This Flu Season Begins the Risk of a Pandemic 2018-2019

A possible new pandemic is forming from a deadly strain of flu emerging from Australia and will be headed to the UK as the normal flow of travels would take it. Britain will perhaps be hit with the worst flu season in 50 years. Already, there are about 170,000 cases of flu reported in Australia which is more than double this season than usual.
The strain of flu is called H3N2, and the number of flu deaths in Australia over winter has not yet been released, but it’s thought to be the worst in many years. The last major flu epidemic was in the 1968 pandemic which began in Hong Kong killing more than a million people worldwide. Flu pandemics have been linked to fluctuations in climate, and new research connects the world’s four most recent pandemics to the cyclical cooling of the Pacific Ocean near the equator.

This post was published at Armstrong Economics on Dec 29, 2017.

Asian Stocks Slide On iPhone X Demand Fears; US Futures Flat In Thin Holiday Trading

For the second day in a row, most Asian markets – at least the ones that are open – were dragged lower by tech stocks and Apple suppliers, with the MSCI Asia Pacific Index down 0.2% led by Samsung Electronics and Taiwan Semiconductor Manufacturing in response to the previously noted report that Apple will slash Q1 sales forecasts for iPhone X sales by 40% from 50 million to 30 million. Most Asian equity benchmarks fell except those in China. European stocks were mixed in a quiet session while U. S. equity futures are little changed as markets reopen after the Christmas holiday.
Away from Asia, stocks remained closed across the large European markets, as well as in parts of Asia including Australia, Hong Kong, Indonesia, the Philippines and New Zealand. Japanese benchmarks slipped from the highest levels since the early 1990s, helping to pull the MSCI Asia Pacific Index down, while shares in Dubai, Qatar and Russia were among the big losers in emerging markets. S&P 500 futures were flat as those for the Dow Jones slipped. The euro edged lower with the pound – although there were no reverberations from Monday’s odd EURUSD flash crash which was only observed on Bloomberg feeds, while Reuters ignored it even if the FT did note it…

This post was published at Zero Hedge on Dec 26, 2017.

2018’s Number One Risk

To find the market’s biggest weakness, a good place to look is at the most crowded movie theater with the smallest exit.
European bonds.
***
You’ve probably seen the charts of European high yield floating around, so I won’t reproduce it here. Yields in the low 2s for BB credits. There was also a European corporate issuer that managed to issue BBB bonds at negative yields a few weeks ago. I think that might have been the top.
No shortage of stupid things these days:
Bitcoin Litecoin Pizzacoin Canadian real estate Swedish real estate Australian real estate FANG Venture capital But European bonds are potentially the stupidest. Maybe even stupider than bitcoin!
Although there is nothing stupid about it – the ECB has been buying every bond in sight, and there’s lots of money to be made frontrunning central banks.

This post was published at Mauldin Economics on DECEMBER 21, 2017.

Freedom of Religion under Attack?

The attack upon religion in Australia is not what one would call a direct assault. It is also not unique to just Australia. This is simply the way prosecutors expand the envelope of power. They look at a single issue and seek to address that issue alone. They rarely look at the implications beyond their immediate objective.
Take FACTA in the USA. The objective is to catch people avoiding taxes by putting their profits offshore. They begin with that assumption and ignore the fact that NOT everyone doing business offshore is to hide taxes. They then obstruct businesses from expanding globally. In my own case, despite the fact that we do business around the globe, because I am an American, I cannot open an account anywhere outside the USA because nobody wants to deal with the FACTA reporting back to the USA. My only solution is to go public since an American citizen can no longer own and operate a multinational business privately. Here we have a law designed to get tax evaders, but it blocks the legitimate business from operating. The only exception is the multinational corporation.

This post was published at Armstrong Economics on Dec 19, 2017.

Freedom of Religion under Attack by Australian Gov’t

OK, believe it or not, the Australian government wants sweeping changes in the Catholic Church and other organizations, including making celibacy voluntary for clergy, but the real kicker is that they want priests to report people who confess sins in church. Politicians no longer have respect for religion or the beliefs of people. To them, there is no God, only their power. This is getting really insane.

This post was published at Armstrong Economics on Dec 17, 2017.

Swedish Housing Bubble Pops As Stockholm Apartment Prices Crash Most Since June 2009

Even though Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest with prices up roughly 6-fold since starting its meteoric rise in 1995.
***
Of course, as we noted last month when the SEB’s housing price indicator, which measures the difference between those who believe prices will rise and those who expect them to drop, took its first substantial tumble, the era of the steadily inflating housing bubble in Stockholm may finally have come to an end.

This post was published at Zero Hedge on Dec 15, 2017.

Sweden: More Signs The World’s Biggest Housing Bubble Is Cracking

We like to highlight that although Sweden’s property bubble is not the longest running (that accolade goes to Australia at 55 years), it is probably the world’s biggest, even though it gets relatively little coverage in the mainstream financial media.

A month ago, we noted that SEB’s housing price indicator suffered its second biggest ever drop, falling by 39 points, only lagging a steeper fall from ten years earlier. This month the indicator, which shows the balance between households forecasting rising or falling prices, fell into negative territory, dropping to -5 from +11 in November. Households expecting prices to rise has almost halved from 66% In October, to 43% in November and 36% this month. The percentage of households expecting prices to fall has risen from 16% in October, to 32% in November and 41% this month.

This post was published at Zero Hedge on Dec 12, 2017.

