Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Kayaking in the Cook Islands, 2019: Photo by H. Becker

Outside local markets its been a very poor start to the trading week with most Asian stock markets closing with solid losses, following what was a very upbeat night on Wall Street in response to the latest – and poor showing –  US unemployment print.  Bitcoin is still relatively steady at the $19400 level, while gold has held on to its recent gains, steady at the $1841USD per ounce level:

The Shanghai Composite is struggling, down 0.6% to 3422 points while in Hong Kong the Hang Seng Index is underwater by nearly 1.4% to 26486 points. Japanese stock markets have moved from going nowhere to selling off with the Nikkei 225 finishing nearly 0.8% lower to 26547 points while the USDJPY pair is struggling to stabilise after its minor comeback on Friday night, currently hovering right on the 104 handle:

The ASX200 was the odd one out, continuing ts advance well above the 6600 point level to close 0.6% higher at 6675 points while the Australian dollar has stalled out once again, still holding above the 74 handle but looking somewhat overstretched:

Eurostoxx and S&P futures are pulling back in response to the poor showing here in Asia although the four hourly chart of the S&P500 is only showing one way to go – up and up – twirling towards freedom:

The economic calendar starts the week very slowly with almost no releases of note as usual following the NFP print on Friday night.

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  1. “The point of modern propaganda isn’t only to misinform or push an agenda. It is to exhaust your critical thinking, to annihilate truth.” Garry Kasparov

  2. Anyways.. I bought few BBUS to put money where my mouth is. Last time is called it right but did not trade it.
    This time it is not high conviction trade as I don’t have actual data if bulk of the call options are expiring 25th (24th technically) but the shear size of call options made me take small position.
    If I am right then we are witnessing same play like at the end of last quarter. Robyn Hood sheep lining up for more shearing just to prove they learnt nothing from the last skinning.
    I expect markets to be down by week end and same to continue next week. JPM and likes need to get their Christmas bonuses so I think they were the ones writing those options and all the need to do now is sell shares (which they bought long time ago and are in the money anyway) and push markets down over the next 2 weeks.
    My thoughts only.

  3. migtronixMEMBER

    “In its briefing note issued on Monday, S&P said it believed the state was going to run big deficits for years to come and it had largely run out of assets to sell to help prop up its budget position.

    “Victoria’s economy has been affected more significantly than other Australian states and territories, mainly because fallout from the second wave of infections resulted in a substantial and prolonged lockdown,” S&P wrote.”

    Ruh roh

  4. WASHINGTON — Military aviation accidents have killed 224 pilots or aircrew, destroyed 186 aircraft, and cost more than $11.6 billion since 2013 — and many aviators believe those numbers will keep rising, a congressional commission established to investigate those crashes has found.

    My personal favorite excerpt ….

    “This seems irreversible,” a Navy squadron commander told the commissioners. “I have increasingly unqualified people to teach the new generation who are then going to be less qualified to train the next generation.”

    The cumulative effect was a demoralized military aviation force, Richard Healing, vice chairman of the commission, said on a call with reporters.

    “The pilots were demoralized by not being able to fly enough, the maintainers were demoralized by not having parts,” said Healing, a former board member of the National Transportation Safety Board.

    Unpredictable funding, coupled with back-to-back demands for military aircraft to respond to the invasion of Iraq and Syria by the Islamic State, Russian aggression in Europe and calls to increase presence in the Asia-Pacific region to counter China have taken a toll, the report found.

    The 2013 budget reductions known as sequestration cut personnel, flight hours and depot maintenance and required the aviation community to do more with less. In the years that followed, thousands of experienced aviators and maintainers left military service for commercial aviation despite being offered sizable retention bonuses to stay.

    Their departures have further increased the workload on those who have remained. – snip

    Tragic as it might seem the best bit is its not exclusive to the military sector …. happy dreams [tm] …

    • It headed Ch7 6pm news too. A smattering of “we’ve run out of locals, or those that want to work” & “necessity to import labour” hints drowning out the violins.

    • happy valleyMEMBER

      No worries. After the next federal election when unelectable Labor leave as their legacy the LNP in control of both houses, the gubmint can marginalise the ABC and have AJ live streamed in to all households 24/7 and make reading of Rupert’s rags a compulsory daily activity? LOL??

    • Mining BoganMEMBER

      Also on ABC wireless this morning was some nimrod saying the obvious boost and saviour to our economy is students, hundreds of thousands of them. The nice presenter just agreed with a little “of course”.

      There was something else that made me swear out loud as I was driving past a couple of quite startled old ladies but I can’t remember what it was.

      • I know the feeling – me with window down and am radio on @ 0500 startles many. It just sends me bananas that this lazy biased journalism is what people should be going after when they bag the ABC yet they fall for the sleight of hand woke stories. Fkn idiots.

  5. So MB brains trust. I bought $500 of CHN at 14 cents in 2018 which i haven’t yet sold (so not quite 4000 shares). I didn’t participate in the capital raise earlier this year after they discovered Julimar (I didn’t quite understand the significance of their find as I bought them for the Vic gold prospects). They’re raising more money to drill it out quickly and for their other good prospects in Vic and WA. A SPP is at $3.75 and today they closed over $4. If I can scratch up the money should I participate?

