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
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Bloomberg reported yesterday that the US has become the world’s biggest exporter of liquefied natural gas for the first time, with 2023 shipments overtaking leading suppliers Australia and Qatar.
The US exported 91.2 million metric tons of LNG in 2023, a record for the country, according to data through Dec. 31 compiled by Bloomberg. The expanded output was due to last year’s restart of Freeport LNG in Texas, which had been shuttered for months following a June 2022 fire and explosion. Qatar, the top LNG supplier in 2022, saw its volumes shrink for the first time since at least 2016, with a 1.9% decline dropping the nation into third spot for shipments of the super-chilled fuel. Australia ranked second, with exports that were little changed from 2022.
Unlike East Coast Australia, the US has a domestic gas reservation scheme in place, which has mostly succeeded in keeping domestic gas prices low.
And the mooted A$80 Billion Deal between Woodside Energy and Santos could also put more upward pressure on Australian domestic gas prices.
“Both Santos and Woodside are material domestic gas producers, which may create market concentration concerns,” RBC Capital Markets analyst Gordon Ramsay said in a note.
It makes no sense to give any member of the gas export cartel – Origin, Woodside, Santos, EXXON or Shell – greater control of gas import volumes. Remember East Coast Electricity prices are driven by the marginal cost of LNG.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Bloomberg reported yesterday that the US has become the world’s biggest exporter of liquefied natural gas for the first time, with 2023 shipments overtaking leading suppliers Australia and Qatar.
The US exported 91.2 million metric tons of LNG in 2023, a record for the country, according to data through Dec. 31 compiled by Bloomberg. The expanded output was due to last year’s restart of Freeport LNG in Texas, which had been shuttered for months following a June 2022 fire and explosion. Qatar, the top LNG supplier in 2022, saw its volumes shrink for the first time since at least 2016, with a 1.9% decline dropping the nation into third spot for shipments of the super-chilled fuel. Australia ranked second, with exports that were little changed from 2022.
Unlike East Coast Australia, the US has a domestic gas reservation scheme in place, which has mostly succeeded in keeping domestic gas prices low.
And the mooted A$80 Billion Deal between Woodside Energy and Santos could also put more upward pressure on Australian domestic gas prices.
“Both Santos and Woodside are material domestic gas producers, which may create market concentration concerns,” RBC Capital Markets analyst Gordon Ramsay said in a note.
It makes no sense to give any member of the gas export cartel – Origin, Woodside, Santos, EXXON or Shell – greater control of gas import volumes. Remember East Coast Electricity prices are driven by the marginal cost of LNG.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The ABS reported that Household wealth rose for the fourth straight quarter (+2.3 per cent or $339 billion) in the September quarter 2023. What you say, we are not feeling it!
The key of course is distribution across households, and the nexus is property values. The ABS says “Household wealth is supported by house prices which have continued to grow despite increases in interest rates” so that total household wealth was $15.3 trillion in the September quarter, which was 7.0 per cent ($998 billion) higher than a year ago. This was largely driven by residential land and dwellings, which contributed 1.7 percentage points to quarterly growth.
And the growth in household wealth was also supported by seasonal tax refunds coming in at the start of the financial year, with deposits increasing 3.4 per cent ($52.8 billion) over the September quarter.
Deposits into accessible transaction accounts (known as Transferrable Deposits) made up $24.4 billion of this increase, with most going into offset accounts. Another $26.1 billion was invested in high interest Non-Transferable Deposits, including term deposits.
So, if you are in the right cohorts, with savings, mortgage free houses, and other assets, you are doing well, whereas many others are simply not. If you are a renter, or mortgaged up to the gills your wealth could well be minimal, while debts are building. So actually, this a symptom of the building inequality in the system.
This puts the RBA in a tricky position. And in fact, while markets doubt the Reserve Bank of Australia will deliver any more rate rises, with current cash rate at 4.35%, the central bank warned on Tuesday it may need to deliver another cash rate increase if inflation remains too high.
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
Will Rising Household Wealth Drive Interest Rates Higher?
Prices rose by 3.9% in the year to November, down from 4.6% in October according to data from the ONS today, driven by positive base effects mainly across oil products. Remember that falling inflation also does not mean most goods and services are cheaper, but rather prices are rising less quickly.
That rise compares to a more-than four-decade high rate above 11% reached last year. The last time inflation in the UK was lower than 3.9% was in September 2021 when it was 3.1%. Most economists had expected UK inflation to fall to 4.3% last month. As a result, UK inflation has fallen to its lowest level for more than two years, driven largely by a drop in fuel prices. The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to November 2023, down from 4.7% in October. On a monthly basis, CPIH fell by 0.1% in November 2023, compared with a rise of 0.4% in November 2022. Within that energy prices fell, but rent and council tax were higher.
Slowing price rises for food, including staples such as pasta, milk and butter, as well as for household goods were also behind the fall.
But while inflation, which is the rate prices rise at, is now well down from its peak in 2022, it is still almost double the Bank of England’s 2% target.
UK inflation remains higher than in other countries including the US and Germany but the gap is narrowing. The fall to 3.9% in November puts the UK on level footing with France, but ahead of the EU’s average rate of 3.1% and the US’s 2.1%.
The softer inflation data prompted Goldman Sachs to bring forward its expectation for the first BOE rate cut to May from June previously.
