Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
This is an edited edition of my recent live show, where I discussed the outlook for 2023 investing with Damien Klassen, Head of Investments At Nucleus Wealth and Walk The World Funds.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
An important article from The Regional’s Dale Webster, published in Independent Australia, highlighting the lies being told to try to justify the removal of banking services from Regional Australia.
https://www.theregional.com.au/
The truth is bank employees are being incentivized to lose their own jobs, and local communities are being crushed by the loss of critical services, while Politicians watch from the sidelines and in fact are complicit.
Banks are destroying their social licence, in the interests of short-term profit.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Join me for a live discussion with Damien Klassen Head of Investments At the Walk The World Funds and Nucleus World.
You can ask a question live!
My thesis and modelling show that availability of credit – driven by interest rates and borrowing capacity is by far the largest driver of home prices. Cut rates and flood the economy with cheap money and property prices are pushed higher, as happened through the COIVD period. Lift rates, tighten borrowing power, and remove stimulus, and prices fall. This thesis has been proved over the pst three years, with Australia’s housing market suffered its biggest annual decline since 2008 last year as sharp interest rate hikes sapped buying power and put off investors.
CoreLogic released their latest national Home Value Index which fell 5.3% in 2022, the first decline since 2018. Annual falls were the biggest in the bellwether market of Sydney, which slid 12.1%, followed by an 8.1% drop in Melbourne. National values declined 1.1% in December, according to the report.
Remember that The Reserve Bank raised interest rates by 3 percentage points since May to 3.1% and is widely expected to hike one or two more times this year. RBA officials have generally publically expressed confidence in Australia’s housing market, highlighting that prices are still higher than at the onset of the pandemic, though recent FOI data underscores their concern falling prices will sap confidence. This despite unemployment at the lowest level in almost 50 years, so they argue most borrowers are well placed to meet their commitments and so loan arrears are likely to be limited.
But overall Australia’s A$9.4 trillion housing market has declined 8% from the recent peak reached in April, after surging 28.6% from a pandemic-induced trough, CoreLogic said.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
My first 2023 Rant with Edwin Almeida, our Property Insider. Edwin takes a look at the latest numbers, and tables his suggestions for what will happen in this potentially prickly year!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Stock markets are down, superannuation funds diminished, and property prices sliding as Chris Joye’s Latest missive shows. So, the answer to my question is probably no, unless you are a politician still receiving a generous pay rise, or a high-flying executive or you are working in high demand areas like information technology or finance, or perhaps construction. And those in the public sector are most likely to be saying no even louder.
The Australian Institute in November said that Australian workers are about to have twelve years of real wages growth wiped out in 3 years as the The Reserve Bank’s November Statement on Monetary Policy revealed just how badly Australian workers are being hit by the current weak growth in wages and fast rising inflation.
In August the Reserve Bank was anticipating that wages in the 12 months to December this year would rise at 3.0%. This has now been increased to 3.1%. That would suggest a better situation for workers, but unfortunately, the RBA has increased its estimate for inflation for the same period from the 7.8% it had in August to now 8.0%. That represents a real wage fall of 4.54% compared to its estimate in August of 4.45%.
All up the new estimates out to the end of 2024 suggest that real wages by December 2024 will be 2.2% lower than they were in June this year. That is again worse than the 1.8% fall estimated in August.
But comparing real wages from June this year misses out on the massive falls that have already occurred. By the end of 2024 the Reserve Bank now estimates that real wages will be some 5.4% below where they were in March 2020 just before the pandemic occurred.
It means that at the end of 2023 workers will on average only be able to buy the same amount of items and services with their wage as they were 15 years earlier in December 2008.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
A review of the performance of our channel last year, with the top 12 shows and main themes emerging, plus some thoughts about our focus for 2023. Thanks for all your support through the year!
At the end of the year, we can look back and pick over the coals of the old and look ahead to the new. But of course, it’s an artificial delineation, and the forces mustering at the end of the old year such as recession risk, rising interest rates in response to inflation, Ukraine and COIVD all are still in play.
Remember U.S. stocks just polished off their worst year since 2008 with a loss on Friday, bringing the year-to-date decline for the S&P 500 to 19.4%, its largest calendar-year drop since 2008. The only years where stocks fared worse were 2002, 1974 and 2008. The same holds true for the Dow Jones Industrial Average, which shed 8.8% this year, and the Nasdaq Composite, which lost 33.1%.
As previously high-flying megacap technology stocks and other interest-rate sensitive assets crumbled, value stocks outperformed this year, sending the Dow to its biggest calendar-year outperformance vs. the Nasdaq since 2000. The blue-chip gauge also recorded its biggest outperformance vs. the S&P 500 since the index’s creation. Energy stocks were a lone bright spot, as the S&P 500 energy sector recorded its best year on record with a 59% gain.
CONTENTS
0:00 Start
0:16 Introduction
0:30 Annual Performance
1:53 US$
2:50 Bonds And Stocks Fall
6:15 Oil
6:40 Gold
7:00 Bitcoin and Gold Compared
8:50 Europe and UK
11:09 China And COVID
11:35 Australia
13:22 Recession Scenarios
19:42 Factors To Consider
24:15 Regulating Crypto
26:04 Conclusion and Close
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Property prices are political not economic. So, while analysts are talking about property price corrections in 2023, and higher levels of defaults; and the IMF talks of a dysfunctional market; the truth is most politicians prefer to sit on the fence and mouth platitudes, to avoid upsetting voters.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
More weakness in markets as we close the year. The realisation of higher rates and recession risk hitting earnings is hitting home as big-tech takes another hit.
So we look at the market action and consider the signals ahead.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/