Prepare For A September Crash!

In today’s market review we are going to focus on Fed Chair Jerome Powell speech at Jackson Hole, just 9 minutes in length but enough to move the markets down significantly.

For the Fed’s monetary policies to have any effect, markets must transmit them via the financial conditions to the actual economy. And the Fed needs to make sure this happens. And today was an effort by Powell to get this job done.

Speech: https://youtu.be/vhMRynjm3CI

The speech was one of the strongest ever by the Fed chief, reflecting the onerous burden borne by the central bank in curbing inflation retreating ever so slowly from four-decade highs.

First Powell said inflation needed to be controlled. That was their main mandate.

Next he signalled there will be more rate hikes in the months ahead, taking the cash rate well above the neutral rate – meaning that they intend to deliberately slow the economy.

And he acknowledged this will hurt households and businesses.

And acknowledge that the current labour market was out of wack.

So, this message cut directly across the ranks of those saying the FED will pivot – arguing the FED has really been signalling that it would soon “pause” the rate hikes or “pivot” to rate cuts, even though the Fed had raised its policy rates four times this year, including twice by 75 basis points, the biggest rate hikes in years.

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Eye Watering Energy Bills Are Coming…

The UK just announced an 80% hike in average energy bill to households, with a further rise expected in January. This is putting millions of people under financial pressure, and unable to eat and heat themselves through the winter.

Worth reflecting on the cause – the hike in gas prices, and the fact that we in Australia are exposed on those same rises in international gas prices. So prepare for more and significant rises here too. Go to the Walk The World Universe at https://walktheworld.com.au/

No Recession: For Now?

Is the US in recession or not? Well the “official figures” are unsure, and despite the inverted yield curve (2-10) you can still argue there is no recession, which gives latitude to the Fed to hike further and faster. We may hear something about this at Jackson Hole, the Central Bankers’ love-in!

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Robodebt Royal Commission Coming!

A Royal Commission into Robodebt was announced today. Deemed illegal in 2019, this programme “recovered” money claimed to be owed through data matching, and was proved to be faulty, leading some to take drastic steps to avoid the debt. Lessons do need to be learnt.

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Hardship Is Now On Your Credit File…

Recent changes in the rules has led banks to start reporting hardship arrangements on customers credit files. They will remain on file for a year beyond the end of the arrangement. This may have implications for some borrowers as they seek to restructure their mortgages in the current rising rate environment.

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

A Litany Of Failures: More To Come!

Builders are falling like flies… and more to come.

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. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Home Prices Returning To Pre-pandemic Levels Fast!

Evidence is mounting that home prices are correcting towards pre-pandemic levels, and fast. Given the tightening of rates, borrowing power reductions, and consumer confidence falls, this is perhaps not surprising. But there are going to be consequences, and further falls should be expected.

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. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

FINAL REMINDER: DFA Live Q&A Robbie Barwick: The Great Super Con 8pm Sydney Tonight

Join us for a live discussion about the current state of Superannuation, and the financial system. Who is it working for? You can ask a question live.

Federal Treasurer Jim Chalmers has told the annual Superannuation Lending Roundtable that he believes that Australia’s $3.4 trillion superannuation sector should play a bigger role in building the nation. He said that with governments heavily laden with debt, energy and housing are two obvious areas that super funds should look to invest.

Former prime minister Paul Keating was also at the event, and called for super funds to look at ways of facilitating access to housing.

From The AFR:

“We see trillions of dollars in workers’ capital, we see government budgets heaving with debt, and there are obvious needs for investment, particularly in areas like housing and energy,” Dr Chalmers told the annual Superannuation Lending Roundtable…

Dr Chalmers pointed to a lack of spending in the aged care sector and said he would “contemplate what, if any, further role for super there is in that”…

“This is a society that can’t house its own children,” Mr Keating said. “If super funds just think they can go buy tech stocks in America and highways in Italy, they’re going to run into trouble. Without being heavy-handed, there is a requirement of the funds to look at social opportunities.”

https://www.macrobusiness.com.au/2022/08/superannuation-is-not-play-money-for-the-labor-party/

Robert Barwick is the Research Director – Australian Citizens Party.

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How To Handle Mortgage Loan Pain…

The Conversation had an useful article about how to deal with mortgage debt pain. Bottom line is to get help and advice early.

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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. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.