Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian stock markets have started the week in an ebullient mood given the solid lead from Wall Street on Friday night with the USD given back ground against the major currency pairs as US Treasury yields continue to spike higher.  Bitcoin gapped much higher this morning, almost above the $49K level before crashing back down to its Thursday low just below the $47K this afternoon as nothing can stop this bubble:

The Shanghai Composite and Hang Seng Index remain closed for Chinese NY holidays while Japanese markets were boisterous with the Nikkei 225 finishing more than 1.7% higher to finally get through the 30000 point level. The USDJPY pair is trying vainly to get out of its funk, after its weak-ish swing higher on Friday night, hovering along just above the 105 handle:

The ASX200 shot nearly 1% high, confirming its move out of its recent trading range to start the week well above the 6800 point level with the Australian dollar bursting higher alongside, almost reaching the 78 handle on the risk on move:

Eurostoxx and S&P futures are tracking higher going into the London session, with the four hourly chart of the S&P500 anticipating more upside when Wall Street reopens tomorrow night with the clear breakout above the 3900 point level ready to twirl ever higher to freedom:

The economic calendar is relatively quiet given the US holiday with European trade balance and industrial production yearly figures the only prints to watch overnight.

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  1. ‘German Ministry Hired Scientists to Induce Corona Fear’
    https://netherlandsnewslive.com/german-ministry-hired-scientists-to-induce-corona-fear/84131/
    “The scientists provided plenty of suggestions, including proposals to put “fear and obedience in the population” on the agenda, writes Die Welt. For this purpose, campaigns could be used with images of people dying of breathlessness because there are no IC beds available.”
    Original article in ‘Die Welt’ (behind paywall):
    https://www.welt.de/politik/deutschland/plus225868061/Corona-Politik-Wie-das-Innenministerium-Wissenschaftler-einspannte.html

      • Well Gavin, it’s the oldest trick in the political power playbook: If you keep the sheeple blinded with fear they will lose critical thinking skills and then most will beg the government for solutions and to take away the pain. Freedoms and rights that have taken centuries of bloodshed to acquire will be relinquished never to be given back.
        The most useful way to create this fear is war. If a real war is not present there are many ways to create a substitute war:
        -The War on Drugs
        -The War on Terror
        -The War on Climate Change
        -The War on Covid
        Are you starting to see a pattern here yet?

      • The Traveling Wilbur

        Strangelove:

        Executes an about face from the big board to face the camera. Mr. President, I would not rule out the chance to preserve a nucleus of human specimens. It would be quite easy… heh heh… rolls forward into the light at the bottom of ah … some of our deeper mineshafts. The radioactivity would never penetrate a mine some thousands of feet deep. And in a matter of weeks, sufficient improvements in dwelling space could easily be provided.

        Muffley:

        How long would you have to stay down there?

        Strangelove:

        Well let’s see now ah, searches within his lapel cobalt thorium G. notices circular slide rule in his gloved hand aa… nn… Radioactive halflife of uh,… hmm.. I would think that uh… possibly uh… one hundred years. On finishing his calculations, he pulls the slide rule roughly from his gloved hand, and returns it to within his jacket.

        Muffley:

        You mean, people could actually stay down there for a hundred years?

        Strangelove:

        It would not be difficult mein Fuhrër! Nuclear reactors could, heh… I’m sorry. Mr. President. Nuclear reactors could provide power almost indefinitely. Greenhouses could maintain plantlife. Animals could be bred and slaughtered. A quick survey would have to be made of all the available mine sites in the country. But I would guess… that ah, dwelling space for several hundred thousands of our people could easily be provided.

        Muffley:

        Well I… I would hate to have to decide.. who stays up and.. who goes down.

