Macro Afternoon

See the latest Australian dollar analysis here:

Macro Morning

Asia stocks are all over the place, finishing the week on a very mixed note given the wobbly lead from Wall Street all week. USD is weakening again against all the majors after a small rebound overnight but Bitcoin is back below the $50K level for the first time since early March having given up any attempt at support this week following the Turkish ban:

Chinese markets are trying to rebound with the Shanghai Composite edging slightly higher at 3465 points while the Hang Seng Index is doing a lot better, up 0.9% to 29019 points. Japanese markets are in retreat again however, with the Nikkei 225 set to close 0.7% lower at 28991 points while the USDJPY pair continues to drop, staying below the 108 handle proper for a new weekly low:

The ASX200 had a mild selloff but has recovered most of it, down only 0.2% going into the close to stay just above the 7000 point barrier, while the Australian dollar is finding more life and stabilising somewhat, bouncing off the 77 handle that has been strong support all week:

Eurostoxx and S&P futures are barely moving higher, with the four hourly chart of the S&P500 showing a very mild bounce off trailing ATR support at 4130 points so it looks like another consolidation period tonight:

The economic calendar finishes the week with a slew of manufacturing and services flash PMI surveys across Europe and the US plus some new home sales data.

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Comments

  1. Panic buying in Perth ahead of speculation they are going to be locked down……..keep your toilet rolls stash high for winter.

    • I sold BTC few days ago and BTFD in other cryptos – small amounts as this downturn may go lot further.

      • The Travelling Albatross

        HEY!!!!!!!!!!!!!!!!!! Long time no see asked about you a lot ! and lots said they missed you
        even thougtht you bought a house and ditched MB
        what are the news of gold? fkn

        • Gold getting ready for its epic run. Can’t see US being able to hike 10Y above 2.5% and I think YCC will kick in the moment 10Y hits 2% if not even earlier. Way too much debt. So gold to da moon.
          Long ALK and MAG and just bought few CHZ today. Also hold few COB, very few.
          No house for me.
          No comment about MB except I really needed to take a break from certain narrative.

          Keep losing money on BBUS and keep buying the back. lol

          Algorand, Graph, Oasis, BAT from crypto.

          • yield curve control won’t be needed as the bond market is rallying all by itself,

          • that too sweeper but in case rates start moving up YCC will kick in really early. but as you said…

          • we’re about we we were yield wise as pre-pandemic with the difference there is now 9 million unemployed. The bond shorting from July last year has been ridiculous. I can see bonds rallying strongly from here.
            Also people forget the US economy was weakening before the pandemic so yields should be lower in a business cycle sense.

          • “gold getting ready for an epic run” …. niko, mate, timeframe (yes, a mug’s question but I am compelled to ask)?

            For at least a decade and a half now I’ve been reading that the tea leaves point to a gold price explosion (not you, but there has always been someone). Most goldies have recovered from the trough in 2014-15 and most have done well over the last year. but there’s been no parabolic explosion. I see Bill Beament has walked away from Northen Star and thrown his dough into a copper and zinc hopeful. There are not too many that have ridden gold better than BB: one very smart operator. Hopefully it is a case of him moving to copper and zinc and not him moving away from gold.

      • if your a mean reversionist, how would you know when to buy in a bear market… given the intrinsic value is zero?

  2. Dogecoin is great.
    now whenever someone says bitcoin has value I can point them to dogecoin.

  3. With the US consumer flush with cash now will be the final Keynesian test (vindication).
    In 08-09-10-11-12-13-14-15, Keynes was proved correct about the liquidity trap.
    But pedantic bet each way monetarists said “Yeah but it’s just expansion of the monetary base”.

    Over the last 12 months broad money expansion has been huge. Will it cause inflation. Or will Keynes super liquidity trap be proved correct again?

      • The next 2 quarters will see high inflation numbers and commodities will continue to rally, but the deflationary undertow will continue because the liquidity trap is real – in that environment commodity price increases become a tax (oil may touch $80 a barrel).- it is very similar to 2011.
        The reality is people are happy to park their savings at negative yields. Finance types can’t get that through their heads because it seems so counter intuitive.

          • nah it won’t. thats the interesting one.
            I remember debates here during the mining boom along the lines … what is driving the aussie dollar 1. iron ore price or 2) interest differentials
            I always pushed the interest differentials case. I think it is pretty clear now that interest differentials are the driver. With the RBA capping the 3 year they are basically doing yield curve control. So Rio for example becomes extremely profitable.

          • In other words:
            The RBA’s laissez faire policy post GFC handed the bounty over to consumers in terms of cheaper imports. Now, in theory it could go straight to producers profits.

          • In a market, you can set price or quantity, but not both (that was one of the big criticism of QE, that the various central banks targeted quantities when they should have set prices).

          • Skip,
            In a competitive market theory says you can’t set price or quantity.
            In reality. the Fed set an (unrevealed) price – which was a real interest rate.

          • I stand by their quasi monetarist targeted quantities and lmmao at Samuelsonesque EMH option pricing which is really rewarmed Bachelier, hence the whole risk pricing GFC dramas, which now Covid gives the big finger to everything … because of private debt levels …

            At least China sees it …

        • The Travelling Albatross

          very interesting, thank you for sharing your thoughts, i did learn something

        • Pretty much describes Japan since 1990, doesn’t it? Decades ago I remember reading articles written by confused economists, wondering why Japanese punters were happy with post office savings accounts that earned nothing for years on end.
          If Australia post did savings accounts I’d probably park my cash there too…

  4. The governments wish list to boost property prices pre pandemic would be to slash rates and pump money into the economy but that would be seen as irresponsible. Covid has allowed them to do so without scrutiny. So perverse.

  5. the China Flu just keeps on giving
    Anyone checked out the Chinaman who toured the best of Perth while infectious? I mean if the CCP really wanted to export the Whu Flu, they’d still be sending it now wouldn’t they… hmmm [pondering noises]

  6. New Zealand housing: Fear of over-paying the new concern for house buyers …

    Fear of over-paying the new concern for house buyers … Miriam Bell … Stuff New Zealand

    https://www.stuff.co.nz/life-style/homed/real-estate/124939265/fear-of-overpaying-the-new-concern-for-house-buyers

    Forget about fear of missing out on a new house – that fear is starting to be replaced by the fear of over-paying for one, economist Tony Alexander says. …

    … concluding …

    … Median prices nationwide increased by 24.3 per cent to a new record high of $826,300 in March, up from $665,000 a year ago, according to the Real Estate Institute.
    .
    .
    Apartments down under (Australia and New Zealand) going under … with a vengeance …

    https://www.macrobusiness.com.au/2021/04/macro-afternoon-1098/#comment-4107488
    .
    .
    For housing to rate as ‘affordable’ it should not exceed 3.0 times gross annual household incomes / median multiples. Generally first home buyer incomes are close to overall medians (other than say Tauranga, a favoured retiree location) …

    Median Multiples | interest.co.nz

    https://www.interest.co.nz/property/house-price-income-multiples

    The housing issue is a major concern to a staggering 60% of New Zealanders and 22% of Australians … according to the IPSOS NZ Issues Monitor February 2021 …

    Ipsos NZ Issues Monitor February 2021 | Ipsos

    https://www.ipsos.com/sites/default/files/ct/news/documents/2021-03/13th_ipsos_new_zealand_issues_monitor_report.pdf

    Why did the New Zealand government fail to deal with the essential structural issues out of the 2017 election … as promised ? …

    … No wonder the regional metros of Australia … in particular … are so attractive to aspirational and desperate New Zealanders.