Houses and Holes


What to look for in an equities bottom

A nice little summary from Credit Suisse. Sentiment is not everything. For me, the most important indicator is that credit spreads lead the bounce.  — We still have a cautious view of equities. We have the following concerns: Recession risk remains very high. We believe that US GDP needs to slow to 1%topush up the


Weak-kneed RBA should have waited for wages, like it said

Here’s what the Lunatic RBA said in Minutes this week: Turning to domestic economic conditions, members observed that price pressures were intensifying and there was upward pressure on wages. Activity and conditions in the labour market had been resilient in the face of global and domestic supply shocks, and strong underlying momentum was expected to


China property prices begin to crash

Yes, it is a non-stop nightmare for the Chinese property market as “houses are for living in, not speculation”. The great adjustment has so far been confined largely to construction volumes over prices but no more! Late yesterday China released its latest 70-city guide to prices and kapow! April price falls were modest at -0.2%


Austrailian dollar smashed with everything

Everything but DXY, that is: AUD was pulverised: Oil fell: Metals too: Big miners reversed: EM stocks gave way: Global junk is screaming RECESSION AHEAD: The Treasury curve was steamrolled: And stocks were smashed: Westpac has the wrap: Event Wrap US housing starts in April remained elevated, at an annualised 1.724m (est. 1.756m, prior 1.728m revised


Fundies “apocalyptic”

BofA fundie survey via ZH.  — One month after the April Fund Manager Survey was downright “apocalyptic” with the majority seeing a bear market and stagflation – yet nobody rushing to sell – and with optimism plunging to levels right before Lehman, today Bank of America published the latest, May FMS (available to pro subscribers in the usual place)


Why the Fed must break oil

Goldman with the note. The more we rally here the more this tightening is undone. Moreover, US growth needs to fall below potential if inflation is to fall. I am no inflationista but still think more will be required in the US. Our US Financial Conditions Index (FCI) has tightened by 80bp since Fed officials


The Chinese economy will not save you

OMICRON is going precisely nowhere. Sinocism: Shanghai Says It Has Stopped Community Spread of Covid – Caixin Shanghai announced Tuesday that it has achieved the goal of no community spread in all of its 16 districts, a key milestone in its over two-month battle with Covid that could embolden authorities to further ease restrictions. The


Late swing to incumbent arrives

There is always a late swing to the incumbent government as undecided voters stick with the devil they know. Today it arrives. Resolve: When voters were asked to name the parties that would receive their preferences, the results showed Labor held a lead of 51 to 49 per cent in two-party terms, a significant narrowing


Daily iron ore price update (at a loss)

The ferrous complex firm on May 16, 2022. Spot did not update: Yesterday’s China data has left me scratching my head. The numbers were disastrous across the board. With the exception of steel output which was only down 5%: Versus cement down 19%: I can only surmise that steel is stronger owing to accumulating inventories.


A bullish take on stocks

JPM Marko Kolanovic has been wrong all year but here’s his latest bullish missive: Cross-asset Strategy: Equities stand to recover if a recession doesn’t come through, given already substantial multiple de-rating, reduced positioning and downbeat sentiment. We expect EM equities to outperform on healthy earnings and a lower equity risk premium, and remain OW China


Chinese economy busts, steel booms!

Chinese April data was out late yesterday and crashed. Pantheon: China: Industrial production growth plummeted to -2.9% y/y in April, after growing 5.0% in March.  Consensus was 0.5%. China: Retail sales growth extended its collapse, at -11.1% y/y in April, from -3.5% in March.  Consensus was -6.6%. China: Fixed asset investment growth slowed to 6.8%


Australian dollar relief rally continues

The DXY rocket eased overnight: AUD took the opportunity to bounce: CNY survived its day of disastrous data: Gold help us all if oil breaks out: Metals were mixed: Miners rose: EM stocks are sick: And junk is still pointing everything down: The Treasury curve flattened: But stocks fell: Westpac has the wrap: Event Wrap


ScoMo was right to keep AUKUS secret from Labor

Anthony Albanese is upset that Labor was not consulted about AUKUS until 24 hours before it was announced even though the Biden administration demanded bipartisan support given the long horizons for the deal: Prime Minister Scott Morrison has denied that Australia broke with the Biden Administration when it decided not to consult Labor about its


Will US house prices crash again?

Calculated Risk does the analysis. CR was superb in the lead-up to the GFC (and ever since). Bill McBride is neither a rusted-on bull nor bear.  If he is right then the Fed has more work to do.  — It is clear that over the next year house price growth will slow from the torrid