    • You bought very early and now they are entering a territory where you are making serious profits from share price going up even marginally. When you buy at $4 you will bring your average price up.
      Think of that and decide if it’s worth.
      Julimar is significant but risky too. Nickel is in demand because of EV’s current battery designs. If let’s say new design needs gold or graphite, nickel prices will fall back real fast as main demand for nickel will again be stainless steel.
      If I was you I would set stop loss now at around $3.5 and let them run as high as they can but keep setting the stop loss ever higher. If you platform allows for trailing sell then I’d do that.

      My thoughts Pop – not telling what to do.

      • Thanks Niko I appreciate your thoughts. I’ve got a 14K paper profit on $500 atm, and they haven’t yet got the drill results of their first decent go at Karri Karri north of Bendigo which they think could be a reasonable gold deposit (they seem to have a good team of geologists). I just have no idea how much of everything has been priced in. I’m not trying to be greedy, which is why I haven’t added to my holding and so far I’ve been content to just go along for the ride and see where this thing goes AND learn from the experience. I wasn’t expecting them to go back for more funding so soon, but I understand their strategy behind it so I thought that I should at least think about it. Looking at the chart I’d expect a decent price pullback (even to $3 which I could deal with no worries from an emotional perspective, but if they get good results from Karri Karri that might not happen? who knows?).

        • Drilling for nickel is expensive. Deep diamond holes cost lot of money. 800m deep hole will cost around $200k. If the area they drill is very remote then price goes up..
          No one knows how they are going to go at Karri Karri but if they hit solid widths and grades then off to $6.
          At some point one has to take profits. Even partial profits are better than no rpofits. Paper profit count for nothing. Seen it evaporate real fast.

          • darklydrawlMEMBER

            “Paper profit count for nothing” <— This. Set a trailing stop if your broker allows it (most of them do under 'conditional orders' or similar). It is then a 'set and forget' thing and you don't need to worry about it. I generally use 10% but go with what works for you. Never be married to a position. You can always get back in again if it's looking better in future.

    • Subject to your tax position, you could sell some of your existing holding to rustle up the cash and effectively lock in the difference between the SPP price and the current price.

        • The only thing I’d add from bitter experience is that SPPs tend to get scaled back so you can’t always be certain of how many shares you are getting.

    • Well done on your investment! If you have the cash available, participate in the SPP as late as possible if the SPP price remains below the at market price. Then you have the option to sell for a stag profit. SPPs involve no brokerage and sometimes are at an attractive price.

      • Thank you. They hit $4.095 intraday today, so it looks like in the short term at least the at market price will remain above the SPP price, esp as they are expecting Vic gold drill results soon (though if they are bad I expect them to drop). Ergh, decisions. Life is easier without them.

  6. So article in today’s west aust paper. Can’t find online link so far. But they have a letter published from someone who says is ex serviceman. In his letter he claims the Australian government advertised in Afghanistan for people to come forward with claims of mistreatment by special forces with an offer of compensation for the information. Does anyone know if these claims are true? Did our government go to an enemy country and offer money for people to make complaints about Australian soldiers?

    • To offer a counter point (and I know this is a sensitive issue for you, not being a d!ck, just adding what I can) – I have several first hand accounts of less than desirable behaviour of ADF personnel from deployemants ranging from Desert Storm to East Timor. I have secondhand scuttlebutt from WW2 to current deployments.

      These days nothing would surprise me but I feel you’re letting your bias control your logic.

  7. Is it wrong to say you would punch the Brisbane extinction rebellion peope if they directly impeded you? What if you knew them/were part of their extended social group? Is it still wrong to want to, and express, your desire to punch them?

    I’m close to severing some long term friendships over this very debacle……

    • I imagine in a city they’d be pretty annoying. In my valley, they’re just sad – painting the XR logo on river pebbles and leaving them around the town centres in the hope someone will notice and wonder enough to go find out what it means. Meanwhile, they drive many km to go attend rallies outside the local pollie’s offices every Friday to have almost no effect on National party policies. I guess none of them write well enough to get a “job” at the ABC or Guardian 🙁

  8. The propaganda starts. MSM now keeps pushing the message how Biden will battle covid19 as if Biden is some kind of knight and covid19 is fire spitting dragon. At the end of the day people will be told – vaccine or no job.

  9. ErmingtonPlumbingMEMBER

    Will a vaccine even be that effective?
    How long have we had Flu vaccines for now?
    If covid-19 ends up mutating regularly ie like the Flu
    Will people need to be revaccinated every year?
    Will it then be no jab no job every year?

    • Will we also be required to do the usual? Report to a doctor coughing up $75 or however much it costs these days for a referral to get the vaccine ……….. the drug companies and medico’s making money hand over fist even as it has been pushed around and under the usual hurdles for approvals. All those questions you ask plus a stack more haven’t been answered but it’s 90% effective apparently so we will get told.