Inflation

[mullokintyre]

If the US opts for any sort of default, surely that would drive interest rates higher?

Could be a good political move and would help the Fed save face

Every major news outlet, plus Yellen, the IMF, WDB and even Jamie Dimon representing the bigs banks are saying what a catastrophe a debt default may mean, if the do not raise the debt ceiling by June 1, so obviously what really happens is somewhat less than that.
Figures of 31 trillion dollars have been wafted around like real money.
Not all of the trillions are due by June 1st, there are some that are ten years or more into the future.
But if the US congress fiddles while Rome is burning, a crisis could arise before the June deadline.
Treasury is the body that manages the inflows and outflows of the dollars, but the outflows and inflows go up and down like most business overdrafts.
it could happen that if there are some big outflows for wages, interest repayments, bribes to third world dictatorships etc take the treasury to the limit well before June 1, default will come sooner rather than later.
Whether gov employees wages are not paid pending some more tax inflows, or default on interest payments arise first is an interesting discussion point.
Mick

 

[divs4ever]

If the US opts for any sort of default, surely that would drive interest rates higher?

Could be a good political move and would help the Fed save face

yields higher first , ( the existing bonds would be hard to sell on-market at current prices )

interest rates a little later , to resist selling new bonds at auction at big discounts to face-value , because let's face it they need to sell those debt instruments , badly .

am still thinking there will be a last-minute deal ( maybe even a month of 'emergency measures ' ) ... but but i am often wrong ( so have a plan for that as well )

 

[over9k]

Just in case anyone was in any kind of doubt.

 

[divs4ever]

Every major news outlet, plus Yellen, the IMF, WDB and even Jamie Dimon representing the bigs banks are saying what a catastrophe a debt default may mean, if the do not raise the debt ceiling by June 1, so obviously what really happens is somewhat less than that.
Figures of 31 trillion dollars have been wafted around like real money.
Not all of the trillions are due by June 1st, there are some that are ten years or more into the future.
But if the US congress fiddles while Rome is burning, a crisis could arise before the June deadline.
Treasury is the body that manages the inflows and outflows of the dollars, but the outflows and inflows go up and down like most business overdrafts.
it could happen that if there are some big outflows for wages, interest repayments, bribes to third world dictatorships etc take the treasury to the limit well before June 1, default will come sooner rather than later.
Whether gov employees wages are not paid pending some more tax inflows, or default on interest payments arise first is an interesting discussion point.
Mick

congress are not fiddling ( grandstanding , for sure ) the US really need to do something about their spending compared to projected income , but will they??

history suggests they will not bite the bullet for long they will concoct a win/win ( taxpayer lose ) deal

they have been here before ( Government employees not getting paid on time ) will they do it again , the Republicans are not overwhelmed by the MAGA faction , i think they will buckle .. for a price

watch for the sucker-punch in 'the deal ' when it is done

 

[JohnDe]

Oil prices still on a small downtrend

Oil Price Charts | Oilprice.com

Oilprices from around the world.

oilprice.com

 

[waterbottle]

View attachment 156888

Just in case anyone was in any kind of doubt.

 Question is how weak can they get? Worse than 2020? Surely not. IMO commodities have been less susceptible to hopium so are probably more reflective of what's really going on compared to equities, which have managed to rally for a while.

 

[Captain_Chaza]

View attachment 156888

Just in case anyone was in any kind of doubt.

This Chart shows lots of doubt in my eyes
Where are you coming from?
Base metals are a broad brush
Too broad to paint IMHO

 

[Jeda]

View attachment 156888

Just in case anyone was in any kind of doubt.

Is that an encrypted message, what may we be doubting

 

[over9k]

Is that an encrypted message, what may we be doubting

That this country is fcuked.

 

[Jeda]

That this country is fcuked.

yes i do doubt that the country is fcuked

 

[sptrawler]

yes i do doubt that the country is fcuked

I agree with you, economies ebb and flow, but demand for consumer goods and building materials is always there.
People can put off buying sht for only so long, then it has to be bought, or built and to build it they need our resources.
We may have a down turn, but until we run out of stuff to dog up China/India/EU and the U.S will want it.
So as usual we bounce back IMO.

 

[mullokintyre]

I agree with you, economies ebb and flow, but demand for consumer goods and building materials is always there.
People can put off buying sht for only so long, then it has to be bought, or built and to build it they need our resources.
We may have a down turn, but until we run out of stuff to dog up China/India/EU and the U.S will want it.
So as usual we bounce back IMO.

