Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Stock markets are wavering in their resolve here in Asia following the meltup on Wall Street Friday night, with Japanese and Taiwanese stocks falling again on continued COVID concerns. While gold continues to surge higher, now at $1852USD per ounce, the crypto world is all gaga following the abandonment of Bitcoin by Elon Musk, with a huge drop in price over the weekend translating into a massive gap down almost to $40K, although a late tweet from Musk has seen it lift back up to the $45K level:

The Shanghai Composite is continuing its bounceback, now up over 1.6% to push through the 3500 point barrier, while the Hang Seng Index is also heading higher, up nearly 0.8% to 28229 points. Beleaguered Japanese stocks still can’t find some momentum, with the Nikkei 225 closing 0.9% lower at 27824 points as the USDJPY is pulling back from last week’s US CPI-induced breakout, as Yen buyers step in and pushing the pair down towards the 109 handle:

The ASX200 was looking to put in a solid session to start the week but has barely moved, lifting only 0.1% to remain just above the 7000 point support level. Meanwhile, the Australian dollar has had a small gap down absorbing the weekend news to be steady at the mid 75 level, again in the mid range after a false breakout last week was thwarted by the better than expected US CPI print:

Eurostoxx and S&P futures are struggling to find traction here but there hasn’t been a sign of a pullback yet,  with the four hourly chart of the S&P500 showing price wanting to extend above its Friday night closing point:

The economic calendar is relatively quiet tonight with some US Treasury auctions and not much else.

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Comments

  1. MathiasMEMBER

    Little moneyz… its always about the little moneyz. One shouldnt be too greedy in these volatile times.

    Although the occasional big win does lift the spirits.

  2. This may interest, and makes far more sense than going down the hydrogen route. Will take decades though… Natural Gas, America’s No. 1 Power Source, Already Has a New Challenger: Batteries https://www.wsj.com/articles/batteries-challenge-natural-gas-elecric-power-generation-11620236583?mod=hp_lead_pos5. Vistra Corp. owns 36 natural-gas power plants, one of America’s largest fleets. It doesn’t plan to buy or build any more… Battery storage remains less than 1% of America’s electricity market … Gas plants that supply power throughout the day face the biggest risk of displacement. Such “baseload” plants typically need to run at 60% to 80% capacity to be economically viable, making them vulnerable as batteries help fill gaps in power supplied by solar and wind farms. Today, such plants average 60% capacity in the U.S., according to IHS Markit, a data and analytics firm. By the end of the decade, the firm expects that average to fall to 50%… Most grid-scale batteries are made of lithium ion, the same sort of technology that powers electric vehicles. They look similar to large shipping containers and are often grouped together to create arrays capable of providing large amounts of power. The cost of discharging a 100-megawatt battery with a two-hour power supply is roughly on par with the cost of generating electricity from the special power plants that operate during peak hours. Such batteries can discharge for as little as $140 a megawatt-hour, while the lowest-cost “peaker” plants—which fire up on demand when supplies are scarce—generate at $151 a megawatt-hour…

    • Interesting. However the batteries go flat, whereas the gas plant can continue indefinitely.

      • I think its based around renewables. The costs of which are huge. But chatting to a mate of mine this morning, he half charged his battery at home yesterday, despite it being cloudy and cold, so he is pretty happy. Only he and his wife, modest accommodation.

        Look, it is not suitable for everyone, and the costs quoted laughable. But power prices are so high now, that in summer, getting a small credit instead of a big bill always nice (that’s just me, without any battery). Is it worth the outlay, even with massive government subsidies? Not sure, I think if in the country side, up north, yes (but installation costs enormous!).

