Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Risk markets are on a knife edge with Asian stocks falling sharply across the region following the latest Federal Reserve meeting, with Chair Powell indicating some serious interest rate rises are on the cards. While Wall Street put in a scratch result, futures are falling going into the London open alongside steep falls here locally as the USD remains very strong against most of the major currency pairs, especially gold. The shiny metal fell out of bed last night and has continued to fall today, currently at the $1815USD per ounce level, coming up to its major uptrend line/obvious support at the $1800 level:

Mainland Chinese shares continued to fall back with the Shanghai Composite down over 1%, currently at 3412 points going into the close, while the Hang Seng Index is even steeper, falling more than 2% to be at 23649 points. Japanese markets are taking the biggest hits, despite a weaker Yen with the Nikkei 225 closing more than 3% lower at 26147 points while the USDJPY pair is holding on to its overnight gains, almost matching the previous weekly high:

Australian stocks couldn’t escape the carnage with the ASX200 closing 1.8% lower to definitively stay below the 7000 point level, finishing at 6838 points, while the Australian dollar is now dicing with the key 70 handle, having dropped to a new monthly low, as the USD proves too strong:

Eurostoxx and Wall Street futures are slowly melting down going into the London open, with the S&P500 four hourly chart showing a classic dead cat bounce ready to be completed as price heads to the September 2021 lows at the 4250 level:

The economic calendar is packed with German consumer confidence, US durable goods and initial jobless claims. Going to be a fun night!

Latest posts by Chris Becker (see all)

Comments

  1. What surprises the Dalai Lama most about humanity –
    “Man sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

    Yossarian let out a respectful whistle – “That’s some catch, that catch 22” he observed…..

        • If it piques your interest I can also recommend Glenn Wallis. He was a Buddhist scholar who translated from Pali. I like his books because he provides an explanation for why he chose the word. He’s also a punk/anarchist so his writing is respectful but not reverential. By that I mean that he asks questions of the text and of the reader.
          https://www.glennwallis.com/writing/basic-teachings-of-the-buddha/

          An interesting cross-over point for the two is that Thich is credited with introducing mindfulness to the West. Glenn wrote a scathing critique of the West’s adoption of mindfulness as an attempt to make everything better when it is the structures of the west that have failed, not the individual.

          You’d probably also like Wallis’s Anarchist Manifesto. It’s a ground up look at the idea as a way for communities to function, not the burn it all to the ground caricature that anarchy is generally put forward as.

          • Thanks again footsore, you’re hitting my current ruminations pretty well with both of those recco’s. Will keep me busy for a bit.

    • The Travelling PhantomMEMBER

      They were supposed to install air purifier machine in every class room, are they any good?
      Not sure if they’ll deliver before next week though with the begging of school term.

    • Short CapitalismMEMBER

      How ironic: the government didn’t widely explain this precisely because it would be loudly skewed by anti-vaxers who would misrepresent it as an excuse not to wear masks without understanding that masks are much more effective at stopping infected people from filling the air with virus laden aerosoles rather than the breather from inhaling them. Of course, those who are most likely to be carrying and spreading it either aren’t wearing them or not fit correctly (hello nose!)

  2. Some of you are interested in my deep-dive into Australia’s Technology exports
    As stated previously I’ve started with Electronic exports (for no better reason that I know a bit about this sector)
    Problem is I stumbled at the very first entry
    2019 showed $738M, and 2018 was $569M under Export Code 8252
    see post for explanation.
    https://www.macrobusiness.com.au/2022/01/macro-morning-1229/#comment-4232242

    What’s interesting is that the main data source for the Atlas of Economic Complexity is UN Comdata
    https://comtrade.un.org/Data/
    Now if you go directly to this data base and look for Australian exports under this code 8252
    you’ll find
    2019 is $185M and 2018 is $169M
    So why is the Atlas showing 2019 is $738M and 2018 is $569M?

    Like wtf how can the data be so far off, so I sent some emails and got a reply that the difference was between the value of the Goods Imported (including freight costs) and the value of the goods exported (not including freight).
    Or in other words freight itself is a major component of the Value of the Imported Item.

    All that I can come up with is that someone is using this code for the export of Ewaste otherwise maybe they’re playing some sort of tax games by bumping up the value of the imported components (for some obscure Tax benefit)

    Anyway that’s where I’m at,
    So going forward I will use the actual Australian reported export data in Comdata (rather than the Import adjusted data as reported in the Atlas.
    Our Aussie data looks more reliable and the huge jump in export revenue over the last few years is completely missing (no surprise there)
    Exports for this category are consistent varying from $108M to $185M over the period 2013 to 2021
    So there is no mystery exporter just bogus data entered by our Import Partners.

