Author: Martin North

Martin North is the Principal of Digital Finance Analytics

Walking The Uncertainty Tightrope Towards Who Knows What Next!

This is our weekly market update where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto on the way. To remind our loyal viewer, this is a data rich show, as I get the weeks developments into perspective.

Market trends are rarely linear for long, they naturally ebb and flow. Despite the flaring conflict in the middle east, and the US election just a month away now, MSCI’s global equities index rose on Friday, though for the week, it showed a roughly 0.7% decline, while the Dow closed at fresh record highs and the US dollar climbed to its highest level since mid-August as investors heaved a sigh of relief after a surprisingly strong U.S. labor market report.

Oil prices rose and settled with their biggest weekly gains in over a year on the mounting threat of a region-wide war in the Middle East, but gains were limited as U.S. President Joe Biden discouraged Israel from targeting Iranian oil facilities. Investors remained anxious about how Israel would respond after Iran fired missiles at it on Tuesday. Supreme Leader Ayatollah Ali Khamenei said earlier that Iran and its regional allies will not back down.

The Australian sharemarket snapped a three-week winning streak on Friday, as the escalating conflict in the Middle East sent traders fleeing equities and pulled shares down from record highs touched a week earlier. The S&P/ASX 200 ended Friday’s 0.7 per cent lower at 8150 points, dragging the score to a weekly loss of 0.8 per cent, its first since early September. Of the ASX’s 11 sectors, nine ended the session lower.

The IMF this week gave a mixed assessment of recent government budgets and whether Treasurer Jim Chalmers and his state counterparts were helping the RBA to tame Australia’s worst inflation outbreak in decades.

Finally, in crypto, Bitcoin (BTC) dropped over 5% this week as the escalating conflict in Gaza and Lebanon fuelled flows into safe-haven assets.

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Don’t Be Misled By Vendor Discounting!

Are property markets morphing into buyers markets and vendor dropping their asking prices? Well, according to recent news corp articles, home seekers are bagging properties for an average of up to 15% below the list price in pockets of Sydney.

Vendor discounting tends to reflect price growth recorded a few months ago, rather than signalling the direction of future price growth. But its complex, Especially now.

Because of the over quoting and under quoting issue, I think it is really very hard to get a read on the true vendor discounting. The averages quoted are often misleading, there is considerable variation, even within the same areas.

Bottom line, is more than ever it is important to understand the granular data in the area you are looking at, rather than the averages, which mask what is really going on. In fact in my live show next Tuesday we will do another deep dive into my data at the post code level, so mark you diaries for that. Meantime, take vendor discounting with a truck load of salt.

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

Home Lending Booms: But What Have They Got To Hide?

The ABS released their monthly lending indicators for September today, and it showed a strong uptick in new mortgage loans, in contrast to poor household spending trends and confidence overall, though as we will see there are questions about this dataset too. Significantly, we also note the ABS is about to terminate its monthly reporting of new loans data, saying the monthly Lending Indicators publication will transition to a quarterly release.

My observation is different because the monitoring of new loans for housing is an essential barometer for the economy, without the monthly data it will be easier for lenders to continue their push to reduce lending standards (something evidently being supported by the opposition party) and so drive home prices even higher.

So credit for home lending, especially investors is booming. Worth recalling here the RBA’s recent warning that falling interest rates could trigger a property price boom that encourages households to take on too much debt.

As you know my surveys highlight some households are under extreme financial pressure, and I will be discussing this in my live show next Tuesday, so official data on household spending, is also an important indicator. So conveniently, the ABS also released household spending data for August today. However, I have issues with these figures too as this data excludes, Rent and other dwelling services, Electricity, gas and other fuels, Communication Services, Education Services and Insurance and other financial services. IN other words, the spending data is partial and incomplete, and excludes more than half of a typical mortgaged or renting household.

So all up, the spending indicators are not really meaningful, yet the ABS will be enhancing the Monthly Household Spending Indicator and ceasing the Retail Trade publication after the June 2025 reference period. On the other hand, the data on lending will be only released four times a year.

This is another example of data not fit for purpose, and I assume the financial pressure the ABS is under. But it does beg the question. What have they got to hide – and who is pulling their strings?

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Will Kiwis Say “Hello” To Deflation?

