Bellwether Transport stock Fedex is headed for another test of primary support at $129/$130 on the monthly chart. Recovery above $145 would offer a target of $170*, but breach of support would warn of a primary down-trend — suggesting a broad economic slow-down. Breach of the (secondary) rising trendline, and support at $120, would strengthen the signal.
* Target calculation: 145 + ( 145 – 120 ) = 170
The S&P 500 continues to threaten a correction. Bearish divergence on 21-day Twiggs Money Flow indicates medium-term selling pressure. Breach of support at 1840 would confirm a correction, while recovery above 1880 would signal an advance to 1950*.
* Target calculation: 1850 + ( 1850 – 1750 ) = 1950
CBOE Volatility Index (VIX) at 15, however, suggests low market risk.
This private submission by Michael Dromgool to Australia’s Housing Affordability Inquiry identifies supply restrictions as the key cause of the current housing affordability crisis:
Traditionally the flexible forces of demand and supply in the property market self-managed the development of land for housing. Development occurred in locations where and when demand was sufficient to warrant it, with a process that was responsive to demand.
…Now fast-forward to the present day. The government has shut off the supply of land on the city fringe to limit the city to its present size, abolishing a free market system in favour of a centrally-directed scheme that severely distorts the property market…..Smart growth is a deliberate policy to make land more expensive, to increase the city’s population density and force more people into apartments, not the detached houses that most people actually prefer to live in….
Economists and politicians in Australia confidently attribute the decline in housing affordability to strong demand driven by economic and population growth, conveniently neglecting the supply side of the equation…..
Many cities in the United States, such as Atlanta, still use responsive planning. In 1981 more people lived in Melbourne than Atlanta and in both cities the median house cost less than three years of median income in that city to purchase. Over 30 years demand from economic and population growth in Atlanta was stronger than Melbourne, it grew much faster and Atlanta’s population was nearly 50% greater than Melbourne’s by 2011 and the median house price there was $129,400, 2.3 times the median income of $55,800. Yet in Melbourne the median house price reached $565,000, nine times the median income of $63,100. The government tries to convince us that houses are expensive due to high demand, yet they are actually cheaper in a city where demand is substantially stronger. The state government of Georgia drew no arbitrary boundary around the city of Atlanta and consequently it expanded outwards onto greenfield land. In Australian cities, homes are expensive because the land is expensive.
Interesting argument against further expansion of NATO on Moon of Alabama:
George Kennan was the U.S. diplomat and Russia specialist who developed the cold war strategy of containment of the Soviet Union, though he later criticized its militaristic implementation. In 1998, when the Senate voted to extend NATO to include Poland, Hungary and the Czech Republic, Kennan was asked to comment. He responded:
“I think it is the beginning of a new cold war,” said Mr. Kennan from his Princeton home. “I think the Russians will gradually react quite adversely and it will affect their policies. I think it is a tragic mistake. There was no reason for this whatsoever.”
…..”It shows so little understanding of Russian history and Soviet history. Of course there is going to be a bad reaction from Russia, and then [the NATO expanders] will say that we always told you that is how the Russians are — but this is just wrong.”
Read a full report of the 1998 interview with George Kennan at NY Times: Foreign Affairs | Thomas L Friedman.
Lorena O’Neil suggests that the number of Russian language speakers will halve from 300 million in 1990 to 150 million by 2025.
….countries that were traditionally bound to Russia by language, culture, energy and ethnicity are starting to gain independence, and relationships with other countries like China are increasing……..[Paul] Goble suggests that Putin will continue to engage in bombast with his neighbors because he’s playing an extremely weak hand that is getting weaker. “In a sense, the thuggishness that Putin is using (on) his neighbors is a product of the weakening of Russia’s cultural influence.”
Read more at Forgetting How to Speak Russian | Fast forward | OZY.
China is dragging the ASX lower despite a resilient US market. Breach of medium-term support at 5340 warns of a correction. Declining 21-day Twiggs Money Flow indicates selling pressure and reversal below zero would strengthen the signal. The primary trend remains upward, however, and only breach of support at 5050 would signal a reversal.
* Target calculation: 5400 + ( 5400 – 5000 ) = 5800
ASX 200 VIX retreated to 13, indicating low risk typical of a bull market.
The Aussie Dollar is also proving resilient, testing resistance at $0.91 and the descending trendline despite weakness on the ASX. Upward breakout would suggest the down-trend is weakening. Recovery of 13-week Twiggs Momentum above zero would go further, signaling a primary up-trend, though only breakout above $0.97 would confirm. Reversal below medium-term support at $0.89 remains more likely, however, and would warn of another decline. Breach of primary support at $0.87 would offer a target of $0.83*.
* Target calculation: 0.87 – ( 0.91 – 0.87 ) = 0.83
China’s Shanghai Composite Index is again testing primary support at 1990/2000. The triangle formation on 21-day Twiggs Money Flow indicates uncertainty. Breach of 1990 would warn of a primary decline to 1850. Respect is less likely, but would suggest a (bear) rally to 2080.
* Target calculation: 2000 – ( 2150 – 2000 ) = 1850
The S&P 500 found support at 1840 and is testing resistance at 1875/1880. Rising 21-day Twiggs Money Flow indicates short-term buying pressure. Breakout above 1880 would signal an advance to 1950*. Reversal below 1840 is less likely, but would warn of a secondary correction.
* Target calculation: 1850 + ( 1850 – 1750 ) = 1950
CBOE Volatility Index (VIX) below 20 continues to indicate low market risk.
….The paper, written by staffers from the RBA’s Economic Analysis Unit says that a temporary 10% depreciation in the real exchange rate for the Aussie dollar can increase growth by between a quarter and a half of a percent over 2-3 years.
Read more at RBA Modelling Shows Precisely How Much The Dollar's Fall Can Affect Australia's Economic Growth | Business Insider.
hat tip to Greg McKenna.
Falling copper prices reflect a weakening Chinese economy. Follow-through below $6600/tonne, after breaching primary support at $6800, signals a primary down-trend.
