All those long only equities managers calling buy the dip are being minced again today. The Australian dollar is down hard again: Bonds are bid bigly: XJO’s bath of blood is hosing everything, gapping down 8%: And the damage is still not priced. Big Iron is down: Big Oil too: And Big Gold: Big Banks
Via Banking Day: Demand for business credit for the next few weeks may be the biggest it has ever been and banks will be sorely tested by the avalanche of flaky applications for working capital finance linked to government support measures. Access to financial support that lowers the cost of business credit applies only to
Via APRA comes the end of mortgage arrears: The Australian Prudential Regulation Authority (APRA) today confirmed its regulatory approach to the COVID-19 support packages being offered by banks and other lenders to their borrowers in the current environment. Many banks have recently announced COVID-19 support packages that provide affected borrowers with an option to defer
Cometh the moment, piss off the man. We saw it in the bushfires, now it is replaying for the virus. SloMo’s chosen strategy to fight the virus is that of Singapore but there is a problem, via Greg Sheridan: So how has Singapore kept the infection rate so low, with just a couple of hundred
Iron ore prices for March 20, 2020 Prices fell after Vale revealed it’s not shutting its Malaysian terminal after all. The steel Everest has finally passed its zenith: Steel and iron ore prices to be crushed in due course as the world shutters.
In his masterpiece, The World in Depression, Charles A. Kindleberger concludes the major cause of the Great Depression was a paralysis of leadership caused by the decline of the UK and the immaturity of the US. Neither was able to provide leadership and put themselves forward as the economy of last resort after the 1929 crash.
DXY took a breather after nine days straight up: The Australian dollar bounced on the crosses: Gold was up: Oil too: And dirt: Not miners: EM stocks did better: Junk was mixed: Bonds were bid again: As stocks hit new closing lows: Central banks have caught up for now. Fed swap lines are doing their
China’s weak recovery plods on: And an asteroid the size of the global economy is about to land squarly upon this weak recovery. From Europe: Asia: And the US: Don’t look to China to save us.
Have a look inside the hospitals of Northen Italy. The Saturday Paper was blunt: Bill Bowtell is both deeply concerned and immensely frustrated. He is concerned by the coronavirus, which is spreading in Australia at rates that put the country on a trajectory similar to Europe. And he is frustrated with the government, which has
Via Roday Lay at Livewire: The only government measure that is likely to stave off deep recession / depression risk is extending a government (tax payer funded) first loss debt program to the banks and, in turn, on to the SME sector. Similarly, the only thing that will save Qantas and Virgin is a tax
The RBA has driven yields down but dang is that curve warped: That slope says massive recovery with inflation imminent! Not. As the risk parity liquidaton eases I expect long end yields will fall along way. Indeed, for some enterprising hedgie with the firepower to do it, it is a singular arbitrage opportunity. There is
When it comes to property media, the propagandists at “Bricks and Mortar Media” take the chutzpah cake: Federal Government moves to close Australia’s borders while calling for the return of overseas Aussies will help protect Sydney’s property hotspots from the COVID-19 downturn, according to Nick Viner, director of buyer’s agency Buyer’s Domain. Mr Viner said
Via the excellent Jonathn Mott at UBS: Banks well positioned to assist the Government and RBA In recent days the Government and RBA have announced a comprehensive package of initiatives to support the economy through the COVID-19 pandemic. RBA Governor Lowe also stated today that authorities will do “whatever is necessary” to support the economy
It is structural change not cyclical. Via Joseph Carson, Former Chief Economist Alliance Bernstein: Economic recession is an infrequent occurrence, but in a fundamental sense recessions are the economy’s way of cleansing the “rot” out the system that have been built up over time. This emanates from bad investments, bad loans, bad policies, excessive risk
The AFR says 20% falls in the offing: Dr Oliver said his base case was for an increase in unemployment to 7.5 per cent that would prompt a 5 per cent decline in property prices before a bounce back. But it could be worse, he warned. “A sharp rise in unemployment to say 10 per
Good work from the banks, via the AFR: Banks will defer small business loan repayments for six months, an additional emergency measure to assist borrowers through the coronavirus crisis, and are open to consider cases of mortgage hardship if they appear. In a move designed to keep a lid on unemployment, Australian Banking Association chief
Notice today that there is no pressure on the banks to cut variable interest rates from any quarter. Not one press article. No comment from the Government. Nor the RBA. This is a great insight into how Australia’s Game of Mates works. Somebody, likely the RBA and the Government as well, has gotten on the
Fresh from Goldman Sachs, The Australian economy is forecast to shrink 6% in 2020 and unemployment spike to 8.5% with a lot more underemployed: “As more people work from home, higher spending on food and utilities will provide a modest offset, but investment activity and exports are also likely to contract.” “There has been a
Cross-posted from FTAlphaville: Back in 2008 the economy suffered from massive oil demand destruction. The result was an epic contango structure in the futures curve which encouraged traders to charter tanks to store oil. A contango (the opposite of backwardation) manifests whenever the price of commodities in futures contracts is higher than the cash price
Via CNBC: Meanwhile, ASX soars 4% at the open: Buy the dip! Lol.
China continues to crawl back towards normal activity. Via Capital Economics: While the rest of the world advances into shutdown. Europe: Asia: US: And if you think that China can resist a global shock, let alone when it is already on its knees, then think again: The post-virus v-shaped recovery narrative is fantasy for China
Private funding that is. There’s $90bn in RBA coconuts on the way. Interbank spreads are still wide: GSIBs globally are locked up: Locally, things got a little worse yesterday with WBC CDS at 96bps: And all of this before we see a single bankruptcy of scale. The crisis did not begin with the banks but
From WES: Dills should not have sold Coles. It was a nice counter-cyclical buffer for all downturns (espeically virus-related). I expect the Bunnigs cash cow to crash. Although folks at home will be tinkering, the collapse in tradie work will be epic.
In my view ScoMo is a sandwich short of a picnic. But I’ve also heard from senior sources that he’s just thick as a brick. When it comes to COVID-19, if it were not for the luck of Summer, Australia would already be Italy. The response to the virus by the Morrison Government has been
From Captain Phil: Good afternoon. The Reserve Bank Board met yesterday and decided on a comprehensive package to help support jobs, incomes and businesses as the Australian economy deals with the coronavirus. I would like to use this opportunity to explain this package and to answer your questions. We are clearly living in extraordinary and
DXY is not finished: The Australian dollar came off its crisis lows but was still smashed over 24 hours: Against EM it was mixed: Gold has further to fall but it is buy the dips now. A $5k target does not seem stupid to me when we come out of this: Oil bounced but is
Via the excellent Damian Boey at Credit Suisse: As leaked earlier today in the press, the RBA cut the cash rate by 25bps to 0.25%, the effective lower bound. It provided forward guidance to the effect that it will not raise the cash rate until it sees progress on jobs, and inflation back within the
Hmmm… CBA has cut home loan rates by 70 basis points to an all time low of 2.29 per cent for 1, 2 and 3 year fixed home loan customers. Alongside that, the bank said it was launching a new term deposit rate of 1.7pc, an increase of 60bps. That looks like cover for zero
From the RBA just now: The coronavirus is first and foremost a public health issue, but it is also having a very major impact on the economy and the financial system. As the virus has spread, countries have restricted the movement of people across borders and have implemented social distancing measures, including restricting movements within
Via FT: As the number of coronavirus cases has exploded across the US, the idea of a direct cash transfer to Americans has emerged as the primary feature of the Trump administration’s $1.3tn response to the crisis. The idea of a direct cash transfer to limit the economic damage from the spreading disease had been
