Tech Wreck 2.0 is here. With it has come a rising US dollar (or is it the other way around?) Tumbling commodities and emerging markets. And a free-falling Australian dollar. First, the charts.
DXY has a strong double-bottom and is off and running:
DXY US dollar index running higher
The Australian dollar was hammered against the US but held against other falling DM currencies:
AUD smashed versus DXY but other DMs falling too
The AUD is still stronger than emerging market forex:
AUD versus emerging market currencies
Brent and gold are still deadly enemies:
Brent versus gold
Base metals were slaughtered as the supercycle meme implodes with a higher DXY:
Base metals tumble
Big miners were hit
BHP, RIO, AAL, GLEN
Overheated emerging markets stocks have jumped off a cliff:
Emerging market stocks free-falling
Junk is showing a little stress:
High yield bond markets
Treasury yields keep on keeping on:
Bond yields higher
Nasdaq capitulated with a broken neckline of a near-perfect head-and-shoulders top. Look out below:
Nasdaq crash
It’s all over for growth stocks. The march of US yields is like cryptonite not crypto:
Tech Wreck 2.0
There’s more room for yields to rise and keep smashing tech:
More bond selling ahead
Driven by inflation:
US inflation surge
The Fed has abandoned you. Via Westpac:
Fed Chair Powell’s comments at a WSJ jobs summit disappointed markets when he did not signal that the Fed would alter its stance due to surging bond yields. He reiterated that it is still “a long way” from reaching the policy goals, and that there is “a lot of ground we have to cover”, signalling it will keep policy very accommodative for a long time. On the rise in bond yields, he said there were a number of reasons, including an increase in confidence, but added that the speed was “notable and caught my attention,” and that he is concerned about “disorderly” moves and any “persistent tightening in financial conditions”. Questioned on inflation and whether the expected rise will be transitory or sustained, Powell said prices should be moving higher from the sub 2% pace, in part due to increased spending as the economy opens, but that it has been a “low inflation world” for some time and that is unlikely to change. If the transitory increase does occur, Powell said the Fed would likely be “patient.”
Be careful what you wish for, Mr Powell. Plenty more downside for tech and the AUD to change his mind.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
I remember being concerned about peak oil in late 1990’s and went down the rabbit hole of western military action around oil rich nations – particularly Africa which barely gets a mention (Nigeria in particular) – what amazed me was that the big oil companies were making most of their profits via playing the stock market on oil prices through elaborate shell companies. So when people claim companies like Apple are the worlds most valuable it really used to make me laugh. There is a fantastic chart of the Saudi Riyal price point right before oil went to $150, precipitated global riots and ushered in the US economic collapse, housing collapse and subsequent GFC.
Very few realise the nexus.
Toby
Come down off your high horse Mr Reeve.
Someone ElseMEMBER
Don’t worry, he’ll fall from his high horse…
russbwMEMBER
the excess delivery of oil to the US was intentional, and lead to shutting off of shale down to US 280 odd rigs. It takes 3-6 months to get shale/wells back up and running and prices to be good enough. Pre Covid, I think rigs were like 700 plus something like that. I would not be surprised in the least if any oil price rise is totally intentional through tightening supply with a booming reopening, combined with commodity price increase and supply chain issues, freight chain induced inflation etc. ie for whatever reason I wouldn’t be surprised if a disinflationary shock combined with an inflationary shock to the US is a goal of some who could take advantage of it.
Christopher Reeve
Zoom out on this chart and look at the INSANE manipulation going on – remember the Saudis were the global oil supplier by MILES at this stage –
yep, nasty. He’ll be back at the FOMC if not before pale and trembling just like 2018, yes sir 3 bags full sir Mr market. He’s aged 20 years since then, this wreck might retire him.
Goldstandard1MEMBER
He’s already acting like “Weekend at Bernie’s”. They roll him out when the market starts to see some reality and they pull the rope that is attached to his hand to show him waving…..
Bloomberg reports “Markets go up due to Fed chairman’s hand waving…….”
But it has to end eventually.
Christopher Reeve
The rest of the world has finally spoken up about the reckless stock market activity of the Fed – Powells comments are most likely tempered by this news from Bloomie terminals and Market watch
Indeed. It took 2 days longer than I thought it would to get back up there (if markets persisted fighting the Fed, which they did). So I am fully stocked up on popcorn, fully in cash, and eagerly anticipating next week already. 😁
It was Porter
US 10 year will be 2% mid year. Tesla 400. Lot of tech with no earnings 10% of what they were at their peak.
Repaired
Woot oil really ripping. How high can it get?
https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/oil-market-counts-down-critical-234144893.html
Speaking of manipulated markets
I remember being concerned about peak oil in late 1990’s and went down the rabbit hole of western military action around oil rich nations – particularly Africa which barely gets a mention (Nigeria in particular) – what amazed me was that the big oil companies were making most of their profits via playing the stock market on oil prices through elaborate shell companies. So when people claim companies like Apple are the worlds most valuable it really used to make me laugh. There is a fantastic chart of the Saudi Riyal price point right before oil went to $150, precipitated global riots and ushered in the US economic collapse, housing collapse and subsequent GFC.
Very few realise the nexus.
Come down off your high horse Mr Reeve.
Don’t worry, he’ll fall from his high horse…
the excess delivery of oil to the US was intentional, and lead to shutting off of shale down to US 280 odd rigs. It takes 3-6 months to get shale/wells back up and running and prices to be good enough. Pre Covid, I think rigs were like 700 plus something like that. I would not be surprised in the least if any oil price rise is totally intentional through tightening supply with a booming reopening, combined with commodity price increase and supply chain issues, freight chain induced inflation etc. ie for whatever reason I wouldn’t be surprised if a disinflationary shock combined with an inflationary shock to the US is a goal of some who could take advantage of it.
Zoom out on this chart and look at the INSANE manipulation going on – remember the Saudis were the global oil supplier by MILES at this stage –
https://www.investing.com/currencies/usd-sar-chart
Zoom right out.
yep, nasty. He’ll be back at the FOMC if not before pale and trembling just like 2018, yes sir 3 bags full sir Mr market. He’s aged 20 years since then, this wreck might retire him.
He’s already acting like “Weekend at Bernie’s”. They roll him out when the market starts to see some reality and they pull the rope that is attached to his hand to show him waving…..
Bloomberg reports “Markets go up due to Fed chairman’s hand waving…….”
But it has to end eventually.
The rest of the world has finally spoken up about the reckless stock market activity of the Fed – Powells comments are most likely tempered by this news from Bloomie terminals and Market watch
https://www.marketwatch.com/story/chinas-top-banking-regulator-warns-of-asset-bubbles-on-wall-street-and-elsewhere-11614676238
Nasdaq wipes out gains for 2021 as US Federal Reserve chairman Jerome Powell fails to calm markets over inflation fears
https://www.abc.net.au/news/2021-03-05/share-market-wall-st-dow-jones-asx-aud-wrap/13218576
https://m.au.investing.com/rates-bonds/australia-10-year-bond-yield
1.85%
Indeed. It took 2 days longer than I thought it would to get back up there (if markets persisted fighting the Fed, which they did). So I am fully stocked up on popcorn, fully in cash, and eagerly anticipating next week already. 😁
US 10 year will be 2% mid year. Tesla 400. Lot of tech with no earnings 10% of what they were at their peak.