Tag: Monetary Policy

Beyond The Budget BS…

In this show, I want to go beyond the superficial analysis of the recent budget given my in box has been flooded by “analysis: thousands of sources, much missing the point.

And in passing a recognition that the proposal to remove the non compete clause in employee contracts, is one welcome surprise.

But the Spin was in full force through the budget speech this week, with Chalmers claiming it represented the biggest ever” improvement in the budget bottom line since Labor’s May 2022 election, based on the May 22 forecast deficit of $79.8 million. This is the annual loss, not the cumulative total! Now, wall-to-wall deficits projected are projected ahead, so it’s a bit rich for the Treasurer to spin so hard, we all might get giddy.

Actually, the budget has been in deficit 33 of the past 50 years – or two-thirds of the time since Gough Whitlam lost office. And yet in that time our standard of living has improved and we still exist as a sovereign nation. So why all the focus on deficits and surrounding spin?

In summary, according to KPMG we got a forecast underlying cash balance of $42.1 billion in 2025-26; a $4.8 billion improvement on the recent MYEFO estimate. But Nearly $85 billion of “off-budget” spending over the forward estimate period, resulting in cumulative headline cash balance deficits of $236 billion over the four years to 2028-29.

But whether we look at the gas cartel, or tobacco tax, so many issues of importance were missed, indicative a a budget for the election, not reform for the ages….

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
Digital Finance Analytics (DFA) Blog
Beyond The Budget BS…
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Beyond The Budget BS…

In this show, I want to go beyond the superficial analysis of the recent budget given my in box has been flooded by “analysis: thousands of sources, much missing the point.

And in passing a recognition that the proposal to remove the non compete clause in employee contracts, is one welcome surprise.

But the Spin was in full force through the budget speech this week, with Chalmers claiming it represented the biggest ever” improvement in the budget bottom line since Labor’s May 2022 election, based on the May 22 forecast deficit of $79.8 million. This is the annual loss, not the cumulative total! Now, wall-to-wall deficits projected are projected ahead, so it’s a bit rich for the Treasurer to spin so hard, we all might get giddy.

Actually, the budget has been in deficit 33 of the past 50 years – or two-thirds of the time since Gough Whitlam lost office. And yet in that time our standard of living has improved and we still exist as a sovereign nation. So why all the focus on deficits and surrounding spin?

In summary, according to KPMG we got a forecast underlying cash balance of $42.1 billion in 2025-26; a $4.8 billion improvement on the recent MYEFO estimate. But Nearly $85 billion of “off-budget” spending over the forward estimate period, resulting in cumulative headline cash balance deficits of $236 billion over the four years to 2028-29.

But whether we look at the gas cartel, or tobacco tax, so many issues of importance were missed, indicative a a budget for the election, not reform for the ages….

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/

Inflation Sticks To The Script: Probably….

We got the next tranche of monthly inflation data from the ABS today, which showed that the Consumer Price Index indicator edged down to 2.4%, which is below economists’ estimate of 2.5%. The headline figure has now been inside the RBA’s 2-3% band for seven straight months.

One important point of distinction with the monthly Indicator is that, while it will include prices for all the items in the CPI basket, not all these prices will be updated each month, so there are large helping of fudge in the numbers, which is why the RBA tends to value the quarterly data more.

That said, even the trimmed mean measure, which smooths out volatile items such as food and energy and is the focus of the RBA’s attention, played ball, decelerating to 2.7% in February from 2.8% in the prior month. The monthly inflation figures are volatile and are unlikely to affect the outlook for interest rates.

The outcome was the equal-lowest rate of underlying inflation since December 2021 and was consistent with the Reserve Bank of Australia’s view that inflationary pressures had cooled considerably over the past year.
The slowdown was driven by a cooling of housing inflation, including rents and power prices, and a decline in fuel costs, the ABS said.

