Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
My latest Friday afternoon chat with journalist Tarric Brooker who is @AvidCommentator on Twitter.
In today’s show we look at Australian Housing, the drivers of inflation, and the limitations of Central Bank policy.
The slides can be found at: https://avidcom.substack.com/p/charts-that-matter-27th-may-2022
Go to the Walk The World Universe at https://walktheworld.com.au/
Property Insider Edwin Almeida and I look over the election results, and consider the impact on property, examine the latest from China, and the market trends. What will be done to try and “save” the property market now?
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest edition of our finance and property news digest with a distinctively Australian flavour.
In our weekly review, we reflect on a chaotic week in the markets, from stocks, to crypto, even as stocks rallied at the end of the week in financial markets thanks to Federal Reserve Chair Jerome Powell’s reassurance that bigger rate hikes would be off the table for now even after the hot inflation readings of the past few days. Separate comments from San Francisco Federal Reserve president Mary Daly also backed half-percentage point rate increases at each of the central bank’s next two meetings. There is a clue to why we are seeing so much craziness.
After sinking almost 20% from a record and flirting with a bear market, the S&P 500 saw a broad-based rally on Friday. It still posted a sixth straight week of declines — the longest losing streak since June 2011. The NASDAQ 100 outperformed amid a rally in giants like Apple Inc., Microsoft Corp. and Amazon.com Inc.
Meanwhile, Elon Musk caused chaos over his takeover offer for Twitter Inc., first claiming his bid was “temporarily on hold” and then maintaining he’s “still committed” to the deal — sending the social-media giant into a tailspin. Tesla Inc. jumped. Treasuries fell with the dollar.
Despite the strong gains on Friday, many traders aren’t yet convinced that equities have reached a bottom after a selloff that shaved $10 trillion from US stock values in 18 weeks. Instead, they say investors should still brace for volatility as the Fed’s ability to fight price pressures without causing a hard landing may depend on factors outside the central bank’s control. Frankly forecasting is a mess.
Back in January, stock strategists known for their enduring optimism expected the S&P 500 to add 5% in 2022.Bond strategists weren’t any more prescient. Interest rate strategists and economists were calling for 10-year Treasury rates to rise to 2% by June. Yields took out that level in early February and have touched 3.2% this month.
Go to the Walk The World Universe at https://walktheworld.com.au/
My latest Friday afternoon chat with Journalist Tarric Brooker @Avidcommentator on Twitter.
We review the latest economic data and consider the strategic implications.
Tarric’s charts are available at: https://avidcom.substack.com/p/charts-that-matter-13th-may-2022
Go to the Walk The World Universe at https://walktheworld.com.au/
An unscripted discussion with my friend George about the upcoming election, and what is going on below the waterline.
Go to the Walk The World Universe at https://walktheworld.com.au/
Those following my channel will know of the modelling which shows the strong link between credit availability and home prices. We know that when credit is tight, and the rate of change in credit is negative, home prices fall. And we are seeing this in spades now in New Zealand.
So today I want to explore some markers in New Zealand, and why property will fall further and faster.
Go to the Walk The World Universe at https://walktheworld.com.au/
We look at how the changes in China’s economy might impact Australia.
Although Q1 GDP data was better than expected, some analysts are predicting that Q2 may be less forgiving. One clue is the rising unemployment rate in 31 major cities in China.
A key question is how much China’s government can offset decelerating growth with fiscal and monetary support? Another critical variable is whether the government continues to pursue a zero-Covid policy, which contrasts with much of the rest of the world, which is increasingly learning to live with the virus. By some accounts, the longer China tries to stave off widespread infection, the bigger the eventual blowback when the policy is abandoned, as some analysts predict.
The pandemic has to be the biggest source of risk for China’s growth this year. And this has significant consequences for Australia.
Go to the Walk The World Universe at https://walktheworld.com.au/
In this week’s market summary, we as usual start in the US, cover Europe and Asia and end up in Australia. This is because the US market trends drive other markets, like it or not. No market is an island – especially Australia.
Now, back in 2018, when the Fed was conducting quantitative tightening and increasing rates, US mortgage rates were around 5%, the dollar index was over 97.50, oil was trading at over $75, and the 10-year rate was around 3%. But the FED broke the markets, as the S&P 500 plunged by around 20%, and so they had to back-peddle from rate hikes. It first held them steady and then had to cut rates and restart QE by the autumn of 2019.
Just four years later, we again have mortgages rates over 5%, the dollar index is at 100, oil is trading over $100, and the 10-year rate is approaching 3%. On top of that, the Fed is now embarking on an even bigger rate hiking cycle and is very likely to conduct quantitative tightening at double the pace of the 2018 version.
CONTENTS
0:00 Start
0:15 Introduction
0:45 Fed And U Turns
3:00 Rate Rises and Policy Errors
4:40 USD
5:00 Gold
6:40 Bonds
9:15 US Economy
11:20 Reporting
12:05 US Markets
14:40 Oil
15:00 UK
15:55 Europe
17:30 Asia Inc.China
20:00 Australia
24:00 Bitcoin and Crypto
24:30 Summary and Close
Go to the Walk The World Universe at https://walktheworld.com.au/
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Caveat Emptor! Note: this is NOT financial or property advice!!
Let’s face it, the rampant rise in Oil prices, is a big headache for politicians around the world, as the lift in prices is driving inflation. Just remember Oil was already on the up BEFORE Ukraine kicked off.
And if you are going to make an unpopular policy change, when better than later Friday before a holiday weekend – the good ol’ putting the trash out.
Certainly the price of Oil is a problem and it seems that any selloff in oil is only proving to be a buy-back opportunity amid one highly volatile energy market. Perhaps the most volatile ever.
Crude prices jumped almost 3% on the day and nearly 9% on the week as the market was hijacked once again by a supply scare on news that the European Union might phase in a ban on Russian oil imports.
Gains in oil were limited earlier in the day as Chinese refiners appeared set to cut crude throughput this month by about 6%. The reduction would be a scale last seen in the early days of the COVID-19 pandemic two years ago, industry sources and analysts said.
But news of the proposed EU ban on Russian oil prompted buyers to swoop in on more lots of crude futures and convinced some shorts to cover their positions as well ahead of the Good Friday holiday, which meant a longer weekend for U.S. markets.
“Heading into the long weekend, oil was vulnerable to some profit-taking, but a major pullback is still unwarranted given the supply situation and as economic slowdown concerns are still far from happening”.
Now the inflation problem is creating a series of back-flips including one relating to plans for oil and gas development on federal lands as now the Biden administration has said it has resumed plans for oil and gas development on federal lands. Granted the plan calls for the government to lease fewer acres for drilling than initially proposed, charge steeper royalties to oil and gas companies, and assess the climate impact of developing the acreage.
Go to the Walk The World Universe at https://walktheworld.com.au/
In my latest Friday afternoon chat with Journalist and Chart hoarder extraordinaire Tarric Brooker we parse the latest data and conclude that the next crisis has already started.
We question the quality of the current political dialogue, the role of Central Banks, the relationship between interest rates and inflation, and so much more…
We had to make do with 15 out of a potential 50+ slides, but the story is crystal clear. Be prepared!!
Tarric is @AvidCommentator on Twitter, and the slides can be viewed at https://avidcom.substack.com/p/charts-that-matter-15th-april-2022
Here is his article on the warning lights: https://avidcom.substack.com/p/recession-warning-lights-are-flashing
Go to the Walk The World Universe at https://walktheworld.com.au/
