area. Practically nothing on the market, and what comes on is expensive and gets sold pretty fast. Unless its ludicrously overpriced.

      • TailorTrashMEMBER

        I’m sure Dan Murphy can shift a bit of that
        …just relabel it Dong Feng bin 41
        We can all drink a toast to uncle Xi
        Drink a bottle for your country

        • How long since you been to Dans ?
          Bushfires have blighted so much stock – massively reduced prices. Restaurants were not buying any stock for most of this year – again.

          They are selling 10-15 year old wines for $15 – its absurd.

          In the mean time half the crops in QLD were wiped out – you would think this would drive up prices – but they are desperate for any cash at all and selling into a saturated market.

        • Mining BoganMEMBER

          I need to start. In a fit of optimism I signed up to do the triathlon series next year. I know, it probably won’t happen because WuFlu but I needed a target for motivation. So in the name of athleticism no alcohol has crossed my lips since Melbourne Cup day. That was two weeks ago.

          Two. Weeks. Ago.

          What’s the point of being fit and healthy if it doesn’t help you drink more?

          • I’m almost 50 – I generally keep fit but regularly relapse. 10k run, 2km swim +weights most days.

            Endurance gets easier I reckon – but explosive speed is totally gone.

            The more fit I get – the less desire there is to drink. At peak fitness you get seriously pissed not having drunk anything for weeks – but you wake up next morning at 5am ready for your run.

            After only a few weeks of drinking and laying about – hang overs return with vengeance.

          • Also I stopped riding after my last accident and ambulance ride to emergency.

            There is no one in my extended family who has not been in an ambulance from riding a bike. Brother in law went through the windscreen recently.

            Bikes are great fun until they are not – and they become – NOT, eventually for everyone given time. Australia is just a terrible place for cyclists.

            ..

          • boomengineeringMEMBER

            Browny, in my seventies, yup ,last few years, hit by a car also pile up pellathon hospitalised both occasions . That’s why the ride is started st 4.00 – 4.30am..
            Don’t ride in the rain as hard for them to see you.
            Not too early Sat Sun as they may still be under in influence.
            Bright head and tail lights, very visible in the semi dark.

          • As you were.

            Old school then – made of boots and nails – touch of concrete I suppose.

            4am – oof.

          • boomengineeringMEMBER

            Browny, you’ve right you know. When hit, out of 3 of us Jarrah got hit the same day and old John my age got hit 2 weeks later by a 4 ton wood chipper. Lucky he didn’t follow his bike as only one brake caliper left un smashed to his $25K Cervelo.

          • ErmingtonPlumbingMEMBER

            Just dont ride on the bloody road!

            I do a 21km ride that has me on Bike tracks for 95% of the ride.
            North side of the Parra river from ermo, over Silverwater bridge, south side of the river to Olympic Park ferry Wharf, around the Olympic stadium, up through Rhodes, over the old Meadowbank Railway bridge then back to Ermo along the Noths side of Parra river again through Meadowbank and melrose Park.

            Health nutters like Browne and you Boom can just do 4 or 5 laps on said or similar kinda tracks and not risk getting ran over by some drunken Tradie or a 36 year old asian female on their Ps in a brand new, 3 ton, Mercedes, Range Rover or Porsche 4×4

  4. Bloody Scomo today on radio talking about this:

    https://www.abc.net.au/news/2020-11-16/productivity-commission-releases-mental-health-report/12887012

    “All levels of government need to do better on mental health”. Well, he could maybe do something first the lazy git. All sleight of hand pretending to be all action on mental health, in reality the LNP have made life even harder in almost every way for those suffering.

    Ever tried to get a mental health exemption for Newstart/Jobseeker? It’s ludicrous, just like all the other “punish the poor and infirm” policies of the LNP. Totes will find a way to blame ALP

    • Yep and 1 way to boost mental health. Give people the opportunity to have an affordable home and a shot at home ownership.

      Sade secure housing 1 of the best things for your mental health. Social housing anyone?

