Houses and Holes

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Good news, bad news for Australian dollar

DXY eased last night: AUD fell across the board: Oil lifted: Even some metals too: And miners: EM stocks didn’t break new lows in the last leg lower but they’re not exactly tearing higher either: EM junk is a fiery comet still screaming sell everything! As yields lifted with oil: And stocks fell: The problem?

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BOJ won’t break

The last deflationist standing is not going to fall unless something changes. Pantheon has the note. — Japanese CPI inflation was unchanged in May, at 2.5% year-over-year, the second month above the BoJ’s 2% target. We now expect inflation to remain above target for the rest of the year, thanks to the ongoing weakness in

9

“Junk” Perrottet funds Putin’s palace

A ripping post from Coolabah Capital’s Chris Joye today. — Since Premier Dominic Perrottet was appointed NSW Treasurer in January 2017, he has presided over an unprecedented, $106 billion surge in taxpayer debt. That means Perrottet and his fierce internal rival, Treasurer Matt Kean, will have saddled NSW residents with $13,000 of extra debt per

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Is bad news good news again for stocks?

Michael Hartnett at BofA leads us off: The Big Flow to Know: YTD investors have bought $195bn of stocks and sold $193bn of bonds; ‘22“capitulation” has been in bonds, not stocks (Chart2). Flows to Know: biggest IG bond outflow since Apr’20 ($16.6bn–Chart 3); biggest global equity outflow in 9 weeks (Chart 4);13th consecutive week of

4

Zoltan the Magnificent gonged commodity top

There is no hotter name in market economics right now than Zoltan Poszar. FTAlphaville singles him out for hagiography: There are financiers whose names adorn gallery wings and university dormitories. The world of money has even yielded a few who can be identified by first name only — at least to insiders. But there is

2

A lifeline for Fed 50bps?

Barclays with the note: The final print of the June University of Michigan measure revised five- to ten-year inflation expectations down to 3.1%, from 3.3% in the preliminary print. The softer long-term expectation may give the FOMC some comfort, though additional readings and July CPI will be key to watch for more stable signs. The

0

Daily iron ore price update (still terrible)

The ferrous market sort of bounced on Friday June 24: Futures pooped overnight with the wider market rally. News remains dubious: While “market confidence has been restored to a certain extent”, Sinosteel Futures analysts said the absence of any additional and specific economic stimulus measures from Beijing will limit any price gains for now. In

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The Chinese recovery is looking pretty good. So far…

One should never underestimate the power of CCP debt. OMICRON is contained: Mobility is lifting: Various economic measures are bouncing: Note that housing area sales are still affected by distortions around the timing of Dragonboat Festival. Even so, it’s a rebound of some sort. But how far it can get remains an issue of counterparty

4

Albo cleans up Morrison’s Pacific mess

The rush to Paris is well worthwhile: Prime Minister Anthony Albanese took a sly dig at Scott Morrison as he vowed to fix Australia’s relationship with France in the wake of his predecessor’s leaked texts scandal. Mr Albanese confirmed on ABC’s 7:30 on Thursday night that he would visit French President Emmanuel Macron, promising to

1

Global PMIs break

A wrap from Goldman. The deflation shock begins. — DM trends: The DM composite flash PMI decreased by -1.8pt in June to 51.9 on a steep deceleration in services (-2.9pt to 52.5) and broad-based moderation in manufacturing (-1.6pt to 52.5). Country-level trends: The manufacturing flash PMI decreased sharply in the US (-4.5pt to 52.4) and

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And now for a copper glut…

The copper chart is not pretty. After being driven to all-time highs by Wall Street spruikers it is now crashing: The long-term story for copper is no shortages at all. The great EV and power transformations can largely be absorbed by recycling.  There is also plenty of supply coming on stream in the next few

3

Bond bear market ends with a bang

Barring some new and nasty shock, it appears the bond bear market is over. It has been the steepest sell-off through May since the foundation of Terra Australis: Aussie bonds were even more dramatic. Most notably after the Ukraine war: There was little sense in this. Despite the rip-roaring surge in the Aussie terms of

3

The commodities bubble begins to burst

Goldman’s commodity bubble-blowers are capitulating: Macro markets today are facing a navigational challenge worthy of Odysseus. In the Greek myth, Odysseus chose to risk his ship by sailing close to the rocks of Scylla rather than risk being pulled under by the whirlpool Charybdis. In our view, policymakers are trying to navigate between the Scylla

1

Daily iron ore price update (Xi’s drivel)

The ferrous complex rebounded on June 23, 2022: CISA data for Mid-June came off but is still ridiculously high: The news that firmed the market was this: Chinese President Xi Jinping pledged to meet economic targets for the year even as the government’s zero tolerance approach to combating Covid outbreaks and a weak housing market

3

Australian dollar shoved to PMI cliff

DXY was firm overnight: AUD is right at the edge of a cliff: Oil fell again: As metals puked: Miners followed: EM stocks held on: But junk is pointing it all lower: Treasury yields appear to have peaked properly now: Which lifted growth stocks: Westpac has the wrap: Event Wrap In his second semi-annual Congressional

27

Brilliant Beijing refuffs Albo’s cowards

In the latest installment of the bizarre and wonderful annals of Beijing looking after the Australian national interest much better than Canberra does we have got this: Chinese Foreign Ministry spokesman Wang Wenbin has defended Beijing’s trade sanctions on $20bn worth of Australian exports, saying the measures were “legitimate, lawful and beyond reproach.” Mr Wang

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fuckedcrypto#351

FtAlphaville as usual. What is so ludicrous about all of this is that crypto sells itself as “sound money”! — It’s been nine long days since crypto fintech Celsius Network announced in a Very Important Message that it was pausing all withdrawals, swaps and transfers between accounts amid “extreme market conditions”. It’s also been nine

3

When will King Dollar fall?

TD Securities with the note. I don’t agree with them. DXY is not going to fall as the US recession gathers steam. That promotes the flight to safety. Moreover, it presents China and Europe as the victims of a follow-on trade shock that will drag them down shortly afterward. Indeed, I am still quite concerned

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So far, the worst year for bonds and stocks ever…

Some eye-popping charts from Deutsche. Bonds worst in 250 years: Stocks worst since Great Depression: Pain! Recession cometh: And it will be deep because the Fed can’t turn early: As Jim Reid himself says: H2 is probably quite binary. If we don’t see a recession materialise over that period it might be tough for markets

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Albert Edwards: Expect a bad recession

Albert Edwards at Societe General brings the sense as usual. — US recession looks imminent and the discussion in the markets has moved on to how deep it will be. Forecasts for a ‘mild’ recession will now abound. But when a key Fed economic model sees an 80% chance of a hard landing, you know

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Aussie flash PMI fades away

S&P with the flash PMI. Reopening boom over. Next up: recession. Full report. — Australia’s private sector recorded a fifth straight month of growth, according to Flash PMI® data. Private sector output and new orders continued to expand at solid rates, leading to a continued expansion in Australia’s private sector workforce. That said, rates of