Today we look at what the RBA says about recession risks, examine the US Bond market ahead of the Federal Reserve decision on rates tomorrow, the start of Bank of England QT and its implications, and the latest data from New Zealand which underscores the expectation that even higher interest rates are to be expected. All up, inflation is created a wide range of casualties!
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Today’s post is brought to you by Ribbon Property Consultants.
The Superannuation system is not fit for purpose, as many are finding out as balances decline, while fees do not but forced contributions increase. So today we look at data provided by APRA on fund performance (down more than 4% in the quarter to June 2022, and further now). And we feature an important contribution from Senator Gerard Rennick who addressed The Senate last week on this important issue.
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On Friday there was a robust, broad-based rally across Wall Street as markets looked over more encouraging economic data and a sunnier earnings outlook. This despite the upcoming Federal Reserve policy meeting next week. The FOMC decision is widely expecting a unanimous vote for at least one last major rate increase, though with the Fed’s preferred price measure still showing inflation is running hot, that might make it harder for them to set up a possible downshift in its rate-hike pace for the December meeting.
That said, despite data on Thursday showed a strong rebound in U.S. gross domestic product (GDP) in the third quarter, demonstrating resilience in the world’s largest economy and oil consumer and an acceleration with inflation, strong consumer spending data, and a robust labor market, much of Wall Street is growing confident that the Fed will pause tightening once they take the funds rate to 4.50-4.75% next quarter to the point where Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed’s Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December.
In addition to the FOMC decision, traders will also closely monitor the nonfarm payroll report. The strong labor market is still expected to show job growth with 200,000 jobs created in October, down from the 263,000 created in the prior month. The unemployment rate is expected to tick higher and wage gains are expected to slow.
So all major U.S. indexes ended the session up about 2.5% or more, with the S&P and the NASDAQ notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May. As a result, the bulls were back, even if largely driven by hopium (remembering the bulk of economists are still seeing a US recession likely next year!)
“This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended,” said Ryan Detrick, chief market strategist at Carson Group. “Big monthly moves historically happen at the end of bear markets.” “This is the second Friday in a row we’ve seen aggressive buying suggesting investors are growing more comfortable holding over the weekend,” Detrick added.
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The news continues to confuse, as Wall Street contended with another volatile session. Investors mulled the Federal Reserve’s path of interest-rate hikes while assessing mixed economic data and a slew of earnings reports, whilst the ECB doubled official deposit rate, and Credit Suisse revealed their plans to revamp their business.
At the end of the day, the Dow closed higher on Thursday, as a rally in Caterpillar and Boeing cushioned the rout in tech after META delivered disappointing quarterly results. The Dow Jones Industrial Average gained 0.61%, the NASDAQ was down 1.6% and the S&P 500 fell 0.55%. The S&P 500 closed lower, after swinging between gains and losses for most of the session.
The big news was Meta Platforms which fell nearly 25% after reporting third-quarter results that missed on the bottom line and were an “absolute train wreck,” according to Wedbush.
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Today’s post is brought to you by Ribbon Property Consultants.
The Bank of Canada lifted the cash rate by less than expected – and people are now redefining “a pivot”. But what does this mean for inflation and future rates, and broader economies. We also look at the market movements.
Go to the Walk The World Universe at https://walktheworld.com.au/
News flash: Liberal Senator Andrew Bragg has given notice of a motion for a major inquiry into ASIC, which will be voted on tomorrow (Thursday). Labor currently opposes the inquiry, and the Greens haven’t taken a position yet.
Urgent: Call – today – the ALP and Greens Senators on the Economics References Committee to tell them they must support an inquiry. See their contact details below.
Whatever Senator Bragg’s motives, a major inquiry into ASIC is VERY important, as this will be the first specific, detailed, inquiry into ASIC since the 2018 Banking Royal Commission laid bare its many failures. And the Adams Report into ASIC’s very low rate of investigations – just 0.74% of all complaints – shows that it’s performance hasn’t improved.
An example of ASIC’s failure is Sterling First, which has left the lives of the elderly tenants ruined.
Below is the text of Senator Bragg’s motion:
Chair of the Economics References Committee (Senator Bragg): To move—
That the following matter be referred to the Economics References Committee for inquiry and report by the last sitting day in June 2024: (This will be a long, detailed inquiry.)
The capacity and capability of the Australian Securities and Investments Commission to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct, with particular reference to: (a) the potential for dispute resolution and compensation schemes to distort efficient market outcomes and regulatory action; (b) the balance in policy settings that deliver an efficient market but also effectively deter poor behaviour; (c) whether ASIC is meeting the expectations of government, business and the community with respect to regulatory action and enforcement; (d) the range and use of various regulatory tools and their effectiveness in contributing to good market outcomes; (e) the offences from which penalties can be considered and the nature of liability in these offences; (f) the resourcing allocated to ensure investigations and enforcement action progresses in a timely manner; (g) opportunities to reduce duplicative regulation; and (h) any other related matters.
The Senators to call are:
Senator Nick McKim Greens: 02 6277 3601 senator.mckim@aph.gov.au
Senator David Shoebridge Greens: 02 6277 3169 senator.shoebridge@aph.gov.au
Senator Jess Walsh ALP: 02 6277 3744 senator.walsh@aph.gov.au
Senator Jana Stewart ALP: 02 6277 3004 senator.stewart@aph.gov.au
In the past week, Adams has published a new 25-page supplementary report examining ASIC’s FY 21-22 performance. Yesterday, this was sent to over 30 federal parliamentarians for their review.
ASIC’s FY 21-22 performance data is the worse in 11 years. The new supplementary report demonstrates the importance of why a stand-alone parliamentary inquiry is required.
There are major problems at ASIC and stakeholders across the country need to have their voices heard be being able to put their case forward to Parliament. The normal oversight hearings only allow ASIC to provide a one-sided distorted picture.
Adams will be going to Federal Parliament tomorrow to do the rounds and find what the sentiment is. It is imperative that the audience and the community at large become aware of what is happening with Australia’s police force and ensure that Parliament is aware of your stories.
We need to give Federal Parliament a push in order to get an inquiry up and going.
Go to the Walk The World Universe at https://walktheworld.com.au/
