Inflation

[wayneL]

WTI looks to be facing resistance near its 100-day EMA again, edging lower today after 2 straight weeks of gains on the back of China’s re-opening. Price is also currently holding right around its 100-week EMA which has provided resistance for the last 9 weeks. So perhaps the market is gearing up for a new leg lower?

However, all trading carries risk, and if oil manages to break higher from here, it could be having an interesting impact on the current “inflation is peaking” narrative.

What I find interesting with the inflation is peaking narrative is where does the trough lie?

Back to the 2% target or will it peak and plateau at some level well above that. Let's say that inflation lingers at 5 or 6 percent.

Is a consistent inflation at that level bullish or bearish?

 

[CityIndex]

What I find interesting with the inflation is peaking narrative is where does the trough lie?

Back to the 2% target or will it peak and plateau at some level well above that. Let's say that inflation lingers at 5 or 6 percent.

Is a consistent inflation at that level bullish or bearish?

That’s a really interesting point. CB’s presumably want to bring inflation back down to target. So if inflation were to plateau around that level, it could possibly add to bearish sentiment, especially as the economic slowdown intensifies.

 

[over9k]

I made a previous post about how the authorities keep saying prices are far too high, not inflation is far too high.

They choose their words very carefully.

 

[over9k]

Yep. Flogged about 25k worth of NRGU yesterday. Angling for a rebuy today.

 

[over9k]

Worth listening to until the end

 

[over9k]

Do I buy some DFEN? Hmmmm...

 

[divs4ever]

What I find interesting with the inflation is peaking narrative is where does the trough lie?

Back to the 2% target or will it peak and plateau at some level well above that. Let's say that inflation lingers at 5 or 6 percent.

Is a consistent inflation at that level bullish or bearish?

the only chance of it peaking , currently , is to squash wage rises

but that causes different issues

 

[mullokintyre]

the only chance of it peaking , currently , is to squash wage rises

but that causes different issues

I might question that.
Wages tend to be a lagging indicator.
We had inflation rising rapidly long before the wages started to rise.
Most experts have said the inflation was due to a supply side issue, rather than pressure from wages.
The next round of inflation could well be pushed by China reopening up - demand for coal, iron ore, energy, copper, red wine, lobsters, wool, cotton, wheat, etc etc.
Mick

 

[waterbottle]

the only chance of it peaking , currently , is to squash wage rises

but that causes different issues

This is already happening thanks to layoffs

 

[CityIndex]

Yesterday’s NAB survey showed business sentiment is continuing to worsen, further reducing expectations for another 25bps rate hike at the next RBA meeting. Should now be interesting to see how Q4 CPI reads and whether it adds to the idea of a dovish RBA.

 

[CityIndex]

So the Q4 inflation data does not support the idea of a more dovish RBA. Headline CPI and the trimmed mean (the RBA's preferred measure) beat estimates. Not surprising to see the Aussie rallying and the ASX200 falling in the initial reaction

 

[Dona Ferentes]

Aussie rallying and the ASX200 falling in the initial reaction

You mean, like this?

 

[mullokintyre]

Yesterday’s NAB survey showed business sentiment is continuing to worsen, further reducing expectations for another 25bps rate hike at the next RBA meeting. Should now be interesting to see how Q4 CPI reads and whether it adds to the idea of a dovish RBA.

Maybe Business sentiment is worsening because those who run the business can see their costs rising inexorably, but struggle to incrrease their own prices.
Mick

 

[sptrawler]

the only chance of it peaking , currently , is to squash wage rises

but that causes different issues

Wages will be squashed over time with the increase in immigration IMO. Which does need to happen, labour costs ATM are crazy here in W.A.

Australian visas 2023: Easier permanent residency for skilled migrants, incentives for international students

Thousands more migrants will be entering Australia in 2023 under its permanent migration program, visa processing will be sped up for foreign workers, and international students will be incentivised to stay longer to fix the critical skills gap. Here is a round-up of major immigration changes…

www.sbs.com.au

The Albanese government lifted the annual permanent migration intake to 195,000 places in its 2022-23 migration program, opening doors to an extra 35,000 migrants to plug the country’s pressing skills shortages and reduce reliance on temporary workers.
Before COVID hit, the Morrison government capped the total intake at 160,000 a year, but migration dropped into net negative territory in the two years during the pandemic, leading to a cumulative loss of 600,000 temporary visa holders.
Under the lifting of the cap, the number of places in the Skilled Stream has gone up significantly from 79,600 to 142,400, with the regional category (subclass 491) poised to get 34,000 permanent migrants and states and territories nominated (subclass 190) 31,000 places, 20,000 more than the previous program year’s projections.
With the highest number of state allocations under the state-nominated program, the New South Wales government recently decided to eliminate requirements related to work experience and minimum points scores for its skilled-nominated visa category.
Sydney-based migration agent Rajwant Singh said NSW's move to relax the criteria for permanent residency pathway has come as a huge relief.
"Removing the point limit and experience criteria has been a huge relief for many applicants, especially for those who have been waiting for their chances for the last 5 to 10 years," he said.
With 11,570 places for subclass 190, 3,400 for subclass 491 and 170 business visa places, Victoria has expanded its eligible list of occupations to plug skill gaps in the state.
“All occupations on the relevant Department of Home Affairs occupation are now eligible, and applicants are no longer required to be using STEMM skills and working in a target sector to apply,” the state government’s website states.