      • I watched a bbc program that Kevin McLeod did a few years back and haven’t looked it up again but keep meaning to. Pretty sure he designed some kind of neighbourhood where the social housing was built as part of normal housing developments to avoid the old ghettos. May be completely mis-remembering but like the idea anyway.

        Edit: NRAS started to do that here in SE Qld at first but then it just became a massive rort like everything else and was more about bolting on non-functional (for the poorer tenant) single bed dwelling as a tax/govt subsidy for the savvies.

      • RobotSenseiMEMBER

        Think about one’s mental health, and just how much having stable employment, a safe place to sleep at night, and food security play into that.

        And one can probably imagine the outburst they might have in the Centrelink office if you were denied any or all of those things.

  5. ErmingtonPlumbingMEMBER

    For those that missed it,
    I think this DLSs piece was the read of the day.
    https://www.macrobusiness.com.au/2020/11/business-council-proposes-selling-mother-into-chinese-slavery/

    I always enjoy Clives eloquent comments too.

    Clive
    November 16, 2020 at 9:43 am

    “… Richardson also said business leaders should not be cowed by critics saying they were selling out the national interest to make profits.”

    Perish the thought! And terrific that Australia can call on its never-ending resource of enterprising ex-public servants who’ve taken their generous super and fled through the revolving door.

    When even the Canadian Conservative opposition is coming right out and demanding that the West stand up to China as new global bully that uses blackmail and hostage diplomacy, the Business Council’s “Neville Chamberlain Plan B” should not be letting mass surveillance, human rights abuses and thuggish diplomacy get in the way of them binding their daughter’s feet to please the emperor. After all, those corporations steeped in the ‘cult of the CEO’ know only too well that pleasing the master with obsequious displays of rolling over and revealing your genitals to the alpha-dog is the only way to prove that you understand how business is done. History shows us that tyrants respect those with brown noses and deaf ears who put profits first. Because, a smiling band of rent-seeking tail waggers carrying gifts would be the last thing that an unreformed hard line communist like Xi Jinping would be expecting!

    I wonder how you say “sit up and beg” in Mandarin?

    Is it just me, or is there a trend developing here? For it seems that those politicians (Keating, Gareth Evens etc) and public servants who bet the farm on China are the ones yelling the loudest that decoupling is impossible and massive suckage force necessary.

    During the 1930s Bob Menzies flogged the pig iron and those companies like IBM and Prescott Bush traded with Nazi Germany until the last moment:

    https://www.theguardian.com/world/2004/sep/25/usa.secondworldwar

    But today, history can be re-invented and troweled over with a little help from Dennis Richardson and Geoff Rabies. How blessed we are to have such people watching our backs.

  6. Ok…whilst it’s on my mind…

    I reckon Trump falling out with, and then threatening, Fox, Murdoch, etc, is going to go really badly for him…

    My money is on Murdoch picking him apart pieces bit by bit; I can imagine special manilla folders getting taken out of special cabinets, and being prepared to be leaked strategically.

    Lesson, Trumpy: as a sad excuse of an oligarch, don’t pick a fight with an actual oligarch, especially a media oligarch.

    Can we place bets on this anywhere? Lol.

    To be clear, though: I don’t actually endorse such an outcome, not do I wish it on Trumpollini – I’m just pondering the outcomes of many things…

    • ErmingtonPlumbingMEMBER

      Trump has always been a narcissistic,egomaniac who seems able to talk endless lies and shyte to cover up his own inadequacies and shortcomings. Though no scholar he must possess a high degree of rat cunning to have pulled of the gig as President of the United States!
      And yet this “picking a fight with an actual oligarch” and Just the whole plain denying his inevitable removal from office seems to be more than just denial and desperation,….Its like he has gone fully Mental. Gone the full retard.
      His Twitter post “I WON THE ELECTION” is filled with Replies of mostly ridicule and open laughter.
      Could the viewing of these replies have broken something in his Brain?
      https://twitter.com/ErmoPlumber/status/1328304690505736193?s=20

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