Have a read of this twitter thread regarding the Nickel Futures market:
Thread by @BaldingsWorld on Thread Reader App – Thread Reader App
Bearing in mind the original intent of futures market was so that a commodity producer (farmer/miner) could sell their product in advance (shortsell futures) at a price that was worth their investment in producing that commodity. i.e. a price hedge so they can secure funding and eliminate risk off losses.
We now have a perverse scenario where speculators have caused the futures market to become a risk of bankruptcy via short-squeeze margin calls. The company itself is still profitable and could meet its obligations of providing the commodities at the hedged price, but they are being margin-called in an attempt to bankrupt them and seize all their assets.
The second perverse scenario is the markets are owned by the Chinese who have decided to shut the market down possibly to prevent this miner going bankrupt.
Yes I read the other day that they actually REVERSED trades that had already gone through which is just absolutely fucking wild
also we are going to see the law abandoned when Russian and western governments just seize whatever assets they like
and the end of the dollar as global reserve currency
we are fairly rapidly heading towards collapse now – it’s accelerating at least
it’s just hard to know how it ends (inflation vs deflation , debt jubilee etc) because it’s purely dictated by highly corrupt and competing oligarchs
there is no point using previous rules or reason
However, DLS is back to calling for house price crashes today
https://www.macrobusiness.com.au/2022/03/markets-ready-to-crash-australian-house-prices/
and for that reason, because he is the most important contrarian indicator on the planet, I am betting on debt jubilee and (hyper)inflation
Governments seizing things is the best case for crypto I’ve ever seen.
Don’t know if you’re aware but governments have been seizing crypto left right and centre
So what? Crypto in privately held wallets cannot be touched by anyone except the person who knows the private key. Only the lazy who keep their money in exchange wallets are exposed to that risk.
then what use is it
“However, DLS is back to calling for house price crashes today
https://www.macrobusiness.com.au/2022/03/markets-ready-to-crash-australian-house-prices/
and for that reason, because he is the most important contrarian indicator on the planet, I am betting on debt jubilee and (hyper)inflation”
Fucking lol. What’s Reusa saying? Because he’s been way more right than DLS ever has over at MB.
https://www.macrobusiness.com.au/2020/03/when-to-buy-the-crash/
Aged like milk lol
The real worry is people are still taking DLS advice and think a housing crash will come soon.
I don’t interpret his article as house prices going to crash. I interpret it as “If money markets are right then house prices will crash, therefore money markets are wrong”.
Regarding the Covid stock market crash. It is a mug’s game. There is no way anyone can perfectly predict the bottom, or the brute force stimulus that was going to occur. If I was going to be critical of DLS is that he wrote a book on the GFC and couldn’t remember what a mug like me remembered about the GFC and central banks supporting the AUD:
Australian dollar takes out 55s… – MacroBusiness
I got my mum out of a long term USD position within 2 cents of the low that day. “Go to the bank and convert your USD balances – now!” That panic was one of the biggest gifts in the past 5 years.
Always buy the end of the world!!!
Have money markets ever been wrong ?
Yes. They have been overstating the Aus rates ever since the GFC. Even after the GFC when the cash rate rose back up to 4.75%, the ten year bond was predicting an average rate of over 5% for the next decade which is more than double the average rate that eventuated.
Hang on
some if that is the premium payable for duration / opportunity cost
the normal upwards yield curve
I doubt the premium is anywhere near the 2.5-3% difference between expectation and reality. The money markets have got it wildly wrong for more 15 years.
Back to the point MB has been trying to make. The Cash rate was 0.75% pre-covid. All the rate cuts + bond purchases since then have seen house prices rise ~25%. Do you think RBA will be able to stop their bond purchases and take us to a cash rate of over 2% predicted by the money markets, without crashing the housing market?
It is not going to happen unless we get some serious wage inflation.
I think the bond market is usually right
Hence why yield curve inversion reliably predicts recession historically
not just good at assessing the economic situation, but also the political situation
id trust the bond market over DLS or my/your instinct I guess ?
the premium doesn’t reflect “reality” – it’s not JUST a guess about where rates will be
it reflects the duration cost which is affected by future growth expectations but also current circumstances
i think high yields are pricing in the current risk of inflation which currently include war , deglobalisation, shortages, profligate government spending, labour shortages, political turmoil / labour organising etc
house prices are important , but they don’t run the world or Putin would never have invaded Ukraine (must be killing property prices in Kharkiv right now )
A lot of what you are saying feeds back into average rate expectations. It does not change the fact it is an average rate expectation.
An inverted yield curve is also that. The average rate expectation over 2 years being higher than the average rate expectation over 10 years implying the central banks will overshoot their rate rises over the short term.
Credit it where it is due. DLS has been right over the last decade regarding rising bond prices. He was right when the money market was wrong. It does not mean he will be right going forward. It also does not mean the money market is infallible.
