The ABS reported that In November 2023, new loan commitments (seasonally adjusted): rose 1.0% for housing, fell 5.6% for personal fixed term loans, fell 4.8% for business construction (a typically volatile series) and rose 0.6% in trend terms and fell 6.4% for business purchase of property (a typically volatile series) but was flat in trend terms. So housing credit is still relatively strong despite higher interest rates, and potentially signalling that the RBA will need to dampen demand further in its inflation battle.
Also on Friday, the rather meaningless Monthly Household Spending Indicators was published by the ABS. As these are based on current prices, they are not adjusted for the impacts of inflation. The indicator is produced using aggregated and de-identified card and bank transactions from banking and financial institutions. They reported that Household spending increased 3.1% through the year on a current price, calendar adjusted basis.
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Digital Finance Analytics (DFA) Blog
Households Spend Less But Borrow More, What Could Possibly Go Wrong?
Once again, another horrifying sage of dumped asbestos turning up in the wrong place, with potentially fatal consequences.
As the Guardian reported, Asbestos has been found in additional samples of garden mulch taken from the Rozelle parklands in Sydney’s inner west, with the state government still unable to say where else in the city the contaminated material may have been used.
After an initial find, an urgent audit was under way to determine what other sites could be affected by what the premier, Chris Minns, described as “a toxic substance”. The government closed the Rozelle parklands to the public and called in contamination experts just three weeks after the park opened above the interchange.
The nearly 10 hectares of green space includes extensive cycleways and green expanses alongside large exhaust stacks for the tunnels below. The parkland was meant to appease inner west residents who had put up with years of tunnelling noises and road closures during the construction of the Rozelle interchange.
The premier said the government needed to know where potentially contaminated mulch had been used “as soon as possible” so it could close the other sites.
“I realise that is massively inconvenient during the school holidays … but we can’t muck around with safety – this is obviously a toxic substance,” Minns said.
John Holland built the interchange and the park. One of its executives, Mark Davies, said he could not immediately disclose a list of the other sites where the mulch had been used.
Over 97% of the asbestos products used in Australia was non-friable material in which the asbestos fibres were bonded by cement, vinyl, resin or other similar material. This form of asbestos product/material is often cited as quite safe unless damaged, sawn, drilled, sanded, crushed or is excessively weathered; But if any of these occur, then non-friable hard bonded asbestos products may release fibres and become friable.
In other words, bonded asbestos is not safe. Corrugated asbestos sheet roofing often shows signs of weathering. When it’s broken into smaller fragments, fibres are released. So Non-friable (bonded) asbestos has the potential to become equally as dangerous as friable asbestos, a distinction should never be made because of the type, colour or form of asbestos – all types, colours and forms of asbestos have the potential to kill people!
Things got interesting this week on the markets, as U.S. stocks closed barely changed on Friday, after wavering between modest gains and losses driven by mixed bank earnings offset cooler-than-expected inflation news that buoyed hopes for interest-rate cuts from the Federal Reserve.
After briefly topping 4800 points in early trading, the S&P 500 fluctuated, slipping modestly negative in the final hour before edging higher at the close. And note that US markets will be closed on Monday for Martin Luther King Day.
Expectations for a rate cut of at least 25 basis points by the Fed in March moved up to 79.5%, according to CME’s FedWatch Tool, from 73.2% in the prior session. Friday’s data also sent Treasury yields lower, although recent comments by some central bank officials have pushed back on any potential rate cuts.
On Friday, data showed U.S. producer prices unexpectedly fell in December as the cost of goods such as food and diesel fuel declined, while prices for services were unchanged for a third consecutive month, in contrast to Thursday’s hotter-than-expected consumer inflation reading. The headline inflation rose more than expected to 3.4% from 3.1% printed a month earlier.
But all in all, yesterday’s inflation report was less than ideal, and the market reaction was mixed. The US 2-year and 10-year first rose then fell, whereas you would expect a swift shift in dovish Fed expectations following a bigger-than-expected jump in US headline inflation. The 2-year was last at 4.146 and the 10-year 3.944.
