Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

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

Outside China, Asian stock markets are pushing higher today despite dashed hopes of more stimulus from the US Congress, and some of the worst days in Europe for new COVID-19 infections and deaths, let alone the out of control pandemic in the US. Bitcoin has broken down after being relatively steady above the $19200 level, off by nearly $1000 so far, while gold has fallen back slightly to waver around the pre-breakdown level at $1860USD per ounce:

The Shanghai Composite is sell off sharply going into the close, down nearly 0.5% to 3395 points while in Hong Kong the Hang Seng Index is going the other way, up nearly 1% to 26561 points. Japanese stock markets is also moving again, with the Nikkei 225 finishing nearly 1.3% higher to 26800 points while the USDJPY pair is stabilising just above the 104 handle:

The ASX200 was the relative laggard, up only 0.6% but still a solid session to finish back above the 6700 points at 6728, while the Australian dollar has lifted strongly, boosting well above the 74 handle and ready to tackle the previous session high at the 74.50 level:

Eurostoxx and S&P futures are pushing higher again with momentum still nicely overbought on the four hourly chart of the S&P500 as it wants to make more and more historical highs:

The economic calendar includes some German trade figures, followed by EIA oil data for November with a few Treasury auctions to keep an eye out on.

Latest posts by Chris Becker (see all)

Comments

    • Did not read the article but reading the headline and your comment I see no issues. He got rejected because lack of skills but got visa because he got talent. 😁

      • Speaking of talent, did you check into Quantumscape tip-off that Virgin Premier posted yesterday? Up bigly!

    • Some of the facts in that article are astonishing. “To be eligible, the applicants must demonstrate the potential to earn a salary at or above the income threshold of $153,600 each year and have their application supported by a nominator of national reputation in the same field.” Heck, I have potential to earn millions! And is there a list of nominators of national reputation? Or by getting the GTI, do these people automatically get added to the list?

      • Shades of MessinaMEMBER

        900 visas granted in a year ?.

        Not really worth getting worked up about I wouldn’t have thought.

    • “Once I discovered that the Australian Computer Society (ACS) was nominating charging applicants for GTI, I approached them and that’s when they approved my nomination after rigorous assessment of my documentation credit card details. Once the nomination procedure was over, I received an invite for permanent residency in July,” he said.

      Rakesh is now planning to settle down with his family in one of the two big cities in Australia contribute further to the migrant led burden on creaking/failing infrastructure and social services after securing a “lucrative job” by early next year.

      But the question is this: does his mother do a good death stare?

      The ACS fee is $500, I am shocked it is so low as the whole thing does seem to be a rubber stamp/ticket clip deal on their side. Chunse.

    • Its such a travesty against their employer for bringing the firm into such a horrible calamity which could effect its profitability and sully the name too investors ….

      Rusa will need additional recreation to resolve any mental discomfort ….

    • SnappedUpSavvyMEMBER

      Stupid country, anyone seen how trucks are driven in India over blind crests and corners with nothing but faith and that will work fine here
      Nothing is more stupid then flooding the roads with Indian truck drivers FFS

  1. NEW ZEALAND: JOIN THE GOLD RUSH IN TO PUBLIC SECTOR EMPLOYMENT ! …

    … Sorry (yes … the housing affordability issue at its core is a finance issue) … no money left over for new housing infrastructure … in the public servants and property speculators paradise …

    … Do check out what the average salaries are … via link …

    A review of things you need to know before you go home on Wednesday; key GDP components deliver positive surprise, public service hiring jumps, farmers less satisfied with their bankers, swaps and NZD little-changed, & more … David Chaston … Interest Co NZ

    https://www.interest.co.nz/news/108331/review-things-you-need-know-you-go-home-wednesday-key-gdp-components-deliver-positive

    … extract …

    … BUILDING BACK, BUT BETTER?

