Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian share markets have had a better response and follow through to the bounces on overseas markets from Friday night, despite a reluctant Wall Street overnight with Chinese shares leading the way after a stumble yesterday. Currency markets are starting to fight back against the very strong USD with the Australian dollar boucning back above the 70 level, helped by burgeoning commodity prices including oil with Brent crude now above $114USD per barrel. Gold is struggling to stabilise as it lifts just above the $1830USD per ounce level while Bitcoin looks like rolling over again, barely hanging on above $30K:

Mainland Chinese share markets are doing much better today after some better news regarding domestic COVID concerns with the Shanghai Composite closing 0.5% higher to 3077 points while the Hang Seng Index has stonked it in, up nearly 3% to finish at 20537 points. Japanese stock markets are still in recovery mode with the Nikkei up nearly 0.5% to 26659 points while the USDJPY pair remains sanguine after from its small Friday bounce, just above the 129 handle:

Australian stocks had a good session with the ASX200 up nearly 0.4% to 7112 points. Meanwhile the Australian dollar has accelerate from its swing trade after bottoming out below the 69 handle, finally reaching above the 70 level and almost putting in a new weekly high:

Eurostoxx and Wall Street futures are slowly inching higher as we head into the European open with the S&P500 four hourly chart showing price wanting to push back above the 4000 point level as it regains momentum following the Friday night bounce:

The economic calendar ramps up tonight with UK unemployment, Euro wide GDP estimates and US retail sales plus an important speech from Fed Chair Powell.

Comments

  1. boomengineeringMEMBER

    TTP. Wherefor art thou.
    Went to factory today and was talking to the unit neighbour for 15 mins. Then he told me it was his first day back due to Covid lockdown. He put it down to not having his third jab .A little while later endless coughing from his unit.

    • Grand Funk RailroadMEMBER

      R E S P E C T

      sock it to me, sock it to me, sock it to me, sock it to me,
      sock it to me, sock it to me, sock it to me, sock it to me,

      Find out what it means to me

      RESPECT

      Take care, TCB

      RESPECT

      Just a little bit

  2. This is insane!
    Well keeps the unemployment figure low, i guess.

    “🔻 60 or so pandemic workers are busy spraying disinfectant on to Wusheng Road (武圣路) in Beijing’s Chaoyang District.”

    🤔 https://t.co/UYBSrXlAhv

  3. boomengineeringMEMBER

    While at the factory a return call from RE agent about 4 acres at Halidays Point for $995,000 listed a couple of days ago… He said he was flooded with enquiries, inspections and had 2 offers at asking price . Thinks it will go for 1.1.
    Seems not many privy to bcnich preaching or even mainstream to cause this frenzy.
    At least it’s another unusual anecdotal surprise.

    • bolstroodMEMBER

      As I posted on another MB thread today,
      The Yanks love a Proxy.
      and …
      The Subs are a stalking horse, the real game is to turn Australia into a Military base for US nukes.

    • “How can you normalize relations with [China] if you stand on the sidelines with a megaphone and shout insults at them?”
      WTF?!?! THEY are attacking US!!!
      This bizarre battered wife syndrome of blaming ourselves for Chinas assault on us is crazy.

    • I really hope ScoMo doesn’t get another term, that lunatic would sacrifice Australian’s for a war effort, but he wouldn’t hold a gun himself.

  4. Grand Funk RailroadMEMBER

    ‘We’ve got a crisis. We need workers’: Big business urges election winner to boost migration
    https://www.theage.com.au/business/companies/we-ve-got-a-crisis-we-need-workers-big-business-urges-election-winner-to-boost-migration-20220513-p5aky9.html
    By Anne Hyland

    May 17, 2022 — 5.00am

    Senior Australian business leaders have urged the next federal government to address the nation’s labour crisis by boosting migration to fill jobs, warning a failure to do so risks causing a slump in economic growth.