      • For what it’s worth my focus will be on just 4 of Australia’s product export sectors.
        The 4 that I’ve selected are (2019 sector exports)
        Vehicles ($2.67B) not as narrow a category as the name implies (includes aircraft exports)
        Machinery ($7.01B) lots of stuff varying from Orthopedics to car ignition systems
        Chemicals ($12.2B) includes Pharmaceuticals, Makeup, Vitamins and lots of other fun Chemistry
        Electronics ($2.56B) (above discovery reduces this to about $2B)

        I’m focusing on these 4 because these sectors create the majority of their product value trough the applied skills and knowledge of their work force. As opposed to value simply resulting from the mountain of high quality Iron Ore that they found somewhere in Australia.

        The total export value of the 4 sectors combined is a little under $25B (of the $316B of Aussie exports in 2019)
        For me this is a very alarming statistic, less than 10% of our export revenue results from products created by applied Aussie knowhow.

        • I’m wondering will the results be:
          a) exasperating
          b) depressing
          c) run the Ozito hose from the Havel exhaust

          • I’m just looking for clarity in the numbers and a Connectivity Matrix
            I have no idea if that excites you or depresses you. For me this information is the foundation upon which we will build whatever Industrial Australia emerges from what we have today.

          • Two untested assumptions there: that the Ozito hose hasn’t split and that the Haval exhaust isn’t already leaking at all the joins and insertion points.

        • Arthur Schopenhauer

          Does the vehicles category include non-manufacturing design work? For example, the Ford Design Group in Melbourne? I have a suspicion it might.

          (Which would be more depressing.)

          • I honestly don’t know.
            Most Export services are not captured / reported by customs officers using a standardized export code scheme, so they become this blob called “Services”. and within the sector “services” the Financial services is so big that it buries any high value activity like automotive design. which is a pity.

          • F’ed if I know
            Obviously Boeing has some exciting programs happening in the military space but I suspect most of the dollar value of these exports is related to more mundane products like Composite 777 tail sections. (if memory serves me correctly they were made in Australia at the old De Havilland site
            I haven’t even started down that rabbit hole, so who knows what I’ll find.

          • The Travelling PhantomMEMBER

            Yea there’s massive warehouse in Melbourne
            for Boeing , don’t know what they make there though

          • Isn’t Boeing making drones here? Or maybe assembling them from imported parts? Or maybe just painting them? Hmmm could be that they’re unpacking them here. Or, uhh, flying them in our vicinity…

          • As far as I know Australia has 1 of the least regulated air spaces in the world and therefore may be beneficial for running experimental flights. I know for Drones etc.. that would be beneficial.

          • Given Leith’s position on Complexity and Connectivity analysis, I wouldn’t hold out much hope of seeing that guest post at MB.
            I can definitely see the limitations of the methodology but it’s telling a very different story and it’s a story that I personally want to understand. I get the feeling Leith is just not all that curious, which is interesting because a related area of study tries to combine Complexity with traditional GDP and for the most part the two analysis methods come to the same general conclusions, however Australia is the outlier under Complexity analysis, WHY?

          • Sorry dodgy as cannot fill the post of PM .
            It is already filled by the sorriest dodger imaginable.

  3. Interesting… Grace Tame is at the tennis supporting Dylan Alcott in his last match on at the moment. They showed her on the big screen and she got a huge cheer.

    It’s really not looking good for Scummo.

  4. The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

    Back shortly. Have to stock up on popcorn.

    Anyone know what that burning smell is?

  5. Hugh PavletichMEMBER

    New Zealand … latest poll …

    Poll: National rises, Ardern’s preferred PM result drops … One News

    https://www.1news.co.nz/2022/01/27/poll-national-rises-arderns-preferred-pm-result-drops/

    Poll: Labour v National – Jacinda Ardern’s popularity slips as Chris Luxon gains ground … NZ Herald

    https://www.nzherald.co.nz/nz/poll-labour-v-national-jacinda-arderns-popularity-slips-as-chris-luxon-gains-ground/OMBCWRP752USNLQNDCVELYRZBY/

    New poll: National take support from ACT, Labour still ahead … Stiff NZ

    https://www.stuff.co.nz/national/politics/300505540/new-poll-national-take-support-from-act-labour-still-ahead

    • Which is really code for β€˜open the sluice gates’ – a disguised dog-whistle at the government to get cracking with the wetbacks supply. You wouldn’t want for this to happen on your watch, would you?

      • ☝️ frosty gets it

        Unless of course the ‘shakes my head’ has an economic crystal ball that just had it’s light bulb replaced.

    • Imagine the electoral carnage if they did start going negative sideways in the lead up to the election. What’s left for the gov to throw at them in that case to hold prices up until May?

      • The Travelling PhantomMEMBER

        Prices where going down up till Scomo got elected in 2019 and the dismissal of Hayne recommendations…would be the greatest karma that prices go down before he leaves “hopefully” despite all what he did

        • The ultimate irony is that new build housing costs are driving inflation because that dumb fvk over stimulated the sector…
          His dumbsh*t policy is going to help bring him undone by pushing up interest rates. Now that’s some funny sh*t.

