Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
My latest chat on a Friday afternoon with Journalist Tarric Brooker, covering the latest economic and financial news, courtesy of his famous slides. https://avidcom.substack.com/p/charts-that-matter-8th-july-2022
You can follow him on Twitter @AvidCommentator
Go to the Walk The World Universe at https://walktheworld.com.au/
In today’s show, we review the weeks market action, starting in the US – by far the most influential market, followed by Europe, Asia and Australia. There is no place to hide. Wealth is being destroyed. And there is no end in sight. Data is flagging recession, as central banks continue to raise rates and given the astronomical debt burden out there this is a big deal.
Even conservative investment strategies are being hit. “This is a train wreck,” says Alex Dunnin, executive director of research house Rainmaker Group. “When a traditionally conservative strategy is getting the worst returns then all bets are off. It doesn’t matter where you go, almost everyone will be in pain.”
The S&P 500 notched its worst start since 1970, plunging 20.6% between January and June. The Dow had its largest first-half drop since 1962, and the Nasdaq Composite had its largest percentage decline ever. And US Stocks slipped over the five days, with the S&P 500 erasing part of its rally in the previous week. Down more than 2%, the index just endured its 11th drop in 13 weeks.
All three indexes posted losses for the week. Despite this Wall Street rallied to close higher on Friday in light trading, with investors heading into the long holiday weekend and embarking on the second half of year looking for the next market-moving catalyst. All major groups in the S&P 500 rose, while the tech-heavy Nasdaq 100 underperformed. Treasuries surged after an ugly first half as weak economic data added to recession fears.
The US economic data was frankly horrid this week. An influx of data showing softer consumer spending, sagging sentiment and subdued manufacturing suggest a US economy with a more fragile foundation, prompting several forecasters to lower their estimates for growth.
Strategists at Goldman Sachs told clients on Thursday that stocks could keep falling later this year since “equities are pricing only a mild recession” and more companies will likely begin reducing their earnings expectations. In the event of a recession, Goldman’s team sees the S&P 500 dropping to 3,600, or 4.9% below Thursday’s close.
[CONTENT]
0:00 Start
0:15 Introduction
2:23 US Weak Economic Data
8:22 GDP Forecast: Down
9:00 Bond Yields
11:00 Buying The Dip
13:50 US Markets
16:00 Oil, Gold and Silver
17:00 Euro-zone Inflation Up
19:18 European Markets
20:00 Asian Markets And China Bonds
22:25 Australian Markets
24:40 Crypto Down
25:47 Tough Times Ahead
Go to the Walk The World Universe at https://walktheworld.com.au/
If you string together recent statements from entities like the Bank For International Settlements, IMF, Federal Reserve and other non-elected entities a frightening story emerges as Central Bank Digital Currencies (CBDC) are deployed to give Central Banks even greater powers, impose cross-border solutions (some would say a global currency) and remove more freedoms from society.
This is being talked about top-down as it were, without proper local consultation and buy-in. The future they portray is frightening.
To make the point I have pulled together material from a number of relatively difficult texts, but see the summary section in the contents section to cut to the chase.
[CONTENT]
0:00 Start
0:15 Introduction
1:25 BIS Report – Digital Money
6:25 BIS New Public Policy
8:30 IMF Future Of Money
15:00 Federal Reserve on CBDC
19:23 Literary Review on CBDC and Monetary Policy
24:50 Summary and Conclusion
Go to the Walk The World Universe at https://walktheworld.com.au/
An important conversation with David Llewellyn-Smith, David is Chief Strategist at Nucleus Wealth and the founding publisher and editor for Macrobusiness.
Australia is facing an energy crisis which has been deliberately set-up by a cartel of producers, across gas and coal. As a result we face crippling costs of energy, and a flow through into higher inflation. As a result the RBA will likely lift the cash rate higher forcing households and business to the wall.
But there is a simple solution, one which would slacken inflation, restore normality to the energy market and take pressure off households and businesses. So the question is, will the new Government grasp the opportunity, or will they be too timid (or even corrupt) to do so?
Go to the Walk The World Universe at https://walktheworld.com.au/
The international club of central banks responsible for controlling inflation has backed Reserve Bank of Australia governor Philip Lowe by warning that wage-price spiral risks are “flashing red” and calling for “front-loaded” interest rate hikes to avoid 1970s-style stagflation.
If central banks failed to tame inflation and wage claims, interest rates would need to rise sharply, risking “large drops in asset prices [that] could trigger a sharp recession and financial stresses”, the Bank for International Settlements said.
The Reserve Bank of Australia has conceded the disorderly end of its yield curve control policy in November last year triggered market volatility and dislocation, alongside damage to the bank’s reputation.
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My latest Friday afternoon chat with journalist Tarric Brooker – @avidcommentator on Twitter. The slides are available at: https://avidcom.substack.com/p/charts-that-matter-24th-june-2022
The latest edition of our finance and property news digest with a distinctively Australian flavour.
Go to the Walk The World Universe at https://walktheworld.com.au/
Join us for a live discussion about the current state of the economy, with a specific focus on Australian property with Leith van Onselen, the Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
The RBA reported on their yield curve control today, and Phil Lowe spoke about rising mortgage rates – how high will they go – and what are the consequences?
You can ask a question live via the YouTube chat.
Go to the Walk The World Universe at https://walktheworld.com.au/
Join us for a live discussion about the current state of finance and politics post the election, with Robbie Barwick from the Australian Citizens Party. We will look at bail-in, derivatives risks, and cash freedom, as well as the national bank. [Power supply permitting!!]
You can ask a question live via YouTube chat.
Go to the Walk The World Universe at https://walktheworld.com.au/
On Friday, the exposing of the monstrous lie that inflation has peaked was a game changer. The reaction in the markets was a swift and fundamental economic and financial market relationships altered. US Inflation for May 2021 came in at 1% for the month vs expectations of 0.7% or 8.6% vs expectations of 8.3%.
CPI came in at 0.6% for the month vs expectations of 0.5% or 6.0% versus expectations of 5.9%. Over the weekend, there is a lot of more chatter that inflation is going to continue going higher – including on mainstream financial channels such as CNBC – over the coming months.
This has put immediate pressure on the US Federal Reserve who meets on Tuesday-Wednesday US time to be more aggressive in rising rates. This could include by raising rates by 75 or 100 basis points. It is important to note that quantitative tightening is expected to commence this week.
The exposing of the monstrous lie that inflation has peaked has now resulted in a breakdown of the financial system. All three risks inflation risk, credit risk and liquidity risk are now all coming into play. There will be more pressure on central banks to deal with inflation risk – if they do, this rises credit and liquidity risks – which can easily result in markets freezing and economic agents (households, corporations, banks and government) defaulting on debt.
A material credit and liquidity risk event can easily plunge the financial system into a new financial crisis. Any attempt to prevent this will lead to soaring stagflation – with a major crash in the share market and cryptocurrencies. The timetable for the pivot (which Adams is anticipating) has just dramatically quickened. All eyes on what the FOMC does on Wednesday, US time.
Go to the Walk The World Universe at https://walktheworld.com.au/
My latest Friday chat with journalist Tarric Brooker @AvidCommentator on Twitter. We look at the latest economic and financial news, and consider the consequences.
Tarric’s slides are available at: https://avidcom.substack.com/p/charts-that-matter-10th-june-2022
Go to the Walk The World Universe at https://walktheworld.com.au/