End of Australian Democracy

Posted: August 20, 2018 in Uncategorized

Democracy is when a leader of a nation is elected by the people. Australia does not have an elected Prime Minister serving its full term since…John Howard (2007).

All the following PMs were “disposed of” by their own party peers. A bit like in a kingdom, when there is regicide. Well, at least for now we are more civilized about it.

From the latest news stream it seems that Dutton, Homeland security minister, is going to challenge PM Turnbull in the next two weeks  and Rupert Murdoch, the kingmaker,  arrived in Sydney the 10th August.

So PMcide is going to be committed soon.

Dutton, Minister for Home Affairs, is unfortunately famous for being racist and using wrong statistics to strike fear and push for a back to White Australia policy.

I am by no mean a libertarian – yes there is an issue with African gang – but they constitute only 27% of crimes – very far away from being a crime wave of African origin.

There is a violence issue, but it is more related to socio-economic issue (the majority of crimes are committed -50% of the State prison population comes from 6% of the state postcode (and 25% from 2% of postcode).

We have an amazing police force that catches most of the criminal and an appalling court system that releases most of them.

But if Dutton becomes Prime Minister we will have to stop teasing Trump as he is even worse.

Or maybe he is the Australian we need to have to wake up as citizens and really push forward some politicians that really care about Australians (wildfires, drought stricken farmers, mortgage stress etc) .

 

Advance Australia fair.

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Yesterday was a telling day. The violence of the move (in relation to the crisis and data) has been stunning.

Telstra +6%, Iluka Resources close to -8%, Walmart +9% etc etc.

We are in a low volume period (between 15 August and 3 September, US Labor Day) and the machines are reigning supreme.

All commodities and related shares were under full pressure. Algos trading was around 85% of all trading
Why do I accuse the machines? Apart some data I am receiving – there are large discrepancy in the US/UK ADRs behaviors that are a tell tale – as the machines are working more on the US/UK markets.
BHP US  Australia -2.55% BHP London -5.22% and BHP US -4.82% (the difference is just the Pound vs USD)
Even more telling and with a real source is TENCENT
Tencent USA -10.22%
Tencent HK -3%
The only difference is that, as the China (and HK) market are down almost 30% – the Bank of China last week increased the deposits for short position in China related positions to 20% – so any machine attack in China has become 20% more expensive.
The Reserve banks should foollow China and regulate more the algos – or they will become the culprits of the GFC 2.
And as you know from the movies they will take no prisoners.

Gold and China

Posted: August 7, 2018 in Uncategorized

Gold has crashed badly in these last months. And it is still full on shorted.

Very few people noted the correlation between Chinese Yuan and Gold.

 

This is because the Yuan is pegged to an SDR Basket that contains gold.

China let the Yuan devalue as part of the trade war – but now is reaching the hard limit imposed after the breach in reserves in January 2016.

This new pattern started today as China increased to 20% the obligatory reserves for Yuan denominated derivative trading. So the pattern could soon invert.Capture Yuan Gold

 

ScalaPrivateW_NEWSLETTER -July 2018

Capture tariff

I decided for a easier way to publish my newsletters directly from my blog,

ScalaPrivateW_NEWSLETTER -June 2018

Gold weakness

Posted: July 23, 2018 in Uncategorized

Gold has been one of the worst performing sector in July what happened?

 

There are several factors at play

  • All the metal conglomerate is under pressure from the potential trade war spill over.
  • June /July are typically weak month for gold and precious metals due to the North Hemisphere summer holidays
  • US Dollar strength (now in doubt as President Trump is looking into currency manipulation – specially the Yuan dropped like a stone).
  • Temporary subdued perceived geopolitical crisis ( I say subdued as satellites show an expansion of North Korea missile program structures and the new Iranian sanctions are due on 4th November).
  • The market has been so good that gold, the classic counter trade, fell. Be wary, crowded trades never worked the last two years.

So – weakness, but not uncommon. Interestingly gold miners are at one of the cheapest level in respect to gold price.

A similar theory applies to all precious metal sector.

Trade wars

Posted: July 12, 2018 in Uncategorized

Ttade wars are ratcheting up and, at least until the November Congress election, they will keep on being with us.

I explore more in detail in my newsletter, but it is a multi_faceted issue.

1 Part show for the mid term election

2. Part real – China 2025 is a direct attack to the US supremacy

3. Overdue as China is attacking the world since 1995.

The issue is that there is no negotiation as until now everybody thought is was a fake trade war.

About the market reaction – it is both bad and good. Why also good? It is one of the few thing that can stop the Fed rising interest. Interest rate, at the end, are the only real killer of bull markets.

On the side, and not talked about, the US Congress is trying its best to take away the tariff power from the President. Not an easy task with ann election pending.