The problem is, consumer goods are less a big part of our GDP than they once were.
For some years, its the service sector that has provided the most action.
When things get tight, what is cut out first?
The coffee and cake meets at the cafe, gym memberships, the weekly tatslotto and flutter on bet365 , the colour and rinse , the nails, the fake tans, the waxing, maybe a subscription to netflix, as well as disney, foxtel, or Kayo, the takeouts via menulog and Uber eats, maybe the thai theraputic massage has to go along with the sessions with the mindfulness centre.
Mick

 

[sptrawler]

The problem is, consumer goods are less a big part of our GDP than they once were.
For some years, its the service sector that has provided the most action.
When things get tight, what is cut out first?
The coffee and cake meets at the cafe, gym memberships, the weekly tatslotto and flutter on bet365 , the colour and rinse , the nails, the fake tans, the waxing, maybe a subscription to netflix, as well as disney, foxtel, or Kayo, the takeouts via menulog and Uber eats, maybe the thai theraputic massage has to go along with the sessions with the mindfulness centre.
Mick

Yes I wasn't meaning consumer goods are a big part of our GDP, I was meaning the World with its ever increasing affluence, drives the demand for consumer goods e.g China, India becoming more affluent societies.
As this continues so does Australia's good fortunes, because demand for our raw materials to build the consumer goods steadily increases, there are slight downturns but they tend to be short lived.
So as usual by and large, we escape World economic downturns, well that is until we run out of raw materials to dig up.
Or our population grows to a point that the per capita GDP income from resources falls.
Until then IMO we will continue to be the 'lucky country'.

 

[waterbottle]

That this country is fcuked.

We just had a record surplus and minerals are at all time lows. Time to buy.

 

[qldfrog]

We just had a record surplus and minerals are at all time lows. Time to buy.

Record surplus in export or budget surplus? The latter the fact that taxes revenues have increased by 10+% due to inflation while expenses have not been indexed yet and so the people of Australia, not only taxpayers, funded this surplus from their blood and pain?

 

[sptrawler]

Record surplus in export or budget surplus? The latter the fact that taxes revenues have increased by 10+% due to inflation while expenses have not been indexed yet and so the people of Australia, not only taxpayers, funded this surplus from their blood and pain?

Actually the Australian Financial Revue, mentioned if the last Government had used the same methodology to do the budget, they would have had a bigger budget surplus 4 years ago, than this one.
Fryenberg would have had a $7billion surplus using the current budget methodology, as opposed to the recent $4billion surplus.
It's how you say say it, or in the case of a Govt budget, it's what you put into it. ?
But is is great press headlines.

 

[qldfrog]

And inflation play on taxes:
Behind the tax cut headlines

Bracket creep dampens Stage 3 tax cut cost

The legislated stage-three personal income tax cuts are estimated to have a nominal cost to the federal budget of about $18 billion a year when they take effect in mid-2024. However, the Australian National University’s research suggests the tax package’s real cost to the budget will be around...

www.macrobusiness.com.au

Horrendous real taxation rates..we are de facto wiping out the middle class...

 

[farmerge]

And inflation play on taxes:
Behind the tax cut headlines

Bracket creep dampens Stage 3 tax cut cost

The legislated stage-three personal income tax cuts are estimated to have a nominal cost to the federal budget of about $18 billion a year when they take effect in mid-2024. However, the Australian National University’s research suggests the tax package’s real cost to the budget will be around...

www.macrobusiness.com.au

Horrendous real taxation rates..we are de facto wiping out the middle class...

Hanging in there on a cotton thread. Not much in the Budget to get me excited

 

[JohnDe]

Petol prices in my area are $159 today, last week it was $2.06. Fruit and vegetable prices are lower at my local, but everything else is up significantly.

Inflation 'being driven by Canberra, not the Kremlin'​

Opposition treasury spokesman Angus Taylor says inflation is now being driven by “Canberra, not the Kremlin” after Labor’s budget contained $21bn in new spending measures to help disadvantaged Australians.

Mr Taylor cited prominent economists including Chris Richardson after he expressed concern that rising spending under Labor may be inflationary and make it harder for the Reserve Bank of Australia to tame inflation.

“It's hard to find the economists who think that this budget is putting downward pressure on inflation,” Mr Taylor told Sky News.
“There's a debate about whether it's waiting and making it worse or it's neutral. But, you know, there's very few saying this is putting downward pressure on inflation.

“Whether interest rates go up or not, that will be up to the Reserve Bank. What's very clear though, is they failed to put that downward pressure that's required.

"And what ends up happening is you end up with a situation where the Reserve Bank has the foot on the brake at exactly the time when the government has the foot on the accelerator.”

“That is the sad reality of what we've seen in this budget, and that will hurt middle Australia. Let's be clear about that.”

JESS MALCOLM

 

[greggles]

Both Labor and the Liberals throw money at any hardship these days. Both are populist big spending parties. Thirty years ago when inflation was around 9%, the cash rate hit 18% and the Australian economy nosedived into recession the people were told that it was "the recession we had to have" with no apology or free money.

People suffered, went without, the economy eventually recovered, and we just got on with it. But we were a much tougher bunch back then. No smashed avo on toast could be found at any cafe, nor soy lattes. Now suffering and going without is being able to afford only a unit instead of a house, or perhaps a cheap house instead of a McMansion.

I worry about where all this economic mollycoddling will lead us long term. It can't be good.