So what is ahead? Well of course we will get the more complete quarterly data in a month’s time, which the RBA is more likely to consider in their rate decision making. But while headline inflation fell to 2.4 per cent last month, it is expected to increase this year as state government electricity bill subsidies expire, even though the federal government has extended the support for power bills another 6 month, and as a result of this use of tax payer funds, the ABS recently revised down the weighting given to power bills in their inflation calculation, which just shows what $9 billion of your money can do!

All this means it is unlikely we will see an April Fool’s Day surprise next Tuesday.

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
Digital Finance Analytics (DFA) Blog
Inflation Sticks To The Script: Probably….
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Inflation Sticks To The Script: Probably….

We got the next tranche of monthly inflation data from the ABS today, which showed that the Consumer Price Index indicator edged down to 2.4%, which is below economists’ estimate of 2.5%. The headline figure has now been inside the RBA’s 2-3% band for seven straight months.

One important point of distinction with the monthly Indicator is that, while it will include prices for all the items in the CPI basket, not all these prices will be updated each month, so there are large helping of fudge in the numbers, which is why the RBA tends to value the quarterly data more.

That said, even the trimmed mean measure, which smooths out volatile items such as food and energy and is the focus of the RBA’s attention, played ball, decelerating to 2.7% in February from 2.8% in the prior month. The monthly inflation figures are volatile and are unlikely to affect the outlook for interest rates.

The outcome was the equal-lowest rate of underlying inflation since December 2021 and was consistent with the Reserve Bank of Australia’s view that inflationary pressures had cooled considerably over the past year.
The slowdown was driven by a cooling of housing inflation, including rents and power prices, and a decline in fuel costs, the ABS said.

So what is ahead? Well of course we will get the more complete quarterly data in a month’s time, which the RBA is more likely to consider in their rate decision making. But while headline inflation fell to 2.4 per cent last month, it is expected to increase this year as state government electricity bill subsidies expire, even though the federal government has extended the support for power bills another 6 month, and as a result of this use of tax payer funds, the ABS recently revised down the weighting given to power bills in their inflation calculation, which just shows what $9 billion of your money can do!

All this means it is unlikely we will see an April Fool’s Day surprise next Tuesday.

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/

In The Front Line Of The Rental Crisis: With Morgan Cox…

I caught up with Morgan Cox, who asked a simple and direct question on ABC Q&A the other day about the rental crisis hitting Australian families, and migration.

The answers from the panelist were appalling, and showed they were playing lip-service to the issue rather than wanted to deal with the real issue, which should be top of mind as the election approaches.

The reaction across socials was amazing, so kudos to Morgan, an ordinary bloke, with a family, trying to get by, willing to take a stand and hold our politicians to account!

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
Digital Finance Analytics (DFA) Blog
In The Front Line Of The Rental Crisis: With Morgan Cox…
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Markets Trying To Make Sense Of The Senseless…

This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, covering commodities and crypto along the way.

It was another complex week, with the interplay of tariffs, central bank non-decisions, and company reports plus the witching trades on Friday adding to the mix. Never-ending market disruptions are upending investment blueprints everywhere in 2025, while hitting sentiment across US stocks. This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of U.S. President Donald Trump’s trade tariffs against global trading partners. Many of the world’s major central banks sent a strong message this week that the uncertainty caused by U.S. President Donald Trump’s trade wars is weighing on growth, stoking inflation, and dramatically reducing visibility on the interest rate outlook.

For the week the MSCI global index was 0.7% higher, but still down nearly 4% lower over the past month and flat year to date. Compare that to the European STOXX 600 which is up more than 8% year to date, while the SP500 is down 3.64% from 1 Jan, and the ASX 200 is down 2.79%.

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
Digital Finance Analytics (DFA) Blog
Markets Trying To Make Sense Of The Senseless…
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Markets Trying To Make Sense Of The Senseless…

This is our weekly market update, where we start in the US, cross to Europe and Asia, and end in Australia, covering commodities and crypto along the way.

It was another complex week, with the interplay of tariffs, central bank non-decisions, and company reports plus the witching trades on Friday adding to the mix. Never-ending market disruptions are upending investment blueprints everywhere in 2025, while hitting sentiment across US stocks. This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of U.S. President Donald Trump’s trade tariffs against global trading partners. Many of the world’s major central banks sent a strong message this week that the uncertainty caused by U.S. President Donald Trump’s trade wars is weighing on growth, stoking inflation, and dramatically reducing visibility on the interest rate outlook.

