DXY eased last night as we approach Fed day tomorrow. We’d better hope that the Fed doesn’t rev up taper or all hell is going to break loose in EMs. EUR rallied: The Australian dollar was hit pretty hard on the crosses: Gold and oil were both soft: \ Base metals calmed down: Big miners
The propertocracy has won another round in the policy fight. Not courtesy of the blood-sucking interests. Rather via the hand of those that set out to end it and instead succumbed to its corrupt siren song. As Labor gives up on property tax reform, any and all reform actually, the thirty-year Australian property bubble once
China has been progressively tightening the noose around iron ore for months now. With some success given recent falls in iron ore prices. Measures so far have included: Releasing strategic reserves. Punishing speculators and limiting futures bidding. Constraining steel output which will lower iron ore imports so long as the curbs are wide enough to
From the beginning of the pandemic, Morrison Government vaccine procurement policy has been written by either carpet-baggers or idiots. First, it sent Pfizer packing mid-last year. God only knows why. Perhaps because its shots were the most expensive. Second, it over-committed to Astra Zeneca, a firm that has never made vaccines before. Perhaps Morrison did
When post-truth becomes the fog of war, via Sinocism today: Global Times: ‘Political virus also needs origin tracing’ as US politicizes, stigmatizes epidemic: FM Wang Yi The coronavirus needs origins-tracing, and so does the political virus, said Chinese State Councilor and Foreign Minister Wang Yi, noting that the US has been trying to politicize the
MUFG on the Fed this week: Fed in focus with USD set to remain supported as shorts are lightened USD: Fed tapering discussions “progressing”. The primary macro event this week will be the FOMC meeting on Tuesday and Wednesday and these meetings are increasingly important given we are gradually approaching the time of commencing the
Goldman with the note: In 1H rising inflation expectations and inflation surprises have been a driver of higher rates volatility, resulting in a more negative equity/bond yield correlation. But more recently investors’ worries of a growth slowdown in 2H have increased. In particular last Monday risk appetite fell sharply and risky assets sold off, only
BofA with the note: Credit easing holds the key in 2H •Despite the recent reserve requirement ratio(RRR)cut, mixed data in 2Q open adata-dependent phase of policy making. •In our view, export uncertainty and investment weakness in 2H will lead to credit easing and help stabilize total social financing (TSF) growth at around 10.7%. An unexpected
XJO is at another new record high this morning as the economy hurtles into recession! Which bonds yields are clearly signaling as the curve is obliterated: The Australian dollar rally stalled out on Sydney’s still rising infections: Big Banks are struggling other than the CBA bubble: But today’s star is Big Iron. BHP has roared
This was always one serious Hail Mary: As China Evergrande Group mulls a special dividend to revive confidence in its tumbling stock, analysts are gaming out several scenarios that could have markedly different implications for equity and bond investors. Chairman Hui Ka Yan, who directly or indirectly controls three-quarters of outstanding Evergrande shares, will meet
Morgan Stanley with the note: NBER confirms the shortest recession in history at just 2 months. From the day the recession began last year, we’ve been ahead of the consensus with the progression of this new cycle staring with the v-shaped recovery. It’s all happening faster than normal and that means rotations and changing leadership
ANZ weekly consumer confidence locked down: ANZ-Roy Morgan Aus Consumer Confidence: Last week confidence fell 3.5% to its lowest since Nov 2020, but it is still well above the early pandemic lows, suggesting the economic hit from these lockdowns will be less than in Q2 2020. #ausecon #ausretail @arindam_chky @DavidPlank12 pic.twitter.com/kE8c7rMCBL — ANZ_Research (@ANZ_Research) July
The ferrous complex was OK on July 26, 2021 as spot firmed and paper held. Steel has not updated: In other data, Chinese mills are restocking which is typical for this of year. Port inventories lifted to 129.5mt: This will aid prices while it lasts. But the reasons for concern are still there. Steel output
There are few investment ideas that show the power of groupthink better investing in Chinese stocks. For years, we have seen investing legends crippled by such investments as one after another they fell prey to the inherent sovereign risk of the CCP. Sure, there are fortunes to be made. But there are fortunes to be
Forex markets were haywire last night as markets try to digest slowing recoveries in both the US and China and what authorities are going to do about it. DXY was soft and EUR lifted: The Australian dollar climbed: Gold fell. Oil is cooked in my view: But there is nothing that base metals like more
From JPM comes the understatement of the century: The financial stability risks of stablecoins The financial stability risks of stablecoinsAmong the more interesting and potentially impactful developments of explosive growth in cryptocurrency markets has been the advent and broadening acceptance of stablecoins. As we have noted in prior work, these tokens form the backbone of
Nordea with the note. I agree with all of it except the Fed hikes. For me, it is still more likely that it is forced backwards not forwards: Covid or rather Delta is back in the limelight as cases surge in e.g., UK and Spain, but the most interesting thing is now to follow the
EY Australia has a new report out on the prospects for Aussie cola over the next three decades and the news is good: Two-thirds of jobs will be lost. Under an orderly scenario, fossil fuel demand falls 42% globally by 2040. Under the disorderly scenario, which delays action until after 2030, fossil fuel demand collapses
Over this year we have watched as various Wall Street investment houses have made a hash of sector rotations and equity factors. Today I can report that they are increasingly falling in behind MB (which may not be a good thing!). The most bearish on stocks and hawkish on inflation has been BofA. No longer!