        • Diogenes the CynicMEMBER

          A battery can also give you some power backup when the grid goes down – mine would be good for 2 days and covers the fridge, freezer and modem. I chose to put a battery on with my solar installation. 10kW hours LG Chem. It pretty much covers night time consumption unless we throw the AC on. Last two months my total draw from the grid was 124 units for 60 days, the rest is provided by solar and the battery kicking in for night time. Next bill will be close to zero the supply charge is the biggest item about $54, minus my feeble exports @7c and my imports which would be around $30. Last year may bill for this period was nearly $700 so progress! Payback is 6-7 years with no power rate increases but those are definitely coming in WA. So far my system is slightly ahead of where I thought it would be.

  3. DingwallMEMBER

    Hmmm Musk obviously didn’t want BC to go under what Tesla bought it at? What times hey …….. when some knob tweeting can send these things all over the shop.

  4. BradleyMEMBER

    Done a bit of driving the last few days and the ABC radio is awash with people ( reporters, that Tim Soupforyouno guy etc) putting the case for opening up asap. Business losses, crumbling marriages, ailing relatives all seem to be more important than our current “normality” (happily saw the Sea Eagles shine with 41,000 others on Friday) and I did detect a whiff of panic in a few of the boosters. All we have to do to break the back of the people Ponzi model is be slow on the vaccine uptake I think and drag Fortress Australia out for a while longer.

    • Arthur Schopenhauer

      They must be getting adverse feedback in focus groups.

      The quiet Australians don’t seem to be thinking mass immigration is a great idea, now their kids have jobs and house prices are rising.

      Rock on ‘Straya.

    • yeborskyMEMBER

      Another year of this “normality” and, hopefully, it will be impossible to deny the benefits of much lower immigration. I’m not an anti-vaxxer by any means but I see no reason whatever, on any level, to rush into a covid jab at this point.

      And go Manly!!

      • happy valleyMEMBER

        But the horse has long ago bolted – my local primary school has a 75% asian cohort.

        • ErmingtonPlumbingMEMBER

          It Doesn’t matter where “they” come from.
          When the numbers are not to great we can Australianise them all soon enough.
          But those howling population ponzi schemers need to be told to STFU and listen to the will of the Australian people.

    • Don’t worry, the ‘berry industry’ has just got its shipment of wetbacks from Webacklandia. NSW government is ‘subsidizing’ the quarantine and travel!

      How do you like your f*ckberries now, hey?

      • BradleyMEMBER

        The bitter aftertaste is making me stick to just market and roadside stalls for my fruit fixes. Luckily they’re plentiful around here.

    • adelaide_economistMEMBER

      What’s telling is that we are also getting a concerted effort by the ‘medical experts’ (including, for example, Dr Nick Coatesworth and Dr Omar Khorshid (AMA)) telling us how the economy has to open up regardless of covid. Don’t ask yourself why ‘medical experts’ are so keen to get international flights happening again or pontificating on the economy or even talking about anything non-medical at all. I’m sure they are speaking from the heart.

    • I love seeing news articles talking about labour shortages due to closed borders, seen a few in the UK too. And it’s funny how it’s causing wage inflation which is apparently not good. Yet we are always told migrants are highly skilled and don’t compete with us for wages. Haha.

  5. migtronixMEMBER

    Problem with Ermo is his daughter shreds harder.

    Wanna go for a skate Ermo?

    • ErmingtonPlumbingMEMBER

      I thought you meant Ice skating the other day.
      I received your tweet asking me to Sk8 with you when picking my up my daughter and some of her buddies from Macquarie centre’s Ice Rink.

      I thought to my self,…how does Mig fken know im here!

  6. The Traveling Wilbur

    Vino (in hand): ✔
    Positions closed: ✔
    Macro Afternoon loaded: ✔
    All my mates up: ❓
    Property winning: ✔
    Relaxation relations still discounting: ✖

      • The Traveling Wilbur

        Speaking of maaaaate… what a weekend of sport! Would have been an epic one even pre-pandemic.

        I missed it totally. 😢
        But did notice all the massive head-contact hits. Did the coaches actually TELL key players to go hard just to push back on the rule changes? I haven’t seen so many ‘careless’ head involved tackles since the ’80s.

