Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

The strong inflation print from the US overnight has kept risk markets contained across Asia today with the added bonus of steep falls on Chinese bourses as the fallout to the middle kingdom economy continues. Currency markets remain constrained by a very strong USD with the Australian dollar now below the 69 handle while commodity markets including oil are slowly lifting higher, as Brent crude heads back above the $106 level. Gold is also trying to stabilise but looks weak on all the charts, currently at $1850USD per ounce while Bitcoin is falling sharply, now below $27K:

Mainland Chinese share markets did okay at the open but have sold off after private lending data shows a sharp retracement, with the Shanghai Composite currently down 0.6% to 3040 points while the Hang Seng Index has declined further, now down 2% to take back its previous gains, currently at 19389 points. Japanese stock markets are no longer treading water with the Nikkei pushed nearly 1.8% lower to 25778 points while the USDJPY pair has pulled back past its previous neutral state, now dicing with trailing ATR support below the 130 level:

Australian stocks started off shakily but have accelerated their selling into the close with the ASX200 down nearly 2% to 6935 points. Meanwhile the Australian dollar is also unable to find a bottom here after making a new monthly low, now heading below the 69 level as momentum inverts into oversold territory again:

Eurostoxx and Wall Street futures are still falling as we head into the European open with the S&P500 daily chart showing price pushing right through the 4000 point level as the bear market cometh:

The economic calendar will include the latest UK GDP estimate, followed by US PPI.

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Comments

  1. So, I called my bank today asking them if they pay break gains if a customer breaks a favourable fixed rate loan (I estimated that my current “pure” gain would be in the order of $80k). There was a pause, then the muffled sound of laughter before they politely told me “no, we don’t do that”.

      • It’s the same maths as why bond prices fall when rates rise.

        Let’s say you have a $1m loan and you fix your rate for say 3 years at 2%pa. Then in a year’s time, with 2 years left on your fixed rate period, let’s say the 2 year fixed rate is 4%. Your fixed loan contract is costing the bank 2% a year because they would prefer to get that money back, on which they are earning 2% and relend it at 4%. So in theory, the bank would be ambivalent to paying you out 2% x 2 years x $1m ($40k) and then lending the money to someone else at 4%, or just leaving the loan with you on foot.

        That $40k is the break gain – that is, the amount the borrower should be paid to break a fixed rate loan.

        Of course, in reality there are a lot more moving parts than that because of hedging and transactions costs but that is the basic premise.

  2. OK guys, so it’s time for me to do some formal product development quotes for an Australian defense contractor.
    It’s all a bit new to me so a friend recommended I read this recently released document on
    Understanding the price of military equipment
    Well I’ve read it 3 times and I’m more confused now than when I started,
    This is, without any doubt, the most bogus project accounting / project cost analysis method that I’ve ever come across..
    And this is what our government wants…boggles the mind

    https://ad-aspi.s3.ap-southeast-2.amazonaws.com/2022-05/SR184%20Understanding%20the%20price%20of%20military%20equipment.pdf?VersionId=0UI.LyXt2kUsK2cjYVYdJp8uEnhtajky

      • boomengineeringMEMBER

        One time the PO came back higher $ than my quote because the period was close to the end of their financial year and if they didn’t spend their budget then they would be given less the following year.

        • boomengineeringMEMBER

          Another time I quoted about $1,500 for an optical rotary encoder but on diagnosis found it needed to Heidenhain which was about $7 000 which I showed them the price it would cost me, no mark up. By the time they gave me the go ahead for the extra cost the $,A went down compared to Euro. They wouldn’t wear that extra cost, I had to.

          • boomengineeringMEMBER

            Best to just put a little extra on for the stuff around and if not accepted then no worries.
            Btw hit my hand with a hammer today. Some idiot overtightened the new vee belts on a 3 ton coffee roaster destroying the drive shaft bearings. The bearing taperlok had seized and C spanner wouldn’t budge it, so hammer and chisel it was, but the shaft turned just before the strike.

          • boomengineeringMEMBER

            Oh nearly forgot. Did some regular work for permanent defense contractor as well. A bit tight on security ( more than actual defence) but in general not too hard to deal with. Don’t get too fazed over all the protocols just follow the rules as they arise, they will.tell you in advance what they expect.