Ahead, of course the impact of potentially higher Oil prices thanks to the closure of the Suez Canal for some ships, which have driven oil prices higher, and the removal of Government support for higher power prices might turn the inflation gauge higher in the months ahead. So again, markets are ahead of themselves, it will be some time before inflation is approaching the 2% target.
If you have savings with a bank in Australia, it is highly likely you are being ripped off. After all, Australian Consumers depend on retail deposit products to conduct their everyday banking, to safely store over $1.4 trillion of their savings and, importantly, to earn a decent return on these funds.
However, as I have been highlighting in recent shows, changes in the cash rate (often referred to as the ‘official interest rate’) via the RBA, and which is the rate paid on lending between banks in the overnight cash market only indirectly affect the cost of funding from retail deposits and the interest rates paid on retail deposit products.
Banks are quick to lift mortgage rates on mortgages, but have been significantly less market driven in terms of deposit rates, with many savers loosing out. Yet relatively few consumers switch deposit products, despite there often being a range of alternative products offering better interest rates and conditions. This loyalty tax means consumers earn significantly less than they should, over all on deposits, which boosts bank profits significantly.
So now the ACCC just completed a report on Retail Deposit Account. They gathered information, and documents on retail deposit products supplied by 14 of the largest banks in Australia. These banks collectively hold more than 90% of household deposits in Australia. This included seeking information directly from these banks as to their retail deposit products and from APRA and RBA, as well as reviewing the information available to the public on the banks’ websites.
The ACCC findings highlights that despite the importance of transaction accounts, savings accounts and term deposits, the ongoing challenges consumers face in searching for, comparing, and switching between products means that consumer engagement with the market for retail deposit products is relatively low. This low level of engagement means many consumers miss out on earning more from their savings.
Widespread strategic and selective pricing also adds difficulty for consumers when seeking to locate key product information and compare market offerings. This lack of transparency may also damage consumer confidence in the market.
Given the range of factors that banks take into account and the strategic pricing approaches they employ when setting their retail deposit rates, the interest rates received by consumers do not automatically follow movements in the cash rate target.
http://www.martinnorth.com/
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Ahead of our upcoming live stream on Tuesday at 8pm Sydney (12th December) I run through our latest analysis based on our surveys, We see that many households are in a pickle with regards to cash flow, and over time this can lead to significant consequences, with defaults expected to rise in the months 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
The Next Chapter In The Household Financial Stress Story...
Next Tuesday I will be running my live show on Household Financial Stress, which continues to worsen. However, what constitutes “stress” is being debated widely – its a matter of definition.
The RBA has joined the debate, but I will argue in today’s show they conveniently presented a lop-sided story, which understates the true picture.
Andrea Brischetto, Head of Financial Stability gave a speech at the Sydney Banking and Financial Stability Conference, University of Sydney, titled Financial Stability and the Financial Health of Australian Mortgagors.
There has understandably been a lot of focus on this issue of late, with many households facing substantial financial pressures from high inflation and higher interest rates. Some of the households feeling these pressures most acutely are those with lower incomes, including many renters.
But the focus was on households with mortgages and how their financial health relates to financial stability.
There has been a lot said and written about the issue of household financial stress in recent times, using a multitude of data sources and reporting on many different individual experiences. Wednesday’s national accounts showed how inflation, tax and interest rates have weighed on real household disposable income. And as RBA Governor Michele Bullock said when discussing the challenge of inflation following the RBA Board meeting this week: High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. The Governor emphasised that the effect of all of this is that many households are experiencing a painful squeeze on their finances.
So she presented an overall picture of the situation, drawing on the RBA’s extensive work in this area, which is published in detail in our regular Financial Stability Review.
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.
Next Tuesday I will be running my live show on Household Financial Stress, which continues to worsen. However, what constitutes “stress” is being debated widely – its a matter of definition.
The RBA has joined the debate, but I will argue in today’s show they conveniently presented a lop-sided story, which understates the true picture.
Andrea Brischetto, Head of Financial Stability gave a speech at the Sydney Banking and Financial Stability Conference, University of Sydney, titled Financial Stability and the Financial Health of Australian Mortgagors.
There has understandably been a lot of focus on this issue of late, with many households facing substantial financial pressures from high inflation and higher interest rates. Some of the households feeling these pressures most acutely are those with lower incomes, including many renters.
But the focus was on households with mortgages and how their financial health relates to financial stability.
There has been a lot said and written about the issue of household financial stress in recent times, using a multitude of data sources and reporting on many different individual experiences. Wednesday’s national accounts showed how inflation, tax and interest rates have weighed on real household disposable income. And as RBA Governor Michele Bullock said when discussing the challenge of inflation following the RBA Board meeting this week: High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. The Governor emphasised that the effect of all of this is that many households are experiencing a painful squeeze on their finances.
So she presented an overall picture of the situation, drawing on the RBA’s extensive work in this area, which is published in detail in our regular Financial Stability Review.
Another Friday afternoon chat with Tarric Brooker, as we look at the status of households, as monetary policy continues to run, and as the tax take accelerates significantly.
Via the charts we look at the trends across the country, invent a new TV game series, and also pick apart the political agenda.
Tarric’s charts are here: https://avidcom.substack.com/p/dfa-chart-pack-8th-december-2023
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Households Taken To The Cleaners: With Tarric Brooker...
