This is a edited version of a live debate between Senator Gerard Rennick and Economist John Adams as we examine economic and monetary policy, debt, and the role of the RBA and other regulators. How can we improve the economic outcomes for Australia, and Australians? Who is to blame for high inflation and home prices?
Original stream: https://youtu.be/DPZNSTeAFkk with chat.
Steve and I discuss the latest in interest rate movements, refinancing, and the impact on household budgets. We look at how households can save significantly and ensure they have the best deals on mortgages and savings rates.
We know that many are still not on the best available rates and as a result are paying more than they need to, which may benefit bank profits, but which do not help individual household cashflow.
Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.
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The US Treasury is fast approaching the debt ceiling, which begs the question – what then? Will Government spending be crimped, will the ceiling be raised again, or will more unconventional strategies be deployed?
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In this week’s market update we as always start in the US, cross to Europe, Asia and end in Australia. Markets have started to look through the recession fears it seems, banking on the Fed slowing its rake hikes, and reversing later in 2023.
Yet the signals are still mixed, and earnings are clearly under pressure in many market sectors. But it does seem to me to be a question about seeing the wood for the trees. The bigger trend on markets still is pointing lower, despite the short term moves higher. We are not, I think out of the woods yet… remembering Central Banks over nearly 20 years have tried to engineer growth through massive stimulation and debt, and economies have been distorted beyond belief. As support is removed, asset values are still over done, and the cost of debt rises.
The Dow cut losses to close higher Friday, as investors bought the early-day dip in banks following a string of better-than-expected results, though concerns about a weaker economy linger. In the end the S&P 500 and Nasdaq finished at their highest levels in a month on Friday, leaving the S&P 500 up 4.2% so far in 2023.
For the week, the S&P 500 gained 2.7% and the Dow rose 2%. The Nasdaq increased 4.8% in its biggest weekly percentage gain since Nov. 11. The CBOE Volatility index -Wall Street’s fear gauge -closed at a one-year low. The U.S. stock market will be closed Monday for the Martin Luther King Jr. Day holiday.
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An interesting report came out last December from the House Standing Committee On Economics, relating to the RBA and their recent questioning of Governor Lowe.
The report was a bit of a squib in that whilst it recognised some of the issues relating to monetary policy and interest rates, they skirted round the big issues of what caused the inflation in the first place, and the role of extended credit in inflating prices.
We discuss the report and its shortcomings.
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The latest edition of our finance and property news digest with a distinctively Australian flavour.
Any incoming data requires interpretation to make sense. And the truth is, factors like recency bias, expectations, and hopium can all influence how newsis interpreted, and decisions made. We saw this on Friday when US markets read the data as signs of a slowing economy, and immediately went to the FED easing rate rises, despite earlier news that they are keeping at the rate rising until inflation is crimped. Treasury yields fell sharply as investors continued to price in the step down in the pace of rate hikes at the Fed’s meeting next month.
But I think the central bank will need to see further slowing of price increases in the December inflation report, due out next week, before deciding whether to slow its next rate hike. It raised rates 50 basis points in December.And future earnings expectations are likely overdone for now, so perhaps markets were one sided in their interpretation of the data. In the minutes from the Fed’s December meeting [released] this week, it was unanimous among members of the FOMC group that they are going to keep interest rates high all year long. We will see.
CONTENTS
0:00 Start 0:15 Introduction 0:30 Data is not Neutral 1:30 US Jobs Report and Macro 3:40 US Markets 7:40 Oil Down 10:20 Gas Down 12:35 Europe 14:00 China and Asia 18:00 “N” Shaped Recovery 19:00 Australian Market 20:19 Gold too high? 21:40 Crypto Bearish 23:25 Summary and Close
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Significant news from the Federal Reserve (FED) and The Peoples Bank Of China (PBOC) shows how divergent their two monetary policy paths are. The FED is committed to lifting rates sufficient to snuff out inflation (despite the markets continually seeking a pivot) and withdrawing stimulus while the PBOC is seeking to provide additional support for the Chinese economy, including the property sector.
This divergence is striking and will have significant impact on exchange rates and global financial flows. Both though are talking about Central Bank Digital Currencies.
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Just before Christmas APRA advised the imposition of a 1% Counter Cyclical Capital Buffer on Australian Banks. Interesting timing, seeing as the Bank For International Settlements had set 2023 as the required date. Up to this point APRA has argued a 1% buffer was not needed in Australia – so what changed?
So, we wonder, are they being forced to comply. and what does this mean for our “strong” banks as interest rates rise and lending slows?
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The latest data to end November 2022 from the RBA and APRA shows that the rate of credit growth is slowing – presumably due to higher rates and reduced borrowing power. That said refinancing including equity draw-down is on the rise…
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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.
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