    • Someone should inform them at least they did not commit financial suicide by putting it all on crypto …

      Which really puts the past into perspective as the libertarian free market posse was all about un-free peoples committing suicide back in the day like those socialist Northern Europeans et al. Now people are committing suicide because of freedom coins – ????? – going whoosh …

      On that note how good is the economic sanctions on places like Venezuela, Iran, et al or now in a pinch even Brazil has said its not a good business decision to open the taps so the U.S. et al has diesel … then some still think the 70s inflation was about QTM and the unwashed needed some stick to tamp it down … not that union busting was the play of the day or anything …

    • The Travelling PhantomMEMBER

      And these are the people pile on property paying 100k above asking price when the market starts to wobble.
      Their service to FIRE sector is invaluable

  3. @EP

    Regarding your question the other day … what does coin have to do with the fact there were no slaves involved in building state funded projects which benefited everyone in society contra some uniformed biblical faerie tale . Well fed, good medical attention, good food and accommodation and a service of only a few years.

    • ErmingtonPlumbingMEMBER

      So your saying the pyramids are the Ancient Egyptian equivalent to Chinas 65 million unoccupied appartments and bridges to nowhere?
      Those Pyramids seem an unnecessary and extreme form of Public works to undertake,…just to keep the plebs busy!

      And how does a Pyramid sized mausoleum,…for one dude!,…provide utility or social benefit for everyone in said society?

    • Like I said you need to read the anthropology and not let your ideological trip wires get triggered E.P. not that Keynes pointed out from a social aspect its better to employ people like FDR did than experience the socially corrosive effects on not doing so and then wonder why the drums are beating and some think Stalin looks good.

      BTW they did roads, water works, especially flood mitigation, drove innovation, pushed sciences, and so much more. Was is perfect, no, and on has to contend with the perspective of the age and put it all into context.

      • ErmingtonPlumbingMEMBER

        I’m happy to pick to pieces the inaccuracies in biblical texts.
        But to suggest their was no Hierarchical structure in ancient Egyptian society that lead to a sizeable proportion of the population being enslaved is ridiculous.
        Every civilisation that has ever existed Utilised slaves.
        It was even common among some hunter and gatherer societies.

        • Dude you’re a moron … the whole projection of slavery from you ideological perspective is mind numbing in context. Mate that bizarre libertarian mindfk is your drama.

          • ErmingtonPlumbingMEMBER

            How do you know there were no slaves involved in the building of Pyramids and temples of Ancient Egypt?
            Got a link.

        • The Travelling PhantomMEMBER

          Man, I respect your patience and your approach to the situation as a dad dealing with a toddler trying to explain and be a good dad!…but the thing with the rapid marsupial it’ll always come back and bite you
          Ps. It’s peak violence Thursday nights (as noticed over few weeks)

    • Bridges to nowhere and the U.S. just blew 40B without blinking an eye for the Ukraine when the first suggestion was 33B. Yet getting so much critical stuff in the U.S. is imploding, student debt, energy costs, water scarcity, and a complete capitulation against the science on covid, health industry workers punching out, imported cheap labour, stealing peoples wages, billionaires and monopolists, unionizing seen as the end of freedom and liberties and everyone will starve …

        • No ones romanticizing but you EP it was want it was but the point is it was not slavery as decanted by some wobbly religious text and others ran with it

          • ErmingtonPlumbingMEMBER

            You rail against religion and its lingering effects in the (not for much longer) globally dominant and supposedly democratic western world but your also against Left/Social libertarianism as well.
            Why?
            What are you actually for Skip?
            Benevolent Dictatorship?

          • ErmingtonPlumbingMEMBER

            Also your jibe at me with,

            “ BUt EP we have to suffer for the good fight in supporting Naxis [tm] and punish the commie nations … be a man … thing of the future of your kids … Albright said so …”

            Is misplaced

            I’ve said from day 1 we should Have accepted Russia’s Annexation of Crimea back in 2014 as a result of Ukraines realignment with the West and not baited them with 8 years of sanctions into a war that IMHO shouldn’t have happened and could have been easily avoided.

  4. Talking to a supplier today and he said that toilet paper shortages will be front pages news again very soon. No one can get an order delivered on time in full.

    • The Travelling PhantomMEMBER

      Well from the couple of supermarkets I frequent, the shelves in general and toilet paper ones especially are always run down or empty. Worse than covid days.
      And that’s on top of everything’s price up by 10% in average

      • happy valleyMEMBER

        Yep – inflation running riot.

        Normal everyday prices (ie not on special) at local Sydney Woolies:

        Listerine 1 litre bottle – last week $9.39; this week $11.00 – increase 11.7%

        Ocean Blue smoked salmon 100g pack – last week $6.20; this week $8.50 – increase 37.1%

        Hope that backbone Phil is coping ok on his $1+ m annual pay packet.