Key Events In The Coming Week: Jobs, Brexit, PMI, IP And More

The first full week of December is shaping up as rather busy, with such Tier 1 data in the US as the payrolls report, durable goods orders and trade balance. We also get UK PMI data and GDP, retail sales across the Euro Area, as well as central bank meetings including Australia RBA and BoC monetary policy meeting.
Key events per RanSquawk
Monday: UK PM May To Meet EU’s Juncker & Barnier Tuesday: UK Services PMI (Nov), RBA MonPol Decision Wednesday: BoC MonPol Decision, Australian GDP (Q3) Friday: US Payrolls Report (Nov), Japan GDP (Q3, 2nd) The week’s main event takes place on Friday with the release of November’s US labour market report. Consensus looks for the headline nonfarm payrolls to show an addition of 188K jobs, slowing from October’s 261K. Average hourly earnings growth is expected to slow to 0.3% M/M from 0.5%, while the unemployment rate and average hours worked are expected to hold steady at 4.1% and 34.4 respectively. Hurricane induced volatility should be absent from the November release, and consensus points to a headline print much more in-keeping with trend rate.
Other key data releases next week include the remaining October services and composite PMIs on Tuesday in Asia, Europe and the US, ISM non-manufacturing in the US on Tuesday, ADP employment report on Wednesday and China trade data on Friday.
Focus will also fall on Wednesday’s Bank of Canada (BoC) interest rate decision, with the majority looking for the Bank to leave its key interest rate unchanged at 1.00%, although 3 of the 31 surveyed by Reuters are looking for a 25bps hike. Following the BoC’s back-to-back rate hikes in Q3, interest rate markets were pricing in a 40-50% chance of a hike at the upcoming decision, that has now pared back to 25% as the BoC has sounded more cautious in recent addresses, highlighting that it expected the economy to slow (GDP growth moderated to 1.7% in Q3 on a Q/Q annualised basis, from 4.3% in Q2) while stressing that it remains data dependant. RBC highlights that ‘the BoC has been focused on the consumer’s reaction to the earlier hikes and is content to wait-and-see for the moment. Wage growth – another key metric for the central bank – has improved in recent employment reports (reaching the highest level of growth since April 2016 in November’s report). Despite its softer tone, the BoC continues to stress that ‘less monetary stimulus will likely be required over time’ and as a result the statement will be scoured for any changes in tone. At the time of writing, markets are pricing a 57.2% chance of a 25bps hike in January, with such a move 91.0% priced by the end of March.

This post was published at Zero Hedge on Dec 4, 2017.

Loonie Soars After Canadian Data Crushes Expectations, 14 Sigma Jobs Beat

The loonie just exploded by 100 pips following a barrage of Canadian eco data, including GDP and employment, both of which crushed expectations.
September GDP rose 0.2% ,/ vs exp. 0.1%, and up from -0.1% in August, which means Q3 annualized GDP will be 1.7%.
But it was the jobs data which was particularly noteworthy; in fact it was borderline “Australian” in how ridiculous the print was: the employment rate in November was 79.5k, up from 35.3k last month, and 8 times higher than the consensus estimate. Not only was this the highest print since 2012, it was also a 14 sigma beat!

This post was published at Zero Hedge on Dec 1, 2017.

Australian Banks – First The Housing Bubble Bursts, Now A Public Inquiry

We keep returning to the subject of Australia and the growing signs that its bubble economy is bursting. Earlier this month, we discussed how the world’s longest-running bull market – 55 years – in Australian house prices appears to have come to an end. We followed this up with ‘Why Australia’s Economy Is A House Of Cards’ in which Matt Barrie and Craig Tindale described how Australia’s three decades long economic expansion had mostly been the result of ‘dumb luck’.
As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Last week, in “The Party’s Over For Australia’s $5.6 Trillion Housing Market Frenzy”, we highlighted some scary metrics for Australia’s housing bubble – notably how the value of Australian housing is more than four times gross domestic product – higher than other nations with housing bubbles, e.g. New Zealand, the UK and Canada. Two days ago, we noted the number of Australians optimistic about the year ahead had plunged to a record low.

This post was published at Zero Hedge on Nov 30, 2017.

Breslow: “The Answer To This Question Will Drive Just About Everything”

Having passed the first hurdle this morning (PCE did not drop further), The Fed’s December hike is now locked and loaded, but, as former fund manager Richard Breslow notes, at the end of the day, the real elephant in the room is if, when and how fast the big central banks shift toward policy normalization. Everything else is derivative. Get this one right and quibbling over some sector rotation or the relative prospects of the Australian versus New Zealand dollars pale in comparison.
The answer to this question will drive just about every other market.
Via Bloomberg,
It’s an interesting issue to contemplate as we wind down a year when sovereign yields, with the exception of China, have been moribund, at best.
All eyes have correctly been on the yield curves but it could very well be that the focus needs to change.

This post was published at Zero Hedge on Nov 30, 2017.

As Australia’s Housing Bubble Bursts, Optimism For The Year Ahead Crashes To Record Low

Zero Hedge readers might have noted our increasingly bearish tone on all things Australian – economic that is, since the cricket team just whipped the English in the first test match in Brisbane. The focal point of our concern is the housing market and, earlier this month, we discussed how the world’s longest-running bull market – 55 years – in Australian house prices appears to have come to an end. We followed this up with ‘Why Australia’s Economy Is A House Of Cards’ in which Matt Barrie and Craig Tindale described how Australia’s three decades long economic expansion had mostly been the result of ‘dumb luck’.
As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
Last week, in “The Party’s Over For Australia’s $5.6 Trillion Housing Market Frenzy”, we highlighted some scary metrics for Australia’s housing bubble cited by Bloomberg. In particular, we showed how the value of Australian housing is more than four times gross domestic product. This is higher than other western nations, like New Zealand, Canada and the UK, which are experiencing their own housing bubbles. The ratio of house values to GDP in the US seems positively tame in comparison.

This post was published at Zero Hedge on Nov 28, 2017.