Macro Afternoon

See the latest Australian dollar analysis here:

Is the Australian dollar an America, Europe or China proxy?

Asian stocks are swimming in a sea of red today due to the growing lack of confidence on Wall Street overnight, as risk sentiment reverses yet again as bond markets continue their own selloff.  Bitcoin found a lot of sellers this afternoon after building up and beyond the $50K level with last week’s intrasession resistance at $51K to high a target it seems as it loses over $2K:

The Shanghai Composite is taking back its previous gains, currently down over 1.6% going into the close at 3516 points while the Hang Seng Index is doing even worse, down more than 2% at 29215 points. Japanese markets are showing the way with the Nikkei 225 closing 2% lower at 28292 points to break daily ATR support while the USDJPY pair resumes its climb above the 107 handle:

The ASX200 was the relative winner, only losing 0.8% to slip back below the 6800 points level, closing at 6760 points, while the Australian dollar was resilient against a record trade surplus print but is still stalling at the 78 handle, with medium term momentum remains against it:

Eurostoxx and S&P futures are dropping fast going into the European opening session, with the four hourly chart of the S&P500 showing a widening trend channel that is on a downward track. The continued inability to breach the upper downtrend line from the early February lows is weighing, with the 3900 point barrier proving powerful resistance:

The economic calendar includes US initial jobless claims as a prelude to the non-farm payrolls print due on Friday night.

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Comments

  1. FUDINTHENUDMEMBER

    Ripping yields, ripping yields,
    Nobody knows the way it feels,
    Caught between Yellen and the Lagarde
    Ripping yields, ripping yields…

    • No. It makes for astute, measured commentary highlighting hypocritical double standards and is worth paying for (I do!).
      If I want hysterical, half-witted commentary I can wander 200 metres down the road to my local pub or come to MB.
      MB used to do business and economics well. Now it does epidemiology, virology and legal matters like university freshers.

      • ErmingtonPlumbingMEMBER

        Ya gotta admit the half-witted commentary is a bit fun and isn’t any worse than what we have served up by the entire mainstream media.

        And yes I agree Michael is well worth subscribing to.
        it’s something I intend to do.

      • Yes, but I’m not dissatisfied. The economic analysis is still there, but probably less of it by volume and quality for two reasons – it’s hard to sustain the energy for a lean start-up like this and there is such a rich body of social and political upheaval that the economic aspect is proportionately smaller.

        I think the current model still delivers, it is subsumed into the social and political. I’d be interested in hearing the views on how the fk business analysts are confident in their analysis in Australia. Better I think to take a structural view and work from there.

        • ErmingtonPlumbingMEMBER

          “there is such a rich body of social and political upheaval that the economic aspect is proportionately smaller”

          I would argue all three are inseparably entwined.

  2. nice little rally right on q this arvo, not sure if it will have legs to the top of the channel. The longer term trend channel up has held so far and I guess that could be a bull flag. Supposedly Powell might be coming out. Worth watching this one, again.

      • absolutely, sentiment seems pretty dinged and things look crook. Inflation expectations and a recession killed the nifty 50. I’m just not convinced we are there yet (no recession, lots of speculation/liquidity), but if this doesn’t open green and Powell disappoints, I agree it could be ugly especially given where prices are right now relative volatility and gamma. If bears want it, this past week since OPEX and now are ripe. I’m more a spectator at the moment due to the dicey situation.

      • lets say we get a crash pattern tonight and into next week. You know maybe around 3600 or something, strong USD, bond rally etc. Then fiscal gets upped, weak USD, YCC, then what for indices? no recession in sight, lots of pumping the liquidity. Probably lots of bouncing but do they get back up to 3950 or so? Probably not, but this market has been crazy for a long time and if real yields are kept negative, you never know 🙂 If it’s saved tonight convincingly, then it could just get crazier.

      • and at some point the BTFD is gunna really hurt. I think it’s not 2008, no liquidity event, I can’t see how markets can tolerate any USD strength for long and therefore the Fed and fiscal will be back big in some way, and in the end whether it’s now or some time ahead it will be a weak USD that will eventually kill the S and P as people realise, the value of my investment has gone up in s and p terms but not in $ terms. Or, if inflation really does kick in and liquidity tightens in some way. Just not convinced, this is how it ends, with inflation expectations rising and overvaluation. Let’s say tonight Powell has a shocker, he’ll be back as quick as he was in 2018 with something special.

      • I think quite possible it’s a weak USD that eventually kills the s and p especially with Powell at the helm.

    • blacktwin997MEMBER

      Hey, you’d be surprised how many of the world’s leading financiers cut their teeth in watermelon farming.

      • chuckmuscleMEMBER

        Illiquid and mark to fantasy valuations. Has stink all over it. Will be interesting to see the fall out, but suspect it won’t be that bad. No one was writing derivs over this [email protected]
        Do suspect that if the holding can be bought for a discount would be a pretty good deal for the buyer🤷‍♂️ so long as they have the patience.