    The State Services Commission updated its public sector workforce data today for the year to June. In a year where the private sector managed to only grow jobs by 0.7%, the public sector employment levels rose 3.4%. The narrow Public Service jumped 8.6% in the year, the biggest increase since this data servies began in 1995, and larger than in the heart of the Clark-Cullen government (the previous high was up 7.6% in 2004). The average annual salary in the Public Service in 2020 was $84,500, up 3.9% from $81,300 last year. The education sector grew by 1.7%, the health sector by 3.7%, local authority staffing grew by 6.5%, and staffing at the SOEs rose also by 3.7% in the year. We chart these rises here. And in case you are wondering, the latest contractors and consultants’ data shows the operating expenditure on contractors and consultants as a percentage of spending on the public service workforce is 11.7%, dipping from 12.8% 2019. But in dollar terms they rose to almost $1 bln in the year (actual $975 mln.)

    HIRING FRENZY

    The same data set reveals that Auckland Council increased its workforce by 16.3% in the year to 14,300 employees, and that compounds to a 24% rise in five years. The 2020 increase was far and away the fastest annual growth in Auckland Council staffing levels, adding 2000 people in just one year.

    SUBDUED COUNCIL REVENUE GROWTH

    Nationally, new data shows that local authority rates and fines (ie “regulatory income”) was up 2.8% in the September quarter from a year ago. Apart from the June 2020 quarter ( 2.2%), that is the smallest rise since 2014.

    • They’ll fish the fck out of them waters, and when they’re devoid of life they’ll move on down south of there and try the same on us! you beauty!

    • Lmmaso …. what was the registry of that last super fish thingy that wanted to suck the life out of Oz waters … is it fruit fly memory hole day – ?????

      • TailorTrashMEMBER

        ok skip …..can you decode down one more level for us simpletons……so we can join in your laughter….

        • What you can’t remember the super fish tanker that wanted to rape the coast of Oz and did not have anything to do with them [tm] …..

          • So nothing to worry about then in your erudite opinion.
            It’s a relief they are just setting up a $200 million dollar fishing operation on our doorstep for humanitarian reasons,
            Especially given China’s straight dealing, transparency and integrity.

          • Your biases are showing, never said anything about it being OK, just pointing out its not just a China thing. Not to mention there has been epic levels of environmental destruction for decades here in Oz and the right wing did not blink an eye, not to mention anyone pointing it out was labeled some commie socialist environmentalist terrorist stealing other peoples profit ….

        • TailorTrashMEMBER

          Thanks skip
          Yes I do …don’t remember the details …but I thought we saw them off ……….or did we ….hard to say in this corrupted country

  2. Posted last week about the massive build up of stock occurring throughout Victoria – haven’t looked at NSW – and what I am seeing is across the board – FAR WORSE in regional areas, despite the ridiculous levels of hysterical propaganda.

    The reality is yes there are some sales occurring, however these are happening from a base of near zero or incredibly suppressed prices with only emergency sales.

    Almost all the purchases that have occurred in the last month or two will require the owners to settle and in order to do so they will need to sell their current house.

    When you consider that only 20+% of sales are new home buyers – the remaining are existing buyers moving with a few buying second homes. This means almost all the sales occurring will require an equivalent listing in the next few weeks.

    When we add in the ongoing mortgage holidays, ending of Job Keeper, Job Seeker, Insolvency holidays and collapsing Chinese trade on top of 48% of all wage earners in Australia having their income negatively effected by covid – things are grim.

    Two points people make – early super withdrawal and mortgage holidays – BOTH of these do not mean increase in house sales or pent up cash. Early super withdrawals required strict conditions and doing so meant you could not apply for a mortgage (credit rating) and the government specifically stated it was not allowed to be used for house purchases. Secondly the mortgage holidays were not just “put on hold” – they were negotiated reductions which meant payments were increased when work resumed to compensate.

    As an example here is just one suburb Coburg – the stock on the market only has one period HIGHER in its history – that is seriously bad.

    https://sqmresearch.com.au/total-property-listings.php?sfx=&postcode=northcote&t=1

    Now consider this is what I am seeing in every town, regional city and suburb – its everywhere and set to get much worse.

    But the kicker is that forced and distressed sales only begin in the new year.

    LNP has primed the cannon for years stuffing it with powder and wadding the spark you are seeing right now is the flint lock firing.

    At least iron ore will remain high for the next couple of years…..maybe….

    • Shades of MessinaMEMBER

      I don’t reckon there will be any forced sales, it will be extend and pretend all the way !!.

      Pretty easy to do with rates so low at the moment.

