Digital Finance Analytics (DFA) Blog – Page 17

Markets Calm Before The Storm, As The AI Wave Wains?

This is weekly market update, starting in the US, Europe, then Asia and then the US, as I get my thoughts organised!

This week, punctuated by a Wednesday US holiday, saw markets taking a breather following recent volatility and record highs. The Nasdaq had hit record highs on Thursday, boosted by strong gains in tech, and indications of a gradual easing in the labor market and inflation levels.

But on Friday, in New York, the S&P 500 closing modestly lower thanks to the quarterly expiration of about $US5.5 trillion of options during the quarterly “triple witching” in which derivatives contracts tied to equities, index options and futures mature. Around 18 billion shares changed hands on US exchanges, which is 55 per cent above the three-month average volume. The options’ expiration coincided with index rebalancing as well.

Remember that S&P 500 is up 14.6% this year, but most of the broader index’s gains have been concentrated in the information technology and communications sectors – up 28.2% and 24.3%, respectively. The rest of the market has been more subdued: the next best performing sector, utilities, is only up 9.5% year-to-date. More than 7% of stocks are down this year. So the huge price gains, including Nvidia’s 155% year-to-date run, have stirred worries that the tech rally might be overheated.

http://www.martinnorth.com/

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

One In Eight Mortgage Borrowers “Extend And Pretend”!

Struggling homeowners are increasingly hitting the pricey reset button on their loans in the hope of dragging down their monthly repayments.
It’s adding years to the length of their loans and potentially hundreds of thousands of dollars in interest costs.

A recent Finder.com.au survey revealed one in eight mortgage holders polled revealed they had extended their home loan to lower their repayments over the last year.

In a trend described as “borrowers stuck in mortgage quicksand”, about half of those who had extended their loans had added more than five years to the life of the debt.

This would result in much higher interest costs over the lifetime of the loan, despite cheaper monthly repayment bills in the short-term, Finder revealed.

“Even a small increase in the length of a loan term can add up to big differences in interest over the life of a home loan.”

http://www.martinnorth.com/

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

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.

Is A 5% Cash Rate For Australia On The Cards?

As I discussed on my live show, on Tuesday night with Leith van Onselen, the RBA decided to hold the cash rate at 4.35%, but there were signs of a more hawkish tone from the meeting notes, and the subsequent press conference (which I might add is becoming less useful each time thanks to weak questions supporting weak answers, come on MSM do your job….)
Bullock was clear, we need more data, there are risks to the upside from sticky inflation, but employment is also an important factor, given their dual mandate.

Just remember folks, the RBA at 4.35% is significantly below several other Central Banks, including the Bank of England, which held rates on Thursday at 5.25%, despite inflation falling to 2% last month, Bank of Canada which cut rates by 0.25% to 4.75% and New Zealand’s Reserve Bank holding rates at 5.5%, despite driving the economy there into recession.

Which begs the question, has the RBA done enough on rates to squeeze inflation out of the economy in Australia, despite being lower the peers, mainly because in Australia a greater proportion of mortgages are linked to variable rates than other countries. Economists are divided, with Leith still holding the next cut will be down, as unemployment rises.

But writing on Monday, before the RBA decided to hold rates on Tuesday, Economist Warren Hogan, at the more bullish end of commentators on RBA rates, wrote in the AFR that the flow of data since the last meeting in early May made it a very close call to hold off on further tightening.

The narrow path is still attainable, but it increasingly looks like we will need to get rates up closer to 5 per cent to stay on it.

http://www.martinnorth.com/

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

Construction Firms Failures Hit A New Peak: There Will Be Consequences…

Last week, yet another building and construction firm hit the wall, collapsing into liquidation owing $5.7m straddling two different states and territories, leading to a “domino effect” impacting 130 projects and 80 staff members.

This is part of the continuing litany of failure, as data from the Australian Securities & Investments Commission (ASIC) shows that a total of 1,245 companies were declared insolvent in May alone.

This is 44% higher than the same period in 2023 and 122% higher than in May 2022. It is also the highest number of insolvencies in a single month since ASIC started reporting this data in 1999. The surge in insolvencies was driven by the construction sector, which recorded 313 insolvencies in May – a record for this cycle.

This is an object lesson for anyone considering contracting with the building and construction firm of any size; do your own due diligence! It also presents another barrier to the Albanese government’s target of building 1.2 million homes in five years—a level of construction that Australia has never achieved before, despite record activity compared with other countries and over 5% of people working in the sector.

http://www.martinnorth.com/

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

Today’s post is brought to you by Ribbon Property Consultants.

Hello, I’m From The Government, And I’m Here To Help You! (Honest!!?)

It’s raining “announcables” at the moment, with interesting developments this past week on the housing and finance front as city, state and federal Governments continue to poke at the broken system. Schemes include, government buying off the plan to give construction firms a leg up, cheap housing for essential workers, changes to lending rules, higher council rates for investors, and further crackdowns on airB&B.

While these may sound attractive from a media positioning perspective, they will hardly move the dial on the broken housing system in Australia. It’s a case of fiddling while Rome burns.

In fact, for more on the broken system, join me on my live show next Tuesday evening at 8pm Sydney, when I will be joined by Leith Van Onselen, Chief Economist at Nucleus Wealth as we discuss “The Great Housing Poker Game”.

http://www.martinnorth.com/

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

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.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.