Bottom fishing

Delivered on By Justin Pyvis

Good morning! According to ANZ/Roy Morgan, Australian consumer confidence rebounded 1.7% off a post-pandemic low last week, driven by confidence in “financial conditions over the next year” and the “good time to buy a major household item” categories. However, it was the:

“[F]irst increase for over a month since mid-April after four straight weekly declines. Consumer Confidence is now a significant 23.4pts below the same week a year ago, May 22/23, 2021 (114.2) and is now 5.7pts below the 2022 weekly average of 96.5.”

Most of the survey was conducted before the federal election results were known so we’ll have to wait a week for the Albo effect. Somewhat concerning for the RBA will be household inflation expectations for 2024, which “remained elevated at 5.3%”.

Consumer inflation expectations for two years from now are well above the RBA's 2-3% target.
Consumer inflation expectations for two years from now are well above the RBA's 2-3% target. Source

Reading the tea leaves

Daily % change







AU Bond



US Bond









Brent (bbl)



Gold (oz)



Iron ore (t)









Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

The US S&P500 fell -0.81% following a warning from Snap about a deteriorating macro environment (see Food for thought below), dragging fellow tech and social media companies significantly lower (e.g. Meta -7.6%; Alphabet -5.0%).

Also hurting sentiment were sales of new single-family homes in April, which “plummeted” -16.6% from March in “a clear recession warning… as rising mortgage interest rates and skyrocketing house prices took a toll on the market”.

Locally, the ASX200 fell -0.28% with only financials (+0.3%) and real estate (+0.4%) finishing in positive territory. The worst performing sector was tech (-3.0%), which was slammed following news after the closing bell in the US from social media app Snap.

Food for thought

Corporate insiders have stopped flogging as much stock recently. Click the image for a larger version.
Corporate insiders have stopped flogging as much stock recently. Click the image for a larger version. Source

According to Bloomberg, US corporate insiders – executives and officers of listed companies – have been snaffling up shares in their own firms at a rate not seen since March 2020, which turned out to be the bottom of the pandemic bust:

“Corporate insiders, whose purchases correctly signalled the bear-market bottom in 2020, are bottom fishing during the S&P 500’s longest stretch of weekly losses in two decades. They were rewarded Monday, as stocks jumped almost 2% on optimism the US will lift some tariffs on Chinese goods.

More than 1,100 corporate executives and officers have snapped up shares of their own firms in May, poised to exceed the number of sellers for the first month since March 2020 marked the pandemic trough two years ago, according to data compiled by the Washington Service.”

Eyeballing the chart provided above, it appears the rebound has come less from insiders ‘buying the dip’ (green bars) and more from the ongoing slowdown in selling (red bars). Bloomberg offered up its own theories for the jump in the insider buy-sell ratio:

“Many explanations exist for Monday’s bounce, from upbeat guidance from JPMorgan Chase & Co. to charts depicting that shares have fallen too far, too quickly. There is also potential for month-end rebalancing that requires fund managers to buy shares after the selloff to bring their equity-bond allocation to preset levels. Another theory points to last Friday’s options expiration leaving market makers free to unwind short positions previously held to hedge their derivative transactions.

Whatever the reason, the prevailing sentiment appears to be that the worst is not over for stocks with lingering threats from the Fed, snarled supply chains and renewed Covid lockdowns in China. The uncertainty over how these issues will affect corporate activity has led to one of the widest gaps in history among strategists' year-end targets for the S&P 500.”

In other words, there’s enormous uncertainty about where where earnings are headed in the short term, let alone beyond this year. Take social media app Snap, which plunged -43.1% last night after:

“[S]haring that the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month. As a result, while our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time.”

A lot can change in a month, even for insiders! No doubt Elon Musk will be hastening his attempt to pull out of his Twitter takeover deal, which now looks especially awful.

Chewing the fat

Bits and bytes

🍆 So far more than 639,000 voters cast so-called “informal” ballots for the House of Representatives at Saturday’s federal election, either in error or as a protest at the options/compulsory voting.

🕊️ South Australia’s government revoked its state of emergency powers after 793 days, a month earlier than initially flagged.

🗳️ The Liberals' loss of 17 seats at the election means it has its lowest proportion of seats since the party was formed in 1946.

🏭 “Japan’s manufacturing activity expanded at the slowest pace in three months in May, as supply bottlenecks due to parts shortages and China’s COVID-19 lockdowns caused output and new orders growth to slow.”

🥶 China’s Premier Li Keqiang congratulated Albo on winning the election, the first message it has sent after an almost three-year long freeze in relations between the nations.

✋ US Atlanta Federal Reserve Bank President Raphael Bostic said “I think a [rate hike] pause in September might make sense”.

🥝 Kiwi retail sales volumes fell -0.5% in the March quarter from the prior quarter, with the biggest drags being motor vehicle and parts retailing, and hardware, building, and garden supplies, all of which were unusually strong in the prior quarter. The RBNZ meets tomorrow.

🤣 The NSW government will spend over $150k to find out whether people like speed cameras and their enforcement signs.

🤝 Australia will host next year’s Quad with the leaders of the US, India and Japan.

📉 UBS downgraded its forecast for China’s economic growth this year to 3% from 4.2%, citing “lingering restrictions and lack of clarity on an exit strategy from the current Covid policy”. JP Morgan also downgraded its forecast from 4.3% to 3.7%.

💩 Tether, the world’s largest stablecoin that claims to be fully backed with reserves but is anything but transparent, had more than $US10 billion withdrawn from it (-13%) over the past two weeks.

⛓️ “Hacked Xinjiang police documents reveal thousands of photos of detainees and detail of life inside the camps, including a police shoot to kill policy for those trying to escape”