Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian stock markets end the week on a poor note, having absorbed the Biden inauguration and initial policy reversals, with commodity currencies weaker against USD as gold and silver remain relatively steady. Bitcoin briefly dipped below the $30K level but has had a small boost this afternoon, but is this enough to stave off a wider breakdown:

The Shanghai Composite has pulled back to the 3600 point level, down nearly 0.5% going into the close, while in Hong Kong the Hang Seng Index has reversed course entirely, down over 1.4% as it proves unable to get above the 30000 point level. Japanese markets are slipping in the wake of a higher Yen with the Nikkei 225 finishing some 0.2% lower at 28684 points while the USDJPY pair hovers at the mid 103 handle and still looking very precarious:

The ASX200 was able to finish dead on the 6800 point level, having lost a handful of points and making a good week, while the Australian dollar is losing momentum going into the London trade, barely hanging on above the 77.40 level and looking set to rollover:

Eurostoxx and S&P futures are also falling going into tonight’s open, with the four hourly chart of the S&P500 showing a stall above the 3800 point level after looking extremely overbought – could more climate change friendly announcements from Biden later tonight put a stopper to this excitement?

The economic calendar ends the week with a series of flash PMIs across Europe and the US.

PS. someone said they didn’t like mittens yesterday, so I put in some kittens instead, howzat instead? Notice they aren’t orange either…Have a good weekend!

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Comments

  1. From a rant on one of the China threads……

    There is another game in play here as well involving China……

    About a year ago the UK had a quiet chat with Canada Australia and NZ about the implications of a major breakdown in Hong Kong. That chat involved consideration of the possibility of the UK needing to place large numbers of ‘refugees’ from Hong Kong – starting with the British National (Overseas) passport holders.

    In recent weeks we have had the Chinese mention they may cease to recognise the BN(O) passports, and in the last year they have effectively ended Hong Kong’s legislative ability, and are steadily approaching the denouement for any scope to protest in Hong Kong.

    Although Australia has been centre stage in terms of economic embargoes by the Chinese, it hasnt been alone – Canada New Zealand and the UK also have significant issues with China. There has recently been another chat with the Poms and there will soon be a range of chats with the incoming Biden administration in the US.

    The Chinese have been waiting to see what comes out of the next US administration. They are now aware that there is unlikely to be any rolling back of the Trump reset of relations with China, and that around them they are facing a world where a lot of very very suspicious nations are looking at them. The world increasingly does not trust the Chinese. The experience of Pakistan and Sri Lanka has generated a load of questions about Chinese finance. A generations worth of experience with Chinese mercantilism and the has generated worldwide questions about the ‘value’ of having outsourced production to China – for other nation states and societies. There is vastly increased awareness that the real implications of Google and Facebook etc in terms of security for societies still hasnt been well thought through, and that embedding Chinese systems and hardware anywhere in the access by whole societies to the internet may have significant downsides – which all comes back to increasing suspicion/belief that Chinese society and the CCP running China have a fundamentally different view of the rights of individuals, the expectations of individuals with regard to the state, and the accountability (and the balance of that accountability) between the state and the individual for each others activities, and rights of appeal or redress.

    More pertinently it brings the questions of whether China is prepared to accommodate a differing interpretation of the rights roles and responsibilities of individuals vis the state, if it is prepared to respect the beliefs vis these of other societies, of it is prepared to shift its own views, and ultimately to if the world will likely have China’s views vis these imposed in some way through a trade and economic relationship with China?

    The basic China centric response is that China will fund its own development, and can supply the rest of the world on the side from here, off sheer volumes and scales of production. That leads directly to questions of China’s finance system, and the ability (should it exist) of China to push itself beyond the ‘middle income trap’ of an economy developing to the point where it needs to players to make a call between following national objectives of societal development or financial imperatives of a viable return to investors.

    In China’s case it has a demographic profile reflecting the life of a ‘replicant’ from Bladerunner – accelerated decrepitude. China will get old before it becomes wealthy enough to meaningfully drive the rest of the global economy. In addition to that it has, and will continue to have, major environmental issues affecting its agricultural production (and hence ability to feed itself). None of that may be that insurmountable, but those types of issues decisionmakers within the CCP to be able to balance competing interests in Chinese society (old – young for starters) and the balance achieved therein to be balanced with global interests (economic development of Chinese society and maturing China demographic – and the tax implications therein) balanced against global demand for access to Chinese consumers and Chinese demand for access to global consumers.

    That makes China’s current stance of bending world trade to whatever whim it has – pockmarked with an urge to ‘punish’ those it sees as acting outside its whims – not just a matter of shooting itself in the foot, but one of strapping gelignite to its cojones. At a macro level the Chinese are presumably well aware of their finite limitations and are looking for a point where they can ‘engage’ with the world on something akin to a face saving level. They would probably like the world to ‘be nice’ for a spell so that they can be nice back.

