Macro Afternoon

Asian share markets are having a fun start to the trading week with the broad selloff on Wall Street on Friday night echoing here with Japanese shares in near freefall and the VIX on an epic ride higher. The seismic shift in Federal Reserve intentions continues to resonate throughout risk markets with the USD strengthening across the board, as gold tries to find a bottom below the $1800USD per ounce level while Bitcoin continues to get dumped as it heads back to the previous lows, now below the $34K level:

The Shanghai Composite continues to stall with no real direction today, about to finish a handful of points lower at 3521 points, while the Hang Seng Index was hit hard on the open, closing 1.6% lower at 28340 points. Japanese stocks had the biggest falls though, with the Nikkei 225 slammed nearly 3.5% lower or 1000 points lower to 27955 points as the USDJPY pair tries to get back above the 110 handle as it previous mid week retracement turns into a possible correction down to the previous weekly lows:

Australian stocks had a torrid start to the trading week with the ASX200 closing nearly 2% lower on the back of lower bank stocks at 7235 points while the Australian dollar is barely keeping on here just above 75 handle as momentum reverts back to the mean after being oversold all last week:

Eurostoxx and S&P futures are trying to recover lost ground going in the London open with all eyes on the VIX which is sending volatile signals across the board. The four hourly chart of the S&P500 shows momentum still heavily oversold and the possibility exists for a volatile swing higher from here, but price action still looks tenuous at best:

The economic calendar starts the week with a few Treasury auctions and a speech by ECB President Lagarde but not much else.

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Comments

  1. migtronixMEMBER

    Banks RC already proved Mysogyson can have his cake and eat it too.

    I don’t hold a candle to a gnat, mate, and no-one cares…

    He resisted the Banks RC like 70 times, held it, did sweet fa about the findings – ie he wasn’t kidding when he rejected it 70x – and rolled right along…

  2. Re-posting a great link from Ermo Plumbing that was on an earlier article.
    Ermo’s view was that all franchisors were bad, my nuanced view was that these United Petrol folks seemed to be taking advantage of “business migrants” who were themselves taking advantage of the “business visa” which they didn’t really qualify for.
    I guess one solution is to remove franchises as eligible businesses for the business visa.

    https://www.abc.net.au/news/2021-06-20/united-petrol-pie-face-franchise-underpayment-battle/100195932

    • C'est de la folieMEMBER

      I actually beamed that one to Leith earlier in the day.

      That story is a classic example of the types of desperate people who are often sucked into becoming franchisees. Some of the may be ‘business migrants’ but I suspect more of them are refugees and other types of migrants who are simply trapped in a world of not being able to get decent work or not being able to do anything meaningful and someone whispers into their ear that the only way to make any money here is to be a ‘small business’ and write off loads of tax (whether the business is profitable or not) – none of that is the fault of the migrants that is the system. These people end up here and end up borrowing thousands (millions in some cases) to own sometimes very marginal businesses with less rights than employees and forever at the beck and call of a corporate head office which treats them as disposable.

      It isnt just these guys and petrol stations, half the convenience outlets in your average shopping centre are franchises. The donuts the ice creams the juices the pizzas and the bakers. The banks lever them to the gills with debt and they are stressed out of their skulls from the get go. Then half the staff they get along the way are people they ‘know’ either know or friends of friends of the same ethnic group and they essentially know they are paying under the card – the employees take it because they ‘know’ the franchisee in many instances and that gives them a tie, and often they are as desperate as the franchisee.

      The model is the problem, and the legislation and lending which supports it. Not so much the people – though I dont doubt there are some serious desperadoes amongst them.

      • Look – I get that a lot of franchises suck the big one. BUT, some franchises (e.g. Mcdonalds / KFC / Hungry Jacks) are good businesses. I have a mate who is in a consortium that own a few burger franchises in regional areas and its a good business. I would LOVE to get the franchise for the Sutton Forest Maccas!! But you need scale, and at just a mum & dad operation you are against the wall. I had another mate that had 2 mexican franchises in Melbourne CBD (mostly malls) and that was fkn tough work. He bailed out.

        But just like the immigration ponzi reduces wages, I would argue that it also reduces standards for franchises – as these companies get a willing selection of folks who don’t know any better to part with their life savings. If we were running a sustainable population then maybe these franchise deals would be better as they would struggle to find operators??

      • Jumping jack flash

        Interesting. There’s a couple of Uniteds where i live and one has had dodgy bowsers for ages. Its like they fixed the diesel bowsers using the distillate nozzles or something. I told the guy about it but he either didnt care or didn’t understand what i was saying.

      • They’re simply doing it wrong. The real business migrants have enough wealth to buy a franchise and can let it rot for a couple of years then will close it down after meeting their PR requirements.

        Knew one who invested in a frozen yoghurt store. Was hardly ever open and the workers gave the stuff away to their friends – small change in exchange for residency

    • “Financially we are broke. Mentally we are broke. Unites ruined our life.”

      Hahahahaha…lolololol….fkn sux to be you, eh, Patel? Heh heh heh.

        • Oh come on Tezza – surely we can enjoy a little schadenfreude on those business migrants. The more the story gets out that Australia isn’t a migrant utopia the more likely it is that we may be able to get on track to a sustainable population.

          • The Traveling Wilbur

            Only a little bit. So it’s, you know, like not declaring on the interest’s register or summin’ like that. Fix it up afterwards and move on.

          • Also, they admit they were in on wage theft too.

            Yep. Part of the problem now has a problem. Screw him.