    • You posted about a single postcode in Melbourne post COVID. Stock-on-market for November for that 3070 is 155 properties which is the average for November going back to 2012 going off the same SQM research.

      • Stock on the market has only just been released – hence the total – there are only NINE months in that entire series where the stock on the market goes above 150 out of a possible 120 displayed months – how the living FCK can it be the average – seriously mate what are you banging on about ??

        At least OPEN the link and take a look you complete gronk.

        • The average stock-on-market for November going back to 2012 is 155 for postcode 3070. Your ‘explosion’ doesn’t exist. It’s just normal for this time of year.

    • It’s only for new cars (and even then I think they only have to be hybrid, not pure EV). It’ll take 10-20 years to cycle through most vehicles on the road and even then a substantial fraction of cars on the road will be hybrid.

      I would expect a majority of new cars sold by 2030 would be electric or hybrid anyway, even absent any specific legislation.

      TL;DR – can’t see this sort of thing having any impact on classic cars for pushing 50 years.

      • EU and much of Asia are completely banning all fossil fuel cars by 2030 – the sale of fossil fuel cars was brought FORWARD a couple of weeks ago to 2025.

        Australians are just completely and utterly out of the loop – industry are freaking out about how we have done literally nothing.

        But yeah – say what you like, whatever you think.

        • EU and much of Asia are completely banning all fossil fuel cars by 2030 […]

          No they aren’t. Basically all bans are on the sale of new vehicles, not existing vehicles.

          – the sale of fossil fuel cars was brought FORWARD a couple of weeks ago to 2025.

          It’s proposed. Has not yet been decided AFAIK. 2025 would be an ambitious target for all vehicles, but eminently doable for small to mid-size cars.

          • Here is the complete phase out – but the thing is manufacture has already shifted to EV – you will be hard pressed to even buy ICE cars by 2030.

            On top of this Australia was recently warned that we will be targeted for trade embargoes and sanctions for our position on carbon – particularly cars and it is being seen as one of the main weapons going forward in trade wars.

            Cars will be the easiest and first to target and hence governments will respond.

            https://thedriven.io/2020/11/12/the-countries-and-states-leading-the-phase-out-of-fossil-fuel-cars/

          • LOL.

            Nothing there comes within a bull’s roar of “completely banning all fossil fuel cars by 2030”. Indeed, there’s not a single total ban listed at all.

            It will be trivial to buy ICE cars in 2030, if for no other reason than all the people trading them in on new EVs. The good news is they’ll probably be cheap as chips (another reason they will persist).

            By 2040, yes, it’s likely passenger ICEs will only be sold as the cheapest used cars, or for corner-case usage like classic cars and way-off-track 4WDing. The average vehicle age in Australia (and most of the developed world) is 8-12 years, so it’s going to take comfortably 10-15 years to replace the majority of vehicles on the road.

            (This is all assuming no massive Government interventions or the collapse of civilisation, of course.)

            As I said, the 2025 targets for all passenger vehicles as EVs are pretty ambitious, I will be surprised if they get there (or there will be a massive purchasing bubble in late 2024 for larger ICE/hybrid vehicles). 2030 is much more realistic and it’s likely even without intervention the majority of new cars sold would be EVs, or certainly hybrids. Even in the US I expect new ICE vehicles will be relatively hard to find (again, outside of corner cases) by the mid-2030s.

    • I was chatting to a kid recently when a Shelby Cobra replica went past with the sound of the V8 rumble. We both looked at it and I said. No matter what, people will always want to drive those cars. Even if Electric is better in every way almost.

      I suspect only the wealthy will be able to enjoy petrol powered cars in the future. You may need special permits to use them and a certain number of days a year they can be driven, but I think they will become more a status symbol as the electronic stuff replaces the old internal combustion stuff.

      I could be wrong, but the sounds of turbo engines and flames out the back will always have appeal.

      • Good points, though I expect classic cars will be largely a rich man’s game well before the cost of petrol becomes the limiting factor.

      • You wont be able to drive them on public roads within the decade.

        I suspect you wont be able to drive on a public road within the decade. We are well and truly past full autonomous vehicles and its now only a matter of implementation – the benefits are just too massive and its ridiculously easy to implement now.

        • Far too optimistic I think you are. Look at the United States they can’t even get people to lockdown to prevent a virus. Do you think they will allow cars to drive them around and remove their freedumbs?

