An important week for a Rant as Edwin and I pick apart the latest housing policy announcements, and the broader economic questions surrounding the Trump Tariff games. What will property do as a result?
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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.
You can tell an election is close as both major parties have launched their campaigns formally, with Dutton in Western Sydney and Albo in Perth. Recognising that costs of living and housing specifically are haunting younger voters, who now comprise the bulk of voters for the first time, housing was at the heart of both campaigns. Both parties launched proposals aimed at tackling the housing market, which of course has become more unaffordable for many, as a result of a generation of bad policy.
But I give them both a major fail as both sides presented a fig leaf that their policies will increase the supply of homes.
Yet again, politicians are dealing with the symptoms of high house prices, not the root causes.
And also remember one third of households are renting, and three quarters are in rental stress, how does any of this help them? Cut migration, cut red tape and step back from further financialisaton of the property market, by reducing tax breaks. Its not that hard, but politically, seeing home prices fall is not a winner either, which is what we really need to escape the housing affordability death trap.
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Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
Con Job: Housing Dog Whistles And Sugar Hits As Election Day Looms!
This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia. This past week was an object lesson in the power of the Bond market. And not for the first time. A favourite quote on markets comes from the former CEO of Citicorp, Walter Wriston, who observed that, “Capital goes where it is welcome and stays where it is well treated. Remember those Words.
I made shows through the week about the fallout from the Trump tariffs and the subsequent 90 day pause of the reciprocal tariffs, the extra hikes directed at China, and China’s escalation back, (Beijing increased its tariffs on U.S. imports to 125% on Friday after Trump’s move to hike duties on Chinese goods) and the turmoil on financial markets, especially a significant sell-down in US Treasuries. This lifted yields (remember bond prices and yields move in opposite directions), with the 10-year up 12.4% across the week to 4.494, while the two year was up 9.07% to 3.970. The long 30-year was up a massive 10.39% across the week, even though selling partially reversed as the Friday session progressed. This is NOT normal. Rumours went around it was China, or Japan selling bonds, but more likely it was driven by hedge funds caught out of position. “Until Treasuries stabilize and start to behave normally, risk assets will struggle,” Barclays analysts said in a note on Friday.
Normally, bond markets, though a huge element in the financial system do not make moves of this scale, after all they are meant to be the safe, secure, boring backstop to the financial system. Macro commentator James Aitken told his clients. “Financial history reminds us that when a policymaker tells hyper-financialised markets he or she is not targeting markets, markets will force the policymaker to target them. Indeed.
In Asia, Japanese stocks were by far the worst performers, given that the country holds large export exposure to both the U.S. and China. Mainland Chinese stocks fell relatively less than their peers, boosted by apparent buying by state-backed funds – China’s so-called national team.
The Australian share market closed lower on Friday, sealing a week that had the exchange record some of its most outsized moves since 2020 as a trade war between the world’s two largest economic powers gathered momentum. The S&P/ASX 200 fell 0.8 per cent, or 63.1 points, to 7646.5 points at the close. The index dropped more than 2 per cent earlier in the session, but improved in afternoon trading as US futures climbed. The ASX 200 tumbled around 0.3 per cent this week – its second consecutive weekly loss.
Investors are redirecting money once bound for Wall Street and fast-growing Silicon Valley tech giants back towards the Australian share market as intense volatility in the United States turns the ASX into a safe haven. Despite a drop on Friday taking the S&P/ASX 200’s falls this year to 6.3 per cent, the local benchmark has performed far better than Wall Street, where the S&P 500 is down more than 10 per cent and the NASDAQ some 15 per cent.
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Digital Finance Analytics (DFA) Blog
In A Hyper Financialised World, Bond Markets Rule…
Amazed though I am, it appears the LNP has one policy which is so critical it should win the election. I am talking about Gas reverse tariffs.
Recall that while East Coast Australia has doubled its gas production over the past decade, the domestic market has been supplied with 25% less gas. This has driven energy prices to new heights as electricity is priced off the marginal price of gas at international rates. I made a show about this recently. The tripling of prices has caused manufacturers to shutter and reduced consumption.
But now, Liberal leader Peter Dutton has launched an East Coast gas reservation, which promises to deliver $10 a gigajoule gas by requiring uncontracted (spot) gas to be directed into the domestic market.
Peter Dutton says the Coalition’s gas policy forcing LNG exporters to increase onshore supply and decoupling local prices from overseas markets will reduce wholesale prices by 23%, slash industrial retail gas bills by 15% and cut 7% from household costs.
Frontier Economics modelling released by the Opposition Leader on Tuesday night claimed his national gas plan—headlined by an east-coast reservation scheme—would immediately apply downward pressure on domestic prices and “progressively lower” gas and electricity bills.
Of course the gas cartel will attempt to slow production to bully the nation, but that’s what the levy is about. It is counter-bullying to prevent it. If production is cut, Dutton can just raise the levy. If the producers eventually want to default on export contracts, that’s up to them.
