44

Respect please

Dear readers, A mix of active traders, buy and hold punters, as well as regular superannuation holders read MB. Can you please keep your comments respectful of that fact. Whilst some of you may make money out of the big price shifts we are witnessing, others will be suffering. Thanks for reading and commenting.

Latest posts

20

Australian dollar crash

The AUD has fallen 2.45% in the first 26 hours of this trading week and currently sits at 1.0170 as I write. Last week I said that I thought the AUD would fall to 0.9700 within two months and I continue to hold that view even though it might happen much sooner than expected. But how does the

24

Where’s the bottom?

So, where is the bottom? To begin to fathom an answer, me must first understand why markets are falling. Last night’s action offers some clues. Although there is plenty of press blaming the US downgrade, it is far more than that. For starters, the downgrade has seemingly done nothing to the attractiveness of Treasuries as

33

RPData sees the light

RPData has seen the light. For the first that I can recall it has stepped outside of simple supply and demand arguments for house prices and provides a downbeat assessment based upon rates of credit issuance: The Reserve Bank’s private sector credit numbers for June 2011 showed the lowest level of annual growth in history

28

August 9 links: Freefalling

Parabolic: gold, US Treasuries Up: ore, $US Down: Euro, grains Crushed: Aussie, energy, metals, CRB Europe rips in on ECB: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2

35

Head and shoulders horror

I know we’ve had a bad day on the sharemarket and I’m no doubt doing a bit of data mining as a result. But I’ve noticed a rather nasty sequence of head and shoulders patterns forming on the S&P500. First, the 1 year chart: That’s a beauty isn’t it? We reported it last week and

6

Buy, sell, buy!

Brokers are predictably divided over the ructions in the market. In theory the declines should add up to some buying opportunities, but bear markets, and that is surely what it now is, are notoriously hard to pick. The big question in this a cycle — i.e. is there enough that constitutes a reliable centre around

7

Europe flails

I thought I would provide some updates on Europe given that the response to the current turmoil is moving quite quickly, and there have been some major announcements  since I wrote my previous post late last night. Firstly we saw a statement from some EU leaders re-iterating …. well, everything. President Sarkozy and Chancellor Merkel

8

Trading Day

The S&P/ASX 200 slumped on the open, after absorbing the S&P downgrade over the weekend, then recovered somewhat but has now rolled over again after lunch. The market is down over 73 points or nearly 2% and stands at 4031 points. Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 1.3%

21

G7 spouts twaddle

Here is the full statement of the G7 released recently: In the face of renewed strains on financial markets, we, the Finance Ministers and Central Bank Governors of the G-7, affirm our commitment to take all necessary measures to support financial stability and growth in a spirit of close cooperation and confidence. We are committed

7

Job ads flat

The ANZ July job market report is out and shows a slight deterioration from May: Total job advertisements on the internet and in newspapers decreased by 0.7% in July to be 8.3% higher than a year earlier. Newspaper job ads fell by 0.5% m/m, while internet job advertising decreased by 0.7% m/m. Newspaper advertising is

33

Pricing catastrophe

I have argued in support of Bill Evans’ end of year rate cut call. But today’s overnight index swaps (OIS) are pricing  50 basis points of cuts for the September RBA meeting and look overdone to me: 7/09/2011    4.256% 5/10/2011    3.879% 2/11/2011    3.641% 7/12/2011    3.508% 8/02/2012    3.370% 7/03/2012    3.325% 4/04/2012    3.301% And yes, that’s six

72

Crisis of the West

In one very important sense, the Standard & Poors downgrade of the United States credit rating is spot on. The debt ceiling debacle that preceded the ratings action showed an extraordinarily destructive political culture at work in Washington. To take the Federal Government within inches of default for no apparent reason was beyond infantile and

11

Europe’s end game

Last week there was a hint that the Europeans may have been finally grasping at a real resolution to their long running economic crisis. The speed at which the EFSF guarantee of the smaller periphery nations had led to contagion in Italy and Spain came as a surprise to the Euro-elite and under pressure from the

