Have you noticed how everyone is now trying to pass the buck for the failed monetary policy, the disastrous results of which were magnified by the COIVD response. Politicians are pointing to the Central Bank.
Central Bankers point to conflict between Ukraine and Russia, and then also point to the COVID caused supply chain disruption (which was largely created by households and businesses suddenly being given cash to buy stuff, creating high demand as the lockdowns took a toll.
In effect no-one in authority wants to accept they helped create the problems we are now facing. And because of that reflex, we may not get to first understand the root causes which created the issues, and so how to address them correctly, and avoid similar issues down the track.
On just this theme, Bernard Hickey wrote an interesting piece on the New Zealand Site interest.co.nz titled “Reserve Bank may have lots of good company in the money-printing dog box, but that doesn’t let it or the Government off the hook on inflation”
Go to the Walk The World Universe at https://walktheworld.com.au/
We know rates are going up, even the RBA confirms this, and now our new Prime Minister has stepped in saying the Central Bank needs to be careful. So what’s going on?
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.
We know rates are going up, even the RBA confirms this, and now our new Prime Minister has stepped in saying the Central Bank needs to be careful. So what’s going on?
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.
The released terms of reference for the review of the RBA are limited, and specifically excludes APRA – thus credit creation, and omits reference to the Council of Financial Regulators, the peak influential body, which includes RBA, APRA, ASIC and Treasury. Thus while the focus on the board, culture, and objectives are laudable, the terms of reference are clearly architected to avoid some of the most fundamental issues. A major opportunity lost, neo-liberalism wins again…
Go to the Walk The World Universe at https://walktheworld.com.au/
The RBA could soon see a major overhaul, amid accusations that its nine-member board lacks economic qualifications writes Frank Chung over at news.com.
As inflation skyrockets and borrowers grapple with sharply rising interest rates, a series of “embarrassing” missteps have focused public attention on the Reserve Bank like rarely before.
With the new Federal Government preparing to undertake a “once-in-a-generation” review of the RBA, former insiders have delivered a blunt assessment of the institution responsible for setting Australia’s monetary policy.
“The board is failing, and the reason it fails is because it lacks expertise,” said Peter Tulip, former head of research at the RBA.
Well, we argue the much needed review MUST be extended to include APRA and the Council Of Financial Regulators, the peak body chaired by the RBA as well.
A raft of poor policy and decisions have led us to create an over-leveraged society, at risk from rising interest rates. And there must be accountability and transparency, unlike at the moment.
But will the proposed review get to the heart of the matter – we doubt it.
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.
This week, we saw significant developments in both inflation, interest rates, bond yields and financial instability. Inflation is still running red hot and some central banks are putting an aggressive stance to combat this inflation through aggressive interest rates rises, however, the real test of central bank resolve is soon approaching.
Adams suspects much faster than what people anticipates. Adams believes that the central bank pivot is coming because the implications of the debt bubble unravelling go beyond just economics, as in the case in Sri Lanka political and social stability are also at risk.
The ruling elite will be looking at Sri Lanka and be extremely nervous about chaos and revolution in their own countries and whether they are at risk of losing political power or even worse – risk of imprisonment or assassination.
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 this week’s market review, consider the hangover coming as the punch bowel of cheap funds is taken away. We start as always with the US, go across Europe and Asia, and end in Australia. Why, because like it our not our fate will be largely determined by what happens in the US – which drives the price of money via the US dollar, and China, our main export partner.
The US FOMC raised interest rates in June by 75 basis points in June. And last month, the U.S. central bank also started reducing the size of its enormous balance sheet. Until September, the Fed will be cutting $45 billion a month from its massive holdings, and it will increase to $95 billion, almost twice as much as it did in the previous episode of quantitative tightening. So the value of the Fed’s assets has already peaked, reaching $8.95 trillion in mid-May 2022.
But, although the Fed is tightening its monetary policy, its stance remains accommodative. According to the Taylor rule, the federal funds rate shouldn’t be just between 1.50% and 1.75%, but at least above 5% .
So the U.S. central bank remains behind the inflation curve and would have to raise interest rates much further to combat high inflation. But in the previous Fed’s tightening cycle of 2017-2019 which led to the repo crisis, forced the U.S. central bank to reverse its stance and cut interest rates.
Given how fragile the financial system is and how much indebted the American economy is, it’s almost certain that the current monetary policy tightening will lead to a sovereign-debt crisis or another kind of financial crisis.
