Just months after unofficially entering the currency wars, China has torn another page from the 'causes of the great depression' playbook. As Reuters reports, for the first time in almost a decade, China - the world's top coal importer - will levy import tariffs on the commodity crushing Australian (the biggest shipper of coal to China) dreams of a commodity-based renaissance. "China is clearly moving to protect its local miners," explained one analyst, which is key since so much of the credit market is predicated on these mal-invested entities - as the China National Coal Association, urged Beijing to act swiftly to support the besieged sector, where 70% of the miners were making losses and more than half owed wages. Crucially, Indonesia - the second-biggest shipper of the fuel to China - will be exempt from the tariffs, which one trader exclaimed, means "It is game over for Australian coal."
Because humor like this obviously costs money. As always, from the one and only Dennis Gartman: "Down 35 points one day; up 35 points the next! The Bulls were taken out and shot Tuesday; the Bears were shot yesterday and all we know for certain is that the upward sloping trend still holds and that weakness is to be bought with the Fed still behind the market."
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- Apple plays defense on iPhone 6 bending, software concerns (Reuters)
- U.S. to Shield Military From High-Interest Debt (WSJ)
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- Yen Weakens on Pension Fund Reform; Aussie Drops to 7-Month Low (BBG)
- Secretive Russian oil giant has no fear of sanctions (Reuters)
- Ride-Sharing Services Face Legal Threat From San Francisco, Los Angeles (WSJ)
- Putin’s Sell-Treasuries-for-BRICS Bonds Plan Has Limits (BBG)
The world may be a big conspiracy and civilization as we know it may end soon, but if you care what the dollar may do next week, take a look at this post.
While we have grown used to eye-poppingly 'odd' data from China (and increasingly the US), last night's surge in Aussie employment is among the greatest statistical pieces of muppetry we have ever seen. As Bloomberg reports, Australian employers added a record number of jobs in August - great news, right? Confirming CBA's decision to hold rates (not cut) and instantly AUD exploded higher. However, since then AUD has collapsed back to fresh 6-month lows plunging over 300 pips in 4 days. The reason - "the market's skeptical," says one trader, as Aussie's miracle jobs recovery was thanks to a 121,000 surge in part-time employees (equivalent to 1.3 million added in one month in the US).
Quick update, and outline of reasons to suspect anxiety over Scottish independence has peaked.
Overview of the technical outlook for the major currencies, bonds, Treasuries, stocks, CRB and oil.
Overview of the technical conditions of the major markets.
But... China's manufacturing PMIs said everything's great in the mal-investment capital of the world? It appears for all the record credit creation in China, none of it is spilling over into demand from its closest trading partners. Australian unemployment spiked to 6.4% - its highest since 2002, missing the 6.0% expectation by the greatest margin on record. No "qualified' economists believed the print would be above 6.1%. AUDJPY is getting battered which implicitly means S&P futures have legged lower...
Near-term outlook for the dollar, without resorting to inflammatory and unproven claims.
Overview of the price action in the forward exchange market and a look ahead.
All around Asia, PMIs are tumbling... except for China's government-sponsored Manufacturing PMI. This week saw Aussie Services PMI (linked significantly to China) tumbled to 2014 lows, Japan's PMI drop, and China's own Services PMI disappoint and fade to 2-month lows. So where is all this exuberance coming from in China's manufacturing industry (despite a 8-month in a row drop in employment)? We don't know; but the fact that China coal prices just hit a record low hardly supports the smog-choking industry of China being at 7-month highs... Hard data vs soft surveys? You decide.
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- ECB Watchers in the Dark Look to Draghi for Illumination (BBG)
All around Asia, PMIs are tumbling. The last few days saw a number of nations' manufacturing PMIs drop with the notable miraculous surge in China (at 2014 highs). Tonight saw the Services PMI side also tumbling with Australia first (at 2014 lows) and Japan fade back to 49 for its 3rd month in contraction. But (unlike the manufacturing side) China 'official' Services PMI faded from its rebound (55 vs 55.5). The drop in Services PMI makes some sense given the 8-month lows in employment indices within the manufacturing PMIs... But then the baffle 'em with total bullshit brigade arrived as Markit/HSBC unveiled their version of Services PMI which jumped to 53.1 - its biggest MoM on record - makes perfect sense.