More of an issue ATM in my opinion, is the current amount of money still sloshing around in consumer land, in W.A I'm still seeing an elevated level of consumerism, it maybe different over East but I doubt it.

 

[divs4ever]

I might question that.
Wages tend to be a lagging indicator.
We had inflation rising rapidly long before the wages started to rise.
Most experts have said the inflation was due to a supply side issue, rather than pressure from wages.
The next round of inflation could well be pushed by China reopening up - demand for coal, iron ore, energy, copper, red wine, lobsters, wool, cotton, wheat, etc etc.
Mick

a lagging factor , in my experience YES,but also a secondary driving force once inflation gets going

i would be VERY careful on re-opening hopes , i strong suspect China has been responding to ' economic warfare ' in it's own way , and that demand may advantage certain nations/companies over others , factoring political policies

 

[divs4ever]

Wages will be squashed over time with the increase in immigration IMO. Which does need to happen, labour costs ATM are crazy here in W.A.

Australian visas 2023: Easier permanent residency for skilled migrants, incentives for international students

Thousands more migrants will be entering Australia in 2023 under its permanent migration program, visa processing will be sped up for foreign workers, and international students will be incentivised to stay longer to fix the critical skills gap. Here is a round-up of major immigration changes…

www.sbs.com.au

The Albanese government lifted the annual permanent migration intake to 195,000 places in its 2022-23 migration program, opening doors to an extra 35,000 migrants to plug the country’s pressing skills shortages and reduce reliance on temporary workers.
Before COVID hit, the Morrison government capped the total intake at 160,000 a year, but migration dropped into net negative territory in the two years during the pandemic, leading to a cumulative loss of 600,000 temporary visa holders.
Under the lifting of the cap, the number of places in the Skilled Stream has gone up significantly from 79,600 to 142,400, with the regional category (subclass 491) poised to get 34,000 permanent migrants and states and territories nominated (subclass 190) 31,000 places, 20,000 more than the previous program year’s projections.


More of an issue ATM in my opinion, is the current amount of money still sloshing around in consumer land, in W.A I'm still seeing an elevated level of consumerism, it maybe different over East but I doubt it.

well i am forward buying of long-life goods , and i am on the East Coast , maybe some spending is deliberately keeping cash savings low in a constructive way

 

[JohnDe]

Maybe Business sentiment is worsening because those who run the business can see their costs rising inexorably, but struggle to incrrease their own prices.
Mick

Depends on the business.

Our business, and I'm guessing like most others at the moment, can pass on the price increases. Consumers still have a lot of Covid savings, and while they do, they won't baulk too much at the cost increases and keep spending. Hence the continued rise in inflation.

The tricky thing is to get people to slow down on their spending, forcing prices down on goods and services. When that happens, we will start to see business struggle, let go of staff, and possibly shut up shop. It's all happened before. Let's hope that the Reserve Bank and government can work together and bring down inflation with minimal pain.

 

[divs4ever]

Our business, and I'm guessing like most others at the moment, can pass on the price increases. Consumers still have a lot of Covid savings, and while they do, they won't baulk too much at the cost increases and keep spending. Hence the continued rise in inflation.

do they ??

sure that is the narrative , but is it the facts

i know one investor previously looking at extra property acquisition , but is currently renovating/improving the existing portfolio

 

[JohnDe]

do they ??

sure that is the narrative , but is it the facts

i know one investor previously looking at extra property acquisition , but is currently renovating/improving the existing portfolio

Maybe each state is going through different difficulties.

Property prices in my state have not dropped. I sold one property in 2021 and purchased one in September 2022 after looking for several years in coastal areas. Still keen to get another but when I find one, by the time I've had a think it's 'under offer.'

In my state, Unemployment is extremely low, job numbers up. Small to medium businesses that I've visited in the city and regional areas are happy with sales, and customer numbers are still increasing.

The million-dollar question is how long this will last.

 

[Garpal Gumnut]

Up until today I was dubious about inflation affecting Australia, but even before I had a look at the AFR, just now, and saw news of impending very large rate hikes and other financial headwinds and disasters affecting the southern regions of the continent, I had changed my mind.

There will be a return to very much lower real estate prices and rents in the large metropolitan cities and a concomitant rise in values in those centres where the real work of Australia is done, mining materials, oil and gas production and exploration and agriculture.

Forget about your Olympics, Games, Sets and Matches, Festivals, ripping off overseas students with dodgy diplomas, Tourism, "Fillum", Fashion etc. etc., selling lattes, and other "Service" sectors of our economy.

The real wealth will return to the North and the West with high wages and near full employment in the regions producing wealth.

Nobody cares about inflation when they are earning the big bucks.

This may be a good time to start a Godbothering Outfit, to open a Church, "repent and leave a cent, for the end is nigh" in Sydney, Melbourne and Brisbane.

gg