14

China’s morbid dependency

In the lead up to Standard and Poors’ (S&P) downgrade of US Government debt, the largest holder of US Treasuries – China – had stepped-up its warnings and condemnation of the US Government’s fiscal mis-management and its deteriorating debt repayment capability. In November 2010, China’s Dagong Global Credit Rating Co. reduced its credit rating for

10

The Great Volatility

The S&P/ASX200 has slid 12% in four weeks with similar falls across major developed markets as the Western crisis has gathered pace in the past month. Apart from the usual and vapid insistence to buy any and all stocks now because they are “cheap”, some commentators have said that ”buy and hold” is dead and

18

Currency reservations

In February 2009 after I came back from holidays in Yamba I sat down with a mentor and mapped out how we thought the crisis would manifest over the coming years. I had a massive advantage over many investors and traders in that in my research I had stumbled upon a book written in 1996 by

86

Fog of the aged

Have you ever wondered why MacroBusiness exists? Why it is necessary for a dozen thirty and (just) forty-somethings to get together and write their buns off about the Australian economy? The first and most vital clue in answering the question is the ages of the MB team. At MB we are seasoned enough to have

11

August 8: At the precipice

Israel crashes. Bloomberg ECB mulls massive bond purchases. WSJ French-German statement. ZeroHedge Europe’s Lehman moment. BBC S&P wrong, no recession. Buffet Recession is upon us. Gavyn Davies, Nouriel Roubini Week ahead for the Dow. Calculated Risk  Three things the Fed can do. WSJ Nothing in the Australian press of value.

39

D’oh, S&P (updated)

Oh my, from the WSJ (h/t Precious Bodily Fluids): A mathematical error discovered late Friday by Treasury Department officials has thrown into limbo — at least temporarily — plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said. The

33

The governance of money

The idiotic ideological battle in Washington over the debt ceiling was yet more evidence of the failure of governance in Western economies, which is the real crisis. Then, after the stock market carnage of last week, the attention was focussed, reasonably enough, on government’s MANAGEMENT skills — how good they are at being efficient bureaucrats

35

S&P downgrades the US

From the newswires: S&P downgrades US debt to AA+ The US had its AAA credit rating downgraded for the first time by Standard & Poor’s to AA+ based on its judgment that the debt ceiling deal agreed by lawmakers would not be enough to curtail record deficits. “The downgrade reflects our opinion that the fiscal

11

Australian Dollar Weekly Wrap

A big week for the AUD as risk finally went off and the AUD tumbled 600 points from the high of the week to finish at 1.0442 in New York this morning. Anyone who talks of safe haven buying now should have to pay these 600 points to charity. On a million dollar AUD position

2

Data Vault

Australian Data At was another big week in Australia with the a number of the key monthly releases showing further deterioration in the non-mining sectors of the economy while the trade balance was a shinning light with another strong performance. The RBA also updated their medium term forecasts which are looking increasingly optimistic relative to reality.

26

Weekend Links: Europe all in?

Rocket: Euro Up: ore, gold, $US, energy Flat: Aussie Mixed: CRB, grains Down: metals  Europe does the big ease: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10

20

Anatomy of a Crash

The mainstream media (MSM) have repeated verbatim their headlines of drastic downturns in stockmarkets, but what’s really going on around the world? In this post I want to illustrate the anatomy behind worldwide market ructions, placing them in context to the 2007/08 crash using some macro charts, and how its not just stock markets “suffering”.

31

Another Crisis – Live

It looks as if European crises have now become a bi-monthly event with the previous one just 2 weeks ago. Once again the Daily Telegraph UK has supplied insomniac Schadenfreudalists with some riveting entertainment with another semi-live blog of the unfolding drama. Latest update 10.00 Italy‘s GDP figures are out, and they’ve come in as expected. Official