Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian stocks fell across the region in a heavy selling day, and while it didn’t replicate the overnight steep falls in Europe or the schizophrenic actions on Wall Street, its enough to get everyone very nervous as we head into tonights Federal REserve meeting. The latest (but late, and inaccurate) Australian CPI print was much higher than expected – quelle surprise – which gave the Aussie dollar a boost, but it may not be enough to get risk currencies moving as the USD remains very strong against most of the majors. Meanwhile, Bitcoin is up more than 10% from its lows, but still at the $36K level and ready to rollover while c  gold holds on to its recent uncorrelated strength above the $1840USD per ounce level, setting up for a potential breakout during tonight’s Fed meet:

Mainland Chinese shares fell back with the Shanghai Composite down over 1.6% to 3466 points going into the close, while the Hang Seng Index did the same, currently down to 24274 points. Japanese markets all lost major ground with the Nikkei 225 closing 2% lower at 27051 points while the USDJPY pair was unable to translate its minor comeback overnight into anything substantial, still below the 114 handle and looking depressed:

Not a good day for Australian stocks which caught up to the rest of the risk complex with the ASX200 closing 2.5% lower to crack below the 7000 point level and taking it back to the pre-COVID highs, as the Australian dollar is still remaining below the 72 handle despite the unexpectedly high inflation print, as the USD proves too strong:

Eurostoxx and Wall Street futures are slowly turning over going into the London open, with the S&P500 four hourly chart showing a classic dead cat bounce after last night’s very steep crawl back up the stairs that lifted the market out of its dire position. The September 2021 lows at the 4250 level are the only support to look for here as four hourly trailing ATR resistance keeps this market in place:

The economic calendar includes the German IFO survey, US consumer confidence and then the start of the Fed meeting for January.

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  1. Much better take on “The Trouble with Bitcoin”

    If someone pitches you on a “great” Web3 project, ask them if it requires buying or selling crypto to do what they say it does.

    Better pop this in –

    00:00:00 Preface
    00:01:12 0. In 2008 The Economy Collapsed
    00:07:09 1. Bitcoin
    00:18:18 2. Ethereum
    00:24:34 3. The Machine
    00:39:07 4. NFTs Exist To Get You To Buy Crypto
    00:57:54 5. The Unbearable Cringe Of Crypto
    01:11:46 6. A Self-Organizing High Control Group
    01:16:57 7. Crypto Reality
    01:25:36 8. There Is No Privacy On The Chain
    01:32:52 9. If This “Looks Like Scam” Then Every NFT Room I’m In Looks Like Scam LOL
    01:38:29 10. Play To Earn Exists To Get You To Buy Crypto
    01:46:39 11. We’re All Gonna Make It And By “We” I Mean “Us” Not You
    01:56:08 12. DAOs Exist To Get You To Buy Crypto
    02:13:21 13. I Know It’s Rigged, But It’s The Only Game In Town

    Covers ideological origins and everything after …

  2. Jumping jack flash

    Looking forward to the inflation and eventual wage rises that come from it…

    My concern is there isn’t enough new debt nor stimulus to pay for the inflation and maintain demand, which would be fairly catastrophic for our little economy down here, built on top of a hodgepodge of SMEs providing services and/or retailing non-essential imported items, that everyone pays for using debt.

    To make matters worse, as soon as some of those mortgages come under the spotlight when interest rates start moving upwards a-la 2007, it’ll be 2008 again, quicker than you can say “subprime is best prime”.

  3. A friend asked:- What else could the world’s economies base their economies on, rather than rely on the imperative of the renewable & growing resource of Humans? (Ponzi) I had no answer…..?

    • Scrapping GDP as a KPI would be a good start.

      Outsider economists have been putting forward ideas for yonks. There’s donut economics, those that champion the commons, the ones that look towards human wellbeing. You could still have capitalism in some sense, you just don’t put growth at the forefront.

      I guess it is like when a religion has a hold of society, anything other than what everyone is used to and what is spoken about as the only way is just thought of as an unrealistic flight of fancy. A dearth of imagination and embedded power structures are what is preventing any real change from occurring.

