Martin North – Page 120 – Digital Finance Analytics (DFA) Blog

No Mercy for the Debt Sheep sent to the Slaughter

Yesterday, the RBA raised its official cash rate by 0.5% to now sit at 0.85%. This increase was above market expectations and was the RBA has signalled that more rate rises are coming. This is particularly so given that the RBA has signalled that inflation is expected to go higher, not lower in the coming months.

Adams and North in the past two months have been warning that rates will go up, however, the key question is now how much pain is the RBA willing to inflict before it becomes too much and they need to stop. This is the 64 million question which no one is able to forecast – including the RBA board. The RBA Board signalled that the one areas that they remain unsure are households and what impact will rising interest rates have on consumption.

However, one of the most critical points that has emerged from the mainstream media coverage is that many people don’t accept the level of mortgage and rental stress outlined in the DFA dataset set. North suggests that mortgage stress is at 43% which would signify a major economic problem – however, the banks and market economists suggest that Australian households are in a strong position to handle these jobs.

As Adams and North mentioned in the last show – there will be a certain percentage of Australian households who will be sacrificed and they will go to the wall. There will be no compassion to these particular households. Especially those who have purchased in during 2022 and who likely took a variable mortgage – these are the sheep that will go to the slaughter. Go to the Walk The World Universe at https://walktheworld.com.au/

Its Edwin’s Monday Evening Property Rant

In my latest Monday evening chat with our property insider, we look at a weird rental property, examine property price falls in the The Shire, and check the latest stats, as well as the latest from the we-chat sources. ANd will the RBA shift rates up a little or a lot?

https://www.ribbonproperty.com.au/

Go to the Walk The World Universe at https://walktheworld.com.au/

We Need To Talk About Financial Stress…

The latest results from our household surveys and modelling underscores the rising financial pressure on households, thanks to higher costs of living, rent and mortgage repayments. As a result we are passing new records, and this before the RBA hikes again.

So today we walk though the results, map the high stressed areas and look at some specific post code examples.

Go to the Walk The World Universe at https://walktheworld.com.au/

An Opera Of Canaries: Market Update for 4th June 2022

Yes, folks, the collective noun for a collection of Canaries is an Opera, and it seems fitting given recent events, and data. In this weeks market review we start with the US – I am often asked why I focus here, and it is because as the USD is so dominant and the US Markets so big, our markets follow like a playful puppy, we hardly think for ourselves, but ape what the US did. And we will also cover Europe and Asia, where several markets were closed on Friday before coming back to Australia.

US stocks resumed their trend of weekly losses after strong hiring data cleared the way for the Federal Reserve to remain aggressive in its fight against inflation. Treasuries fell and the dollar strengthened against peers.
The Dow Jones Industrial Average slipped 1.7%, or 349 points, the Nasdaq fell 2.5% and the S&P 500 fell 1.7%.

Go to the Walk The World Universe at https://walktheworld.com.au/

The Credit Crunch Is Coming!

Latest data from the RBA showed a surprising fall in new credit for housing. So we look at the numbers and consider the likelihood of a credit squeeze ahead.

https://www.abs.gov.au/statistics/economy/finance/lending-indicators/apr-2022

Go to the Walk The World Universe at https://walktheworld.com.au/

New Zealand’s Emerging Property Disaster!

We look at the latest data from New Zealand, and how the property portals spin the story of rising stock, falling prices and confidence, against rising mortgage rates.

And we can probably extrapolate what may be going to happen here in Australia in the months ahead, considering our rate is well below the current NZ OCR of 2% – ahead of the RBA decision Tuesday, when we expect a 0.4% rise.

Go to the Walk The World Universe at https://walktheworld.com.au/

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Message From The Bears: Markets Are Non-Linear

US equities started the month lower after a strong set of data suggested the Federal Reserve has not yet slowed growth enough to tamp down inflation, while JPMorgan Chase & Co.’s Jamie Dimon warned restrictive policies threaten to tip the economy into recession.

After doubling in size through asset purchases in the first two years of the pandemic, the FED’s balance sheet will be reduced at a pace that’s almost twice as fast as after the last financial crisis. While the process officially commences on Wednesday, the first US Treasury securities won’t run off until $15 billion mature on June 15.

Minutes of the Fed’s most recent policy meeting, on May 3-4, said that, “Regarding risks related to the balance-sheet reduction, several participants noted the potential for unanticipated effects on financial market conditions.” The next meeting is scheduled for June 14-15.

And Americans are putting more on their credit cards and taking out fewer mortgages, as they need to increasingly borrow to cover the higher cost of everyday essentials and respond to rising interest rates. US consumer borrowing soared in March by the most on record as credit-card balances ballooned and non-revolving credit jumped, underscoring the combined impact of solid spending and rising prices.

The S&P 500 fell 0.8% as data showed an unexpected advance in US manufacturing activity as well as exceptionally high job openings, fueling concern the Fed will need to get more restrictive to slow runaway price gains. Financial firms in the index slid 1.7% after Dimon said private borrowers may be stranded as conditions tighten.

Jamie Dimon warned investors to prepare for an economic “hurricane” as the economy struggles against an unprecedented combination of challenges, including tightening monetary policy and Russia’s invasion of Ukraine.

“That hurricane is right out there down the road coming our way,” the JPMorgan Chase & Co. chief executive officer said at a conference sponsored by AllianceBernstein Holdings Wednesday. “We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.”

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.