    With the Poms in the exit lounge the EU has just done an investment deal with China which has a lot of people scratching their heads. There was sweet FA in it for the EU, except maybe those (Germany for starters) looking to protect the position of assets already in place in China. As much as anything it was possibly a ‘win’ for China insofar as it will limit unanimity between the EU and US at a time trade relations between them – which have also been buffeted by Trump and will need to reset – are stretched a tad. One of its unintended effects may be to drive a bigger wedge between the EU and the UK, with security issues being voiced out of the UK likely to continue a need to tone down UK links with the EU in the eyes of Chinese interests.

    That trade deal was plausibly only made possible by the UK leaving the EU, and in recent weeks the UK calling out China vis the treatment of Uyghurs and support for democratic process in Hong Kong has started to give rise to scope that the UK outside the EU may become a bigger China irritant – particularly with its claim on the loyalties of a significant number of Hong Kongese through the 1998 Treaty and the BN(O) passports.

    That UK ability to call things out makes it a useful ally of the Canada Australia NZ experience of recent relations with China and probably a more overtly anti (even if not as anti as Trump) China tenor coming out of the US. The touching base between the old British empire dominions poses a very serious threat to China – any easy flee and refugee hearing for a considerable number of Chinese with a direct passport somewhere else, which would almost certainly turn into a general encouragement for Chinese to flee China for quality of life purposes and freedom of expression purposes, which of course would draw a Chinese crackdown. From there it would likely harden up the US position in terms of protecting the interests of Taiwan (which would be supported and encouraged by Japan, and probably Korea) and the whole strategic ring around China’s maritime routes.

    • Does it really matter if China does not abandon shareholder Capitalism or tax haven Atlantic antics are not sorted ….

      This month Naomi Fowler speaks to activist and writer Ben Phillips about how past struggles for justice were won and how we can win them again. We discuss valuable lessons he learned from living and working around the world which he writes about in his book How To Fight Inequality and why that fight needs you.

      Plus: Why is the Chinese economy so successful? Naomi discusses with John Christensen the rise of China and, unless they chuck shareholder capitalism, the continuing demise of the US and the UK.

      https://www.thetaxcast.com/

      PS hope the family issue is moving in the right direction.

    • Ronin8317MEMBER

      The Chinese Emperor started to believe in its own propaganda. In the Chinese version of the well known fable, when the Emperor has no clothes, and the entire country also have to go naked as well.

      • Like it or not the Chinese did something no other Atlantic nation has ever done in a short time line and now integral to how global markets function. All whilst Atlantic nations are having a few dramas, too say the least, not to say I promote anyone in particular, but only pointing out the shift in geopol bargaining power.

        • reusachtigeMEMBER

          Seriously, how is such a massive commie sympathiser as yourself allowed on the streets?

          • “How many business have you owned.”
            Yeah sure, that’s why in the twilight of your life you’re still busting your balls every day building patios, because manual labour is soooooo much more honest and fulfilling when you’re old and decrepit innit?
            ‘Corporate Star’ (your words), give me a break you nincompoop.

        • Ronin8317MEMBER

          Deng Xiao Ping mapped China’s foreign policy with a single phrase : 韬光养晦. Literally it means “Hide your Brightest while growing under shadow”. A lot of people mistake it as ‘bide your time until you’re ready’, but that is wrong. It is not a strategy but a description of how China should become : a strong nation that does not flaunt its power. Deng came to concept to avoid the misstep of USSR and USA where the cost of becoming a hegemony end up ruining it.

          Under Xi, China has taken the opposite approach.

          • Lmmao … I’m not pro one way or another because geopolitics is like that … and its tiresome to deal with people that get their world views from the back of a wheat bix packet …

          • Not sure if you were dissing reusa or Ronin there skip. I don’t always agree with Ronin’s assessments of things to do with the PRC but I tips me lid to his knowledge.

  2. Just imagine those kittens in a jar of formaldehyde alongside a collection of two headed sparrows etc

  3. Reminds me of an old t-shirt slogan: “I like cats, but I couldn’t eat a whole one”. Got many laughs from that one.

      • Christopher Kennett

        Cesar Chavez was a Mexican-American (born in the USA) union leader, who opposed illegal Mexican immigration because it was being used to undermine labour standards and break strikes in the USA…

        Meanwhile Biden opens the borders and blesses millions of illegal immigrants?

        • For your information the entire history of America was built on immigration, wave after wave, became a model that everyone else should emulate and if force was necessary so be it because someone said that is how the world works ….

    • Mining BoganMEMBER

      Lol, I read that and thought Cesar Romero, the one true Joker. Don’t know if he fought for the little man like the Chavez fellow though.

