Category: Economics and Banking

Finally, APRA Gets The Message!

Concurrent with the current Regional Branch Inquiry, APRA has announced a review of its Points Of Presence Data. This is welcome, because the current data contains many inaccuracies, and we need good data to ensure adequate transparency in terms of access to banking services.

https://www.apra.gov.au/discussion-paper-adi-points-of-presence-review

You can make a submission to this review.

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The New Zealand Hawk Stands Alone…

A significant gulf has opened up between New Zealand and Australia in terms of monetary policy, after RBNZ lifted another 50 basis points, while Australia held. Underlying this are a series of conflicting assumptions about how the economies will fare – but the risk of recession in New Zealand is now highly likely – some would say certain; while in Australia, the protection of the housing market appears to be front of mind, with the RBA willing to let inflation burn hotter for longer. Both cannot be right!

The RBA Pauses, For Now…

We discuss the Tuesday RBA decision, which was more about waiting to assess the impact of their past decisions, and the broader economic dynamics, than a “pivot”, yet many with vested interests are pushing that line. Worth considering the fixed rate cliff, and also the likely rise in unemployment. But the damage has been done, with significantly higher mortgage repayments locked and loaded now.

To The Other Side Of The World

A travel log of our relocation from the Illawarra, Australia, to Bath in the UK. In the past week, we settled the purchase of the new DFA HQ in the UK, flew for more than 24 hours from Sydney to Heathrow, packed the dogs off to the airport for their separate travel itinerary, and also swapped out our Australian car, for a similar model in the UK. In the days ahead, we will begin to get back to making regular shows, but meantime this is a short show in acknowledgement of the thousands of kind comments we received from the community. You are a great bunch, and your appreciation of our work is truly amazing, thanks.

All Is Calm – But Is It The Calm Before The Storm?

In my final show from Australia, I consider the latest outlook for the financial system, ahead of decisions from the FED and Bank of England as markets try to navigate the uncertain signals coming to the surface. It may be calmer for now, but the question is, is this the calm before the storm?

And I will be back from the other side of the world in a few days as things progress with more shows on property and finance.

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

Banking Crisis – What Banking Crisis? With Damien Klassen

My final chat with Damien Klassen from Nucleus Wealth before I fly out focussed on the current banking crisis and how this might play out ahead.

Things could get very interesting.

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Danger: Bank Fragility Ahead!

Are we in the foothills of the next banking crisis? Quite possibly. Investor sentiment remained fragile on Friday despite massive rescue for the banking sector, leaving global equities under pressure while gold prices were poised for their largest one-week rally since March 2020.

The U.S. banking crisis began after two mid-sized lenders — Silicon Valley Bank and Signature Bank— were rescued by the Federal Deposit Insurance Corp last week as depositors yanked billions of dollars from them after fearing about their solvency. Silicon Valley eventually filed for bankruptcy protection over the past 24 hours. A third bank, First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks.

SVB Financial Group announced it would seek Chapter 11 bankruptcy protection, the latest development in an ongoing drama that began last week with the collapse of Silicon Valley Bank and Signature Bank which sparked fears of contagion throughout the global banking system.

On Friday, investors lost confidence in U.S. regional banks and Credit Suisse in Europe. Risk appetite waned after showing signs of recovery on Thursday. Credit Suisse’s chief executive said on Friday the bank was working hard to stem customer outflows, although this could take time. Credit Suisse shares resumed their decline.

Fed data on Thursday showed banks sought record amounts of emergency liquidity in recent days, which helped undo months of central bank effort to shrink the size of its balance sheet. Its latest discount window borrowing has further seen banks take $150 billion, which makes for a new record even topping the 2008 GFC.

“Last week the Fed’s balance sheet swelled by $300 billion, wiping out 4 months of QT in one week,” gold bug Peter Schiff wrote in part of a Twitter reaction. “By the end of the month the balance sheet could reach a new high. Rate hikes don’t matter. Inflation is headed much higher, thanks to bank bailouts.”

Markets are pricing in a 25 bps increase by the U.S. Federal Reserve when it meets next week, down from previous expectations for a 50 bps increase. At last glance, financial markets have priced in a 60.5% likelihood that the central bank will raise its key target rate by 25 basis points, and a 39.5% probability that it will let the current rate stand.

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