It’s not a reflection of where the market thinks rates will be
it’s a reflection of the compensation demanded for duration / having money tied up
if there are better IMMEDIATE opportunities for return on investment elsewhere , then long rates will rise
Having said all this , don’t know that DLS has really been “right”
he’s a perma bear – a broken clock is correct twice a day
he should have sold bonds in early 2020 but I bet he didn’t
they’ve been slaughtered since then
it’s always a good time to hold bonds for him
https://www.smh.com.au/politics/federal/higher-interest-rates-priced-in-by-the-market-treasurer-s-warning-to-mortgage-holders-20220310-p5a3ld.html
Jewdenberg getting the peasants ready for it too
very weird that he would take the blame preemptively, since it won’t happen until after the election ?
why not just say rates are always lower under the LNP, wait until you lose, then blame labor when they go up ?
Lots of weird behaviour by the libs leading up to this election , like they want to lose
In an exclusive interview with The Sunday Age and The Sun-Herald, the Treasurer put Australians on notice that “the market has been pricing in – it’s a statement of fact – higher interest rates in due course”.
But with financial markets in Australia pricing in a full percentage point increase in interest rates by year’s end, and another 1 percentage point in 2023, Mr Frydenberg conceded the cost of a mortgage was likely to rise – even as wage growth remained relatively flat. However, he moved to reassure families.
Frydenburg must have also been a former comedian. Ignoring the Royal Commission recommendations, introducing the 5% deposit scheme, and then bitch slapping ASIC with “the will of parliament” for attempting to challenge irresponsible lending.
https://m.youtube.com/watch?v=PwdjmL5Uu3I
think you will enjoy this video
two fairly credible internet experts with differing views on the bond markets
Thanks for the link. I knew those two were due to debate and couldn’t find the link.
It seems Joseph has backed away from his prior claims that QE is inflationary / money printing
So a crash in 18 months then?
Western governments have been seizing assets for a long while now. Only before it was reserved for the evil little people – Libya, Iraq, NK, and lately, Afghanistan. Now with Russia in the cross-hairs, which has the largest number of sanctions slapped on it, compared to all other countries, the sanctions are starting to bite….. in the US and especially in EU.
https://www.theguardian.com/world/2022/mar/10/russia-plans-to-seize-assets-of-western-companies-exiting-country
I am fairly certain that if this was happen (and it likely will), there will be a loud protest from the collective west about this unfair action. So, Russia gains real assets on the ground, and will be able to operate, people in the West, from billionaire owners to your run-of-the-mill investors, will lose. This is madness.
And let’s not even talk about energy.
DLS has sort of answered my question with that article. I asked him if he believed we had a subprime scenario with lenders falsifying repayment calculations and pretending the honeymoon rates would last for the life of the loan. He seems to be implying yes.
I personally don’t believe lenders would risk blatant fraud. A 2% saving in interest over 3 years should equate to around 6% saving which would ultimately push up the house price by around that amount. I doubt prices would fall much further than that amount with interest rates resetting.
If on the other hand the money markets were right and RBA raised rates by 2% over the next two years… but Dave and Leith have repeatedly stated the money markets have got it wrong as there is no way RBA would crash the housing market by raising rates by 2%. This week Leith mentioned 1% max before RBA had to reverse some of it.
Edit: just re-reading Dave’s article. I don’t even think he is implying subprime. Just saying the some of all would crash house prices. So he is being a little sensationalist and subtly suggesting the money markets have got it wrong.
EmBee has been talking up the increase in fixed rate and seem to ignore the decrease in variable rates. A good LVR and you can get a rate in the low 2%. Haven’t banks also been dropping investor rates?
Phil Lowe will not raise rates, he even said he wants to see what happens with the supply side. Inflation is more of a threat than rate rises. Inflation will increase expenditure and somewhat reduce some borrowing capacity.
good thinkin’
That truly is newsworthy. I saw a very odd looking nickel price yesterday but was busy with something else, I assumed it was an error. Thanks for investigating and sharing.
If Scomo is smart, he will kill immigration now.
The higher commodity prices + tax revenues with minimal immigration will deliver a massive cash boost to everyone in Oz.
Leading to higher bank reserves which the big 4 will immediately offer as lower rates to home buyers.
All of which means a sweet year in ezfka with big dividends and higher house prices. If AUD falls a bit wages will definitely rise too.
Calling it, Scomo will win the next election if he slow walks immigration.
But he is not smart …. so open teh gates and lower the rate is the only play in his masters books
LoL!
If Scomo is smart? But…but…he’s not. Everybody knows that.
He got plenty of that rat cunning though, never know, could happen.
Yeah probably won’t. But I’m hoping his inner scummo will shine through.
baldrick level rat cunning ..the reverse midas.
https://www.understandingwar.org/backgrounder/russian-offensive-campaign-assessment-march-9
Fog of war.
https://thesaker.is/ukrainian-front-strategy-without-tactics-must-see/
Good read