    That might just as easily read Senior Australian Parasite Managers of an inward facing bubble economy have urged the next Federal government to renew the population Ponzi which swamped incomes, added to the housing shortage, and is there every morning on roads and trains, in lieu of pursuing a competitive exposed economy enabling people to add value to their lives through meaningful application of economic endeavour

    Diane Smith-Gander, who chairs the Committee for Economic Development of Australia, and is a director of energy company AGL and chair of buy now, pay later group Zip, believes the top three priorities for the incoming federal government should be: increasing the participation of women in the workforce, addressing the skills shortage that has reached a crisis point for the country, and ​decarbonisation of the economy.

    Diane is a quintessential scion of the complete NeoLiberal era. A McKinsey consulting career, a spell heading a load of Quangos, involving tourism, WA grain handling and the NBN now ensconced in the university scene. Never been in a business worrying about economic competitiveness where money was an issue, direct beneficiary of population ponzi.

    Tony Shepherd, a former president of the Business Council of Australia, director of Snowy Hydro, EnviroPacific, and chair of Venues NSW, agrees that the top priorities of the next government have to be addressing the skills shortage and the productivity of the nation. “We’ve got a crisis. We need workers. It’s constraining industry and business generally,” he says.

    Tony doesn’t come across as having much experience with the salt of the earth either. Started as a public servant, slipped across to infrastructure builds – including Moomba pipeline and Sydney tunnels – as a private public partnership type for Transfield, Chair of the GWS football franchise. A career made out of enabling the population Ponzi, mainly from government funded roles.

    The tight labour market has seen Australia’s unemployment rate fall to 4 per cent, its lowest levels since the mid-1970s. In the Reserve Bank of Australia’s May Statement on Monetary Policy, it forecast the unemployment rate would fall to 3.5 per cent by next year – the lowest level in 50 years.

    Isn’t it good. Nothing to complain about there, people are now starting to anticipate income increases, or thinking about switching gigs.

    Companies from BHP to small café owners are being hampered by labour shortages. Roles from train drivers to waiters to miners remain unfilled. Cafés in some cases are operating on reduced hours, while BHP was forced to downgrade its production forecasts for its nickel and copper divisions because of staff shortages.

    And the reason they aren’t training up more or offering more for people to come and join them is?…..

    A lack of workers in Australia is partly because of the decline in immigration over the past two years when the government shut the international border. However, there has also been a fall in the number of skilled visas being issued since 2017, according to data from the Home Affairs website.

    Is there a ‘lack’? Can we assume there is a ‘lack’ simply because of an unsubstantiated reference to BHP downgraded nickel production forecasts or waiters? OK train drivers require a fair bit of training, but the waiters done, most of the nickel producers don’t either.

    Overall permanent migration visas have also declined from around 180,000 to 160,000 currently.

    Well even at 160 thousand that’s more than double the average Net Overseas Migration intake Australia averaged over 30 years between 1975 and 2005

    Shepherd says Australia’s inability to fulfil skilled roles means the next government has to prioritise a review into the education system at the high school and tertiary level, and target areas where Australia is weak, such as in science and engineering graduates. He says there also needs to be an examination of the TAFE system to produce more workers in trades.

    Tony is 100 correct there. If the ideological underpinning of the NeoLiberal era hadn’t been the trashing of education through privatisation and using ‘education’ to become the ticket clip du jour of the population Ponzi there would probably be far more of whatever skills he thinks we are missing. Even Tony would presumably be aware that there are lots of engineers and science types currently employed in situations that don’t go anywhere near using their skills.

    The Sydney Morning Herald and The Age contacted dozens of business leaders, most of whom declined to stick their heads above the parapet to argue for what they believe should be the priorities of the next federal government. During a federal election, company chief executives, chairmen and women, and business groups usually steer clear of politics. As the Nobel Prize winning economist Milton Friedman said: “The business of business is business.”

    But this piece dug up two…..

    A number of Australian companies even go as far as having a rule of not commenting on election promises and policies during the election campaign. Companies are cautious knowing that showing partisan support for one party is a gamble, especially if that party doesn’t end up winning office. Another reason is that companies don’t want to alienate customers, staff, or shareholders by entering the political fray, except on issues where there has been widespread community support, such as same-sex marriage, climate change or wages growth.

