Tech Wreck 2.0 smashes Australian dollar

See the latest Australian dollar analysis here:

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

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

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

AUD smashed versus DXY but other DMs falling too

The AUD is still stronger than emerging market forex:

AUD versus emerging market currencies

AUD versus emerging market currencies

Brent and gold are still deadly enemies:

Brent versus gold

Brent versus gold

Base metals were slaughtered as the supercycle meme implodes with a higher DXY:

Base metals tumble

Base metals tumble

Big miners were hit

 

BHP, RIO, AAL, GLEN

BHP, RIO, AAL, GLEN

Overheated emerging markets stocks have jumped off a cliff:

Emerging market stocks free-falling

Emerging market stocks free-falling

Junk is showing a little stress:

High yield bond markets

High yield bond markets

Treasury yields keep on keeping on:

Bond yields higher

Bond yields higher

Nasdaq capitulated with a broken neckline of a near-perfect head-and-shoulders top.  Look out below:

Nasdaq crash

Nasdaq crash

It’s all over for growth stocks. The march of US yields is like cryptonite not crypto:

Tech Wreck 2.0

Tech Wreck 2.0

There’s more room for yields to rise and keep smashing tech:

More bond selling ahead

More bond selling ahead 

Driven by inflation:

US inflation surge

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
Latest posts by David Llewellyn-Smith (see all)

Comments

  1. DingwallMEMBER

    Repaired

    Powell is concerned about “disorderly” downward moves in the market

      • Christopher Reeve

        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.

        • 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.

  2. 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.

    • The Traveling Wilbur

      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. 😁

  3. 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.