        Strangelove:

        Well, that would not be necessary Mr. President. It could easily be accomplished with a computer. And a computer could be set and programmed to accept factors from youth, health, sexual fertility, intelligence, and a cross section of necessary skills. Of course it would be absolutely vital that our top government and military men be included to foster and impart the required principles of leadership and tradition. Slams down left fist. Right arm rises in stiff Näzi salute. Arrrrr! Restrains right arm with left. Naturally, they would breed prodigiously, eh? There would be much time, and little to do. But ah with the proper breeding techniques and a ratio of say, ten females to each male, I would guess that they could then work their way back to the present gross national product within say, twenty years.

  2. V_brancy at all costs

    https://www.smh.com.au/politics/nsw/mckay-backed-man-for-visa-despite-indecent-assault-conviction-20210215-p572oi.html

    NSW Labor leader Jodi McKay provided a letter of support for a Tamil man who was attempting to obtain an Australian visa despite previously being jailed for indecently assaulting a child.

    The man, who arrived by boat from Sri Lanka in 2012, was convicted in 2017 of two counts of the indecent assault of a 13 year-old-girl in western Sydney and was sentenced to 12 months jail.

  3. Update: Remote working / working from home trends …

    COVID-19 and the Ongoing Global Workplace Revolution … Joel Kotkin and Hugo Kruger … Quillette Com

    https://quillette.com/2021/02/14/covid-19-and-the-ongoing-global-workplace-revolution/

    … extract …

    … Is the online revolution a game-changer? …

    … Technologies that barely existed at the time of 9/11 are now widely deployed within banks and leading tech firms, including Facebook, Salesforce, and Twitter; all expect a large proportion of their staff to continue to work remotely after the pandemic. This shift has reaped unanticipated productivity gains according to one study of European companies, cutting operating costs by roughly one-third. A recent University of Chicago study suggests as many as 34 percent of American workers could do their jobs remotely.

    These patterns can be seen globally. Based on OECD estimates, after the pandemic, some 128 million workers will not need office space, which could lead to a reduction of 2.3 billion square feet per year. A survey conducted by France Info shows that the number of people who now work from home had increased by 24 percent by September 2020, and more than half of respondents said they would like to be given the opportunity to continue to work from home once the pandemic ends. … read more via hyperlink above …
    .
    .
    Access recent associated MB post …

    https://www.macrobusiness.com.au/2021/02/weekend-reading-13-14-february-2021/#comment-4075342

    Australians’ desire to work from home affecting house prices … Tarric Brooke … News Com Au

    https://www.news.com.au/finance/economy/australian-economy/australians-desire-to-work-from-home-affecting-house-prices/news-story/da9e4605e132dc1a5a61506f07fd433d

  4. Does anyone follow Steve Van Metre on youtube? He doesn’t always talk through his analysis to a concrete conclusion on his channel but this interview on Palisades Radio goes over his current thinking about how there is actually too much liquidity in the system and the mechanics of how that could cause a liquidity event. Anyway I’m interested in any opinions people might have (seems plausible to me but bonds are one gaping hole in my basic understanding of the financial system and global macro, I know I need to understand them, but something always gets in the way of me exerting the effort to get the mechanics, but now I’ve publicly admitted my ignorance maybe I’ll get around to it)
    https://youtu.be/UP5pPyvmMH8

      • Thanks. Part of the problem is understanding finance and the economy is a hobby, though I view it as a life and death one (I’m stuck being a low income earner so investing is the only way I’ll deal with my earning handicap). The other part of the problem is I’m never going to buy a bond as a retail investor so the incentive to learn about it is rather low. But it is on the list of things to get my head around properly

        • You are doing well, reading your comment below, congratulations.
          If you have some time to spare and want to read about traders and their different approaches to the market I would suggest the ‘Market Wizards’ series from Jack Schwager.
          If you get interested in bonds at a later point anyway, you could try finding a Bond ETF that fits your narrative.
          Wishing you good health and good luck.