    Nothing much to quibble with there…..Why would businesses risk offending either the punters or their politicians with a stand on an issue which may not be popular?

    Higher Costs

    Peter Shergold, who was the head of prime minister and cabinet in the Howard government, also says the nation has to increase migration in the short term. “Australia still depends for its economic growth and development on large-scale recruitment of labour from overseas. We need to think: what is the appropriate balance that we need between permanent and temporary migration? And how can we do it in a way that is not perceived as a short circuit to investing as we should in our own education and skills training?”

    Shergold says it’s the first time in three generations that Australia has not had mass migration. He wants to see a greater opportunity for temporary migrants to progress to become permanent residents, and also for the university and TAFE sectors to become integrated. While Australia needs more science graduates, Shergold says it also needs more people willing to work in aged care and childcare.

    They rustle up Peter Shergold in lieu of business types. Peter is a former head of the public service, noted for being a right wing gargoyle. He states Australia still depends for its economic growth and development on large-scale recruitment of labour from overseas’ .

    Peter brings us to the question ‘do we want growth for growths sake or do we want sustainable economic growth which delivers quality of life growth for Australians?’ and from there the question of ‘does demand for migrants drive migration or does migration drive demand for the loudest parts of Australia’s economy?’

    Those two questions bring us back to the fact that currently Australia has an economy which revolves around a small number of resources extraction operations or agriculture operations selling off the national bequest to enable the promulgation of debt to the benefit of various economic interests, but not to the quality of life of everyday Australians. That dynamic has been largely obscured by trebling the net overseas migration volume between 2005 and 2019 and exhorting to Australians that this is ‘economic growth’ when effectively it delivers flat per capita income growth and declining living standards for those Australians.

    A tight labour market has pushed up wages, which has taken centre stage in the federal election campaign alongside the cost of living and interest rate rises.

    In the RBA’s May Statement on Monetary Policy, it revealed that more than half of the companies surveyed expected to pay wage increases above 3 per cent over the year ahead because of the tight labour market. Companies such as Woolworths have supported an increase in retail workers’ wages in line with underlying inflation. The Australian Council of Trade Unions has called for a minimum wage increase of 5 per cent.

    Straight piece of reportage there……

    CommSec’s chief economist Craig James says without an upsurge in migration it will be hard to fill job vacancies, and expects businesses will either start looking at working existing employees harder or restructuring to prioritise what work they can and can’t do. “If you’re paying 3.5 per cent wage increases, and you want inflation at 2.5 per cent, the difference between those two has got to be productivity. Otherwise, companies will go backwards, they’re not getting the return. They’re paying out 3.5 per cent growth on wages, and getting 2.5 per cent on price.”

    James is quite right and that outcome is precisely what Australia needs. Productivity delivering economic substance. It is precisely that outcome which has been held at bay by flooding the country with the population Ponzi which has enabled employers to treat employees as chattels and suppress incomes growth for more than a decade.

    Shepherd says the inability to fill jobs will lead to higher costs, in areas such as wages, and Australia’s competitiveness declining. Both sides of politics have promised to review the migration levels.

    Tony needs to read some of Craig James work. Businesses need to prioritise activities and restructure for productivity. Tony could also acknowledge that inability to fill jobs (to the extent it does exist) will lead to income growth too.

    Australia’s growing wage pressures come after a decade of low wage growth, where real wages have declined. Across the world’s richest countries, there is a trend of wages growth and rising prices for goods. This has added to inflationary pressures in the global economy already caused by a disruption to factory production and supply chains from COVID-19 restrictions in countries such as China, and a spike in oil prices triggered by Russia’s invasion of Ukraine.

    So the whole world is looking at increasing wages and costs – all the more reason to embark on some productivity growth in Australia.

