Houses and Holes

2

US and China on recession collision course

Hard to believe, I know. It was only a few months ago that we were all celebrating the boom of a lifetime but that’s how fast things can turn in the COVID environment. The Fed’s GDPNow measure is almost in contraction now: As we know, China is already at 0.2% as well: Some of the

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Australia rejects global farting agreement

Fresh from farting its zero-carbon mitigation unpolicy, the Morrison Government today confirms that flatulence will be protected in the national interest: Australia is rejecting a push by the U.S. and the European Union to join a global pact to cut methane emissions, expected to be announced at the crucial COP26 summit in Glasgow which starts

8

Beijing frantic as Chinese property bust deepens

S&P is really warming into its job of being a pro-cyclical agent of destruction: A third of China’s property developers could see their liquidity “acutely strained” in the worst case scenario as weaker sentiment and new regulations weigh on their funding sources, said S&P Global Ratings. More than half of its rated portfolio of Chinese developers are

7

Australian dollar rides the inflation panic

DXY eased overnight as EUR gained: Australian dollar rode the inflation panic: While commodities foretold the deflation shock to come: Big miners were thumped: EM stocks have rolled: Junk is still OK: The Treasury curve was hammered: That helped Growth but stocks were soft overall: Westpac has the wrap: Event Wrap Bank of Canada surprised markets

12

2022 deflation shock takes shape

BTC cheerleader Jack Dorsey called the top for inflation earlier this week: Hyperinflation is going to change everything. It’s happening. — jack⚡️ (@jack) October 23, 2021 That’s ridiculous. 2022 is going to bring a deflation shock the likes of which the world has not seen since 2015.  Goldman: With used car prices rising sharply again

3

MS: Fire an ice equity correction approaches

Morgan Stanley is still making the most sense on Wall Street with daylight second: Over the past few weeks we have discussed the increasing probability for a colder winter but a later start than previously expected. In other words, our Fire and Ice narrative remains very much intact, but timing is a bit more uncertain

5

Chinese energy bubble bust resumes

The Chinese energy bubble continued to burst yesterday as coking coal futures were put to the sword again: Given the collapse in Chinese steel output, this was the craziest of the energy bubbles. Really, the only reason for its bid was some possible switching from thermal to coking coal in power consumption but that was

18

More defaults as Chinese property crisis rolls on

The Chinese property developer crisis still shows no signs of easing despite incremental efforts to fix it. Policymakers are applying the CCP jawbone: Chinese authorities told billionaire Hui Ka Yan to use his personal wealth to alleviate China Evergrande Group’s deepening debt crisis, according to people familiar with the matter. Beijing’s directive to the Evergrande

1

Australian dollar firms into inflation

DXY was firm again last night as EUR fell: The UAD had another strong night on today’s inflation print. A big yawn for me: Oil and gold fell: Base metals too on signs China is lifting metals processing output: Big miners fell as well: EM stocks have stalled: Junk bounced: But the Treasury curve looks

20

Sly ScoMo delivers net-zero

Does PM Morrison not see that we can see? Or are his instincts for today’s tribal politics spot on and he knows all that he needs is a fig leaf for followers to hide behind? The Crikey wrap is succinct: Prime Minister Scott Morrison’s long-awaited climate plan, called “The Australian Way”, has no detail and no modelling

0

Goods to services hand-off begins

Nordea with a snippet: One likely underappreciated driver of so-called supply chain issues stem from demand-side issues. The initial shock from the pandemic depressed demand both for goods and services. However, already by June 2020 US goods consumption had surged way above trend. If you can’t consume services as you’re locked into your apartment –

3

Chinese property crash triggers more easing

Good and bad news today for the Chinese property crash today. It has been a few better days for developer spreads and equity as the PBoC gets busy with its jawbone. Wider financial conditions remain tight: But the demand side of property is seeing easing: As the construction market outright crashes: But hopes that the

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Truth is dead. Long live the fakenet

Truth is dead and buried. It’s was killed by four blows to the head. The first and worst (also the best) is the internet which is the structural driver. Access to unlimited information has substituted authority, consensus and evidence with identity, fragmentation and narrative. The second and perhaps outright worst is the rise of post-modernity,

3

Goldman slashes Chinese growth, nowhere near enough

Goldman with the note: The weak Q3 growth was driven by a number of factors – Covid outbreaks and chip shortages that the government has less control over on the one hand, and property tightening and power cuts that are mostly policy-driven on the other. The September activity data show evidence on the combination of

7

Trafigura corners copper market

Reuters with the story: The London Metal Exchange (LME) was forced to apply the restraints as a ferocious squeeze rocked the market, with the premium for cash metal spiralling out of control to an unprecedented $1,103.50 per tonne at one stage on Monday as the exchange’s monthly prompt date descended into chaos. The London copper

3

Exclusive: Anne Stevenson-Yang on China’s hard landing and beyond

Via our goods friends at Gordon Johnson Research: Can China Rescue Its Economy from Property? No. The current downturn is driven by demand, not supply. ·         What’s happening now? China’s economy took a sharp left turn in July. Construction starts down 17% YoY in September, following a 14.6% decline in August. Crude steel production down 21.5% September.

5

Chinese coal bubble collapse sucks in metals

The Chinese energy crisis is cooked. Put a fork in it: On Friday, the NDRC said it held a meeting with large state-run companies including oil refiner Sinopec, aluminium giant Chinalco and steelmaker China Baowu on “rational” energy usage by industry on Thursday and said they should take the lead in energy-saving and carbon reduction.

5

No end in sight to Chinese property rout

There’s plenty of talk about the end of the Chinese property crash. There’s plenty of hope for the end. There’s plenty of selling of the end. What is missing is the end. The crash rolls on imperturbed by the madness of men. Actual sales of apartments remain very weak at around 2014/15 levels: Another key

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Sly ScoMo’s net zero pantomime ends in net zero

The planet is saved. Hooray: Scott Morrison will attend next week’s climate change summit in Glasgow with a commitment to achieve net zero emissions by 2050 after the Nationals agreed to a deal they said would enable them to cushion regional and rural Australia against the effects of the economic transition. Before he leaves on

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United Australia Frankenstein slays Coalition re-election hopes

Careful what you wish for. After years of breathing life into woke-hating, coal-loving loons, the Murdoch press has birthed a Coalition Frankenstein monster: An exclusive Newspoll conducted for The Australian shows popular support for the Liberal-Nationals falling two points to 35 per cent, the lowest level of support recorded this term. That spike can only