Houses and Holes


Fed still hawkish

JPM on the Fed minutes. —————————————————————————————————————— The main messages from the July FOMC meeting minutes were the same ones that Powell conveyed after the meeting: Ongoing increases in the funds rate would likely be appropriate, the pace of hikes would slow “at some point,” and the Committee will be data dependent in determining when that


Gas cartel plays dead

The gas price is hanging around $19Gj again today as the cartel calculates that that is low enough to take the heat off it during ADGSM negotiations with the captured Resources Minister Mad King. Power prices have thus fallen back too and at these prices will raise utility bills by about one-third over the next


Below the surface, bear market rally deteriorates

The Market Ear with more terrific charts. Big vols are moving higher JPM currency volatility index has moved sharply higher. VIX is so far “unimpressed” as equities are focused on the upcoming expiration and people are trying to figure out how much more the systematic players will buy… Refinitiv The trend in bond volatility Volatility


MOAR China stimulus to no effect

This: Chinese banks will likely trim their benchmark loan prime rates Monday for the first time in months to help spur borrowing demand and reverse a sharp slump in consumer and business sentiment. The one-year loan prime rate — the de facto benchmark lending rate for banks –is expected to be cut by 10 basis


Gas cartel eaten by coal cartel

It’s cold comfort for punters being reamed by the energy cartels but take a moment to enjoy the earnings release of Origin energy today. The card-carrying member of the gas cartel is being hollowed out by the coal cartel: Origin Energy Limited (Origin) reports underlying profit rose 30 per cent to $407 million for the


US dollar to the moon!

Credit Suisse on DXY. —————————————————————————————————————————— FX markets have now entered what was supposed to be an aimless, low-volatility fortnight ahead of the 25-27AugJackson Hole meetings. Instead, implied volatility in key pairs jumped at the start of the week, in our view primarily as a function of China’s surprise rate cut on Monday. Later in this


Daily iron ore price update (puke)

The ferrous complex puked on August 17, 2022: Chinese iron ore port inventory climbed again last week: The reasons being cited for the price falls are balderdash: Nearly 20 steel mills in China’s southwest regions had suspended operations as of Wednesday, according to steel industry data provider SMM. The power rationing is expected to continue


China fooked

Goldman does  China is fooked in the nicest possible way. It ain’t short-term and it ain’t getting better. CNY is going to fall. A clear picture of weak domestic demand: Combined with muted inflation and weak credit growth, July activity data confirmed the lack of domestic demand. With a few exceptions, most indicators showed sequential


Albo & RBA annihilate households

In my ten years of observing the hideous Australian macro sausage factory in action on this blog, I have never seen a more stupid and harmful series of policy blunders than what we have today on both the monetary and fiscal sides of the equation. The two are gutting Australian living standards when they should


The end of the Chinese dream

A good take on the Chinese property adjustment from TSLombard. Upon becoming General Secretary of the Communist Party in November 2012, Xi Jinping announced the goal of his leadership would be the “China Dream”, the great rejuvenation of the Chinese nation. Reporting at the time from Beijing, Evan Osnos, staff writer for The New Yorker,


Beijing’s Solomons coup advances as Albo grovels

Must Australia liberate the Solomons again? This time from China’s tinpot allies: Last week dignitaries, including US ambassador to Australia, Caroline Kennedy, gathered for a dawn ceremony on Bloody Ridge in Solomon Islands to commemorate the 80th anniversary of the start of the brutal battle for Guadalcanal. Solomon Islands Prime Minister Manasseh Sogavare didn’t bother


Hartnett: Get short

BofA’s excellent Michael Hartnett has released his latest monthly fundie survey and has had enough of the bear market rally. ——————————————————————————————————————————– Our survey says: sentiment remains bearish, but no longer apocalyptically bearish as hopes rise that inflation & rates shocks end in coming quarters (Chart1); BofABull &Bear Indicator stays at “max bearish” 0=no immediate reversal


Sell BHP with both hands

We’ve reached the blowoff profits phase of the COVID commodity mania. The AFR is on its knees sucking the proverbial: The biggest contributor to Australia’s record trade surplus, BHP, has vowed to be disciplined as it pursues growth in “future facing” commodities after reporting its biggest profit in Australian dollar terms, record dividends worth $23.2


Australian dollar steps on yuan trapdoor

DXY held its gain last night: AUD held its losses: Oil is not well: Metals did a bit better: Mining popped. Meh: EM stocks are trying: But junk has stalled: The US curve pancaked: And stocks paused: Westpac has the wrap: Event Wrap US industrial production in July was stronger than expected, up 0.6%m/m, with manufacturing


World must ready for war as Chinese growth dies

There is an exceptional documentary running on Foxtel and/or AppelTV at the moment called Blood Money: Inside the Nazi Economy. It chronicles the rise of rise of Nazism from the macroeconomic angle, from the issuance of MEFO bonds and rearmament, through to the necessity of invasion and occupation as the economic output of the militarised


Brace for corporate misery

BofA with the note. I will add that higher inventories meeting weakening demand is not a recipe for good profits. Not everything is about the second derivative Waning demand and pricing power plus continued wage pressure do not seem like reasons to celebrate. But Wednesday’s weaker CPI (note)(a mere 53bp drop) was met with applause–peak


Has the market priced a Fed put that’s not even coming?

Michael Wilson at Morgan Stanley. There is a Fed pivot coming in my view as inflation falls relatively quickly. But it’s coming because so is the global recession led by China and Europe but also landing in the US. Earnings are going to fall a lot further yet and that is not priced.   ———————————————————————————————————————————- The


What will end the crash-up?

The Market Ear with more great charts. What could make this rally more durable? JPM’s head of US market intelligence Andrew Tyler points out what could take this even higher (not saying it will): 1. lower Sept CPI 2. human participation – closing shorts, going long, and then levering up 3. dovish inflection from the Fed. and what would