Bloomie runs a series of leading indicators for China. They are not comprehensive but aren’t bad, either as a general leading indicator: Bloomberg Economics generates the overall activity reading by aggregating a three-month weighted average of the monthly changes of eight indicators, which are based on business surveys or market prices. Note the weakness especially
XJO is at a record high this morning: The Australian dollar is soft: With bonds modestly bid: Big Iron is right at record highs. BHP flopped over the line earlier but pulled back. RIO and FMG are near. All three charts look very bullish for a breakout. I don’t typically comment on the miners but
TSLombard with the note. Last September, Xi Jinping surprised the world by announcing two ambitious climate goals: that China would reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060. Beyond the headline carbon objectives, the green initiative is an important domestic tool to bolster government efforts to centralize political power and allocate
Mwahahaha! The FT has a great story today on the bond market pain trade: Heavyweight bond investors are sticking with bets against US government debt, saying an unflagging rally paints a false impression of deep concern about the economic outlook. BlackRock and JPMorgan Asset Management are among the fund managers continuing to wager that US
Attention Labor. That’s what a patriot sounds like. On China, at least. After years of Labor groveling to China despite all signs that it has turned fundamentally hostile to everything that Australia stands for, it was refreshing to see Trade Minister Dan Tehan offer a very plain and simple take on where things are at:
China’s Three Red Lines policy for deleveraging property developers has pushed the largest and most highly geared to the edge of extinction. Everngrande is fighting on, pulling every string that it can: At least two of Hong Kong’s biggest lenders are reconsidering halts on mortgages for China Evergrande Group’s unfinished properties, after the decisions were
The ferrous complex stabilised on July 24, 2021 with spot up slightly and paper too. Steel has not updated: Since January, I have held a “sell the rallies” position for iron ore. I am now moving to an outright “sell” position. There are five reasons. First, there is early evidence that this time it is
Forex was stable Friday night as the week’s fireworks subsided and risk rallied hard. DXY was up and EUR down: The Australian dollar dead cat faded: Gold fell, oil firmed: Metals were firm: Miners lifted: EM stocks not so happy: Junk fine: Curve squashed again: Which drive FAAMGS mad: Not much data to report from
Albert Edwards of Societe General with the note Many seem at a loss to explain the recent bond market rally in the face of higher-than-expected inflation data. Readers of these pages will not have been surprised, as the collapse in the credit impulse we have been highlighting was calling for just such a rally. More
TS Lombard with the note: Don’t let your heart rule your head. There are times when one cannot help being emotional, and the last 18months have pushed many of us to emotional breaking points. But when it comes to managing money, introducing emotion into the equation often leads to bad decision-making. (This author was guilty
This is a bit like asking Dracula why there’s a blood shortage but here’s Goldman with its best effort on why bond yields are plunging: Q: The reflation theme in markets seems to be unwinding, led by bonds. What is recent price action signaling about the recovery? A: Since the recent Mid-may highs, both 10y