    • Their banks are choking on cash at the moment they can’t make money on without some changes being made to the system, but since no-one wants to touch the chaotic mess unless it spirals out of control everyone is on the edge of their seat. It will be swamped later in the year by coupon issuance but until then enjoy the show………..the system wants to go negative but the Empire can’t have that.

      https://twitter.com/Stimpyz1/status/1361029614479441921

      • Well I’ve taken a lot of share profits recently as I’m hoping to buy a house (should receive paperwork any day now). I decided to take some more profits today. If the market does have another liquidity/risk off event then I’ve banked my profits, got enough now for a super decent deposit, and even some cash to btd in whatever asset class I feel like. I didn’t trade the last 12 months as well as I could have, but I wasn’t expecting to be able to buy for about 1-2 years later so making as much profit as possible wasn’t my goal initially. However I’m super happy with what I’ve managed to do as an amateur investor/speculator. I’m a bit concerned about how euphoric the markets seems to be, the amt of insane stuff going on and that lots of smart people think inflation is here/right around the corner. I have been thinking inflation is coming but what if it is still a few years away? I get the whole crack-up boom thesis as opposed to reflation but I’d rather be safe than sorry atm. I think when/if the house transaction goes through then I’ll start trying to figure out what might be going on and what my next investing steps are going to be. Right now my brain hurts

    • This will give you a back drop to the era post hard currancy ….

      very long book that may well be the best illustration of the basic principles of Modern Money Theory available. The book is “A Call To Arms,” by Maury Klein. It is an historical account of the U.S. mobilization as it prepared for, and engaged in, war with Germany and Japan. The scale of the task was unprecedented in human history—and the accomplishment of it changed not just the structure of the American economy, but American society as well. What is striking about the story—and the monumental effort to quickly build, virtually from scratch, the largest and most sophisticated war machine ever to exist on the planet—is that there is nary a peep of concern or argument about how this enormous task would be paid for. All of the anguish and struggle had not to do with finding enough “money” to pay for things, but rather with finding enough things to buy—and enough skilled labor to properly marshal it all together. In the end, virtually every real resource available in the continental U.S.—oil, gas, steel, aluminum, rubber, copper, sugar, tin, and man-hours of labor—was purchased by the Federal government to build the Army, Navy, Air Force and Marine Corps that ultimately defeated the Axis powers. The scale of the sovereign spending is almost beyond comprehension—especially given the fact that, at the starting gate, the U.S. economy was still decimated and impoverished by the Great Depression. At the finish line, however—VJ day, September 2, 1945—the U.S. had become the most powerful, efficient, and equitable economic power the world had ever seen. So how did it all get paid for? And even more important, how did we travel from that VJ day of economic triumph to our sorry state of today, where we think we are so “broke” we can’t even afford to hire enough fire-fighters and equipment to put out the forest-fires raging in our western states? – snip

      https://neweconomicperspectives.org/2013/08/mobilization-and-money.html#more-6200

      Ponder why Milton’s arbitrary fixing IR to a targeted 2% after reading this …

      MMT answers “yes.” The key to this answer lies in seeing a flaw in the conventional “truth” of treasury bonds, the reality of what treasury bonds legally represent and, consequently, the value and usefulness they have in the operations of private commerce.

      To uncover the flaw, begin with the question: why would a private bank (or anybody else in private commerce) trade real, genuine, “spendable” sovereign fiat dollars for a treasury bond representing fiat dollars that can’t actually be “spent” for, say, ten years? Does the U.S. Treasury coerce the purchase of its bonds? In fact, banks and big spenders and players in private commerce pretty much line up to trade their fiat dollars for the Treasury’s bonds like cattle line up at a hay-trough. Why? Hunger—not for the crunch of hay, but for safe, guaranteed, no-work-required profits. Safe, guaranteed, no-work-required profits are not something easily found in the world of private commerce. They are much appreciated and sought after, however, because the biggest headache in private commerce, if the truth be told, is figuring out what to profitably do with profits. There is a staggering amount of profit in private commerce that hasn’t figured out what to do next. If it does nothing, it simply shrinks due to “background” inflation. If it rushes to invest itself recklessly, without the concerted and creative efforts required by successful private enterprise, it risks being lost completely. Thus, the U.S. treasury bond is a godsend for private commerce: the players trade their excess capital (sovereign fiat dollars) for the interest-bearing treasury bonds and make a profit without having to creatively exercise their brains or worry about anything at all—except, perhaps, whether the United States is going to collapse as a sovereign government.

