Digital Finance Analytics (DFA) Blog – Page 18

The Investor’s Dilemma: Hang In Or Jump Out?

This is our weekly market update, is the best way I have found to organize my thoughts for the week and to track what’s going on. We start in the US, crosses to Europe, then Asia, and Australia, and we also cover commodities and crypto.

In the US, the Nasdaq eked out a fifth straight record closing high on Friday following gains in Adobe and other technology-related shares, while the S&P 500 and Dow ended slightly lower. The Dow Jones Industrial Average fell 0.15%, to 38,589.16. The S&P 500 lost 0.04%, at 5,431.6 and the Nasdaq Composite added 21.32 points, or 0.12%, at 17,688.88.

For the week, the Dow was down 0.5%, the S&P 500 rose 1.6% and the Nasdaq was up 3.2%. So the S&P 500 ended its four-day run of record closing highs, but still climbed more than 1% for the week. The S&P 500 technology sector rose 0.5%, hitting another record high close. The communication services sector rose 0.6%, leading gains among sectors.

Adobe shares jumped 14.5% a day after the company raised its annual revenue forecast on more demand for its artificial intelligence-powered software. But the Russell small-cap index fell 1.6%, adding to recent losses, while the S&P 500 industrials sector was down 1%.

The big issue this week was the Feds post decision press conference, with investors still trying to gauge how soon the Federal Reserve might be able to cut interest rates following Wednesday’s cooler-than-expected CPI report and the Fed’s revised dot plot, which lowered rate-cut expectations this year from three to one.

http://www.martinnorth.com/

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

Let’s Play Some More Numberwang!

The seasonally adjusted unemployment rate fell by 0.1 percentage point to 4.0 per cent in May, according to data released today by the Australian Bureau of Statistics (ABS).

With employment rising by around 40,000 people and the number of unemployed falling by 9,000 people, the unemployment rate fell to 4.0 per cent.

In April we saw more unemployed people than usual waiting to start work. Some of the fall in unemployment and rise in employment in May reflects these people starting or returning to their jobs.

While the total number of unemployed people fell by 9,000 in May, this followed a 33,000 increase in April. Unemployment was around 24,000 people more than in March, an average increase of around 12,000 people each month.

“There are now almost 600,000 unemployed people, however, that is still nearly 110,000 fewer people than in March 2020, just before the pandemic.

As a result of the increase in employment and the fall in unemployment, the seasonally adjusted employment-to-population ratio remained at 64.1 per cent and the participation rate remained at 66.8 per cent.

The latest net overseas migration figures showed that Australia’s NOM was 178,500 in Q3 and 129,400 in Q4, totalling 307,900 for the half. This leaves only 87,100 worth of NOM over the first half of this year to meet the federal budget’s 395,000 NOM target for 2023-24.

Given that net permanent and long-term arrivals have remained hot so far in 2024, NOM is once again going to blow way past the budget’s forecast.

http://www.martinnorth.com/

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

The Fed’s “High For Longer” Ripple Effect

Wednesday was it turned out, a game in two halves, with a slightly better than expected CPI read in the morning, before the Fed’s no change decision later, but impacted by a more hawkish stance in the subsequent press conference. Risk-on assets had rallied after the CPI report showed the US core consumer price index fell to the lowest in more than three years. But later, the Federal Reserve penciled in just one quarter point interest-rate cut this year, down from three seen in March.

The CPI core goods inflation was in negative territory, but the news was not all as good. Remember that to account for the ongoing questions over measuring shelter prices, Chair Jerome Powell and his colleagues chose to focus on the so-called supercore of services excluding housing, a measure particularly influenced by wages. The good news is that both indexes fell last month — a bit. The bad news is that they’re still far too high for comfort and continue to make it hard to cut rates.

And The FED decided to hold rates, but played the data dependent, higher for longer card, again.

http://www.martinnorth.com/

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

The Housing Market Sheep And Goats (Which Are You?)

Data from my surveys, as discussed this past week, along with other market data shows we have a very divided housing market, with on one side of the ledger many households under significant pressure and begin forced to sell up, while watching their property values slide, while on the other side property investors are still piling in competing with owner occupied buyers, especially at the lower end of the market and bidding prices higher. Actually of course there are many micro markets across the country, and so any headline “data” on rises or falls mask important differences. Housing isn’t just the great Australian barbecue-stopper. It’s our greatest pain point, too. All this only days after Australia’s GDP figures grew at the lowest rate in three decades, excluding the COVID-19 pandemic, and as traders push out rate cut expectations well into next year.

So today I will be looking at the latest signals from the data relating to mortgage prisoners, forced sales, credit growth and investor activity, to provide context for the misleading headlines we see on the property portals.

http://www.martinnorth.com/

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

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