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Macro Afternoon

The bounce stumbled overnight but has continued here in Asia as the news of the Federal Reserve’s surprise rate cut in the wake of the economic impact of the coronavirus has been absorbed without the fear on Wall Street. Further, a lead by VP Joe Biden in Super Tuesday has also assailed the Streets fear

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Coronavirus: It is time to look at the data differently

About a month ago, I posted here about how to look at coronavirus statistics. At the time, it was all about early warning signs, ignoring China data and focussing on the rest of the world. That analysis worked well for highlighting the problem early and changing investment strategy in front of the herd.  But that

7

Junk credit monstered

Via The Australian: Australian fund manager Perpetual has sought to sooth investor nerves after its $500 million listed corporate debt trust was hit by an 8 per cent share sell-off amid a blow-out on junk bond markets. Kristy Bradley, a client manager at Perpetual Investment Management, on Wednesday told shareholders in the company’s Credit Income

18

Foxtel is slowly dying

Foxtel CEO, Patrick Delany, has attempted to put a positive spin on the loss of subscribers from its basic packages, telling a Future of TV Advertising conference in Sydney that these are “low-value” customers the company didn’t want anyway: Foxtel’s churn is coming from low-value customers the company “shouldn’t have chased” because they were paying

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Virus panic strips shop shelves bare

Panic buying is gripping the nation as shoppers stock up on staples like toilet paper, tissues, rice, flour, canned goods, bottled water, and hand sanitiser. Photos floating around the web illustrate the situation. Below is a sample. Here’s shoppers at Costco and Woolworths stocking up on toilet paper: Here’s photos of empty supermarket shelves: Meanwhile,

22

Australian tourism faces “ruin”

Via The Guardian: Australian tourism bosses have warned that hotels could be forced out of business if the coronavirus outbreak continues to severely restrict visitor numbers. Hotels in Cairns and the Gold Coast – both destinations supported by large numbers of visitors from China, South Korea and Japan – are advertising rooms at half the normal tariff this week.

3

Caixin China services PMI halves

Via Caixin: February PMI data signalled the first reduction in business activity across China’s service sector on record due to restrictions implemented to contain the recent coronavirus outbreak. Firms across all sectors reported on the damaging effect that the virus was having on the economy via company closures and travel restrictions, with total new orders

4

GDP in Detail: Calm before the storm

The Australian Bureau of Statistics (ABS) today released the national accounts for the December quarter, which registered soft 0.5% growth in real GDP over the quarter and just 2.2% growth over the year. On a per capita basis, real GDP rose by 0.2% over the quarter and by 0.7% over the year. According to the

23

What has the Fed done?

Via Damien Boey at Credit Suisse: Central bankers seem quite averse to cycles and volatility. By corollary, they seem extremely keen to bail out passive investors. But why? Overnight, the Fed cut rates by 50bps, and investors responded unkindly. Equities sold off aggressively, and volatility (VIX) rose to 36.8% from 33.4%. The 10-year bond yield

15

The virus is about to erupt in the US

The US now has 108 reported cases and nine reported deaths. The latter suggests the fomer is out by a factor of ten. Check this CNBC video out to discover why: COVID-19 is in the US and already spreading fast. 1.5m new test kits are on their way and numbers will rise fast in the

9

Australian GDP still weak

The ABS is out with Dec quarter GDP: GDP summary The Australian economy grew by 0.5% in seasonally adjusted chain volume terms in the December quarter 2019 Through the year GDP was up 2.2% The terms of trade fell 5.3% Household saving ratio decreased to 3.6% Seasonally adjusted, percentage change (a) Sep 18 to Dec

7

ASX bubble continues to pop

The AUD’s RBA stupidity premium is eroding this morning: Bonds are still hot stuff: The XJO bubble is still bursting: Big Iron has a little dead cat bounce going: Big Gas doesn’t: Is there hope yet for Big Gold? Certainly coming out of the crash there will be with US interest rates at zero: Australia’s

4

Victorian Treasury blames oldies and women for low wage growth

Economists at the Victorian Treasury have blamed higher participation from women and older Australians for adding to labour supply and lowering the state’s wage growth: A team of the department’s economists has found that employment in Victoria is back to pre-global financial crisis levels, but wages growth is way below pre-crash levels. But underemployment, driven

7

NSW Government hands reins to High-rise Harry

In 2017, NSW Planning Minister, Rob Stokes, pushed-back against the federal government’s blind march towards a ‘Big Australia’, claiming it is leaving Sydney forever struggling to keep pace: Rob Stokes said the state government was left trying to retrofit the NSW’s infrastructure and services to an expanding population, without a clear, transparent trajectory of NSW’s

19

Melbourne and Sydney for sale listings surge

SQM Research has released its Stock on Market report for February, which revealed that property listings rose by 0.2% over the month but were still down 13.8% year-on-year: However, as shown above, listings in Sydney and Melbourne bounced, jumping by 9.9% and 10.0% respectively in February. According to SQM Managing Director, Louis Christopher: “The month

36

No stimulus is going to work on a dead patient

Having delivered a lousy stall speed economy into an historic shock, Recessionberg is gone. Enter Scotty from Marketing, via Paul Kelly: Scott Morrison has taken to heart the Treasury advice from secretary Steven Kennedy. “We are not interested in solving the wrong problem,” the Prime Minister says. Dead right. He says the global threat is

1

Macro Morning

By Chris Becker  The Fed has surprised and spooked markets by announcing an out of cycle rate cut, sending confidence down alongside bond yields, the USD and Wall Street. Nerves are frayed with US stocks closing nearly 3% lower and sending Asian futures down with them. Gold stacked on big gains however, rallying over $50USD

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Angry China applies virus travel bans

Yeh, via the BBC: Travellers from countries with severe coronavirus outbreaks who arrive in some parts of China will have to undergo a 14-day quarantine, state media say. Travellers from the virus hotspots of South Korea, Japan, Iran and Italy arriving in the capital will have to be isolated, a Beijing official has said. I

11

Steadily China awakes

More green shoots today:   Slowly but surely. Next comes the external shock. Links from Sinocism: 1. The outbreak China’s crisis wanes as epidemic takes hold in US, elsewhere – AP The health ministry announced just 125 new cases detected over the past 24 hours, China’s lowest number since Jan. 20. Another 31 deaths were

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Gerry Harvey warns of deepening retail recession

Executive chairman of Harvey Norman, Gerry Harvey, has warned that Australia’s retail recession will deepen with more store closures on the way: Speaking after the release of Harvey Norman’s latest results, Harvey told news.com.au there are more retail collapses on the way, and they will likely include smaller businesses. “The main ones have probably gone

1

Australian incomes take a terms-of-trade dump

Monday’s December quarter Business Indicators release from the ABS, which feeds into today’s national accounts, showed that the gap between wages & salaries has narrowed against business profits. As shown in the next chart, real business gross operating profits fell in the December quarter, down 1.2% in trend terms: Therefore, while there remains a wide

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Universities brace for $8b international student bust

Last month, the chief executive of the International Education Association of Australia, Phil Honeywood, warned that Australia’s education sector and broader economy faced an $8 billion hit from the loss of Chinese international students: Phil Honeywood said the entry ban on non-citizens who had been in mainland China was a worst-case scenario for universities, English-language