          • BUt EP we have to suffer for the good fight in supporting Naxis [tm] and punish the commie nations … be a man … thing of the future of your kids … Albright said so …

          • 3 weeks ago, right after the ‘excise halvin’ – paid $267 to fill up … felt like taking a loan to fill up! 🤬

          • The Travelling PhantomMEMBER

            @ Ermo same here $130 to fill the BT
            @Frosti what did you fill?

    • The Travelling PhantomMEMBER

      So their friends get commissions.
      Ps I shared it in daily links and DLS made an article about it. But good on you for sharing it again the people need to be aware of shifty Scomo activities

    • The main points of neo-liberalism include:

      THE RULE OF THE MARKET. Liberating “free” enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers’ rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say “an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone.” It’s like Reagan’s “supply-side” and “trickle-down” economics — but somehow the wealth didn’t trickle down very much.

      CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply — again in the name of reducing government’s role. Of course, they don’t oppose government subsidies and tax benefits for business.

      DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environmentand safety on the job.

      PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

      ELIMINATING THE CONCEPT OF “THE PUBLIC GOOD” or “COMMUNITY” and replacing it with “individual responsibility.” Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves — then blaming them, if they fail, as “lazy.”

    • Hill Billy 55MEMBER

      Cause private hands are less filthy, well the ones we usually give the assets too, anyway.

      Also helps the State govts to not come hanging out in Canberra looking for their usual rations. Looks as if Scomo is doing good business. Whatever works is the story.

    • haroldusMEMBER

      My point is these are state assets, not federal assets.

      If the states had any concept of autonomy or the wellbeing of their citizens they would suggest the feds get a rather large dog up them

    • ErmingtonPlumbingMEMBER

      Yes it would be fascinating to follow Arya as she conquers and enslaves the Indigenous inhabitants of a New World to the west only to find those inhabitants don’t make good slaves requiring the importation of Dothraki slaves to properly exploit this newly discovered Continent.
      It’s Aryas manifest destiny

      They’ll need to throw in some Big foots And Sasquatch’s to get the mug punters interested though.

  5. Ronin8317MEMBER

    I’m looking at the forum on Terra : the way people are being taken for a ride is depressing.

    There were 350 million LUNA coins in circulation a few days ago. As the price drops, the number of coins increases : so there are now over 7 billions of them. The people who are buying it in the hope it’ll rebound are being flogged.

    https://www.coindesk.com/markets/2022/05/12/terras-luna-has-dropped-997-in-under-a-week-thats-good-for-ust/

    Most of the buyers don’t know what’s going on.

  6. Hugh PavletichMEMBER

    Russia …

    Russia’s Economic Isolation Deepens As Shipping Lines Make Final Port Calls … Zerohedge

    https://www.zerohedge.com/economics/russias-economic-isolation-deepens-shipping-lines-make-final-port-calls

    By Greg Miller of FreightWaves,

    Russia’s ocean container imports continue to collapse as shipping lines wind down the last remnants of their services to the country’s ports.

    Russia — now effectively a pariah within Western logistics circles — still has cargo import options. Yet the loss of virtually all of its ocean shipping links makes obtaining consumer goods and components much more difficult. Elvira Nabiullina, Russia’s Central Bank chairwoman, recently warned that the range of consumer goods available in her country is already shrinking and Russian companies needing foreign components are facing “serious problems.” … read more via hyperlink above …

  7. reusachtigeMEMBER

    Commie chicken sh1ts!
    https://www.news.com.au/world/asia/north-korea-declares-severe-national-emergency-after-recording-first-covid19-case/news-story/0cc030e7f2ab1249fa963e30bc1956f4
    A dead North Korean is a good North Korean!!! I think we would all agree. Like Russians and chinamens, we hope those carnz get it in a violent turret blow off (I’ve received so much joy watching those tanks explode knowing there are a few more dead commies. I dream skip is there fighting for his commie fatherland until he expires)

  8. reusachtigeMEMBER

    I think we would all agree that that skippy character is the epitome of the worst kind of evil commie. We can disregard it’s noneense knowing that it is designed to bring about evil socialist ideals that will kill children.

  9. Hugh PavletichMEMBER

    Russia Ukraine conflict …

    How did Russia lose an ‘entire battalion’ crossing a Ukrainian bridge? | Ben Hodges … Times Radio

    https://www.youtube.com/watch?v=pI3aYCK_rfE

    “The Russians have not demonstrated very good operational security or concealing their movements.”

    After Russia loses an ‘entire battalion’ crossing a bridge in Ukraine, Ayesha Hazarika talks to retired US Army officer Ben Hodges about what might have happened. … view via hyperlink above …

    ‘No call for mobilization, escalation’ at Russian Victory Day parade says Ben Hodges DW News

    https://www.youtube.com/watch?v=XAo47t0Ae7M

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