      • I don’t pretend to have answers, but I saw a headline recently somewhere about “where is growth coming to come from when population growth is moving negatively sideways?”. I thought why the bloody hell do you need growth when there’s less ppl?
        Traditional custodians didn’t bother with this crap.

        • I worked with a bloke whose sister relaxed into that level of consciousness – “wh!te boys are too uptight” – and she ended up in the Pilbara. Partnered with a traditional custodian, family visits to Melbourne had them at a Chinese restaurant where XY would, as an indulgent treat, suck the eyeballs from the whole fish served in the banquet. Relaxed and comfortable and smacking his lips in satisfaction, he hugged-slapped my colleague “ahh, Tom, thank God for the Chinese”.

          • reusachtigeMEMBER

            No need to be racialist! It’s not just the Chinese. I was travelling through Crete a few years ago enjoying the party bars and hooked up with the locals for a few weeks. They used to fight over the fish heads and the eyes. Spitting out the little seed thing was interesting. Bluddy Cretans.

      • Thanks Footsore, you triggered a memory of an article I read many years ago, maybe before mainstream drowned it out.
        It was a detailed history of how the US used to measure Societies Welbeing before GDP gained favour in the early 1900’s IRC.
        They measured incarceration rates, crime types, health stats, schooling stats. I can’t remember what else….. Something I wish I’d kept, now I understand more of our current regime.

      • The Travelling PhantomMEMBER

        Opens the door wide for bartering, and who will have more power! the story of civilisations on small scale

        • And a bit more TTP, I have always said to the wife, when she does the 3 monthly shop to keep an eye out for the elderley women ( these women that are in their 70’s and 80’s ), at the cash register, especially if they go digging in the purse….She will nod to the checkout person with the card, and do the swipe and pay.After the thank you’s she has a natter, and then gets the details , so she can follow up with a drop off of some lamb and preserves the following 3 month interval.

      • Muttafukaburrasaurus.MEMBER

        Geothermal drilling/ energy should be something that Australia has an immediate advantage in.
        Our mining capabilities are world class and there is a high energy source, literally below our feet.

        • Arthur Schopenhauer

          Very familiar with the problem in a “skin in the game” way. Solar and wind are cheaper, and will remain so.

      • Thanks Yokel. Mentally, physically, emotionally healthy, happy people are going to be more productive – Particularly if they find Their fulfilling niche rather than being stamp pressed into part of a soul destroying chain gang. Bottom up instead of top down BS.

  4. Not that I have any data, but I suspect mortgaged households are more resilient to rising interest rate than we expect. If banks are stress testing their clients correctly then there shouldn’t be any catastrophic fall out even if rates increase by 2%. A 3% rise and we will be in very interesting territory.

    • PalimpsestMEMBER

      The issue (well one issue) is the amount of consumption sucked out of the economy. 1% on a hundred thousand mortgage ( ah nostalgia) is very different from 1% on an eight hundred thousand mortgage. That causes flow-on effects. The household can manage (just) but the economy can’t.

      I want to find how to go long on tins of baked beans.

    • C.M.BurnsMEMBER

      “Not that I have any data”

      a “great” way to start any proposition. Unless you’re a philosopher, in which case, carry on old chap

      • We’ve meant to have been using data to support our wild proclamations all this time? I’ve always gone with the fizzy fizzy feel good theory. I drink this and that until I fizzy fizzy feel good and then kind of just go for it. Fun for the whole family.

    • Absolute BeachMEMBER

      Probably not Joe. Banks diligence aside, $1 paid as interest is no longer being spent by the consumer. That extra dollar paid as interest does not equal $1 that goes straight into the real economy. A fraction may return in return on savings or bank profits. Bottom line- it is not good for GDP.

  5. boomengineeringMEMBER

    Hope Poppy (Popcod) Is doing well. No posts from her for a long time. No news is good news.

  6. “I’ve been critical about a lot of the coronavirus measures, but I am confident millions of lives have been saved by people wearing masks for 30 seconds to enter a restaurant, prior to sitting down and taking it off for an hour to eat and talk.“