      What makes the treasury bond even more magical, however, is that if, say, a big opportunity comes along to invest real sovereign fiat dollars in a killer profit-making venture—no problema! The secondary market for U.S. treasury bonds—other folks who can’t imagine, right now, what to do with their private commerce profits—provides instantaneous liquidity: the treasury bond can be traded for the real sovereign fiat dollars needed – snip

      http://neweconomicperspectives.org/2019/01/mmts-opening.html

      Lastly something that has relevance too covid …

      http://neweconomicperspectives.org/2019/01/mmts-opening.html

      But then there is never an issue with write offs, pork, military spending, or unearned income for the rights sorts ….

  5. Mining BoganMEMBER

    So, the WuFlu eh..

    It’s well documented my love for old Studebakers. Prices boomed a few years back but now they’ve dropped right off. Rumour is because they haven’t been built since the sixties they only appeal to the oldtimers who remember them and it’s these same oldtimers who are being bumped off by the WuFlu. Families aren’t keeping them to remember dear old dad. No, they’re selling them for things like botox and superbowl tickets.

    Even here in Oz they’re getting cheaper. Must be the only thing that is though.

  6. Cheers to all the MB crew who sent me and my partner best wishes and kind words on our house purchase over the weekend.

    It’s a fabulous place, and we spent a big wad of cash on it, but I still hope for the sake of my kids and all my fellow Australians that the Ponzi detonates as of last weekend. I don’t care if I lose money out of it, it’s what the country desperately needs.

    For those who are still saving and looking and hoping, good luck and best wishes.

    • The Travelling Albatross

      Tomorrow I’m meeting with the bank manager applying for a loan, looking to buy a house but its on auction, and not sure how to handle an auction, any advice?

      • innocent bystanderMEMBER

        before you go to the auction write your max price on a piece of paper and put in your pocket.
        at the auction do not let any r/e spivs stand next to you to try and influence you.
        when you start to feel all emotional about just a lil more … check your written max. It isn’t worth any more than when you wrote it, right?

        what else you do at the auction, how you bid etc, doesn’t really matter, altho I always leave it as long as possible to bid.

        everything else you should have sussed before the auction (inspections etc)

      • Arthur Schopenhauer

        1. Go to a bank and ask how much they will lend you with 5% deposit on the house. The manager will have a valuation number. That’s what the majority of bidders will have. Between the big 4 the number is pretty much the same.

        It’s highly unlikely the property will sell for less than that.

        If it’s in a townhouse zone, you will have to pay the land value of whatever townhouses can fit on the land, if a builder/developer is bidding too.

        2. Don’t bid until the final call, and then wack on $11k. (If the bidding is hot.)

        3. What IB said.

        • The Travelling Albatross

          very interesting info, so you reckon i should tell the bank manager the exact house im looking to buy before they even decide if they will lend me?

      • The Traveling Wilbur

        Rent your last uber eats driver for the morning to make bids on your behalf at the auction.

        It’s the only way to keep the auctioneer’s expectations to a minimum.

        Edit: der, sorry. Just realised the above advice is probably unnecessary on a duplication of effort / being redundant basis.

      • For bidding at auction it’s important not to show others how much stress or how close you are to your limit. Each bid should be done with confidence that you still have plenty of cash in the tank to play with.

        If you feel you’ll be too nervous get someone else who’s not emotionally invested to bid on your behalf. But sticking to your max bid.