    Central banks around the world have been lifting interest rates in an effort to curb inflation, which could dampen spending and investment by business. Still, some business leaders such as Macquarie Group chief executive Shemara Wikramanayake remain optimistic. She believes the economy will remain resilient despite the threat of rising interest rates and inflation, saying the trends of decarbonisation and digitisation will drive strong business investment.

    Both are also strong productivity drivers.

    Lunatic Fringe

    Diane Smith Gander, a director of Australia’s largest emitter of greenhouse gases AGL, also wants the next federal government to prioritise securing a unified national approach to decarbonise the economy, arguing there has already been a lost decade on federal public policy in this area.

    “Everyone agrees with climate change science now, apart from a small group, which you might describe as the lunatic fringe,” says Smith-Gander. “We need to find a way to step towards a swifter decarbonisation of the economy, and support to ensure that it’s done in a just way and an orderly way, which maintains energy affordability for Australian households so that Australians continue to support the push to decarbonisation.”

    All plausibly good stuff, just not about any need for immigration to be refired up.

    AGL is the subject of an activist investor campaign by billionaire Mike Cannon-Brookes, who opposes a plan to split the company, and has criticised its failure to move towards decarbonisation more quickly.

    Smith-Gander believes whichever side of politics wins on May 21 will have a strong mandate to act on decarbonising the economy. CommSec’s chief economist Craig James agrees: “Any government coming in at ground zero, whether Labor or the existing government, this is the time when you can do things. You have to take the opportunity from early on in your term and provide leadership.”

    It’s a view also shared by Shepherd. “It comes down to leadership and policy. Business is pragmatic. They will work with anybody.”

    More good stuff but makes the piece feel like a half baked each way bet on population Ponzi and decarbonisation…..Nobody anywhere has made a case for immigration needing to be returned to levels Australia has experienced for the last 15 years prior to Covid.. Nobody has articulated any identifiable skills shortage and the obe inforned comment in the piece points to exactly what we do need – productivity based reforn – as being triggered by any labour shortage we can get, with the antidote to a decades worth of incomes flatlining coming as a side bonus.

    • Wipes tear from eyes for the day Corps trained people and they stuck around ***then*** it became fashionable to Head Hunt[tm] people for top dollar from other Corps and as neoliberal logic dictates its only $$$$$$ that matters and it would be un-rational not to take the offer … whole thing becomes a bear pit of survival …

      All of it completely avoidable but those MBAs have to keep making up reasons to keep their jobs … like Gresham’s law covid super spreaders and the next moment everyone’s infected …

    • happy valleyMEMBER

      “Tony Shepherd, a former president of the Business Council of Australia …”

      And head of Abbottolypse’s Commission of Audit when Abbottolypse took power in 2013? Hmm.

    • Muttafukaburrasaurus.MEMBER

      Don’t forget all the mould/ fungal respiratory infections to complete this seasons infecta trifecta .
      Viral-Bacterial-Fungal.

    • Grand Funk RailroadMEMBER

      Weirdly enough I have had maybe 4-5 underlings report in sick the last couple of weeks all the same symptoms – headache chest and coughing with sore throat – all testing negative for Covid

      • Watch those RAT tests…with Omicron BA.4 and BA.5 a lot of people reckon on only 50% accuracy……as the virus gets ever further from its original form PCR is needed……helps detect Influenza and RSV for chronically ill people as well.

        • bolstroodMEMBER

          It could well be flu, but here are my very recent experience of RATs tests.
          My daughter put me onto it when I told her i was testing Neg to Covid although I felt crook.
          “Don’t put the swab up your nose Dad “she told me, “swab the back of your throat”
          Bingo Positive.
          When I told the nice nurse who phoned me to see how I was going she said ” Oh well that makes sense because that is where the infection is ” even though the Health advice is swab the nose.
          When I told her I was disappointed to be testing positive on day 7 she said , ” Oh don’t bother testing for another 6 weeks because you are full of dead virus that will still test positive on a RATs.
          So how do you know when you are Neg ?
          I caught the Covid from a guy at Choir who reckoned he was clear because he was over 7 days from infection date.
          No wonder Australia has the highest Covid infection rates in the world.
          Remember a year ago iso was 2 weeks, now 1 week. This is for economic reasons NOT medical ones.