  4. COVID everywhere by winter

    Biden first order of business was to allow Mexican citizens to enter the illegally again. Second order of business is to get rid of the term illegal alien.

    The lunatics are truly running the asylum.

  5. I think there was some insider buying in ALK today. All goldies went down while ALK finished up fair bit and was up almost all day.

    Same for CEL but CEL has been getting lot of support all week. Up almost 50%.

    ANother winner I expect to have is KCC listed on TSX. They have JV with REE and are drilling Trundle in NSW. I dropped REE as I don’t trust the management and don’t like their rare earth project. On top their second rare earth project turned out to be a dud.

  6. reusachtigeMEMBER

    How hilarious would it be if Google packed up and farked off never to be seen in Australia again. LOLOLOL.

    • happy valleyMEMBER

      We could without Murdoch media ahead of not having Google any day of the week. The replacement search engine for you for talent for relo parties will be …?

      • duckduckgo – a vastly more useful search engine & I like the way it doesn’t advertise at me based on previous search history…

    • COVID everywhere by winter

      Twitter and Facebook can join them.

      Tiktok is communist owned but there’s quite a bit of talent on there same with Instagram.

    • I miss the days of having to pick up the news at my local newsagent. It makes me wonder why the newsagent wasn’t paying Rupert for directing customers to his newspapers through his store.

  7. COVID everywhere by winter

    The Ayatollah of Iran has made a veiled threat on Twitter to assassinate Trump yet not a squeal from the shrill left? Twitter hasn’t put a caution on the post. Disgusting organisation.

    • What are your saying … the dude that had the responsibility and ended in 400K deaths is a sweetheart guy … I mean its not like someone is doing your AO with Willie P like some cities ….

        • I understand the concept of personal responsibility is not something your acquainted with let alone acknowledge … might have something to do with that dog collar around your neck ….

          • I could take you to the bush and see how you fair with some grandads …. pay good money to watch not only yourself but a bunch of other posers …

            Can’t wait to see carpal tunnel undue so many that think chicken pecking is a day job for’eva …

          • @haroldus … lmmao I missed that retort …

            I was talking about how you would fair with a bunch of blokes that have run businesses for decades and worth tens or hundreds of millions, but you would not know it by looking at them and work and play hard. Trust is a huge deal and they don’t suffer fkwits – zero tolerance.

            And you respond with bags of lime … sigh … such a knee jerk when having your backyard manhood questioned. Yet that does not change the topic of how you would roll with these sorts for an extended period of time in work or play. Took youngest son starting his last year of HS with an apprenticeship with Volvo CE back up to his uncles place past Jimna and myself and him are always welcome, where not even half the wife’s family is offered such, even with clients on the property.

            I speak from experience and not deductive processes … sorta like your blood O2 running out in less than 5 min with heavy exertion so I don’t even know if you could walk around half the property.

          • FMD you are so full of yourself Skippy, it is at the same time vomit inducing and riotously hilarious that someone can have such an inflated ego, I honestly think you would make Trump blush.
            Let’s repeat some of your own bragging and boasting here over time:
            -IQ 120+
            -Family owns vast tracts of land in the US
            -Special Forces, killed a few Commies
            -‘Corporate Star’, rubbed shoulders with the bigwigs of finance like Bill Gross
            -Knows all about everything because read a book about thingy once
            -Can dance like a black fella.

            Now compare to: At retirement age relegated to doing back breaking work every day building patios and spouting alphabet soup on some obscure blog.
            You have so little self-awareness that you don’t even realise that any 6 year old can see right through your bovine excrement.
            You’re full of it, just give it up ya big old phoney.

        • mate why don’t you just own your comments like you do with the rental hs.
          If you think this bloke shouldn’t have soon to be 500k deaths on his conscience tell us why.

    • reusachtigeMEMBER

      Yep. Scum. Just like Biden saying he wants to unite American again yet straight away goes on a mission to sign executive orders to remove all the great things Trump put in place and over half of America wants, this sh1t is just going to further galvanise the patriots. Twitter and the rest of that rubbish will feel some serious revenge down the track. Rightly so!

      • The Traveling Wilbur

        You just made me read summaries of 17 executive orders. Much ado about swfa.

        It’ll be all language and mandatory daily hugs of snowflakes for four years like I always suspected. Anything that was going to hurt business is a) minimal b) all done already. The only complaint you’ll have about Biden this term is that he wasn’t trying to be as generous as Trump was.

        • Trump was ingenious … oops … made Bill Clinton look good … mirth ….

          Stick to gardening and losing the fat ….

        • rejoin Paris agreement
          centralise covid response
          revoke Keystone pipeline.
          make masks mandotry
          extend eviction moratoriums.

          oh yeh really swfa

          when cynicism becomes an excuse for laziness.

