Economic Data – Page 2 – Digital Finance Analytics (DFA) Blog

Plenty Of Waffle But No Beef: The Rental Scandal That Pollies Prefer To Ignore!

In my live show with Leith van Onselen yesterday, we pulled apart the major party campaigns relating to housing, which focussed on those trying to buy, and a promise of higher home prices for all. This will put a rocket under home prices. But the real story, and the accompanying policy vacuum relates to the rental sector. One third of households are renting, and the number continues to rise as people are squeezed out of home ownership.

As I reported my surveys show that more than three in four renters are under financial pressure, with many caught in the ugly situation of having to accept significant further lifts in rent or have to enter the scrum to find another place which is more affordable.

“Australia is facing its worst rental crisis yet … with little relief in sight for most renters,” said Karen Walsh, chief executive of National Shelter. “Many renters across Australia are hurting and in distress. As rents rise faster than wages, they’re trapped in a relentless cycle … facing a reality where hope for a brighter future feels increasingly out of reach.”

Speaking to ABC News Channel, Maiy Azize from Everybody’s Home — a National campaign dedicated to fixing Australia’s housing crisis — and a former national secretary for the Greens, said it was a huge problem but there had not been any significant major party announcements for renters.

“Six hundred and forty thousand renters across the country are in really, really extreme rental stress, there is just nothing put on the table for them this federal election, which is really disappointing to see.”

This is a policy free area, through the campaign, yet its the pointy bit of the housing crisis. Why are politicians avoiding the issue?

In A Hyper Financialised World, Bond Markets Rule…

This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia. This past week was an object lesson in the power of the Bond market. And not for the first time. A favourite quote on markets comes from the former CEO of Citicorp, Walter Wriston, who observed that, “Capital goes where it is welcome and stays where it is well treated. Remember those Words.

I made shows through the week about the fallout from the Trump tariffs and the subsequent 90 day pause of the reciprocal tariffs, the extra hikes directed at China, and China’s escalation back, (Beijing increased its tariffs on U.S. imports to 125% on Friday after Trump’s move to hike duties on Chinese goods) and the turmoil on financial markets, especially a significant sell-down in US Treasuries. This lifted yields (remember bond prices and yields move in opposite directions), with the 10-year up 12.4% across the week to 4.494, while the two year was up 9.07% to 3.970. The long 30-year was up a massive 10.39% across the week, even though selling partially reversed as the Friday session progressed. This is NOT normal. Rumours went around it was China, or Japan selling bonds, but more likely it was driven by hedge funds caught out of position. “Until Treasuries stabilize and start to behave normally, risk assets will struggle,” Barclays analysts said in a note on Friday.

Normally, bond markets, though a huge element in the financial system do not make moves of this scale, after all they are meant to be the safe, secure, boring backstop to the financial system. Macro commentator James Aitken told his clients. “Financial history reminds us that when a policymaker tells hyper-financialised markets he or she is not targeting markets, markets will force the policymaker to target them. Indeed.

In Asia, Japanese stocks were by far the worst performers, given that the country holds large export exposure to both the U.S. and China. Mainland Chinese stocks fell relatively less than their peers, boosted by apparent buying by state-backed funds – China’s so-called national team.

The Australian share market closed lower on Friday, sealing a week that had the exchange record some of its most outsized moves since 2020 as a trade war between the world’s two largest economic powers gathered momentum. The S&P/ASX 200 fell 0.8 per cent, or 63.1 points, to 7646.5 points at the close. The index dropped more than 2 per cent earlier in the session, but improved in afternoon trading as US futures climbed. The ASX 200 tumbled around 0.3 per cent this week – its second consecutive weekly loss.

Investors are redirecting money once bound for Wall Street and fast-growing Silicon Valley tech giants back towards the Australian share market as intense volatility in the United States turns the ASX into a safe haven. Despite a drop on Friday taking the S&P/ASX 200’s falls this year to 6.3 per cent, the local benchmark has performed far better than Wall Street, where the S&P 500 is down more than 10 per cent and the NASDAQ some 15 per cent.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

Gas: One Policy To Rule Them All!…

Amazed though I am, it appears the LNP has one policy which is so critical it should win the election. I am talking about Gas reverse tariffs.

Recall that while East Coast Australia has doubled its gas production over the past decade, the domestic market has been supplied with 25% less gas. This has driven energy prices to new heights as electricity is priced off the marginal price of gas at international rates. I made a show about this recently. The tripling of prices has caused manufacturers to shutter and reduced consumption.

