Clearly, Goldman Sachs is still too long commodities: Growing scarcity across physical markets. Since last October, policymaker and investor focus has remained on the vaccine-driven demand recovery from the deepest recession on record. Yet today, physical goods demand has reached such high levels — above pre-pandemic trends in all but oil — that the system
Don’t blame me, I’m just the messenger: Modelling by a new scientific lobby group projects that NSW’s road map to reopening may lead to all the state’s intensive care unit beds being full for five weeks over Christmas and almost 1000 people dying from COVID-19. The modelling is the first release from OzSAGE, a group
The ferrous complex was mixed again on September 13, 2021 as spot fell sharply, paper held on and steel bounced hard: There were more rumours of production cuts in steel mills for the rest of this year. I expect these cuts to be permanent. Or, at least until the panic sets in over growth. Below
There is nothing that incenses the Chinese population more than money lost on realty. Evergrande is on the receiving end of that anger: China Evergrande Group is facing mounting protests by homebuyers, retail investors and even its own employees, raising the stakes for authorities in Beijing as they try to prevent the property giant’s debt
Morgan Stanley has an excellent note today that summarises the entire business cycle ahead for mine: Reason 1 to stay long USD: Peak bearishness on US growth? Our US economists have revised down their 3QGDP estimates for the US to 2.9%Q SAAR compared to 6.5% previously. The impact of the Delta variant has been clear
Chris Joye at Coolabah with the note: In the AFR this weekend I write that after months of debate about whether the Reserve Bank of Australia would increase or decrease its stimulus in recognition of the COVID-induced recession, Martin Place delivered on its promise to maintain a “flexible” and open-ended approach to its government bond purchases (aka
Chinese credit is slowing and the property development segment is diving into a hard landing. The signals are everywhere. Goldman has more: Evergrande developments the main driver for near term risks. With Evergrande bonds pricing in elevated risks of default, investors are questioning how “fat” the tail risk is for China property bonds. More specifically,
The nihilistic pragmatism that drives the Australian political economy is as much ironic as it is useless. Our political discussion can lurch from “black is white” to “white is black” in the blink of an eye. In the absence of context, memory and values beyond political tribalism, no truth has adhesive properties. And so, as
The ferrous complex was mixed on September 10, 2021 as spot fell, paper was flat but steel lifted: Chinese iron ore inventories are rising again, hitting 131mt last week: That China has rising iron ore inventories amid crashing prices tells us all we need to know about the slackness in the market. The cartel knows
The Australian dollar tried to rally Friday night but slammed back down as the Fed hinted that taper is go. That lifted DXY and EUR fell: The Aussie popped and dropped: Gold sank but oil rose: Base metals inhaled deeply on the crack pipe: Miners not so much: EM stocks still look very troubled: Through
Chinese credit for August was out Friday night the news is poor. TSF came in at 2.9tr yuan: This is 17.3% lower than last August and the 3MMA is still down 15.9% to boot: Year to date new credit is still hovering around -16% and has been for six months: The rolling annual mountain is
In lieu of my own assessment of the smartest guys in the room this week, here is an alternative from ZeroHedge. In my view, a commodity crash and equity correction are dead ahead as China slows much more than the market is pricing for. Inflation is not the risk, deflation is. Morgan Stanley We start
Goldman with the note: Treasury Secretary Yellen sent a letter to congressional leaders this morning (Sep. 8) indicating that the the Treasury will exhaust its cash and extraordinary measures “during the month of October”. This is in line with our expectations, though slightly sooner than the “October or November” timing that the Congressional Budget Office
Albert Edwards at Societe General with the note: The unravelling Chinese Credit Impulse we highlighted earlier this year accurately foretold the stalling of the global reflation trade. Is this a pause that refreshes or are we in a re-run of a decade ago? For back in 2011 a bubble of reflation enthusiasm burst, and bond
The soft bailout of Evergrande has begun: Regulators in Beijing have signed off on a China Evergrande Group proposal to renegotiate payment deadlines with banks and other creditors, paving the way for a temporary reprieve as the cash-strapped developer struggles to come to grips with more than $300 billion of liabilities. China’s Financial Stability and
