Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
This is my edit of our latest economic update with Nuggets News. We look at the latest across markets, and talk about some of the big picture issues which are driving the agenda.
We touch on the US inflation (before the figures were released), as well a Australian property and some of the current waves of regulation locally.
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Higher for longer is back baby, following the latest CPI data from the Bureau of Labor Statistics which came out today, for March. It was significantly up on expectations, the third month in a row this has occurred. This signals a fresh wave of price pressures that will likely delay any Federal Reserve interest-rate cuts until later in the year, or even later into next year.
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The latest decision from the New Zealand Monetary Policy Committee was released on Wednesday, which was to leave the cash rate at 5.5%. Their key messages were little changed since the February MPS, showing little hurry to change current restrictive settings despite overall CPI inflation expected to fall below 3% this calendar year.
Upside short-term risks to the inflation outlook were largely downplayed, with the RBNZ expecting sub 3% inflation later this year. Despite the economic outlook evolving broadly as expected and inflation on a cooling trend, the RBNZ chose to defer any decisions on when to pivot to an easing bias until more clarity emerges.
Higher for longer…. again!
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Go to the Walk The World Universe at https://walktheworld.com.au/
This is an edited version of a live discussion, as we look at the post code detail from our recent surveys, as the third part in our latest series.
See the basis of our analysis here: So Who Is Really Feeling The Pinch? https://youtu.be/xvE-jPsGQUk
See the mapping of our data here: Mapping The Pinch: Where Households Are Hurting The Most… https://youtu.be/Y-xycboQ1j4
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
More insights from our property insider, as we look at the issue of supply and migration, plus the impact of the recent flooding rains, and also the latest on listings and prices.
How broken in the market at the moment, and how are agents playing psychological games with prospective purchasers?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
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In the second part of our series on March 2024 results from our surveys, we deploy our mapping tools to display the hot spots across the country for mortgage, rental and investor stress, as well as defaults and net rental yields.
For a description of our approach, watch our earlier show here: So Who Is Really Feeling The Pinch? https://youtu.be/xvE-jPsGQUk
On Tuesday at 8pm Sydney we will deep dive on the post code level analysis. DFA Live Q&A: A Deep Dive On Post Codes Feeling The Pinch https://youtube.com/live/GmSKvYYQI1k
http://www.martinnorth.com/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
This is our latest weekly market update.
Last Wednesday, Fed Chair Jerome Powell retained a cautious stance towards future rate cuts in a speech to the Stanford Graduate School of Business. “Recent readings on both job gains and inflation have come in higher than expected,” he said, suggesting that the U.S. central bank will continue to study more data before starting a rate-cutting cycle.
Atlanta Fed President Raphael Bostic, a known hawk, said rates should likely not be reduced until the fourth quarter of this year, with only one cut likely in 2024. “We’ve seen inflation kind of become much and more bumpy,” Bostic said. “If the economy evolves as I expect, and that’s going to be seeing continued robustness in GDP and employment, and a slow decline in inflation over the course of the year, I think it will be appropriate for us to start moving down at the end of this year, the fourth quarter.” But on Thursday, Minneapolis Fed President Neel Kashkari said rate cuts might not be required this year.
Then we got data on Friday showing US payrolls rose in March by the most in nearly a year and the unemployment rate dropped, pointing to a strong labor market that’s powering the economy. Nonfarm payrolls advanced 303,000 last month following a combined 22,000 upward revision to job gains in the prior two months. The unemployment rate fell to 3.8%, with more people joining the workforce and able to find a job as participation rose.
Some are now seriously asking whether rates are high enough to quash inflation. A rate hike would really change the market dynamics. That said, Alice In Wonderland like, many analysts still seem to be wired into a rate cut soon.
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Banking is a game of confidence, in that if fears of a potential bank collapse arise, then naturally people who hold money at that institution will try to grab their cash, and run. The Global Financial Crisis, where many banks were saved by the use of public funds.
But this means taxpayers are on the hook, and so post the GFC, there were attempts to develop alternatives which would transfer risks from the tax-payers to other parties, including shareholders bond holders and even depositors of an affected bank. The so called bank resolution – or living will – includes the deposit bail-in regimes which were proposed (initially by merchant bankers by the way) and adopted by the G20 to allow deposits held at banks to be grabbed and converted to equity. This happened of course in Greece a few years later.
In the IMF Global Stability Report from October 2023, there was a section which highlighted that the March 2023 bank runs in Switzerland and the United States were unusually large and fast with their speed and size facilitated by rapid online deposit withdrawals and the rapid spread of worries among important groups of depositors via social media and other digital channels.
I am often asked if bail-in is a real risk to savers, and my reply remains the same. It’s a theoretical risk for sure, thanks to the likes of the IMF and others, but practically, its unlikely to be activated because the collateral damage would be enormous. But understand that those bankers who dreamed up bail-in and the QANGO’s who are pushing it, are still pushing Governments to give the financial regulators ever more power, never mind democracy. Its a cautionary tale of who is actually calling the shots, and the risks to democracy are real.
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Wherever you look, the news is not good for those wishing to see housing affordability relief.
First demand for rentals continues to be powered by the overseas influx. New data from the Department of Home Affairs shows that at the end of February, the number of international students in Australia hit a record high of 713,144, whereas the number of temporary migrants in Australia hit a record high of 2.8 million (nearly 2.4 million excluding visitors).
Or put it another way, the number of student visa holders in Australia is running around 80,000 above the pre-pandemic peak, while the number of temporary visa holders excluding visitors is around 400,000 above the pre-pandemic peak.
Then we can turn to the question of new housing supply. I have covered before the fact that the country is littered with half-completed construction projects, many of which are competing for labour and resources with the large number of government and commercial projects also currently running. This crowded out home builders as the major projects sucked in labour and drove up its cost.
But we also continue to see more building firms going under. In the light of this, perhaps we should not be surprised that the total number of dwellings approved fell 1.9 per cent in February (seasonally adjusted), after a 2.5 per cent fall in January, according to data released on Thursday by the Australian Bureau of Statistics (ABS).
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.
An important discussion about the future of cash across Australia with Robbie Barwick from The Australian Citizens Party.
The CEO of CBA Matt Comyn floated the idea of limiting cash transactions to $500, so we pull this apart in the context of the Use Cash campaign which ran successfully on the 2nd April.
See my earlier show for detail of that campaign, and the Senate interrogation of the RBA which we also discuss. The Fight For Cash Just Got Terminally Serious! https://youtu.be/LiNSH7I_8xs
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/