Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

Asian stocks are having a fairly solid session, although Aussie stocks are missing out on the action despite the record trade surplus. The USD is holding on to its overnight reversal gains with the Australian dollar trying to clawback its post RBA rate rise downtrend while Yen continues to weaken. Meanwhile oil prices are continuing their slip below key support levels, with Brent crude now pushed down to the $96USD per barrel level, while gold is relatively stable and holding above short term support at the $1750USD per ounce level:

Mainland Chinese share markets had a good start to the session before giving up gains midway through with the Shanghai Composite now only up 0.5% to 3179 points while the Hang Seng Index is surging through the 20000 point barrier, up more than 1.6% to 20090 points. Japanese stock markets are coming back in similar fashion with a weaker Yen helping, with the Nikkei 225 up 0.6% to 27915 points as the USDJPY pair builds on its overnight stability to get back above the 134 level:

Australian stocks basically went nowhere with the ASX200 closing 0.1% higher as it continues to reject the 7000 point level, closing at 6978 points. The Australian dollar was able to clawback some more of its post RBA rate rise walloping but is still well below the 70 level against USD:

Eurostoxx and US futures are holding on to their overnight surge positions with the S&P500 four hourly futures chart showing price action pausing here at the 4150 point level as the relief rally takes another breather before the next legup:

The economic calendar ramps up again with the latest BOE meeting, followed by US balance of trade figures.

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Comments

  1. Bottleshop Inflation interesting here in Brisbane, Wild Turkey 101 cans have gone up in price – a single cost me $9.20 yesterday instead of the usual $7 or $8. This was BWS in Enoggera, BWS in Inala had the same product but at $10.20, standard ticket price at both locations. They’re gouging all them jimmies in Inala lol

  2. Stephen Morris

    Interesting fact:

    Today is the 108th anniversary of the start of World War I (at least the date on which Britain declared war on Germany and made it a global conflict).

    That itself was 99 years and 47 days after the Napoleonic Wars ended at Waterloo and almost exactly 200 years after the end of the War of the Spanish Succession (September 1714).

    These things do have a habit of coming around.

  3. UK banking, anything like this here?

    “An innocuous change to the Bank’s monetary policy framework in 2009 now means commercial banks are remunerated, at the Bank’s policy interest rate, for all of their holdings of central bank money. But paying out interest to the banking sector for holding money in this way is an exception, not a historic norm. Given the lack of policy alternatives at the time, this method of conducting monetary policy may have been expedient in 2009. But with the banking sector now holding nearly £1tn in central bank reserves, higher inflation, and rising interest rates, three traditionally distinct issues have become needlessly conflated at an unnecessarily expensive cost to the government. The adjustment of the Bank’s interest rate – aimed at altering credit conditions – now has enormous repercussions increasing both the amount of government interest payments and the profitability of the banking sector”

    ” Based on this implied pathway of interest rates, the Bank would have transferred £15.08bn by FYE 2022 – 23 to the banking sector – equivalent to reversing all cuts to welfare payments since 2010 – and a total of £57.03bn by FYE 2024 – 25 – enough to fully retrofit over 19 million homes in the UK or to send every household in the UK a cheque of £2,000.”
    https://neweconomics.org/2022/06/between-a-rock-and-a-hard-place

    • The RBA are now paying 1.75% on ESA balances which are the excess reserves created by QE. So that TFF money lent to banks at 0.1% is now gathering interest at 1.75%

      • Should probably add that the banks borrowed at 0.1%, lent it out at 2.5% then it came back as deposits which the RBA is paying them on. Supposedly it’s to cover the interest they’d have to pay to depositors. Talk about double dipping

      • exactly the question I asked yesterday

        Is lifting interest rates actually deflationary at all?

        They no longer bother to manipulate the overnight rate by repo/RR , instead they just pay interest on reserves

        has not been addressed by anybody

        Why do they not just do QT, instead of lifting interest rates?

    • pfh007.comMEMBER

      You can be sure that when that ridiculous monopoly privilege of the private banks, to operate reserve accounts at the central bank, is extended to the general public and non banks, the absurdity of paying interest on reserves that are 100% safe and liquid will become bleeding obvious and it will be removed in a nano second.