    • In line with one of the big pub owners that was full Brexit and now cries in his beer about not having E.U. employees to take advantage of …

      • – The UK imports some 60% of the food the UK consumes and those imports come from the EU. That’s the reason why there are no import tariffs on food coming from the EU while at the same time british food exports to the EU have suffered under EU import tariffs & procedures.
        – Keep in mind: Before Brexit the UK also had the same import tariffs & procedures the EU now still has.

    • What is even more chilling is there will be no capacity for the UK economy to adapt and they will all starve to death.
      In addition, a possible theoretical response, say, to raise the wages of lorry drivers is egregious and we should be hoping for a reversion to a situation where an abundance of cheap foreign labour is available as it is good to suppress wage growth for workers.

      • TailorTrashMEMBER

        You get it …Winston from behind his plywood
        box would be giving you the V sign ( and no one could see him ..and just as well in modern woke Britain)

      • The Travelling Phantom

        nah mate, Scomo just signed a paper last week with boris to export tim tams and vegemite to UK , they’ll be ok

    • The only thing better than living in a country where Barnaby Joyce is continuously elected to parliament is living in a country where he gets to be acting PM. We are living the dream. I know I’ll be enjoying an extra cold Tui tonight. Hopefully our cricket and rugby teams are uplifted by having a Kiwi in charge of the joint.

      • FUDINTHENUDMEMBER

        It’s a real wonder that outback farming types wonder why they get looked down on with derision by city folks when that’s what they keep dishing up.

        • Not much different to those who only vote Liberal or Labor. All three parties claim to represent a section of society and then fail to do so. Barnaby is just the most comical manifestation of supporting a team regardless of its performance, players or back of house.

          • FUDINTHENUDMEMBER

            True that. Its the difference between a giant douche and a turd sandwich. Or a giant varicose-veined beetroot. Choose yer poison!

    • Another bonus, we are now the holders of the America’s cup. Sweet as bro.
      Plus we get to claim Hadlee. Which means that we arguably have two of the three greatest fast bowlers of all time.
      Neil and Tim Finn are now properly ours. As are The Chills. Having a Kiwi in charge is the schizz.

  3. SweeperMEMBER

    If anyone wants a glimpse into the mindset of the millennial investor read some of the stuff on wallstreetbets.
    Story after story of millennials piling their life savings into short dated out of the money call options and losing everything.
    And how are they going to recover from that if they lose 15yrs savings?

    And this.. supposedly is a way to get back at Wall Street, by handing over premium to Wall Street for worthless options, when the option market makers literally can’t lose.
    I would prefer not to generalize but it seems a lot of millennial’s are clueless when it comes to money. It’s the same mindset behind crypto. Lets “stick it to the man” by buying some worthless token and provide the gen xer’s running the exchanges/miners with real money to buy their private yachts.

    “Yeah, it’s overwhelming, but what else can we do?
    Get jobs in offices and wake up for the morning commute?”

    • migtronixMEMBER

      Lol its you who understands nothing.

      A) out of money puts/calls have been making people rich since forever. The “stick it to the man” aspect comes from flipping the script on the boilerrooomesq hedgies by making the strategy public.

      B) only you would stand next to a giant mine, replete with labour force and equipment and say “you’re digging up nothing, you know that”

      • bahahahaha

        “out of money puts/calls have been making people rich since forever”
        not deep out of the money options expiring yesterday – as a general rule – excl. Wall St selling worthless options.

        “only you would stand next to a giant mine, replete with labour force and equipment and say “you’re digging up nothing, you know that”

        a better analogy would be a giant incinerator powered by fossil fuel with millennial’s all standing around captivated by the flames climbing over one another to be the first/next/best to throw in their life savings and boast about it on twitter.

        • The Traveling Wilbur

          Yes, but a *good* analogy would be a massive conveyor belt which stupid, ignorant and gullible people were throwing all of their liquidity at as if it were a casino from the State of Unregulated Souls that slowly and inexorably turned their money, hopes and dreams into a magical stream of neverending smashed avacado on toast for consumption in private corporate dinning rooms everywhere.

        • I think my link of late on Barry’s day trader P/L over a protracted period sums it up …

    • Thank you for that. I feel better having seen that. It’s nice to see some honesty and tough love from leaders

      Reminds me of a conversation I had with a very high ranking Chinese banker years ago about her wanting to migrate to the US. She was around 40 at the time and absolutely killing it in her career with one kid and a high powered husband. I asked her why she wanted to migrate when she was obviously in the most successful 1%of Chinese who got to the top without powerful family connections. She wanted a better future for her daughter and thought life in America or the west would get it (had to explain her kids life was already better than the majority of western kids from a material perspective, though this was before the air pollution was cleaned up). I asked her why she didn’t focus on making China a better place if someone as successful as her who had achieved so much thought it didn’t offer good opportunities for the next generation. She looked at me quizzically and said it wasn’t possible for the private individual to have a positive effect. It was illuminating as it appeared to be a widespread attitude. Anyway she’s still in China still kicking career goals

    • Yes, the original meaning of the word has long been lost. I used to work for a place that considered itself a meritocracy. I used to joke that it was, in the original sense. Sadly, no one had any idea what I was talking about.

    • Jumping jack flash

      So we are steadily marching towards the Green utopia, then?

      Looking at one of the charts in that article told the tale: Chinese CO2 output almost doubling over the past decade while everyone else’s has fallen.

      And this is hardly surprising due to the financialisation of the developed world. Manufacturing is incredibly detrimental for the planet and now, thanks to the magic of debt, completely unnecessary.

      But we still need the “stuff” don’t we? Someone at some stage needs to break ground, and someone needs to make the stuff we need. So we get a single region to manufacture our “stuff”, then give them special concessions with regards to “climate targets”, and every so often tut-tut at them while we feel all superior doing basically nothing of any consequence with our piles of low-carbon debt.

      Yes. Utopia.