You have to forgive me this week. I’m sick (not COVID). Should be back next. Below find the latest wrap of everything China and commodities. Needless to say, it is playing out precisely as foreseen with a growing growth scare beginning to take down commodity prices and increasingly threatening all bloated markets. Chinese authorities remain
Westpac with the note: Following the stubbornly high Victorian case count and the associated decision by the Victorian government to abandon the zero case objective we have reviewed our growth forecasts for the Australian economy. The Growth Numbers Our forecasting process is based around using our estimates for growth in hours worked in the states
I could write this one up but ZeroHedge has done a good job of it. The takeout is materially lower Chinese property starts ahead… With algos busy chasing upward momentum in futures and global stocks, the biggest – if largely ignored story – remain the ongoing collapse of “China’s Lehman“, the $300+ billion China Evergrande,
The ferrous complex crashed again on September 6, 2021 as spot fell off a cliff, paper has some catching up to do and steel did not update: CISA steel output data for late August was smashed to a new low: Though at least inventories fell 10% so demand was better. However, iron ore supply is
DXY firmed overnight and EUR eased: The Australian dollar rolled over: Oil and gold eased: Base metals were soft: Big miners smoked crack as iron ore crashed: EM stocks were OK: Junk is OK too: The curve smoked crack as it steepened Stocks were led Growth as usual: Westpac has the wrap: Event Wrap German
Treasurer Josh Frydenberg in a speech today at the ANU Crawford Leadership Forum: During the Cold War, the Soviet Union was largely cut off from the rest of the world. It did not trade or invest much outside of its sphere of influence. Contrast this to the present day. The IMF estimates that China’s share
Goldman with the note: Sen. Joe Manchin (D-W. Va.) has attracted substantial attention with an op-edin the Wall Street Journal regarding his views on upcoming fiscal legislation. In it, he calls for a “strategic pause” on consideration of the $3.5 trillion/10 years budget reconciliation legislation, which Democratic leaders hope to assemble in committees over the
Morgan Stanley with the note: 2021 has been a harder year for many investors than the headline indices imply. It’s been a year where ‘ESG’ and ‘Quant’ remain key structural trends in the investment community. And it’s been a year that has seen an almost constant, running debate over the outlook for growth and inflation. Commodities,
TS Lombard has a crack at it: The mantra of “Common prosperity for all”, proclaimed by Xi Jinping in more than 60speeches this year, is an ideologically appropriate slogan for a Communist Party after decades of lop-sided growth and rising inequality. The promise of greater fairness, re-balancing between labour and capital, increased social provision is
A seriously behind the curve Goldman Sachs is still trying to defend its capital-devouring long commodity call. Having completely missed the severity of the China slowdown, and associated commodity crash, it now says a rebound is imminent: We have to add to the mix a combination of weather related disruptions, rising regulatory risk andthe material
The ferrous complex was mixed on Friday 3rd of September 2021: In news, China wants more ore: China’s iron ore producers aim to increase domestic iron ore concentrate output by more than 100 million tonnes between 2021 and 2025, an official with the country’s steel industry association said on Saturday. Luo Tiejun, the vice-chairman of
Thankfully we still have some independent press. The Saturday Paper: The rate of Covid-19 hospitalisations in New South Wales is being reported at one-third of the real figure, with the actual numbers being masked by a decision to only report those who end up in medical facilities, and not the thousands receiving care under the
Forex markets sustained their counter-trend actions Friday night, and how. DXY fell like a stone while EUR and AUD are roaring: It’s a pretty wild rally suggesting a short squeeze yet CFTC data got even longer: Commodities all rose: Miners less: EMs stocks too: EM junk was soft: The US curve steepened: And Growth led
Careful what you wish for. COVID states are to be punished with open borders and we all know what means: States that fully vaccinate 80 per cent of people aged 16 and older will be able to resume international travel, as the Prime Minister said a new deal will double Australia’s vaccine supplies for September
TS Lombard with the note: Powell reiterates AIT policy.In the end, the Jackson Hole policy retreat did not herald the announcement of a major policy shift (we never thought it would, but some investors were betting on a hawkish surprise.) Markets interpreted Fed Chair Powell’s speech as dovish, buying equities and selling USD. Indeed, Powell
