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Macro Afternoon

by Chris Becker Outside Australia, Asian stock markets are in retreat mode after being mixed yesterday as confidence fades going into tomorrow night’s NFP print, with all risk going into undollars like Yuan, Bitcoin and Yen and of course precious metals. Gold is having another stab at the $2050USD per ounce level with silver again

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Coalition pursues wrong kind of housing stimulus

Housing Minister Michael Sukkar told a conference that housing policy will be a key component of the federal government’s 2020 Budget on 6 October. Amongst other things, extending the First Home Loan Deposit Scheme and changes to the National Housing Infrastructure Facility are believed to be under consideration. However, Sukkar has reportedly ruled out funding

16

Parents mental and financial stress soars

The Melbourne Institute has released research on parent’s soaring mental and financial stress arising from COVID-19: In mid-May, 56% of survey participants anticipated they would be personally impacted by the coronavirus for longer than six months. Eight weeks later, 67% now expect the effects to extend for longer than six months. Additionally, after a period

19

How the Victorian Government failed COVID-19 contract tracing

The hits keep coming for Daniel Andrews’ Victorian Government, with a 9News investigative report revealing that the Government scaled back contract tracing efforts just as the virus outbreak began from failed hotel quarantine: Evidence of Victoria’s contract tracing data is illustrated in the next chart showing the virus erupting in Victoria, while cases have remained

17

An investor’s guide to good government stimulus

We are in a strange political environment. Globally there have been trillions of dollars of government stimulus announced, deficit hawks have turned chicken, and formerly staunch opponents of government intervention have been leading the charge. How should investors assess each government stimulus announcement? One day the Australian government told us they had the right level

9

VIC records another 471 COVID-19 infections vs NSW’s 12

Victoria has recorded another 471 COVID-19 infections, down from yesterday’s record 725: There was another 8 deaths overnight in Victoria. NSW recorded only 12 new cases, the same as yesterday. It is also doing a far better job containing outbreaks and preventing community transmission: Victoria now has 7,449 active COVID-19 cases, 96% of the nation’s

11

Australia’s population to swell regardless of COVID-19

A group of researchers have modelled the impact of COVID-19 on Australia’s future population. They find that Australia’s population will still swell to nearly 32 million people by 2040 even if immigration “plummets to zero in 2020-21 and takes eight years to return to the long-run average”: Our new modelling shows that under a worst-case scenario, Australia

32

International education agents demand Australia slay its elderly

With COVID-19 ripping through India: An Indian education agent has demanded that Australia open its border to international students: Navjot Singh, a migration agent based in the northern Indian state of Punjab says policymakers in Australia need to do a lot more than just granting post-study work visa rights to retain its current students. “Australia’s

16

Revenge of the CCP-Nazi apologists

We begin, as always, with Labor and the once hawkish Richard Marles, at Domain: Opposition defence spokesman Richard Marles says a Labor government would not let backbenchers lead the debate on China, accusing the Morrison government of letting “fringe dwellers” damage Australia’s relationship with its biggest trading partner. Mr Marles hit out at government MPs

4

Gotti wrong again on gas supply

Though at least he covers it. Via Gottiboff: The dam wall holding commercial gas prices at ridiculous levels is starting to crack …The crack in wall was actually opened by ACCC chief Rod Sims late in 2017 when he approved a buying group, Eastern Energy Buyers Group, to aggregate orders from medium sized businesses up

13

Victorian Government refuses to give quarantine answers

Victoria’s Health Minister, Jenny Mikakos, avoided seven questions on Melbourne’s Hotel Quarantine debacle at Tuesday’s Legislative Council question time by saying she would provide a written response the following day. These questions included topics like: When the government first became aware of problems around quarantine? Who made the decision to outsource to private contractors? Will