          • US wont follow suit on pollutants, but the US is a failing state and will simply be left behind, its joining South America quick smart and is only a decade away – EU and Asia are already there and this is the future.

            As far as autonomous vehicles go, and as a car enthusiast you need to watch the following to keep up with things. Keep in mind this company is no where near as advanced as Google Waymo – there are now THREE separate companies with fully autonomous – DRIVERLESS – cars on the roads in the USA.

            https://www.youtube.com/watch?v=sliYTyRpRB8

          • Lmmaso at driver less … uber just sold on its project … hows that popular science flying car freedom thing going for investors…. snorhortle ….

          • US isn’t a failing state you said it yourself where is all the EV innovation coming from?

            They just don’t care about their poor. Poor people don’t contribute much to the economy anyway.

            It might have a far higher percentage of working poor compared to Australia or much of western Europe, but it’s far from a failing state. If anything COVID has demonstrated its resilience.

        • I’m not a betting man, but I’d be extremely comfortable laying down a large sum of money that neither of those predictions will be true in 2030.

          Indeed, I’d only be a little bit nervous wagering neither of them will be true in 2040 (at least in most of the world, places like Singapore and Hong Kong will probably get there).

        • This is lol’s central. Aircraft were well beyond achieving autonomy in the early 1980’s, yet I still see a pilot in every aircraft carrying people and virtually all aircraft. Even military aircraft tend to be unmanned rather than autonomous, an important distinction.

      • I think you & Smithy are both right. Smithy used a word to describe the difference between an electric motorbike & his own piston jobbie that really hits the mark – Visceral. It’ll probably eventually be a rich mans corner, club rego, limited days/kays etc. Petrol might eventually become synthetic – Ethanol?

        GT40 kit cars going for $150k – for a kit car…… FMD, it’s become a rich mans game already.

        I hope you’re wrong Plod, but Nanny state ‘n all……. 🙁

        • Maybe we will all be given carbon credits? If you’re vegan you get a head start? I’d go Vegan so I can still drive my cars haha.

        • Doubt it – reckon it will be track and private property only.

          Very much doubt you will be allowed to use personally driven motor vehicles on public roads within the decade in many places and it will be entirely phased out.

        • I remember when we moved back from the States I seriously contemplated bringing back most of the bits to build a Cobra replica, but ended up balking at the overall cost of either getting the RHD chassis locally or having a LHD one converted (I have about US$30-40k as the total amount in my mind, plus of course actually doing the work).

          If only I’d had a decent crystal ball I would have brought back fvcking two of them and sold one to cover all the costs with change left over.

        • Quite a few new cars are already doing this on the inside. Remains to be seen if any are going to do it on the outside (there is actually a genuine problem with EVs being too quiet in pedestrian-heavy areas).

      • It’s going to be a bit like push bikes. Yeah a nice old steel frame has a good vibe, but once people start kicking about in super quick light machines with computer controlled engines on each wheel the old stuff will feel seriously old.

    • Arthur Schopenhauer

      Not a single ICE factory is planned. There are 89 gigs scale battery plants under-construction or in planning. The internal combustion is dead, baby, Dead as.

      ICE cars are to electric mobility, as the horse and carriage were to the Model T. There is not a horse stable or feed lot in any Australian CBD. You might own an ICE car, but petrol distribution points will become scarce.

      It’ll be done within 10 years.

      • Yup. Dead right.

        Hard for people to really grasp the speed of change – wont be any ICE car sales in major western countries at all by 2030.

        Trucking fleets, buses and the big stuff will go even before small vehicles – Tesla trucks (and others) had orders of 30k from Walmart they day they were announced – China converted their entire fleet of buses to electric two years ago.

        People have absolutely no clue about what is happening in Australia – we are just so ridiculously backward its not funny. Truly no idea in OZ.

        • Arthur Schopenhauer

          Its got nothing to do with carbon credits or incentives. It’s all about projected future profits and the supply chain. All money is moving to the most attractive area for future profits. That’s electric.

          There is such a tsunami of profit potential for the winner of the electric drive train race, even companies like Ford are going all in.

          ICE will be produced in the factories that already exist, using engineering that has already been paid for, until refineries can’t sell at volumes to keep them profitable. The collapse of the supporting industries will then be swift. Like the horse and cart.