      • My wife has those symptoms and I’ve got them mildly too. Think my son had a runny nose also. So who knows? Maybe just a head cold or Covid. But I’m feeling just a little under the weather nothing serious.

          • Interesting, I don’t really have a cough or sore throat, tiny bit of mucus and headache and just feel tired. But I also went to bed late so that doesn’t help. The missus got tested and came back negative same with RAT tests she did (a couple). So I really don’t know?

    • Arthur Schopenhauer

      There’s a lot of disinfectant in the air, apparently.

      Looks like they’re in the process of turning inward.

  5. Goldstandard1MEMBER

    What we are seeing now is no strategic plan because there is no solution to what we are facing. You literally have central banks (monetary policy) FIGHTING governments (fiscal policy). If they succeed in nuetralising eachother, chaos is even worse and you’ll see societal fallout. It won’t even be about property anymore. Surely people see this is getting bad and 100% gets really bad? Everyone knows the share market is about to go full bear and yet we are all in so deep the buyers keep buying. I cannot see a soft landing and still going long cash (and actual cash too).

    • Hill Billy 55MEMBER

      As scary as your scenario is, I agree in principle. What amazes me id that Joshie says with a straight face how great our economy is with an $80 Bill deficit for the year and interest rates at such low levels.

      What would it look like with a balanced budget and the cash rate at 3%?

      • The lies coming off ScoMo and Josh are astounding, how they can just flat out lie like that. It’s a talent in and of itself.

  6. https://www.rfa.org/english/news/china/legal-militias-05132022131815.html

    New cultural revolution coming soon, I’m sure all those capitalists investments will be safe when it happens. 😜

    “China sets up local law enforcement militias to boost ‘stability maintenance’
    Several cities and provinces have issued orders to recruit physically fit lawyers and paralegals to the ‘struggle’
    By Qiao Long 2022.05.13

    China sets up local law enforcement militias to boost ‘stability maintenance’ Police and officials wearing protective gear work in an area where barriers are being placed to close off streets around a locked down neighborhood after the detection of new cases of Covid-19 in Shanghai, March 15, 2022.
    AFP

    Judicial authorities across China are setting up “people’s legal struggle militias” to aid law enforcement, recruiting lawyers 18-45 “in good physical condition,” according to official notices posted online.

    A notice issued by bureaus of justice in Shanghai, Guangdong, Hubei and other locations said the militias would be formed in support of “our online forces.”

    “Plans are under way to set up legal struggle militia and report to the armed forces department of municipal government before the end of May,” the notice said.

    “We are recruiting … lawyers or paralegals from city law firms. Recruitment criteria: Aged 18-45 years old, in good physical condition. [Ruling] Chinese Communist Party (CCP) members, veterans preferred,” it said.

    Chinese criminal lawyer Mo Shaoping said he had never heard any mention of “legal struggle” in his career.

    “It seems like a coined expression; I’ve never heard it before,” Mo told RFA. “I haven’t seen any definition of ‘legal struggle’ in any legal dictionary.”

    Current affairs commentator Zha Jianguo said the use of the word “struggle,” which has roots in the political “struggle sessions” of the post-1949 era and the kangaroo courts of the Cultural Revolution (1966-1976), suggested a move away from the rule of law and judicial channels.

    “It means a kind of intense conflict and tension between people,” Zha said. “It’s a neologism, which means they want to fight, but to use the law as a weapon, but without any specific legal basis.”

    “It’s about cloaking artificial ‘struggles’ … in a legal veneer.”

    Dangerous indicator

    Political scientist Guo Wenhao said the creation of militias is a dangerous indicator of what is to come, now that the power to “enforce the law” has been delegated beyond government departments and law enforcement agencies.

    China empowered local officials at township, village, and neighborhood level to enforce the law under an amended administrative punishment law that took effect in July 2021, as well as operating a vastly extended “grid management” system of social control in rural and urban areas alike.”
    See link for more