Economic Data – Page 60 – Digital Finance Analytics (DFA) Blog

Whoops: We Are Still Going Backwards!

The latest wages price data to end March 2022 was below expectations (despite the RBA liaison programme). As a result, households continue to go backwards unless you happen to be employed in a few high-demand industries. Public Sector works are also doing worse.

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Too Late Bankers: Too Late!

Reflect on this for a moment. Four more years. The Senate voted 80-19 last week to confirm Jerome Powell for a second term as chairman of the Federal Reserve, in a bipartisan vote that was largely expected.

19 senators voting against confirmation consisted of Republicans who weren’t happy with Powell’s performance on inflation, but also a sprinkling of progressive Democrats like Elizabeth Warren who objected to him for not doing enough on other things, like bank regulation or climate risk.

People give Powell a lot of credit for following the playbook of his predecessor, Ben Bernanke, when faced with the challenge of the COVID-19 pandemic—print money like crazy and hope for the best.

It worked, except we now have runaway inflation, perhaps due to an excessive amount of money creation.

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.

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

Will The Fed Put Put A Put At 40%?

Albert Edwards at Societe General has once again highlighted the risks in the markets, and that the coming bust will surely be devastating. At the end of 2021 he wrote about four surprises which will shake the markets.

US financial conditions have tightened considerably in recent weeks and severe cracks are beginning to be seen in the asset valuation ‘Ponzi scheme’ that the Fed et al have inflated over this last, and several previous, cycles. Like any other Ponzi scheme, it needs constant feeding with new money to keep the charade afloat. But having let the inflation genie out of the bottle, the Fed is now determined not to ease policy (yet) despite financial conditions tightening. Hence bond yields, unusually, are now rising in line with tightening financial conditions. But for how long?

At a decline of around 40% (close to 3,000 on the S&P), the soothing ‘brrrr’ of the QE printing presses will likely once again be heard. And that point might be closer than people think.

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Three Big Housing Nasties…

We look at recent commentary from New Zealand highlighting three forces which are combining to drive home prices lower. In fact, we argue they are three for the four horses of the apocalypse. As a result, expect prices for fall further and faster. And this is an objective lesson to Australia, who is about 6 months behind.

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The Coming Hyperinflation of Australian Property

The most important set of economic questions facing the Australian people is inflation, interest rates and mortgage/financial stress. The recent release of the Consumer Price Index by the Australian Bureau of Statistics at officially 5.1% and the subsequent raising of interest rates by the RBA is now the main conversation which many Australian families are having. With only one interest rate there is already a sea change in the sentiment in both the property market, shares and cryptocurrencies. Many Australians with significant debts are now quite nervous about what does the future hold. Analyst Martin North and Economist John Adams discuss…. Go to the Walk The World Universe at https://walktheworld.com.au/

The Persistence Of Inflation…

As discussed yesterday, the US inflation read was seen by the markets as important. A fall in the number would lead to markets potentially regaining their footing. Before the report, economists had been betting that annual inflation would dip below 7% in the third quarter of this year on expectations that supply chains will get back in order and inflation will dent demand.

And of course Joe Biden had come out before the number was released saying “I want every American to know that I am taking inflation very seriously and it’s my top domestic priority,” “The first cause of inflation is a once-in-a-century pandemic. Not only did it shut down our global economy, it threw supply chains and demand completely out of whack… And this year we have a second cause: Mr. Putin’s war in Ukraine.”

But Americans got little respite from inflation in April, as prices for a range of necessities and discretionary-spending categories continued to climb at some of the fastest-ever rates. The Labor Department said Wednesday its consumer price index slowed to 0.3% last month from 1.2% previously, exceeding forecasts for a slowdown to a 0.2% rise. Consumer prices in April year-on-year slowed to 8.3% from 8.5%.

Grocery prices were up 10.8% over April 2021, with meat rising 13.9% and eggs up 22.6%.

That S&P bear market debate is raging nonetheless, with some strategists and observers saying the S&P 500 is growling just like one should. Wall Street banks like Morgan Stanley have been saying the market is getting close to that point.

But should the S&P 500 officially enter the bear’s lair, Bank of America strategists, led by Michael Hartnett, have calculated just how long the pain could last. Looking at a history of 19 bear markets over the past 140 years, they found the average price decline was 37.3% and the average duration about 289 days.

While “past performance is no guide to future performance,” Hartnett and the team say the current bear market would end Oct. 19 of this year, with the S&P 500 at 3,000 and the NASDAQ Composite at 10,000.

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