We look at the latest ABS data as unemployment hits the lowest since 1974. That said, hours worked fell, despite the growth in jobs, and more were on the bench because of illness.
Question now is whether higher wages growth will follow.
Category: Politics
Australia at Risk of Sri Lankan Chaos & Revolution!
This past weekend, the world witnessed Chaos and Revolution in Sri Lanka with the storming of Sri Lanka’s Presidential Palace. The Sri Lankan economy has collapse and this has resulted in societial chaos and a political revolution with the Sri Lankan president fleeing the country. Why did it happen? How is this relevant for Australia?
The lessons for Australia are very real and Adams and North will come back to Australia’s foreign debt problems in the coming months.
Go to the Walk The World Universe at https://walktheworld.com.au/
The Big Lie About First Homeowner Grants…
In recent years we have seen a swathe of “initiatives” from state and federal governments with the aim to encouraging and helping more first-time buyers into the housing market. The previous Government claimed they had helped “hundreds of thousands” into the property market.
The latest ABS statistics shows that the number of First Time Buyers is falling again – and the part peaks map directly onto Government “stimulus” measures.
The latest is the Albanese Government release of 40,000 new places under the Federal Government’s Home Guarantee Scheme, which will enable eligible first home buyers to purchase a property with a deposit of as little as 2% or 5%.
This as a time when the Reserve Bank of Australia is aggressively increasing rates and house prices are expected to plunge by between 10% and 20%, depending on the forecast. What could possibly go wrong?
In fact, the evidence suggest that these schemes are ineffective. Indeed, the long-term trends in terms of home ownership shows that across Australia, a smaller proportion of people own their own home, and those that do have bigger mortgages for longer. The latest Census data, which is still in the process of being released continues to confirm this trend.
Home ownership rates in Australia have declined over several decades, and the likelihood of attaining home ownership by age 30 has fallen substantially. Go back two decades and the average age of a first time buyer was 27 year, today its 34 years and rising based on my surveys. In addition, especially in Sydney, Melbourne and Perth, first home buyers (FHBs) are now buying fewer houses and more units, and evidence shows that more are receiving parental assistance.
Also while mortgage repayment affordability stress has been cushioned by falling interest rates until 2022, mortgage deposit requirements have risen with prices and become an increasingly serious constraint—far more so in Sydney and Melbourne than elsewhere.
I have long argued that this First Home Owner grants are bribes which distort the market, lift prices and are more designed to assist the construction sector. In other words, First Time Buyer Grants are a con.
Go to the Walk The World Universe at https://walktheworld.com.au/
After Central Banks – What?
There was an outstanding piece from John Authers this week arguing that the Age of Credibility for Central Banks Is Over as inflation blunders have destroyed the trust that’s anchored the global financial system since the end of the gold standard.
Certainly, in Australia, the RBA has been on shaky ground for many years, including over forecasting wages growth, taking interest rates too low, and relying on household wealth to be artificially inflated by poor policy for years. But the shocking reversal from last November’s no rate rises til 2024, to today’s 1.35% target cash rate, with more to come, shows just how far from credible they are – despite politicians still talking about mountains of respect. Over in New Zealand they are further up the curve, but the issues are the same. Central Bank credibility is shot.
It appears that the most likely anchor to replace central bank credibility is confidence in governments. But that is not a comforting thought.
Go to the Walk The World Universe at https://walktheworld.com.au/
The Recession Obsession…
The latest edition of our finance and property news digest with a distinctively Australian flavour.
Wall Street ended little changed on Friday after a volatile session in which investors tried to comprehend how a robust jobs report would influence the U.S. Federal Reserve and its plans to aggressively hike interest rates.
“I’m calling this period right now a recession obsession,” BMO Capital Markets Corp. chief investment strategist Brian Belski said .“Institutional investors are not positioned for any kind of upside move. That’s why you are seeing these sharp moves on a day like today and certainly over the last few days in terms of a short squeeze. We remain positive and think people are way too negative.”
Atlanta Fed President Raphael Bostic, until recently among the central bank’s most dovish policymakers, said on Friday he “fully” supports another 75-basis-point rate rise later this month.
Speaking later on Friday, New York Federal Reserve President John Williams did not specify if he favors a half point or three-quarter point increase at the Fed’s upcoming July meeting, but acknowledged rising interest rates were affecting the economy.
[Content]
0:00 Start
0:15 Introduction
0:27 Recession Obsession
1:35 US Non Farm Payrolls
4:45 US Markets
10:15 Gold
10:35 European Markets
12:00 Oil
12:40 Asian Markets
14:20 Australian Markets
16:15 May Trade Surplus
18:30 Market Trends
21:25 Crypto
22:15 DXY
22:35 Summary and Close
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The Dominos They Are Afallin’: With Tarric Brooker
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/
No Escape! Recession Will Destroy Wealth. Period.
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/
CBDC: Where Are They Taking Us?
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
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How Energy Cartels Will Smash The Housing Market!
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/
No Real Wage Rise For You, Or You, Or You..!
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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