Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
More from our property insider as we look at the latest from the market. Are listings really on their way up?
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New research from NAB suggests the average Australian feels only “moderately” stressed about money or making ends meet, but also only “moderately” comfortable they are on top of their finances, could manage a major unexpected expense, and are on track to have enough money for their future financial needs. But averages mask.
They say over 4 in 10 (43%) Australians experienced some form of financial hardship in Q2, and is now up from 29% in early-2022 amid rising inflation and higher interest rates. Money is “very much” a source of stress for 1 in 3 Australians, and 1 in 4 are struggling “very much” to make ends meet.
Financial hardship can happen at any time, and is often the result of sickness, job loss or over-commitment, but rising interest rates and cost of living is now also causing financial distress in more households.
The worsening financial situation reflects a number of factors. First, the roughly one-third of households with a mortgage are obviously being smashed by the RBA’s 4.0% of interest rate hikes, which has lifted variable mortgage repayments by about 50%. The situation facing this cohort will only worsen if the RBA hikes further. There are also around 500,000 fixed rate mortgages that will expire over the second half of this year, which will reset these mortgages from rates of around 2% to variable rates approaching 7%:
Second, the roughly one third of renting households are experiencing explosive rental growth, especially across the major capital cities: Rental inflation will remain turbo-charged given the federal government is running the biggest immigration program in history amid falling housing construction rates:
Finally, overall cost-of-living pressures are impacting all cohorts, driven by the hyperinflation in energy (gas and electricity) prices along east coast Australia.
3 in 10 Australians do “not at all” feel they could manage a major unexpected expense, and 1 in 5 do “not at all” feel on top of their day to day finances, or believe they are on track to have enough money to provide for their financial needs in the future.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Well, dangerous investor euphoria is now spreading like a rash on the belief, at least in the US, of a perfect soft landing as inflation is vanquished, without a recession. Cash and hedges are out, replaced by demand for everything from small caps to meme stocks. Industrial shares are on a tear, junk-bond spreads are narrowing, quants are ramping up Treasury shorts and everyone is piling into stocks.
How different from the recent talk about recession, as data on the surface at least suggests the US economy is thriving amid mounting evidence the Federal Reserve is beating inflation.
On Wednesday, Federal Reserve Chair Jerome Powell said the Fed was not forecasting a recession and did not rule out another rate hike, saying it would follow future economic data. But they would not hit their inflation target until 2025.
More than half of the firms listed on the S&P 500 have reported second quarter earnings as of Friday, out of which 78.7% have surpassed analyst expectations.
All the optimism has sent the S&P 500 to the brink of its sixth advance in seven months and pushed prices in the Nasdaq 100 to almost 35 times profit. It’s manna for bulls — even as it leaves them with precious little wiggle room should anything in the economy or monetary policy not unfold as hoped.
Economic data keeps defying bearish predictions — everything from gross domestic product to consumer confidence and hiring has beaten forecasts. Reports on Friday showed the employment cost index had its slowest advance since 2021 in the second quarter, while the Fed’s preferred inflation gauge posted the smallest increase in more than two years.
The personal consumption expenditures (PCE) price index increased 0.2 per cent last month after edging up 0.1 per cent in May, the Commerce Department said. Food prices dipped 0.1 per cent while the cost of energy products increased 0.6 per cent.
In the 12 months through June, the PCE price index advanced 3.0 per cent. That was the smallest annual gain since March 2021 and followed a 3.8 per cent rise in May.
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The Fed lifted rates again on Wednesday to a 22-year high, and pretty much repeated the statement from last month. But there is an expectation of higher rates for longer, and that inflation would be above target for the next couple of years.
The market reacted as expected, given the hike was well signaled, but lifted the probability of another hike this year a little, but that will be determined by incoming data. The Fed meets again late September.
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.
The Consumer Price Index (CPI) rose 0.8 per cent in the June 2023 quarter and 6.0 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).
CPI inflation slowed in the June quarter, with the quarterly rise being the lowest since September 2021. While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.
This means Australia’s inflation rate eased more than expected in the three months through June, reflecting global trends and bolstering the case for the Reserve Bank to pause again at next week’s policy meeting.
The result was the second consecutive decline in the pace and the RBA currently expects inflation will return to the top of its 2-3% target by mid-2025.
The easing in prices will be welcomed by Governor Philip Lowe, who has put the central bank in data-dependent mode after raising interest rates 12 times over the past 15 months. Expectations that the result will allow the RBA to stand pat on Tuesday saw the Australian dollar extend losses and the yield on policy-sensitive three-year bonds fall, while stocks rose.
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.
This is an edited version of my latest live stream which was an important live discussion with Robbie Barwick from the Australian Citizens Party as we discuss the upcoming censorship bill relating to Social Media, the attempts by Banks to strangle communities and abolish cash, and the risks emerging from Central Bank Digital Currencies and other measures designed to remove hard earned societal freedoms. And we may also stray into international politics and global agendas too!
Go to the Walk The World Universe at https://walktheworld.com.au/
Our latest chat with our property insider, Edwin Almeida including a walk round a property being converted to “budget accommodation.
https://www.ribbonproperty.com.au/
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Wall Street closed out another week with a quiet Friday on US markers as stocks found some stability after sliding the day before.
The S&P 500 edged up by less than 0.1 per cent, to 4,536.34 to cap its eighth winning week in the last 10. The Dow Jones Industrial Average added less than 0.1 per cent, to 35,227.69.
The blue-chip index was lifted by gains of more than 1% each in Procter & Gamble (NYSE:PG) and Chevron (NYSE:CVX) . It is now up over 6% in 2023, compared to the S&P 500’s 18% rise.
To be sure, the 18.1 per cent jump for the S&P 500 this year also has critics saying the rally has come too far, too fast. The risk of recession remains because inflation and interest rates remain high.
In Australia, The RBA does not expect inflation to return to the upper end of its 2 per cent to 3 per cent target band until mid-2025.
ASX company profits are on track to contract in the 2024 financial year for the first time since the pandemic, casting a dim light on the forthcoming earnings season which investors and strategists warn will translate to weaker returns for shares. Soaring wage bills, the rising cost of borrowing, and high energy costs are eroding profit margins and offsetting the bullish performance of Australia’s jobs market and robust house price growth.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
My latest Friday afternoon chat with Journalist Tarric Brooker goes deep into the economic substructure of the economy, where we see people pulling in two directions at the same time – Burnout Economics!
https://avidcom.substack.com/p/burnout-economics-presentation-on
https://avidcom.substack.com/p/resuming-student-loan-payments-to
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
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Australian employment surpassed expectations in June and the jobless rate held at a lower revised rate, underlining the labor market’s resilience to rapid interest-rate increases.
The jobless rate remained at 3.5%, having hovered in a range of 3.4%-3.7% since June last year, Australian Bureau of Statistics data showed Thursday. The economy added 32,600 roles from a month prior, more than double estimates, and employment has now risen in nine out of the past 12 months.
The data increases pressure on the Reserve Bank to resume raising rates, with money market bets implying a better-than 50% chance of a hike to 4.35% at its Aug. 1 meeting. The Australian dollar extended earlier gains, rising to 68.25 US cents. Three-year bond yields jumped 12 basis points, heading for their largest one-day increase since July 7.
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.