Compared to the weak RBA rate of 4.35%, the Reserve Bank of New Zealand, lifted earlier and higher, and has begun to cut rates as the New Zealand economy slipped into recession. Next week we will get the next RBNZ rate decision, and a new survey has show that although New Zealand business sentiment is improving a window has opened to allow a cut interest rates of 50 basis points. The RBNZ has forecast around 2.5% of rate cuts over a 2.5 year period.

The contrast with Australia is interesting, because the RBA has left rates at a lower rate trying to preserve the gains in employment, whereas the RBNZ lifted more aggressively and tipped the New Zealand economy into a recession. Neither outcome is great, showing the problem with blunt monetary policy tools.

In addition, the latest New Zealand migration stats reveals a sharp moderation in net overseas migration, a critical factor working against economic growth. And worse, a large number of citizens are emigrating from New Zealand, replaced by poorer migrants from developing nations according to Stats NZ. As a result, annual New Zealand’s population growth is slowing, which will moderate demand. And of course New Zealand’s economy is stuck in a protracted per capita recession and unemployment is rising fast.

All up, clearly more rate cuts are coming, and a period of falling prices – deflation – could well be on the cards. As a result, the RBNZ will need to front load those future rate cuts, so 50 basis points next week are highly likely.

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DFA Live Q&A HD Replay: Investing Now: With Damien Klassen

This is an edited version of a live discussion with Damien Klassen, Head of Investments at Nucleus Wealth and Walk The World Funds. Given the strength of the markets in recent days, and the China stimulus programme, what’s ahead, and how should you position given the level of volatility and uncertainty out there?

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Its Edwin’s Monday Evening Property Rant!

The latest news from our Property Insider Edwin Almeida, as we look at the latest moves from Government (including erecting statues!!) news from China, and the latest data. Things continue to show a gap between strategy and reality, as negative gearing questions emerge again!

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

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

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

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

There Is NO BASIS For This “MAD” Legislation!

This is an edited version of a post John Adams and I made on In The Interests Of The People, doing a deep dive into the arguments around the proposed Combatting Misinformation and Disinformation) Bill 2024 which on the 19 September 2024, the Senate referred to the Environment and Communications Legislation Committee for report by 25 November 2024.

You have JUST ONE Day! as submissions close on the 30 September 2024.

This bill would severely curtain unfettered free speech by putting onerous responsibilities on social media platforms across issues as wide as electoral, health, social and economic. In practice the Government will define “truth” and will essential silence alternative voices.

You have a limited opportunity to make your views know before 1984 type conditions arrive!

IOTP Edition here: https://youtu.be/R-m0ZITOVhQ

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/MisandDisinfobill

Contact details:

Committee Secretary
Senate Standing Committees on Environment and Communications
PO Box 6100
Parliament House
Canberra ACT 2600

Phone: +61 2 6277 3526
ec.sen@aph.gov.au

https://citizensparty.org.au/media-releases/say-no-albaneses-orwellian-disapproved-information-censorship-bill

About this inquiry: The bill proposes to amend the Broadcasting Services Act 1992 and would make consequential amendments to other Acts to establish a new framework to safeguard against serious harms caused by misinformation or disinformation.

The bill would provide the Australian Communications and Media Authority (ACMA) with new regulatory powers to require digital communications platform providers to take steps to manage the risk that misinformation and disinformation on digital communications platforms poses in Australia. These would include obligations on providers to assess and report on risks relating to misinformation and disinformation, to publish their policy in relation to managing misinformation and disinformation, and develop and publish a media literacy plan.

The bill would also provide ACMA with new information gathering, record keeping, code registration and standard making powers to oversee digital communications platform providers.

http://www.martinnorth.com/

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

Stars Align To Create A Bubble Dream; But Is A Nightmare Around The Corner?

This is our weekly market update where we review the market action starting in the US, then Europe, Asia, and Australia and also cover commodities and crypto along the way. This is a data packed segment, so be warned!

This week markets drove higher, pretty much across the board, thanks to the fall out from the Federal Reserve is slashing interest rates, more benign US economic data and China finally moving more determinedly to bolster growth as China’s central bank lowered interest rates and injected liquidity into the banking system, and with more fiscal measures expected to be announced before a week-long Chinese holiday starting on Oct. 1. Listed shares of Chinese companies jumped on the latest series of stimulus measures from Beijing to boost the domestic economy, including those on international markets.