        Have you done your research in the area? It really helps to see other auctions in streets close by and similar homes. Gives you a feel for the demographic you’ll be up against.

        • The Travelling Albatross

          There are nearly no auctions in this area
          Mostly town houses, but I want to buy a house and this one came on its own title ( it’s about 830 sm)
          I’m considering asking an older friend to do it for me.
          Thank you

      • Try an offer pre auction? They may not be interested but the last house I bought was listed as intended to go to auction but they took an offer early. Admittedly that was 2013ish when things were selling real slow, not the current market.
        If a date has already been set for the auction then probably not going to have a lot of success though.

      • This is how I approached it.

        Everybody is shy, nobody wants to start bidding, so start off with a low ball offer. It’ll be rejected, but it will start others bidding if anybody is going to do so. Immediately drop out, look downhearted, shake your head when the auctioneer asks you to bid and let everybody else go for it until bidding ceases and somebody has “won”. Wait until the auctioneer says “going twice”, and then recommence bidding. Come in confidently with a substantially larger bid than what the bidding had stopped at.

        At this point it should just be you and one other party who is now disconcerted and confused because they just thought they’d won and now they haven’t . Appear confident and relaxed, smile at everybody (particularly the other bidder) and continue bidding with absolute confidence. Don’t look around and anxiously ask your spouse if you should continue…you should have all that sorted out before hand. Bid with utter confidence as though you have millions to spare right up until the last bid. Either you win, or you reach your upper limit and it’s time to look for another house.

        Might not work for you, worked like a charm for me.

        All the other advice is good too…know your limit, have it on a piece of paper in case you forget because the stress is amazing etc…

    • Congrats!

      We’re playing interest rate arbitrage and switching banks and are getting the place val’d. I’ve put in for a 11.5% increase in val in 2 months (we bought off market, no agent and no competition probably meant a lower price -have repainted , fans in bedroom new induction stove and oven and opened up 3 rooms into a 6x6m photo studio for wifey) -be interesting to see what bank comes back with / I don’t think there’s much chance of a drop anytime soon

      Macroboom!

  7. The way Dan deals with journalism is brilliant.
    Treats questions as arguments. Debates the journalists argument as he just did with Sales.
    It immediately removes the artifice of impartiality and discredits journalism.

  8. It’s no wonder that with 2 weeks to go to the election, the young woman was urged to keep quiet. We were this close to ending NG, franking credit rorts etc and we won’t be as close for a long time to come. Double damn.

  9. Today I learnt that in Norwegian law allow people to walk anywhere so long as it is not within a certain distance of a home. It is to encourage people to get outdoors and see the country. It is also because they believe that while you may have specific rights to land that you own, it does not make that land exclusively yours. Those Norwegians are smart cookies.

    • I think similar in Australia in limited circumstances. It was the case In Vic that a gazetted rivers / streams was public access land even if through private property. I don’t know how wide, perhaps a chain or x metres, or far down the flow volume it extended. Trickle, spring flow? I understand that there are only a couple of exclusively private watercourses in Vic. This is what I’m told. Could be bullsht,

    • lol crypto kiddies and elon leg humpers!. I wonder how much Tesla value is Elon enviro branding, even if fake. This stuff just destroys enviro street cred. Then again, $$ don’t give a fuk.

  10. Bond yields soar …

    Recovery hopes take off, bond yields soar … Sarah Turner … Australian Financial Review

    https://www.afr.com/markets/debt-markets/recovery-hopes-take-off-bond-yields-soar-20210215-p572h8

    Bond yields have surged to almost pre-pandemic levels led by US Treasuries breaking through 1.2 per cent, and equity markets are trading near record highs, providing more evidence the global economic recovery is gathering steam.

    The 10-year US Treasury yield climbed to 1.208 per cent on Friday on Wall Street. Australian bonds followed suit on Monday, with 10-year Australian government bond yields rising to 1.303 per cent, the highest level since COVID-19’s spread. … read more via hyperlink above …

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