My latest Friday afternoon chat with journalist Tarric Brooker, as we look at the RBA’s latest Statement On Monetary Policy, and the recent Bond Market dynamics.
And we look at the economic fall out on households if rates go higher for longer. Tarric’s charts can be found at: https://avidcom.substack.com/p/dfa-chart-pack-6th-october-2023
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Laughing Or Weeping, We’re Back: With Tarric Brooker!
Despite all the hopium from the property lobbyists, the truth is more households are running out of runway with regards to their finances.
It has shown up in my latest surveys, with more than half of mortgage holders now struggling with cash flow, and 70% percent of renters in the same boat.
Next Tuesday on my live show I will be walking through the detail behind these numbers. But the pressure is also showing up in other statistics. For example, the Australian Bureau of Statistics last week revealed that value of household deposit accounts decreased by $6 billion in the June quarter, with it being the first decline in 16 years.
“This was the first fall in deposit balances since the Global Financial Crisis and indicates that the household sector was tapping into cash reserves amid rising cost pressures”, the ABS said.
The decline indicates that households are ‘running’ down savings built up during the pandemic to pay for bills and loans as a result of the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes to fight inflation and the overleverage into property driven by weak lending standards and high prices. Something has to give.
Meanwhile, figures released by the RBA on Friday indicate a growing number of people are using their credit cards to cover the cost of increased bills, with the stock of personal credit having risen by 1.6% in the five months to August.
It seems to me the real pressures are now painfully obvious, and some are truly running out of runway.
But note, the RBA’s forward guidance on monetary policy was unchanged, stating that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”
So, buckle up people, turbulence ahead.
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.
Digital Finance Analytics (DFA) Blog
Crash Alert: Households Are Running Out Of Runway!
In the UK, Annual growth in regular pay (excluding bonuses) is the highest we have seen since comparable records began in 2001. The Office for National statistics said In May to July 2023, annual growth in regular pay (excluding bonuses) was 7.8%, the same as the previous three-month period and the highest regular annual growth rate since comparable records began in 2001.
Annual growth in employees’ average total pay (including bonuses) was 8.5% in May to July 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June and July 2023. But we can see workers are chasing real wages growth, as inflation eases, just a little with annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay up for the year by 1.2% and for regular pay a year on year rise of 0.6%.
In Australia, The Fair Work Commission released their latest data on Monday which revealed that average pay rises in new collective agreements in Australia have soared to a high of 4.7 per cent, closing in on inflation and putting pressure on wage forecasts. The increase is the highest average recorded since the commission’s data series began in mid-2022, surpassing previous highs of 4.4 per cent and is based on 174 deals lodged from August 12 to August 25, extended to 63,553 employees.
But with inflation at 6% on the quarter to June 2023, and the monthly series at 4.9%, on average workers are still going backwards in terms of real take home pay after inflation.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
This is an edited version of our recent live show, as I discuss the latest economic and housing news with Chief Economist at Nucleus Wealth, Leith van Onselen, who is also the co-founder of Macrobusiness.
We do a deep dive on the Population Ponzi and why housing shortages are likely to remain with us for ever. Its by design.
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
DFA Live Q&A: HD Replay: The Population Ponzi With Leith van Onselen
As I said recently, being data dependent means higher volatility as markets swing from bullish to bearish and back. While in Australia the bulls ran hard on Friday, later Wall Street experienced a significant notable downturn as investors responded to the news of a strike by the United Auto Workers against leading automakers Ford, General Motors and Stellantis. U.S. manufacturing output barely rose in August amid a decline in motor vehicle production before any industrial action starts.
Adding to the volatility was the fact that piles of derivatives contracts tied to stocks, index options and futures expired on Friday, compelling traders to roll over their existing positions or to start new ones. This time, it coincided with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Another deep discussion, plus slides with journalist Tarric Brooker.
Thanks to all those who posed us questions (we did not get through them all, but will keep then for our next show…)
Who is the economy for – and what does the data tell us? The charts are at: https://avidcom.substack.com/p/dfa-chart-pack-15th-september-2023 if you want to follow along.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Chasing Our Tails? Your Burning Questions Answered: With Tarric Brooker...
New US inflation numbers came out, and they included at least some reasons for concern. The headline figure deteriorated for the first time in months rising 0.6% in the month and 3.7% year on year. The broadest picture, breaking down into food, energy, and core services and goods excluding food tells the story.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest from the ABS says the unemployment rate remained at 3.7 per cent in August (seasonally adjusted.
They said “with employment increasing by around 65,000 people and the number of unemployed only dropping slightly, by around 3,000 people, the unemployment rate remained at 3.7 per cent in August.
“The large increase in employment in August came after a small drop in July, around the school holiday period. Looking over the past two months, the average employment growth was around 32,000 people per month, which is similar to the average growth over the past year.
“The employment-to-population ratio rose 0.1 percentage point to 64.5 per cent, around the record high in June. The participation rate also increased, up to a record high of 67.0 per cent in August, which, together with the high employment-to-population ratio, continues to reflect a tight labour market,”
Monthly hours worked fell 0.5 per cent in August 2023 (following the increase of 0.2 per cent in July), while employment rose by 0.5 per cent. Despite a small fall in August, hours worked were 3.7 per cent higher than August 2022, continuing to reflect faster growth than the 3.0 per cent annual increase in employment.
“The strength in hours worked over the past year, relative to employment growth, shows the demand for labour is continuing to be met by people working more hours, to some extent,” The ABS said.
But there are a few questions to consider about this data, compared to other information out there. The numberwangers are at it again!
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.
Well, the slew of economic data in the past few days suggests the UK economy is in a bit of a pickle, with a mix of recessionary signals pulling against some more positive wages news (at least for some). And it highlights the dilemma facing many Central Banks, as their data dependency pulls them in multiple directions and highlights how complex the current environment actually is.
It seems the economy is losing steam, though that’s partly driven by industrial action and unusually wet weather but its tracking well below the Bank of England’s growth forecast for 3Q, and yet cost pressures in the UK are running too high for the central bank to be bounded by growth concerns just yet.
The latest data from the ONS showed that the UK economy shrank at the fastest pace in seven months in July as strikes and wet weather hit activity harder than expected, reviving fears that a recession may be under way. Gross domestic product slipped by 0.5% following a 0.5% gain in June. Economists had expected a contraction of 0.2%. Services, construction and manufacturing all shrank.
The main cause of the contraction was the dominant services sector, which fell 0.5% in July. Cool and rainy weather depressing retail sales during the month. Output was also dented as doctors, teachers and rail staff walked off the job in their disputes with the government over pay.
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.
Last week, the departing RBA Central Bank Governor Philip Lowe used his final public comments given at the Anika Foundation to defend his more controversial comments, saying while some of his explanations had “missed the mark” the media also had a responsibility to avoid “clickbait”.
But he also highlighted the limitations of monetary policy and suggested that fiscal and monetary policy could be better connected than today, something which should have been considered by the recent RBA review.
So today we look at what he said, and will also touch on where Central Bank Governors go after they leave their post.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
The Limitations Of Monetary Policy (And What Lowe Does Next...)