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My first Friday chat with Tarric Brooker, Journalist and Chart-Meister.
Will recent developments force a replay of the recent inflation crisis and keep rates higher for longer. If so, what are the potential implications politically and economically?
His charts are here: https://avidcom.substack.com/p/dfa-chart-pack-12th-january-2024
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Digital Finance Analytics (DFA) Blog
It’s All Happening - Again! With Tarric Brooker...
The US Bureau of Labor Statistics just released their December 2023 inflation read which showed the consumer price index increased 3.4% in the year through December, the most in three months and on a monthly basis, it also rose by more than forecast.
The shift up was driven by Americans paying more for housing and driving, challenging investor bets that the Federal Reserve will cut interest rates soon. Used-car prices increased for a second month, defying expectations for a decline.
The CPI excluding food and energy rose 0.3% in December from a month earlier. On an annual basis, the so-called core measure increased 3.9%. Economists favor the core metric as a better gauge of the trend in inflation than the overall CPI.
Shelter prices, which make up about a third of the overall CPI index and contributed to more than half of its advance, rose 0.5% in December. The gain included a rise in hotel prices that were down in the prior month. Economists see a sustained moderation in this category as key to bringing core inflation down to the Fed’s target.
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The Securities and Exchange Commission has for the first time approved exchange-traded funds that invest directly in Bitcoin, a move heralded as a landmark event for the roughly $1.7 trillion digital-asset sector that will broaden access to the largest cryptocurrency on Wall Street and beyond.
Now much is resting on the concept that the futures market has already brought crypto assets sufficiently into the financial mainstream.
The SEC was frankly bounced into this decision in response to the loss of some critical legal cases, and puts Bitcoin ever closer to existing financial services players. This does not necessarily mitigate risk.
SEC Chair Gary Gensler said “While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin,”. “Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
Crypto zealots have for years argued that a so-called spot fund that invests directly in Bitcoin would be beneficial to investors and would help bring the industry closer to the more highly regulated world of traditional finance. It also suggests a sort of milestone of maturity for the relatively nascent industry, where skirmishes with regulators came to a climax after the collapse of Sam Bankman-Fried’s FTX empire highlighted risks lurking in the industry.
But of course, by definition, the mainstream approval this represents cuts right across the original ideology of Bitcoin already compromised by the significant use of derivatives, and becoming ever more controlled by large financial institutions and regulators.
Even after Gensler went to such lengths to say that the SEC wasn’t giving any seal of approval to Bitcoin, the odds remain that this will expose many more people to crypto’s risks and opportunities. So Caveat Emptor! Let The Buyer Beware!
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Digital Finance Analytics (DFA) Blog
Bitcoin Gets The SEC’s Spot Tick – But Caveat Emptor!
The latest monthly inflation read was out today, and it suggests rates will be higher for longer. While there was a drop, some of this was helped by Government intervention, and some other factors in the incomplete monthly numbers were still strong.
The RBA started tightening later than peers, yet shifted to smaller, quarter-point moves earlier. Now, as global disinflation trends beg the question whether Australia will again lag its peers, what’s clear is that the RBA will stay hawkish until it sees credible signs that inflation is moving back to target.
This month’s annual increase of 4.3 per cent is down from the 4.9 per cent rise in October and is the smallest annual increase since January 2022.
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Following my post about Household Financial Stress https://youtu.be/G1T72rUFlgA and the upcoming live show tomorrow, I received many requests for postcode level analysis. So I made an extra show here to cover some of the requests.
Post Codes Covered (In Order) In This Show: 3912 4868 2560 4670 2487 6149 3842 3799 6072 4178 2042 4215 3690 2640 6030 2137 4670 3174 3012
Join us tomorrow on the live show for more. https://youtube.com/live/nXhfjacOnA0
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Digital Finance Analytics (DFA) Blog
Household Stress: You Asked, We Answered! [Postcode Analysis]