For the week the MSCI global index was 0.7% higher, but still down nearly 4% lower over the past month and flat year to date. Compare that to the European STOXX 600 which is up more than 8% year to date, while the SP500 is down 3.64% from 1 Jan, and the ASX 200 is down 2.79%.

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/

“Transitory” Inflation Is Back, Baby…

Overnight we got the latest decision from the US Federal Open Market Committee keeping its benchmark federal funds rate steady for the second straight meeting, in a target range of 4.25%-4.5%.

But in the subsequent press conference, where Fed Chair Jerome Powell seemed to be tip-toeing through a potential minefield, he said the committee had down forecast growth, increased inflation expectations, and said the full impact of tariffs had yet to work though. And while the FOMC did slow the pace of balance-sheet runoff — their updated forecasts and dot plot betrayed little concern about the growth scare that has gripped markets. More rate cuts are expected, perhaps two though the year, despite the higher inflation and lower growth.

Significantly though he dusted off the old “transitory” moniker again, which you will recall was used through the early phase of the strong inflationary pulse we saw post COVID. It was then dispatched to the dustbin of stupid and unhelpful terms, that is until it was resurrected in the press conference. Seeing as they got it so wrong last time, was it wise to do that, as I am not sure it will help their credibility this time around.

Incidentally, because the Fed will also start shrinking its balance sheet at a slower pace starting in April, meaning it will reduce the amount of bond holdings it lets roll off every month that is a quasi rate cut, without being a rate cut. Again, this is engineering a watch and wait period, for the FED, and perhaps the possibility of the real rate cut will be clearer by the Northern Summer.

So this was a do not harm press conference, but I suspect despite wanting to calm the markets, and avoid tripping over Trump, the truth is the data-dependent FED is itself unsure of future trajectory. Which may not bode well for the rest of us!

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
Digital Finance Analytics (DFA) Blog
"Transitory" Inflation Is Back, Baby…
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“Transitory” Inflation Is Back, Baby…

Overnight we got the latest decision from the US Federal Open Market Committee keeping its benchmark federal funds rate steady for the second straight meeting, in a target range of 4.25%-4.5%.

But in the subsequent press conference, where Fed Chair Jerome Powell seemed to be tip-toeing through a potential minefield, he said the committee had down forecast growth, increased inflation expectations, and said the full impact of tariffs had yet to work though. And while the FOMC did slow the pace of balance-sheet runoff — their updated forecasts and dot plot betrayed little concern about the growth scare that has gripped markets. More rate cuts are expected, perhaps two though the year, despite the higher inflation and lower growth.

Significantly though he dusted off the old “transitory” moniker again, which you will recall was used through the early phase of the strong inflationary pulse we saw post COVID. It was then dispatched to the dustbin of stupid and unhelpful terms, that is until it was resurrected in the press conference. Seeing as they got it so wrong last time, was it wise to do that, as I am not sure it will help their credibility this time around.

Incidentally, because the Fed will also start shrinking its balance sheet at a slower pace starting in April, meaning it will reduce the amount of bond holdings it lets roll off every month that is a quasi rate cut, without being a rate cut. Again, this is engineering a watch and wait period, for the FED, and perhaps the possibility of the real rate cut will be clearer by the Northern Summer.

So this was a do not harm press conference, but I suspect despite wanting to calm the markets, and avoid tripping over Trump, the truth is the data-dependent FED is itself unsure of future trajectory. Which may not bode well for the rest of us!

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/

Economic Update March 2025

This is my edit of our monthly economic update recorded with Nuggets News, where we parse the latest news and data and try to figure what is really going on.

This time we focus on the fall out from the trade wars, and Australia’s economic prospects ahead of the upcoming budget and election.

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
Digital Finance Analytics (DFA) Blog
Economic Update March 2025
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