[CONTENT]
0:00 Start 0:15 Introduction 00:46 Removing The Punch Bowel 2:45 US Dollar 4:00 Economic Indicators 5:45 US Markets 08:00 Bonds 8:50 European Markets 10:25 Oil and Gold 12:40 Asian Markets 14:00 China Economics 15:30 China Property Bust 19:25 Australian Market 22:00 Crypto Crash 23:00 Conclusion
Go to the Walk The World Universe at https://walktheworld.com.au/
Following the Reserve Bank’s double rate hike, big banks have lifted all their variable mortgage rates by 0.5 percentage points. As a result, the average variable borrower will have seen their rate rise by 1.25 percentage points since the start of May. That means someone with a $500,000 mortgage, with 25 years remaining, will see their repayments increase by an estimated $333 in total across the three hikes, RateCity.com.au said. While variable rate borrowers with loans with CBA, NAB, and ANZ will be charged a higher interest rate starting today, it will take weeks for their monthly repayments to rise. In fact, the increase in monthly repayments many of these customers are currently seeing resulted from the May hike. This is because banks typically give 20 to 32 days’ notice before lifting their monthly repayments, despite charging their customers the higher rate from the effective date. Even then, the increase to their monthly repayment might not take effect for another few weeks, depending on when they are due. UBS has predicted interest rates will peak at around 3.5 per cent in March next year, but said this will still hit the housing market hard. “We still think market pricing of about 3.5 per cent – if delivered – would likely crash housing, and see the economy nearing a recession,” George Tharenou, chief economist at UBS, told The Australian. If interest rates were to rise to 3.5 per cent it would likely see the average variable mortgage rate hit a whopping 6 per cent and could plunge the economy into recession, according to the investment bank. “Interest payments across the economy next year for the household sector will close to double from now,” Mr Tharenou said. “We have never seen such a sharp increase in repayments. That really crushes household cashflow next year when you have cost-of-living issues.” 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.
Digital Finance Analytics (DFA) Blog
The Property Crash Is Just Getting Started.. [Podcast]
Stocks wobbled but ultimately ended lower on Wednesday, as the fastest pace of inflation in decades stoked bets that the Federal Reserve will be forced to deliver a much larger than expected 1% rate hike later this year. The S&P 500 closed down 0.5%, the Dow Jones Industrial Average fell 0.7%, or 208 points, the Nasdaq fell 0.1%.
U.S. inflation rose 9.1% in June to hit a fresh four-decade high, topping economists’ forecast for a 9% rise, driven by an 11.2% leap in gas prices and a 1.0% increase in food prices.
This report will make for very uncomfortable reading at the Fed,” it added. US inflation roared again to a fresh four-decade high last month, likely strengthening the Federal Reserve’s resolve to aggressively raise interest rates that risks upending the economic expansion.
The widely followed inflation gauge increased 1.3% from a month earlier, the most since 2005, reflecting higher gasoline, shelter and food costs. The so-called core CPI, which strips out the more volatile food and energy components, advanced 0.7% from the prior month and 5.9% from a year ago, above forecasts.
The red-hot inflation figures reaffirm that price pressures are rampant and widespread throughout the economy and taking a bigger toll on real wages, which are down the most ever in data back to 2007. The inflation data will keep Fed officials on an aggressive policy course to rein in demand, and adds pressure to President Joe Biden and congressional Democrats whose support has slumped ahead of midterm elections.
“Rather than cooling down, inflation is heating up,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note. “While a pullback in gasoline costs in July and reported retail discounting will help tamp down the flames, the broad pressure in the core rate, led by plenty of inertia in rents, suggests inflation may not peak for a while, and might remain stubbornly high for longer than anticipated.”
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.
Stocks wobbled but ultimately ended lower on Wednesday, as the fastest pace of inflation in decades stoked bets that the Federal Reserve will be forced to deliver a much larger than expected 1% rate hike later this year. The S&P 500 closed down 0.5%, the Dow Jones Industrial Average fell 0.7%, or 208 points, the Nasdaq fell 0.1%.
U.S. inflation rose 9.1% in June to hit a fresh four-decade high, topping economists’ forecast for a 9% rise, driven by an 11.2% leap in gas prices and a 1.0% increase in food prices.
This report will make for very uncomfortable reading at the Fed,” it added. US inflation roared again to a fresh four-decade high last month, likely strengthening the Federal Reserve’s resolve to aggressively raise interest rates that risks upending the economic expansion.
The widely followed inflation gauge increased 1.3% from a month earlier, the most since 2005, reflecting higher gasoline, shelter and food costs. The so-called core CPI, which strips out the more volatile food and energy components, advanced 0.7% from the prior month and 5.9% from a year ago, above forecasts.
The red-hot inflation figures reaffirm that price pressures are rampant and widespread throughout the economy and taking a bigger toll on real wages, which are down the most ever in data back to 2007. The inflation data will keep Fed officials on an aggressive policy course to rein in demand, and adds pressure to President Joe Biden and congressional Democrats whose support has slumped ahead of midterm elections.
“Rather than cooling down, inflation is heating up,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note. “While a pullback in gasoline costs in July and reported retail discounting will help tamp down the flames, the broad pressure in the core rate, led by plenty of inertia in rents, suggests inflation may not peak for a while, and might remain stubbornly high for longer than anticipated.”
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.