          Even if you want an ICE car, you won’t be able to buy one, and petrol stations will become progressively rarer.

        • “Tesla trucks (and others) had orders of 30k from Walmart they day they were announced ”

          How many have they shipped? Oh that’s right, it got quietly dropped due to being completely infeasible with current technology…

      • It’ll be done within 10 years.

        Average vehicle age is 10 years. It’ll take 10-15 from the day the last petrol vehicle is sold for them to become a minority on the streets and probably more like 30 before you have to go searching for petrol.

        (That is of course unless some technological breakthroughs make EVs absurdly cheaper and/or there’s a massive Government subsidy/replacement programme.)

        • Arthur Schopenhauer

          What I meant was, you won’t be able to buy a new ICE car in 10 years. Then at some point it won’t be profitable to refine & distribute petrol for vehicles.

          Its the same model as coal fired power stations. Wring the most out of the existing infrastructure. Once it’s worn out it won’t get replaced.

          • I’ll be very surprised if you can’t still buy a new ICE (I’m including hybrids in that) car – at least in places they’ll still be allowed to sell them – in ten years, though I do expect a comfortable majority of sales to be EVs.

            One of the places they’ll still be selling them is the US, which is why they’ll still be available. RHD markets will likely fare a bit worse (better?) though once the UK and Japan leave ICEs behind.

            I’m also expecting there to be an exception to the “no new ICE cars after 2030” for rural vehicles – ie: Hiluxes, Rangers and such. Whether this is actually enforced (ie: you actually have to be living/working rurally), or simply left to the market remains to be seen.

            4WDing is a pretty common holiday type. I’m not sure people will be taking EVs up to the Cape (or even to Fraser). 😉

          • Yeah, different versions of that Seba presentation have been being posted here for 5 years. If you search for “seba site:macrobusiness.com.au” you’ll be able to read previous discussions.

            The problem is that his position is (IMHO) built entirely off dense city and (maybe) suburban areas, that are extremely conducive to EVs and autonomous vehicles. So consequently I think his timescales are way too ambitious for a general case (easily 5, probably more like 10-15, years too ambitious), though they may end up true for some areas.

            In particular, some of the stuff he talks about like dramatically improving highway congestion through either co-ordinated active cruise control, or fully autonomous vehicles, will only be feasible once those technologies hit critical mass of vehicles on the road – which is easily 10, and probably more like 20-25, years away. There are still cars selling new, today, for $40-50k that don’t even have ACC yet, for example, let alone it being standard on the cheapest sh!tbox cars.

      • Just like when the iPhone came out and completely dominated and changed the mobile phone market, electric vehicles will do the same to the ICE car industry.
        Why would you buy an ICE car (new or otherwise) after 2030 when electric will be so much cheaper (initial and running costs) and less polluting, more reliable not to mention much more powerful (for the hoons). People just won’t want them.
        The government will start to tax them out of existence once the health benefits off electric vehicles are realised.

        • Just like when the iPhone came out and completely dominated and changed the mobile phone market, electric vehicles will do the same to the ICE car industry.

          1. Phones are cheap. Cars are expensive.
          2. The iPhone represented a substantial increase in functionality. An EV does not (in some ways, a step back). This is the same reason comparisons with the horse and cart fall down.

          Why would you buy an ICE car (new or otherwise) after 2030 when electric will be so much cheaper (initial and running costs) and less polluting, more reliable not to mention much more powerful (for the hoons). People just won’t want them.

          Because second-hand ICEs will be cheaper, or maintain advantages in certain use cases.

          The government will start to tax them out of existence once the health benefits off electric vehicles are realised.

          They won’t need to, and it would be immensely regressive.

          • 1) Sill comparison. People buy news cars all the time. Electric vehicle price point is dropping all the time, They will be much cheaper to run (‘fuel’ and maintenance).
            2) Rubbish. Due to advantages like being able to refuelled at home plus less mechanical maintenance they are becoming a much simpler appliance.
            3) Why would you buy a dead product irrespective of price? You won’t be able to onsell it, parts will become very limited.
            4) They will tax them due to climate targets and pollution reasons.

          • Sill comparison. People buy news cars all the time.