Bottom line, Australian gas must be reserved for Australians first. Otherwise, Australians face surging gas and electricity costs, higher inflation, further deindustrialisation, lower productivity growth, and declining living standards. For this policy alone, a key to future prosperity, LNP wins.
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I caught up with Robbie Barwick Senate Candidate for VIC and Research Director for The Australian Citizens Party, to discuss Trump, Tariffs, China and importantly what Australia needs to thrive and survive in this uncertain international environment.
Yesterday I went through the market falls, as China retaliated to the Trump tariffs, even as President Donald Trump ploughed ahead with plans to impose steep new tariffs on imports despite warnings that the policy could trigger economic chaos.
Yet only 13 hours after the duties had gone into effect, in a social media post, Trump said that a set of tariffs on imports from many of America’s largest trading partners were paused. He indicated that turmoil in the financial markets following the implementation of the tariffs played a role in his decision.
In particular Bond yields had climbed, with speculation this might be a signal China was selling some of their massive holding, or perhaps it was hedge funds needing to raise cash to meet margin calls in a falling market, or maybe it related to elevated inflation fears. But it does appear the ructions on the Bond Markets cash a shadow on the tariff show.
Just remember this is a 90-day pause, and 10% tariffs are still in play, with some suggesting that these will remain a baseline for any negotiations, while others are seeking zero tariffs. This has a long way to go, and markets will likely remain jittery, so expect more icebergs ahead.
Digital Finance Analytics (DFA) Blog
RMS Trump Sails On, Having Avoided An Iceberg, For Now…
President Donald Trump’s so-called reciprocal tariffs are now in place, creating self-inflicted choppy waters, as RMS Trump sails on through a flog of confusion, dealing a thunderous blow to the world economy as he pushes forward efforts to drastically reorder global trade.
Trump argues that the taxes will boost US prosperity and revive domestic manufacturing, but his approach has drawn criticism from Wall Street, economists and some in Trump’s own party, who have questioned the administration’s methodology and warned of an economic fallout that could include higher consumer prices and slower growth, if not a recession. He has long argued for tariffs as a solution for his trade grievances, this plan will reassert US power, revive domestic manufacturing and extract geopolitical concessions.
He signed an executive order raising reciprocal tariffs on China to 84%, up from the 34% announced on April 2. With 20% in existing duties already in place, the total tariffs on Chinese goods now amount to 104%, along with import taxes on roughly 60 trading partners that run trade surpluses with the US. That comes after a 10% baseline tariff for most US trading partners took effect Saturday.
Asian countries are bearing the brunt of the measures, with Cambodia and Vietnam facing 49% and 46% charges, respectively. Imports from the European Union will be taxed at a 20% rate.
All of this, the president and his administration have repeatedly promised, will lead to a future boom, both economically for the US and politically for his party.
“We’re going to win the midterm elections, and we’re going to have a tremendous, thundering landslide,” Trump told Republican lawmakers and donors Tuesday. “I really believe that.”
The truth is, the economic sea has gotten very stormy, and there are indeed icebergs out there, but the as to who will get through safely, and who will go down with the ship is too hard to call.
Gold remains a relative safe haven, sitting just over 3,060 USD per oz, but commodities are down with WTI Oil at 58.19, and Brent at 61.44. and Bitcoin was last at 77,764.
As I discussed last week, much of the pain will be born in the US, as globalisation, which benefitted some but not all unravels. Beyond that new trade patterns will emerge, but meantime markets will remain tossed about by the currents and tides so batten down the hatches.
http://www.martinnorth.com/
Digital Finance Analytics (DFA) Blog
Will Trump's Titanic Tariff Plan Hit An Iceberg, And Who Goes Down With The Ship?
This is an edited version of a live discussion as I explore the latest from our modelling deep dive the latest households mortgage and rental stress analysis.
See my earlier show where I discussed the disconnect between reality and the current political election discourse. With just under half of households caught in a cash flow trap, we need some serious policy… https://youtu.be/jZoeH_KJrhc
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Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Post Code Analysis: Where Households Are Hurting
This week we consider the impact of the Trump Tariffs on Property in Australia, look at the latest numbers and where property demand is coming from, and also consider some of the risks embedded in your homes.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
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.
In this show we explore the latest on rental and mortgage stress, from data drawn from various sources, including our own surveys to highlight the mismatch between the massive problem many people are facing into, versus the glib political narrative on show through the election so far.
This also sets us up for our Tuesday live show were we will do a deep dive into the post code analysis. Link for that show here: https://youtube.com/live/cq3x1XAEVwc
If there is a specific post code you would like me to cover in that show, drop it in the comments below.
http://www.martinnorth.com/
Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Many Households Are Feeling The Pressure (And The Election Is Missing The Point..)