        • The Travelling Albatross

          From valued at 6 billion to be sold to Apollo holdings for 120 million is quite a discount

          • chuckmuscleMEMBER

            My miscommunication, was talking about units in the supply chain finance vehicles. Seems to me like someone high up in CS got jack of this stuff, after probably causing an issue for 2 months and told the managers to pull it. So they get put up for a fire sale because management is impatient

  3. Inflation, infrastructure & commodities

    Last night was more confirmation of the rotation into metals and infrastructure.

    I think the US 10 year will be 2% mid year

    Tesla will be cut in half by mid year. Lot of tech with no earnings going to zero or close to it.

    • blacktwin997MEMBER

      People probably misread it as Centre For Pubic Integrity and didn’t want to go near it.

  4. Inflation, infrastructure & commodities

    All this hysteria from our media for years about Trump with the bogus made up Russia “collusion” allegations, taking every sound bite out of context, trying to claim he incited a riot, etc.

    There was more reporting of each and every Trump ‘gotcha’ moment on the other side of the planet than probably the biggest scandal I can remember the AG being accused of a violent, sadistic, brutal anal rape of a 16 year old girl.

    It wouldn’t take much prying to uncover more dirt on Porter but our media won’t touch it. This guy has been hiding in plain sight for decades (allegedly).

    • The Travelling Albatross

      I bet he’s vegetarian and was taking the salad ingredients only😉

      • RobotSenseiMEMBER

        The sauces and condiments are the only high-yield items.
        The rest of the produce in the boxes is variable quality.

    • ErmingtonPlumbingMEMBER

      I work in 100s of homes per year, quite often when the owners or Tennants are not there.
      I always work under the assumption I am being recorded.
      Every time.
      Its the best way to avoid ever being filmed sniffing some Sheila’s (or Blokes) undies.

          • The Traveling Wilbur

            Given how long you’ve been doing it (plumbing) we all assumed it was implied.

          • The Travelling Albatross

            @TTW what happened to that chap who always admired you and your wine and was growing lawns in Queensland oh and I remember him hating Mig? He was failing at winning or something

          • Probably banned for calling too many people spud.
            It was quite funny because one of his first posts here under the [email protected] handle he told me to pull my head in when I was abusing Smith in my usual colourful style. Can you imagine the gall trying to be a moderator with your first post? Then he turns into being quite possibly the most abusive person on MB ever.
            Hahaha! No self reflection at all. Which is quite common actually with people in general.

  5. Christopher Reeve

    So no discussion of the negative rates on the US repo market collapsing liquidity ? No ?

    This is it – either the Fed prints the $21 Trillion market back into liquidity or global stock markets break.

    This is what was being warned about by you know who today / yesterday.

    This….is…..it……

  6. MathiasMEMBER

    Scott Morrison… bahahahaha…

    “This is not the mob process,” he said. “There is not the ‘tribe-has-spoken’ process. “That’s not how we run the rule of law in Australia.”

    I’ll be honest. After sitting here and earning a few bucks on my Trades, then seeing the Government print Billions and drop it into half the Liberal Bank Accounts in Australia, Im really losing the value for what moneys really worth in this Country.

    These are the lowest points I’ve ever seen in Australias history… and I suspect they’ve only just begun.

    • happy valleyMEMBER

      Indeed. We have a benevolent dictator at present and after the next election?

    • I’d drink to that, but I may not stop drinking. I really do think we are hitting a low point in Australian society at the moment. Inequality, lack of actual leadership and spinsters with no real plan.

      Sure we did better than most places but only because most people complied with lockdown. Not because we had effective leadership.

  7. New Zealand: Now … rapidly starting on the path of reaping the economic consequences …

    ‘Gale force’ economic warning: what 1% rise in mortgage rates would mean … Tom Pullar – Strcker … Stuff NZ

    https://www.stuff.co.nz/business/124438249/gale-force-economic-warning-what-1-rise-in-mortgage-rates-would-mean

    Mortgage lending has “gone bananas”, leaving Kiwis sitting on a massive pile of debt with a low interest rate on it, ANZ chief economist Sharon Zollner has warned.

    Now, just a 1 per cent rise in mortgage rates would slash 5 per cent off the disposable income of Aucklanders, she said.

    The latter figure would be about 3 per cent in the rest of New Zealand, she said.

    Zollner described that as a “gale-force headwind warning”. …

    … “It is not just houses in New Zealand, this is a global issue,” she said.

    “If you misprice something for a long time, people will demand the wrong amount of it. And I would say ‘risk’ has been mispriced deliberately for a very long time.”

    The message for 20 years had been “central banks have got your back”, Zollner said.

    “People say to me ‘the Fed won’t let equities fall’ or ‘the Reserve Bank won’t let house prices fall’, as if central banks are omnipotent, and that fails the ‘too good to be true’ test. … read more via hyperlink above …