          • The Traveling Wilbur

            Financially speaking, the 17 EOs move things back to about 2018. Reusa doesn’t need to worry ’bout nothin’.

            Now re-list all the non-COVID non-process improvement EOs out of that 17 that will hurt rich people. Oh, you did already. All 2 of them. Paper cuts. Reading comprehension ≠ laziness.

            Do your own research. (not just 1% worth either).

          • The Traveling Wilbur

            Possibly. But nothing to do with the scope of my swfa EO x 17 observation. Nothing at all.

            When moving the goalposts becomes an excuse for TLDR.

          • eviction moratoriums is huge imo.

            tax and spend policy is set within the framework of the political culture.

          • The Traveling Wilbur

            election moratoriums would be huge.
            eviction moratoriums are huge too but… make everyone suffer a little (except really poor people) – instead of huge risks to the wealthy of not acting at all. It aint hurting them so much as protecting. Too big to fail (but without direct fiscal support).

            Anything else is still goalpost moving.

      • Galvanise to what? There isn’t a surface that hasn’t already been corroded – you don’t have a base, you have sore losers that don’t want to play anymore

        • Tranny for a health minister may upset the conservative right who believe it’s a form of mental illness..but I just hate the woke tokenism of it all.

          • I don’t think these appointments are just to make a statement. They are a big head f**k to those that make a fuss about these things as a distraction from people looking at what’s happening. That is, the ScoMo’s, Bolts, and Tucker Carlson’s of the world. It’s too early to tell, but if they just get on with the job and let the news organizations and all the peanut gallery, including the shut ins and twitterati, fight it out among themselves, then they’ve saved themselves a lot of hassle. Regardless, it’s usually a few weeks before one gets an idea of what any new government is actually about and a few months before any real judgement can be made about competency. Personally, I’d just like to see one, of any flavor, exceed the rather low expectations I’ve set for governing. It’d also be nice if these guys managed to give America a bit of chill time. Trump took a lot out of that country, and those that were for him seemed to be just as worked up as those who were against him. Covid has ravaged the place. A boring old fuddy duddy might be what it needs at the moment. Time will tell.

  8. Update … Initial American hotels and the cruise industry impacts … just the start of it …

    American Hotels Experienced Worst Year Ever … Zerohedge

    https://www.zerohedge.com/political/american-hotels-experienced-worst-year-ever-zero-profit

    Which Cruise Ships Will Be Scrapped Or Taken Out of Service Because of the COVID-19 Pandemic? … Cruise Critic

    https://www.cruisecritic.com/news/5423/?et_cid=3392960&et_rid=254964275&et_referrer=newsletterPopup

  9. New Zealand’s woeful housing affordability: another damning OECD report …

    Low income Kiwi households struggling with unaffordable housing, OECD report says … Rob Stock … Stuff NZ

    https://www.stuff.co.nz/business/124038161/low-income-kiwi-households-struggling-with-unaffordable-housing-oecd-report-says

    A housing affordability report released by the OECD organisation of developed nations has ranked New Zealand top for unaffordable housing for its poorest families. … read more via hyperlink above …
    .
    .
    … The latest IPSOS NZ Issues Monitor found ‘housing’ the major concern … by a country mile … at 53% (highest on record … and a staggering 16% higher than the previous quarterly report). Meantime IPSOS Monitors elsewhere have ‘housing’ at 16% in Australia and 14% in the UK …

    Ipsos NZ Issues Monitor – November 2020

    https://www.ipsos.com/sites/default/files/ct/news/documents/2020-11/12th_ipsos_new_zealand_issues_monitor_nov_2020.pdf
    .
    .
    … meantime in the real world … Dallas, USA … 25 year old teacher Lani Huang tells her story living on $58,400 a year with her recently purchased home of $155,000 …

    … therefore house price 2.6 times her single income … with boyfriend under strict instructions to contribute additional funding ! …

    How a 25-year-old teacher making $58,000 in Dallas spends her money … VIDEO … CNBC

    https://www.cnbc.com/video/2020/12/17/58k-a-year-dallas-millennial-money-lani-huang.html

    Lani Huang, 25, earns $58,400 as a public middle school math teacher in Dallas. She made an additional $1,212 from teaching virtual summer school and making instructional math videos for her school district and recently bought a home for $155,000. This is an instalment of CNBC Make It’s Millennial Money series, which profiles people around the world and details how they earn, spend and save their money.

  10. Is Dominic still here or has he given up trying to school the ‘eat the rich’ crowd.
    I hope you’re ok Dom.

      • Sorry to hear if true, don’t recall him ever mentioning CRE investments.
        Didn’t seem like the type that would have all eggs in one basket so trust that he will be alright in the end.