Houses and Holes


Australian dollar roars on the crosses

DXY resumed its bullish climb last night and EUR sank: The AUD held its recent gains and now roaring versus the crosses: Oil is a rocket. The entire energy complex is: Base metals are still struggling: EM stocks are right at the cliff: The EM junk siren is wailing: As Treasuries back up: Stocks managed


The travel boom cometh

BofA with the note: The clouds are parting The COVID Delta clouds are passing and the sun is starting to shine again. Our high frequency economic indicators are inflecting higher, the economic data surprise index has turned and the bond market has taken notice. We think 3Q will prove to be the soft patch in


Good riddance to a bad Gladys

The number of rotten narratives surrounding Gladys Berejiklian’s exit is staggering. They range from partisanship to sexism and all are symptomatic of the same thing, the collapse of anything resembling truth. The facts are simple. Gladys Berejkilian was accused of corruption and is under investigation for it. She should have resigned a year ago. Instead,


China fights Evergrande downdraft

There’s a new acquisition: China Evergrande Group and its property-services arm were halted in Hong Kong stock trading amid a report that the developer agreed to sell a controlling stake in the unit to raise much-needed cash. Trading of Evergrande was suspended pending an announcement on a “major transaction,” the developer said Monday in a stock


When will the Tsar end the energy crisis?

Goldman with the note: This year’s tightness in European gas markets has highlighted the market’s vulnerability to Russian supply. Specifically, Gazprom’s decision not to book for October the full capacity available at one of the main pipelines that delivers gas to Germany poses an increased tightening risk to NW European gas balances and, hence, further


Volatility is back

Nordea with the note: Autumn has clearly arrived. It’s getting colder. Maybe that’s starting to be true also for markets. The past week brought with it the first lower lows in S&P 500 since the bottom in March 2020. Equity volatility has behaved strangely since May with spikes around VIX expiry every month. And beneath


Wall Street: Don’t BTFD

Wall Street is turning increasingly bearish on stocks, catching up with MB. BoA: Q4 view: higher inflation, hawkish central banks, peak GDP & EPS= low/negativestock/creditreturns; sell rallies into Nov Fed taper; long H2 barbell of long inflation (e.g.commodities, energy, small cap, leisure, banks, Japan) & long quality (e.g. cash, utilities, staples, healthcare, apartments REITs); short


Ignorant Crikey rewrites Australia-China history

Some very poor journalism from Bernard Keane at Crikey: In all the coverage of the AUKUS announcement and the government’s continuing criticisms of China, one question has received too little attention: why has Australia gone from the Tony Abbott Coalition hosting Xi Jinping in the Parliament in 2014 to celebrate a trade deal to now pursuing a


Morrison done for

Newspoll has a couple of results today which suggest that the Coalition government is cooked. First up, AUKUS: A significant majority of voters back the construction of a ­nuclear-powered submarine fleet for the Australian navy amid community anxiety over the perceived national security threat posed by China. Most also believed that the trilateral strategic defence


The problem is not Evergrande, it’s China

Listening to the slow grind of cognitive gears about China is painful. Goldman: Macro volatility has had limited impact, so far, on performance across the Asia credit market. The recent move higher in US Treasury yields and downside pressures on China growth have not provided a negative drag on Asia credit spreads, which have mostly


The energy bubble will burst like lumber and iron ore

Some folks never learn. COVID disruptions to both supply and demand have blown rolling bubbles and busts through commodities including lumber, iron ore, precious metals, and foodstuffs. Base metals are still inflated though beginning to struggle. The new bubble is energy. Each time the formula is the same. Temporary virus distortions boost demand. Temporary supply


Once again, Aussies rely on Beijing for protection from Canberra

This is how entrenched the mass immigration economic model is in Canberra despite all of the evidence against it and the population at large hating it: Australia recognized China’s Sinovac Biotech Ltd. Covid-19 shot and India-made AstraZeneca Plc jabs, paving the way for overseas travelers and fee-paying foreign students who have received those vaccinations to


Australian dollar catches energy tiger by the tail

DXY  pulled back on Friday night and the usual correlations applied. EUR was up: Australian dollar bounced: Commodities too though base metals are lagging: And big miners struggled: EM stocks look rooted: And the EM junk warning siren is blaring ever louder: Despite yields falling: Stocks managed moderate gains: Finally, CFTC market balances hit another


Lombard: Buy US dollars

TSLombard with the note: The new piece of information investors received from the FOMC meetinglast week was not about the taper, which the Fed had telegraphed extensively.What caught themarket by surprise wasthe hawkish tone and the higher policy rates projections in the dot plot. The 2021 fed funds rate median projection was hiked to 0.3%


Russia is driving the global energy shock

There have been a lot of articles pointing to the Chinese ban on Australian coal imports as the cause of the global energy shock. This was partly the case earlier in 2021. But Australian coal has been going out roughly as normal more recently, just to other markets. The key driver is, in fact, choked


Mad Macquarie’s mortgage mayhem

BankingDay with the note: The two-months’ worth of much anticipated industry data on loan deferrals produced by APRA late yesterday can only add to the belief there will be an early shift to macroprudential controls on bank lending in the mortgage market. The top-line numbers seem ho-hum at first glance. Total loan deferrals of A$11.9


Global energy panic builds towards shock

It’s off the hook now. Thermal coal futures are out of control: Coking coal futures are out of control: LNG futures are out of control: Oil is a poor second cousin but still rose: The trigger was a China panic: China’s central government officials ordered the country’s top state-owned energy companies — from coal to


Chinese recession intensifies

Evergrande news is thick and fast. Some kind of selective bail-out and bail-in is underway depending upon whether you’re Chinese or not. Sincocism: Evergrande appeases high-yield onshore investors with partial cash repayment as some local governments bar property-for-debt swap | South China Morning Post In a notice seen by the Post, the Housing and Urban-Rural


Australian dollar jumps with energy

DXY eased up overnight but EUR kept falling: The Australian dollar rebounded: So did oil and gold: But base metals are in trouble as Chinese growth sinks: Big miners lifted with iron ore: EM stocks held on: But the EM junk siren is still blaring: US yields rolled: Following stocks lower: Westpac has the wrap:


So that’s why iron ore went nuts

This morning I noted the crazed bid in Dalian iron ore futures overnight which have boomed and busted so far today: What triggered such manic action? This: At a meeting chaired by central bank Governor Yi Gang, authorities told financial institutions to cooperate with governments “to jointly maintain the steady and healthy development of the


Why the Fed will taper on the oil shock while others won’t

Deutsche looks at the role of oil in central bank thinking: The financial world is trying to work out what the implications are for the energy price shocks we are seeing and whether central banks should tighten policy as a result or keep policy loose to reflect possible demand destruction that it might eventually bring.


Of course the yuan is going to fall!

Never over-think things. China is entering a recession as its property development sector goes bust and an energy crisis shuts industry.  That is going to result in stimulus. Perhaps not like the olden days but stimulus nonetheless. What kind? Fiscal is constrained. There’s plenty of scope at the federal level. But at the local, there