25

RBA’s Tulip polishes his property bubble

Five years ago, RBA’s senior research manager, Dr Peter Tulip, released crazy research arguing that Australian housing is 30% undervalued and that owning a home is “now more attractive, relative to renting than it has been at any time in the past 30 years”. Now Dr Tulip is back, this time releasing a research paper

2

UBS: Aussie banks mull “artificial dividends”

Via the excellent Jonathon Mott at UBS: Two steps forward… one big step back? With Melbourne moving to Level 4 lockdown (all non-essential businesses closed), the outlook for the Australian economy and banks has deteriorated sharply. After a strong economic bounce from May until early July, this is a clear setback. While the assumptions underpinning

5

Greedy Melbourne University underpays its slaves

While the University of Melbourne’s vice-chancellor, Duncan Maskell, feasts on his $1.5 million salary, he has flooded the institution with insecure casual staff: The rush towards insecure work has been led by the University of Melbourne, Australia’s richest tertiary institution, which listed reserves of $4.43 billion while employing 72.9 per cent of staff on insecure

10

Plenty of fuel left in the gold rocket tank

A couple of charts today make the point. Real interest rates have room to fall further: Gold ETF flows are still very small:   AUM proportions dedicated to gold are still WAY down versus previous peaks: Probably the best chart of all, DXY is still very high: The lows of the GFC period are 24%

91

ScoMo left behind as Australia votes for virus elimination

The Morrison Government should do a major volte-face on its virus suppression strategy. There are three reasons. First and most important, elimination is the best way forward. Virus-free New Zealand is tracking for far better economic, lifestyle and health outcomes than Australia is. Second, governments in the virus-free states of WA, SA, QLD, TAS, ACT

5

Macro Morning

By Chris Becker  Another record high on Wall Street, pushing the risk complex to yet more stretched valuations as gold also makes another daily record high above the $2000USD per ounce level, with silver outshining with a near 5% gain to be above the $27USD per ounce level. Its all about the weakness of USD

44

Dodgy Dan Andrews delays hotel quarantine inquiry

With three epidemiologists and genomic sequencing experts scheduled to appear today, the judicial inquiry into Melbourne’s botched hotel quarantine disaster was conveniently delayed by six weeks: The inquiry into what went wrong in Victoria’s hotel quarantine program has been delayed due to the state’s coronavirus crisis. The board of inquiry, headed by former Family Court

51

Mortgage collapse points to further property price falls

Yesterday’s mortgage commitment data from the Australian Bureau of Statistics (ABS) continues to point to price falls for Australian property. The next chart plots the annual change in the value of mortgage commitments (excluding refinancings) against CoreLogic’s 5-city dwelling value growth to July: As shown above, mortgage growth has historically been a strong leading indicator

2

Irrelevant S&P dumps Victoria on downgrade watch

Who cares. Deficits are irrelevant… Overview • On Aug. 3, 2020, the State of Victoria declared a “state of disaster” in response to rising cases of COVID-19, triggering additional lockdown measures that we expect to severely hit economic activity. • There is an increasing possibility that we will lower our long-term rating on Victoria within

34

Australian car dealerships face collapse

The Federal Chamber of Automotive Industries (FCAI) yesterday released new car sales for the month of July, which revealed that sales have collapsed to December 2009 levels following 28 consecutive months of decline: New car sales fell by 12.8% relative to the same month of 2019, with annual sales volumes 22% below their March 2018

6

Links 6 August 2020

Global Macro / Markets / Investing: Gold Hits $2,000 For the First Time In History As Dollar Extends Declines – The Street Richard Branson’s Virgin Atlantic is the 2nd Virgin airline to declare bankruptcy as the pandemic rips apart the industry – Business Insider Stock Market Crash: Is The End Game Here? – Forbes Disney

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Macro Afternoon

by Chris Becker Asian stock markets are quite mixed going into the tail end of the trading week, with all eyes remaining on the big moves in precious metals with gold maintaining and then pushing well above the $2000USD per ounce level with silver again re-engaging its own little bubble, currently zooming past the $26USD