In this show I look at the latest home price trends, and other data which is showing the pressure of houses and businesses. Prices may be on the turn, but affordability is still a critical issue.
Edwin, our property insider was absent today, hope he will be well enough for a return later in the week, but we will see…
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In today’s show I want to delve into three important issues, which I do not think the mainstream media gave sufficient weight and consideration to.
The first relates to the market interest rate assumptions which drives the RBA models, the second concerns the use of cash and the impending upending of current arrangements in July, and the third, the question of the fate of Australia’s Gold, and what is happening to physical Gold more broadly. For each I will add my own analysis.
So as always, as questions are asked and answered, actually more questions are raised. But to me these three questions, the link between Bank modelling and market assumptions on interest rates, the use and availability of cash, and the physical gold market, are all ones to watch.
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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 along the way.
When UK Prime Minister Harold Macmillan was asked what was the greatest challenge for a statesman, he replied: ‘events, dear boy, events’.
This is highly relevant to this week’s market review, because they were whipsawed through the trading day asking what is a negotiating gambit and what is a serious policy proposal. After opening higher, they sank mid-session during a public berating of Ukrainian President Zelensky by President Trump and Vice President Vance at the White House. Zelensky is “not ready for Peace if America is involved,” Trump said in a post on Truth Social afterwards.
But, US investors shook off the volatility through mid-afternoon and then pushed still higher leading into the closing bell so that all three US benchmarks rallied, with financials leading all 11 of the S&P 500 industry sectors higher. As a result, The S&P 500 climbed 1.59% The NASDAQ gained 1.63%, while the Dow Jones Industrial Average rose 1.39%. The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 7.10% to 19.63.
Across the week, the Dow was up 0.95%, the S&P 500 was down 0.98% and the NASDAQ was down 3.47%. Both NVIDIA and Tesla rallied to finish the week, rising 4 per cent and 3.9 per cent respectively, but were still down 7% and 13% for the week. Shares of NVIDIA which reported earnings late Wednesday, swung to losses as investors focused on signs of increased AI spending in the industry.
The MSCI global index was up 0.66% on Friday, but still down 1.33% for the week, while the STOXX 600 European index was up another 0.6% across the week after touching a record high on Wednesday. Australia’s ASX 200 rounded off earnings season on a negative note, slipping 1.2 per cent, to post its second consecutive month of losses, tumbling 4.2 per cent in February wiping out all gains this year.
The level of uncertainly across markets is reaching fever pitch, and we can expect to see more volatility as the world order is shifting under our feet. On Tuesday I will be discussing the implications for investors with Damien Klassen from Nucleus Wealth on my live show. One not to miss!
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We look at the weird two-facing issues of credit growth, which is rising faster than inflation, and real disposable income which is still under pressure, and lower than some years ago. It is not expected to recover any time soon.
Latest data reinforces the pressure on wages, which means more households are leveraging up, despite aggregate data which according to the RBA is pointing somewhere different. So today we explore this conundrum.
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Volatility in crypto has pulled the value of Bitcoin towards $80,000 USD, as the so-called Trump bump continues to fade across markets. With a pro-growth president devoted to deregulation, and bent on asserting US dominance over everyone else, the conventional wisdom was to pile into US assets and crypto, and brace for bond yields and the dollar to surge higher. All that happened in the weeks after the election. But since Donald Trump actually took office on Jan. 20, and particularly in the last week, all the Trump trades have reversed.
It is quite likely we will continue to see extreme volatility in the sector, and the journey up and to the right quite possible, given the limited supply of Bitcoin, so while, as a speculative trading asset people will continue to play with it, as a cornerstone of a secure wealth building strategy, I am less convinced.
My point here is that market uncertainly is broader than just crypto, but Bitcoin and other coins are likely to continue to magnify the volatility also visible in other markets.
No wonder perhaps that a critical detail from the 2025 meeting is that Warren Buffett’s Berkshire Hathaway’s cash pile hit a record high to over $330 billion, suggesting the Oracle of Omaha and his investment Colossus are on the sidelines.
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The less meaningful monthly CPI was released today by the ABS. The headline was that the reported annual CPI was unchanged, while the underlying rose just a tad. But remember this monthly series is only partial, being goods heavy while the services sector is the problem child at the moment, which is why the RBA prefers to look at the quarterly numbers, which are a couple of months away.
Annual trimmed mean inflation excluding volatile items and holiday travel was 2.8 per cent in January, up slightly from 2.7 per cent in December.
Nothing here to move the dial.
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Today I catch up with CEO and Founder of Ro&, an Australian based AI application which is bringing real world capability to the video intelligence and security industry, Roanne Monte.
Link: https://www.roand.ai/
We discuss the origin of the business idea, its development and launch via Armatec Global, and the broader questions about the future of AI and how it plays into current world events.
This is a remarkable story which shows Australia can innovate and lead!
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This is an edited version of a live discussion with Research Director for the Australian Citizens Party Robbie Barwick, as we examine the current state of the so called “Rules Based Order”, in the light of Trump driven change of trajectory from the US, fragmentation in Europe and the rise of a multi-polar world. Who are the potential winners and losers? What are the political, social and economic implications, and how might it impact the impending Australian Federal election?
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Property Insider Edwin Almeida and I discuss the latest shocks from the new cycle (don’t shoot the messenger!) and pick over the latest from the property market. Who are the winners and losers?
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Today’s post is brought to you by Ribbon Property Consultants.
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Today I want to look at the question of refinancing after the RBA rate cut, and whether a long term fixed rate mortgage in Australia would be a good idea.
While the ‘big four’ banks have committed to passing on the full 0.25 percentage point RBA driven rate cut to their customers, meaning those on variable rates will have their interest rate reduced by that amount in the next few months, if your mortgage rate is currently in the high sixes or 7 per cent, then you should definitely look and see if you can get a better rate following the RBA’s rate cut on Tuesday.
Beyond that, there is a fundamental difference between the mortgage markets in the US and Australia. A 30-year fixed mortgage is a dominant product in the US, where they account for about 70 per cent of outstanding mortgages but in Australia the bulk of loans are variable rate loans, which move in line with market rates, and indirectly the RBA cash rate, together with short term fixed rates which are again priced off the yield curve.
In the US, In the US, government-backed institutions like Fannie Mae and Freddie Mac provide liquidity to banks so they can sell 30-year fixed-rate mortgages. As a result, Banks in America are able to offer the riskier loans because of the existence of these so called government-sponsored enterprises (GSEs).
BlackRock chief executive Larry Fink suggested that Australia should introduce 30-year mortgages. The chief executive of the $18 trillion investment giant BlackRock said “We believe Australia should be building a 30-year fixed-rate mortgage market,” in an interview reported in the AFR. Fink, who was a pioneer of the mortgage-backed securities market during the 1980s, says Australia is uniquely positioned to pursue such a development because of the size of its $4 trillion superannuation pool.
Seems to me that engineering long term fixed rates in Australia may sound attractive to the big investment houses, the banks, and even the Government, but I am not convinced it is good for ordinary Australians. And it is worth remembering that through the GFC, US mortgage borrowers defaulted in droves, due to rate resets from low teaser rates, allowing those same investment houses to subsequently hoover up stressed property for a song. They are on the side of investors not prospective home owners.
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