As a result, we saw upswings in markets across the globe, and this despite weaker oil prices and rising conflict in the middle east. MSCI’s gauge of stocks across the globe rose 0.25%, to an intraday record high. Europe’s benchmark STOXX 600 index closed at a record high, ending up 0.5% at 528.08. China’s blue chips jumped 4.5%, bringing their weekly rise to 15.7%, the most since November 2008. Hong Kong’s Hang Seng index also gained 3.6% and was up 13% for the week, its best performance since 1998.

The Dow Jones Industrial Average rose 0.33%, to 42,313.00, the S&P 500 fell 0.13%, to 5,738.17 and the Nasdaq Composite fell 0.39%, to 18,119.59. All three major U.S. stock indexes posted a third straight week of gains. Nvidia’s 2.2 per cent decline was the reason for the S&P 500 and Nasdaq slipping on Friday, pointing to a report that China is urging local companies to stay away from its chips. The NASDAQ Golden Dragon shot to 7.236.16 while the Russell 2000 was at 220.33.

The best performer of the session on the Dow Jones Industrial Average was Chevron Corp (NYSE:CVX), which rose 2.47% while the worst performers of the session was Amazon.com Inc (NASDAQ:AMZN), which fell 1.67 and International Business Machines (NYSE:IBM) was down 1.16% to 220.84.

“It’s a bubble dream,” according to Bank of America equity strategist Michael Hartnett. His data had another $US10.9 billion flowing into US equities in the week ended September 25.

“Fed cutting into recession is negative for risk assets, but Fed cutting with no recession is positive and investors firmly of the view Fed and China is sufficient policy easing to short-circuit recession risk,” Hartnett wrote.

So in the context of overvalued stocks, markets are still betting on higher ahead, which is quite possible but before the surface there are significant cross currents and risks. So volatility will remain the watch word, and the bubble dream might yet turn to nightmare. We will see.

Save Free Speech: Fight The Disinformation Bill!

This is an edited version of a recent live show I did on Adam Stokes channel relating to the Combatting Misinformation and Disinformation) Bill 2024 which on the 19 September 2024, the Senate referred the provisions of the bill to the Environment and Communications Legislation Committee for report by 25 November 2024.

You have JUST SEVEN Days! as submissions close on the 30 September 2024.

This bill would severely curtain unfettered free speech by putting onerous responsibilities on social media platforms across issues as wide as electoral, health, social and economic. In practice the Government will define “truth” and will essential silence alternative voices.

You have a limited opportunity to make your views know before 1984 type conditions arrive!

Adams Live stream: https://youtu.be/jhiRS7_TE9Y

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Environment_and_Communications/MisandDisinfobill

Contact details:

Committee Secretary
Senate Standing Committees on Environment and Communications
PO Box 6100
Parliament House
Canberra ACT 2600

Phone: +61 2 6277 3526
ec.sen@aph.gov.au

https://citizensparty.org.au/media-releases/say-no-albaneses-orwellian-disapproved-information-censorship-bill

About this inquiry: The bill proposes to amend the Broadcasting Services Act 1992 and would make consequential amendments to other Acts to establish a new framework to safeguard against serious harms caused by misinformation or disinformation.

The bill would provide the Australian Communications and Media Authority (ACMA) with new regulatory powers to require digital communications platform providers to take steps to manage the risk that misinformation and disinformation on digital communications platforms poses in Australia. These would include obligations on providers to assess and report on risks relating to misinformation and disinformation, to publish their policy in relation to managing misinformation and disinformation, and develop and publish a media literacy plan.

The bill would also provide ACMA with new information gathering, record keeping, code registration and standard making powers to oversee digital communications platform providers.

http://www.martinnorth.com/

Is The Postal Bank Winning? With Robbie Barwick…

This is a good news story, as I discuss with progress being made on the move towards the creation of a Postal Bank in Australia, with Robbie Barwick from the Australian Citizens Party.

https://citizensparty.org.au/campaigns/public-post-office-bank

But we need to keep the pressure on to ensure that the National Bank is developed in the way to benefit ordinary Australians and Businesses, so there is more still to do. And keeping pressure on our elected representatives will be essential!

Links to the two shows we discuss:

LPOG: https://youtu.be/MHGZwK0vFgw?si=XA2zj0XJfbmTTsgc
Malcolm Roberts: https://youtu.be/n1B1wKHcz5g?si=TD3ZakbamzdAfyy8

http://www.martinnorth.com/

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