But now, Liberal leader Peter Dutton has launched an East Coast gas reservation, which promises to deliver $10 a gigajoule gas by requiring uncontracted (spot) gas to be directed into the domestic market.

Peter Dutton says the Coalition’s gas policy forcing LNG exporters to increase onshore supply and decoupling local prices from overseas markets will reduce wholesale prices by 23%, slash industrial retail gas bills by 15% and cut 7% from household costs.

Frontier Economics modelling released by the Opposition Leader on Tuesday night claimed his national gas plan—headlined by an east-coast reservation scheme—would immediately apply downward pressure on domestic prices and “progressively lower” gas and electricity bills.

Assessment of Coalition gas policy proposals

Of course the gas cartel will attempt to slow production to bully the nation, but that’s what the levy is about. It is counter-bullying to prevent it. If production is cut, Dutton can just raise the levy. If the producers eventually want to default on export contracts, that’s up to them.

Bottom line, Australian gas must be reserved for Australians first. Otherwise, Australians face surging gas and electricity costs, higher inflation, further deindustrialisation, lower productivity growth, and declining living standards.
For this policy alone, a key to future prosperity, LNP wins.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

RMS Trump Sails On, Having Avoided An Iceberg, For Now…

Yesterday I went through the market falls, as China retaliated to the Trump tariffs, even as President Donald Trump ploughed ahead with plans to impose steep new tariffs on imports despite warnings that the policy could trigger economic chaos.

Yet only 13 hours after the duties had gone into effect, in a social media post, Trump said that a set of tariffs on imports from many of America’s largest trading partners were paused. He indicated that turmoil in the financial markets following the implementation of the tariffs played a role in his decision.

In particular Bond yields had climbed, with speculation this might be a signal China was selling some of their massive holding, or perhaps it was hedge funds needing to raise cash to meet margin calls in a falling market, or maybe it related to elevated inflation fears. But it does appear the ructions on the Bond Markets cash a shadow on the tariff show.

Just remember this is a 90-day pause, and 10% tariffs are still in play, with some suggesting that these will remain a baseline for any negotiations, while others are seeking zero tariffs. This has a long way to go, and markets will likely remain jittery, so expect more icebergs ahead.

Will Trumps Titanic Tariff Plan Hit An Iceberg, And Who Goes Down With The Ship?

President Donald Trump’s so-called reciprocal tariffs are now in place, creating self-inflicted choppy waters, as RMS Trump sails on through a flog of confusion, dealing a thunderous blow to the world economy as he pushes forward efforts to drastically reorder global trade.

Trump argues that the taxes will boost US prosperity and revive domestic manufacturing, but his approach has drawn criticism from Wall Street, economists and some in Trump’s own party, who have questioned the administration’s methodology and warned of an economic fallout that could include higher consumer prices and slower growth, if not a recession. He has long argued for tariffs as a solution for his trade grievances, this plan will reassert US power, revive domestic manufacturing and extract geopolitical concessions.

He signed an executive order raising reciprocal tariffs on China to 84%, up from the 34% announced on April 2. With 20% in existing duties already in place, the total tariffs on Chinese goods now amount to 104%, along with import taxes on roughly 60 trading partners that run trade surpluses with the US. That comes after a 10% baseline tariff for most US trading partners took effect Saturday.

Asian countries are bearing the brunt of the measures, with Cambodia and Vietnam facing 49% and 46% charges, respectively. Imports from the European Union will be taxed at a 20% rate.

All of this, the president and his administration have repeatedly promised, will lead to a future boom, both economically for the US and politically for his party.

“We’re going to win the midterm elections, and we’re going to have a tremendous, thundering landslide,” Trump told Republican lawmakers and donors Tuesday. “I really believe that.”

The truth is, the economic sea has gotten very stormy, and there are indeed icebergs out there, but the as to who will get through safely, and who will go down with the ship is too hard to call.

Gold remains a relative safe haven, sitting just over 3,060 USD per oz, but commodities are down with WTI Oil at 58.19, and Brent at 61.44. and Bitcoin was last at 77,764.

As I discussed last week, much of the pain will be born in the US, as globalisation, which benefitted some but not all unravels. Beyond that new trade patterns will emerge, but meantime markets will remain tossed about by the currents and tides so batten down the hatches.