"Intelligent Insight"
Join me for a live discussion with Tony Locantro from Alto Capital for a realistic assessment of the current market, and outlook. You can ask a question live.
https://www.altocapital.com.au/
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We review the latest in new lending statistics and building approvals released by the ABS.
In essence there are signals of consistent slowing, despite a small rise in first time buyers entering the market in reaction to the 1 month RBA rate rise pause. However, refinancing continues to drive the markets as more seek better rates. Building approvals continue to languish, as the HIA are always keen to underscore.
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Breaking news, as Westpac reverses its decision to close some of its regional branches, in response to the pressure form the Senate inquiry (which we managed to get up). I discuss this with Robbie Barwick from the Citizens Party.
The job is not done yet, and we need to ensure the Treasurer reverses his support for a totally independent Central Bank!
Giving up authority over the RBA – The ultimate BETRAYAL of the Australian people https://youtu.be/EA7FhBZxfuM
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The latest from our modelling showing more pressure piling on households as mortgage rates and rents rise faster than incomes, and costs of living continue to bite hard.
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Dale Webster at The Regional has caught CBA out, as despite their promise not to close regional branches while the Senate Inequity is running, they are, by carefully defining down “Regional” to a very narrow definition, conveniently leveraging the ABS definitions, despite elsewhere calling these same regions Regional.
https://www.theregional.com.au/post/commonwealth-breaks-pledge-to-pause-regional-bank-closures
The Senate needs to hold CBA to account here. Write to your Senator, and also CBA management. This is plainly not acceptable nor within the spirit of their earlier statement! Well done Dale!
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We continue to see massive swings in prices, and I need to remind you that while major players continue to benefit from these wild gyrations in perceived value – as shown in recent trading results, (not least because they can programme trades using algos, and harvest income from the movements) – retail investors hardly benefit, because they are always behind the trade, unable to benefit from the dark pools and high-speed trading. It is an unequal game.
Take Friday, for example, where U.S. stocks rallied with the Dow posting its biggest one-day percentage gain since Jan. 6, as shares of Apple surged more than 4% after upbeat results and U.S. jobs data pointed to a resilient labor market.
Adding to the bullish momentum, regional bank shares rebounded from declines tied to the collapse of First Republic Bank. Analysts upgraded a number of lenders they said were oversold. PacWest Bancorp rallied 81.7% and Western Alliance Bancorp jumped 49.2%, while the KBW regional bank index advanced 4.7%.
Apple’s quarterly results also cheered investors worried about a potential recession. The iPhone maker’s shares hit their highest level in about nine months, and the stock ended up 4.7% in its biggest daily percentage gain since November. The stock was the biggest positive influence on all three major U.S. stock indexes.
The U.S. Labor Department report showed job growth accelerated in April and wage gains increased solidly, suggesting the labor market has stayed strong despite recent interest rate hikes from the Federal Reserve.
All in all, the wild market rides continues…
CONTENT
0.00 Start
0.13 Introduction
1:00 US Markets
2:10 US Labor Markets
6:30 US Earnings
7:00 Europe
9:05 Oil
9:30 Gold
11:57 Asia
13:52 Australia
17:00 Crypto
17:50 Summary and Close
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The latest RBA’s Statement On Monetary Policy (More than 80 pages) said very little which was new, with inflation not expected to land within their target zone until 2025, with lower growth and higher unemployment. They reconfirmed an expectation rates could still go higher.
They did try to defend corporate profits as not driving inflation…. hum… but not very successfully in my book.
https://www.rba.gov.au/publications/smp/2023/may/
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The continued pressures on US Regional Banks highlight the risks created by the changed interest rate environment – even if the scenarios are different from the 2007-8 GFC. But banks are under pressure as margins are compressed, and are needing to revisit their strategies, as both ANZ and Macquarie reposted this week. In fact, a credit crunch could well be on the cards.
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As discussed in The Conversation, the RBA was made subservient for a reason.
As prime minister, Chifley had the principle enshrined in the Commonwealth Bank Act of 1945, and it was later enshrined in the Reserve Bank Act of 1959.
The ultimate supremacy of the government over the Reserve Bank board was hard won – by Labor – and it is easy to imagine circumstances in which a government might need to use it.
Even the knowledge that the trigger is there, never pulled, lets the board know it is not able to go completely rogue and act against the wishes of a democratically elected government.
Chalmers ought to consider the wisdom of keeping his ultimate power in reserve. One day, Chalmers or his successors might wish they had it. The current recommendation to remove it is just plain wrong!
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The Fed lifted rates again to 5 to 5.25%, but the press conference did not go to plan and the markets turned to thinking a pivot was likely. Bond yields moved, and concerns about a spreading banking crisis grew, as PacWest said it was looking at options.
Meantime, the FED holds to its view there will be no recession, so no rate cuts.
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