        Edit: discounting the last Rangers FC match I saw of course.
        Edit: the above is about NRL, mostly. 😕

  7. Walter Berg IVMEMBER

    Here is an interesting data set flipped to me today

    The gender balance of the larger Australian legal firms (those reporting to the WGEA)

    • Arthur Schopenhauer

      And the Partner balance?

      (Not so many positions for the 10,000s of Law grads produced every year.)

      • Walter Berg IVMEMBER

        The person who alerted me to the data stated that Australia churns out about 15 thousand law graduates each year, and has a lawyer population of circa 66000.

          • That was a fun read. (Full text was publicly available through another site.) It’s also be interesting to see what effect a high proportion of property developers has in corruption and rent seeking. I’d wager that it also pushes it higher.

    • If that includes legal assistants, I’m suprised it’s not tilted more to women.

    • Jeez mathias’ head is going to explode in an epic supernova of divorce and similar stories

    • So more women lawyers than men, I’m surprised. Although it’s a great career for women.

  8. TheRedEconomistMEMBER

    I just saw an advert for this Thursdays Q&A on the ABC.

    It would appear industry shrill Senior Economist Gabrielle D’Souza at lobby group CEDA will be featuring.

    https://twitter.com/QandA/status/1394114782890840067?s=20

    If you missed her performance on budget night, see linked below

    https://twitter.com/ceda_news/status/1392076097164959744?s=21

    A quick LinkedIn search uncovers Ms D’Souza is also a Board member of the International Education Association of Australia which is described as Australia’s leading organisation for international education.

    https://www.linkedin.com/in/gabriela-d-souza-ba986a172

    UE did a great piece last week

    https://www.macrobusiness.com.au/2021/05/industry-shills-demand-migrant-workers/

    • If I watch qanda again I may just lose the will to live. Luckily I don’t think anyone who isn’t already committed to their views watch this show anymore.

      • MathiasMEMBER

        Whats qanda? Is that a TV thing? I think I watched TV once. It was many years ago.

  9. boomengineeringMEMBER

    Trying to stop deflation by inciting inflation is like lighting a candle to keep warm in a room full of petrol.

  10. – Elon Musk should be prosecuted for “currency manipulation”.
    – Bitcoin isn’t a currency but a stock-like “instrument”. So, Musk should be prosecuted for stock manipulation.
    – On top of that: TESLA is a socalled “Ponzi Scheme”.

  11. MathiasMEMBER

    Copy and pasted…

    Five valuation frameworks to assess the cryptocurrency – DBS Bank

    “Disruptable markets. Analysts review the potential for disruption of various currency and commodity markets and estimate how much market share Bitcoin will take from fiat (currently c.USD100t of global money supply) or gold (currently valued as a c.USD9t market). For example, estimating that Bitcoin would eventually gain the prominence of gold with a back-of-envelope calculation would see an estimated price of (USD9t ÷ c.18m BTC in existence = USD500k per BTC).”

    “Costs of production. This is a supply-side consideration applicable to traditional commodities where the equilibrium price of Bitcoin is equivalent to the cost of the last miner to join in producing (in this case, the cost of electricity consumed in mining Bitcoin).”

    “Equation of Exchange (MV = PQ). An old macroeconomic equation to value money using the supply of money (M), velocity of money in a given time period (V), the price level (P) and the transaction volume in a given time period (T). With a relatively static M for Bitcoin, estimates of V and T would lead to an approximation for its price P.”

    “Metcalfe’s law. This was originally applied to telecommunications networks where valuations are proportional to the square of users in the system (n2). For Bitcoin, this implies that a liner increase in adoption would lead to an exponential increase in valuations.

    “Stock-to-flow models. The stock-to-flow ratio is used to evaluate the current stock of a commodity against the flow of new production. High ratios are indicative of store-of-value commodities, as production is stored more as a monetary hedge than consumed in industrial application.”