      For the time being the RBA justifies paying interest on reserves as one of the unfortunate costs of supplying cheap bank credit to the speculating middle classes.

      And isn’t it funny how economics commentators in the financial media struggle to find anything of interest in this issue.

      Can’t let the general public choose not to do business with the banks can we!

    • Ronin8317MEMBER

      The Russian economy has already ‘collapsed’, but that doesn’t mean the war cannot continue. There are no upside. Even if Putin stops the war now, the economy won’t get any better because the sanction will stay. Far better to keep the price of gas and oil high.

      • ErmingtonPlumbingMEMBER

        Russia won’t leave its Ukrainian territorial gains without the lifting of sanctions and acknowledgment of its sovereignty over Crimea. If the West enables the killing of far greater numbers of Russians I have no doubt Putin will say fk it and use Nukes.
        It’ll be tactical Nukes on Ukrainian territory first but with a fully stated guaranteed commitment to launch its entire strategic Nuclear arsenal if attacked for doing so.
        Putin isn’t going down militarily without taking the West down with him.
        It’s much more sensible to negotiate a compromise

      • Its funny listening to some, Russia has done better under sanctions over the year because its force its economy to be more self reliant vs say the U.S. or U.K. that set themselves up as financial capital gate keepers. FFS the U.S. could not even get masks et al for early covid PPE et al, got zip wrt Mfg or supply or raw materials. Mean while the dived between the haves and have nots keeps growing and growing and then some ponder why the social cohesion is going poof and political scene is such a mess.

      • Atom Heart MotherMEMBER

        Didnt you guys listen to the pod I did last weekend?

        MB Radio: Ukraine, VVP and the bills – a chat with Ben Aris
        https://www.macrobusiness.com.au/2022/07/mb-radio-ukraine-vvp-and-the-bills-a-chat-with-ben-aris/

        Russia is minting dough at the moment with the complicit assistance of China and India, but also much of Europe itself (buying Russian crude refined in China and India), OPEC and even the United States. Check the refining rates of Russian sourced crudes through Fujeirah (Emirates) and then check the exports of products of this through to the US. It couldnt be more flagrantly insane if it tried. Then think to yourself that the US is depleting its Strategic Petroleum Reserve.

        Then there is the phosphates and the grains etc.

        Sure, over the longer term Russia becomes captive to the China India developing world set, and isolated. But for the here and now it is simply coining funds. The far bigger short term issue is who is going to fund Ukraine, and how much they are prepared to pay when the gas runs out.

  4. reusachtigeMEMBER

    I was in the Sydney CBD today and noticed that hardly anyone is wearing masks anywhere, except a few Chinamen looking types but you’d expect their fear, and hardly any coming out of Wynyard station. Social establishments seemed well patronised too. It made me feel good that no one is really falling for the Covid panic anymore and they’re back in town! So good!!!

  5. Ronin8317MEMBER

    What is it with the NSW Police about charging people without any evidence in cold cases?

    https://www.abc.net.au/news/2022-08-04/tobias-moran-granted-bail-over-murder-simone-strobel/101300798

    They did something similar with the William Tyrell case as well : once they’re fixated on a person they don’t care even if they don’t have any evidence. Maybe they think everyone will just ‘crack’ like Scott White in court? The only evidence they have is his ex-wife’s recollection of some conversation from years ago. I mean, they don’t even accept these kind of ‘evidence’ in China for murder!!

  6. https://youtu.be/qgkQVqIKtaQ
    Anecdata bubble pop on Japanese hot Boi cars. Around 20mins 30 seconds explains how dealers / hoarders collected these cars in anticipation of ongoing price rises. But now stuck with stock quickly losing demand and soon values. Lots of folks leveraged into the market. Bound to take a haircut.

    Good I say, I want a cheaper GTR lol. $300k for an old Datsun is a bit much.

  7. The BoE has just described the economic armageddon on the horizon with the biggest rate rise in 27 years. It will lead to the biggest drop in living standards in the UK on record.

    Watch as property prices fall at least 60%

    You all know it’s coming.

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