            No they don’t. Average vehicle age is 10 years. I don’t have any data on how often the average person replaces their mobile phone, but I’d be surprised if it was much more than three years. This means new technologies and capabilities become commonplace in phones on a far faster schedule than cars – and that’s before considering a) how much functionality can be implemented in software, not hardware on a phone and b) the dramatically different regulatory environments they are developed and sold under.

            TL;DR: Comparing vehicle evolution to phone evolution is stupid. They’re not even playing the same game.

            Rubbish. Due to advantages like being able to refuelled at home plus less mechanical maintenance they are becoming a much simpler appliance.

            These are minor refinements, not fundamentally different capabilities. The petrol car represented a near infinitely more capable mode of transport over the horse and cart. An EV compared to an ICE is… somewhat cheaper to run (and most people don’t consider TCO) with a negative tradeoff (though only really relevant to a few) of limited range.

            Combining analogies, an ICE to an EV is like a generation or two older smartphone to a current smartphone. The horse and cart to a car is like an old-school operator-switched landline to a mobile phone.

            Why would you buy a dead product irrespective of price? You won’t be able to onsell it, parts will become very limited.

            Same reason people buy anything even when there are better options available. It’s all they can afford.

            If someone only has $10k to spend, a $20k EV is unattainable, even if the lifetime cost of the latter is lower.

            The cheapest RWCed vehicles on carsales are ca. $2,500. How long do you think it’ll be before second-hand EVs hit that sort of price point ?

            They will tax them due to climate targets and pollution reasons.

            Well, far be it for me to assert the Government won’t go looking for new taxes, but I would be surprised if they do, because it would be immensely unpopular and harmful.

            Firstly, it won’t be necessary as an incentive because ICE replacement by EVs due to the latter’s superior features will happen naturally.

            Secondly, heavily polluting vehicles will be off the road anyway through sheer age and attrition.

            Thirdly, it would be an extremely regressive tax because until they disappear completely, ICE vehicles will increasingly end up in the hands of the poorest, with the least ability to either a) pay additional taxes or b) replace their vehicle.

    • happy valleyMEMBER

      Straya is truly a morally bankrupt c.ntry? WorkChoices 2.0 also effectively announced today by your LNP gubmint?

      • Really is crazy – Covid is going to crash Australia hard with the Chinese departing. Posted a link above but the ratings agencies just put us on notice – I can’t see a turn around with Scomo without HUGE concessions to China so they will just continue to crush us to send a message to places like NZ, Brazil, Canada, etc

        Australia really only has Iron ore left and there is huge poverty coming and people are going to go ballistic when they realize what has transpired.

        The USA NEVER had these things – so implementing them is hard – we have them taken away – so we know we can have them back. Thats when revolutions are much easier to spark.

        Fighting for something that has never been is a ridiculous dream – French Revolution – fighting for a return to normal is just a day job.

        Scomo and co and total morons.

    • ErmingtonPlumbingMEMBER

      Ha ha,…gotta love the learn to code schtick.

      “Why, then, do policymakers and business leaders continue to focus on reskilling? Lafer thinks it gives them an easy way out by laying the blame for workers’ dim employment prospects on their failure to acquire the right skills rather than facing up to deeper structural changes in the economy. He says that a better option might be a push for better pay and conditions in other in demand industries that employ lots of people but are poorly rewarded such as construction, healthcare and education. But that debate is contentious, he admits.”

    • Yes. Broadly speaking the Left is held to a dramatically higher standard (‘how will you make things better’) than the Right (‘do you think you could try to not make it worse’).

    • happy valleyMEMBER

      Well, she is probably after a bit of job security and with the LNP WorkChoices 2.0 gubmint in control of this country, there’s not much more of a secure job than working for the biggest LNP fan club?

    • If the two Australian-Germans had lead to hundreds of deaths and a lockdown of NSW for a month or two then Gladys would be in a dramatically different position.
      They wandered off, don’t seem to have the virus and infected no one.
      Why would anyone try to compare it to the Victorian situation and claim it is not fair to Labor?

    • ErmingtonPlumbingMEMBER

      Who woulda thunk that, that old fashioned dish of soft porn for the masses would still be getting served up in 2020 after decades of the hard core creepy stuff being widely available for free on the internet.