    • The Travelling PhantomMEMBER

      Where’s Harry when you need him to reference another post!πŸ˜…πŸ˜

    • The Travelling PhantomMEMBER

      the second those 35K soldiers leave Germans will build a huge army that can invade Europe in no time..
      they are a capable nation with great culture and philosophy with lots of science I give them that, just
      their leadership is a constant failure though except Bismarck maybe

  6. The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

    Frozen solid Event Cinemas Sprite (2021 vintage) + neat Bacardi.

    • The Travelling PhantomMEMBER

      Man, its been few days above 30 degrees and humid in melbs, how do you survive that in Brisbane?
      Nothing beats 15-20 degrees and the cool breeze

      • Yeah, it’s a puzzlement! I do suggest that perhaps one is better in a more temperate climate easily found around, oh, say Melbourne. Therefore one ought to look for accommodation around that particular area instead of fvken clog up our roads and raise the real estate fvkin prices, ya’ pack o’Kents!

        • The Travelling PhantomMEMBER

          Yea, those oldies rent their houses here and then buy up there…clogging both cities

          • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

            Nah. Some of us have AC and couldn’t give a rats what happens in suburban malls here in Summer.

        • I hate humidity.
          Definitely effects brain function and the quality of elected governments.
          Federal elections and electoral boundaries should be weighted according to humidity.

          • Yeah well I’m doing 14 hours a day driving Ubers trying to pay off the mortgage while you sit at home on your fat @rse drinking prosecco and whining to your idiot girlfriends about me.

            I’ll show you tired.

          • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

            I hope you don’t make your riders listen to Steel Panther for the entire trip.

          • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

            Do you explain all the colloquialisms to the English as a second language customers? And to those not born in Newcastle too?

          • No no.

            After Kevin’s masterpiece “Did I Get Whacked on the Weekend” I always do my Michael Jackson joke. Cracks ’em up.

            For the English as a second language customers I just have “Hey True Blue” on a loop, and sing to them looking in their eyes and smiling, whenever we come to the lights or are in traffic. I can see the patriotic effect it has on them from the tears in their eyes when they smile back.

          • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

            They’ll stop doing that if you take the specimen jars off the dash.

      • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

        Fair question. Nothing new. Just rollin’ more with being ok with what’s always been wrong.

  7. Also……..
    https://www.dailymail.co.uk/news/article-10446881/Muslim-AFLW-player-refuses-wear-teams-Pride-jersey-religious-reasons-Australia.html

    The president of the Islamic Council of Victoria told The Age it was important she sat out the round if she felt it compromised her religious values.

    ‘It’s complex… given the AFL is an inclusive environment and there is respect for all different and divergent view I am hoping, and I am sure she would be hoping as well, that her club and the AFL community would respect her choices on that matter,’ Adel Salman said.

    • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

      Funny how there’s no chorus of social media voices demanding the club take action?

      Good. Shame ‘nothing’ doesn’t happen more often.

      • The Traveling Wilbur πŸ™‰πŸ™ˆπŸ™Š

        You’re quite correct, “Its” is not complex at all. It’s is a contraction. And comes with an apostrophe.

    • Isn’t it great that we have people of diverse backgrounds, cultures and genders playing sport?

      Also isn’t it great when diverse people don’t like showing support for diverse causes? πŸ˜€

      But I’m glad there working it out, I mean imagine you were a man with these views and played men’s football?

        • I just like the idea of some kind of multi layered Inception style wokey mind fcvk. Like what happens when an Aboriginal midget flashing his d!ck to raise awareness of female [email protected] mutilation amongst women refugees gets his member stuck and mangled in Dylan Alcott’s spokes? Like where the fcvk do you direct the rage there?

    • Also, 3 comments with nearly 2500 combined up or down votes.

      Methinks the moderation may be strong with this one.

        • You mock the DM, but how is it worse than the SMH/Age, Tele/News, Grauniad, or even their ABC?

          I can’t see how it is.

          • It’s just different degrees of fake news / propaganda. The Daily Mail is slightly more trashy. Like that’s where I read about MAFS stars and stuff like that.

  8. Do the non exchange linked retail suckers who buy crypto even care if they have a reason?
    As in, it clearly isn’t an inflation / money printing hedge.
    If you have no reason all the best but why waste peoples time with all the garbage self justification?
    Just admit you are buying an empty box.

    • And what exactly are you buying when you invest in foreign currencies? Stocks? Bonds? Futures Contracts, Commodities etc..? It’s it just a piece of paper? What about art work? Just paint on a canvas isn’t it? Royalties?

      What is an empty box to you? When you buy BTC you’re buying rights to an address on the blockchain.

      • 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.

        https://www.youtube.com/watch?v=YQ_xWvX1n9g&t=429s

        What part did you not grock and then mangle it into some concept of rights aka contracts and enforceablity when crypto was a scam from day one.

        Ugh I remember the early days and all the libertarian framing which is manifold the joke crypto is because it was a corporatist funded head shrinking propaganda agenda to forward their social market agenda.