Inflation

[waterbottle]

I think its a sign of chinas recovery from covid, in the past 18 months China has seen significant inflationary cost pressures due to supply chain restrictions.

Now that people can move and factories can operate more optimally, a lot of cost pressures are easing off, also western demand for goods has dropped of the covid peaks now that we can spend on experiences again, rather than just goods.

I think all this is taking pressure of Chinas cost pressures.

https://www.abnamro.com/research/en/our-research/global-industry-and-trade-in-the-doldrums

these are drops compared to when the hiking cycle began, not the COVID peaks

 

[waterbottle]

50-50 shot at an Australian recession now

CBA cuts growth forecasts, places odds of recession at 50pc

Australia’s biggest lender now sees annual growth slowing to 0.7 per cent in the final quarter of this year as the RBA’s rate rises hit consumption.

www.afr.com

 

[Value Collector]

https://www.abnamro.com/research/en/our-research/global-industry-and-trade-in-the-doldrums

these are drops compared to when the hiking cycle began, not the COVID peaks

Yep, the whole point of raising interest rates is to lower demand and raise unemployment, so that supply and demand can be brought in line with each other, and there is less upward pressure on pricing.

 

[waterbottle]

Yep, the whole point of raising interest rates is to lower demand and raise unemployment, so that supply and demand can be brought in line with each other, and there is less upward pressure on pricing.

Seeing as you're so active in the FMG thread, what are your thoughts on iron prices for Aus? I get the impression that commodity deflation is already underway given what's happening in China

 

[Value Collector]

Seeing as you're so active in the FMG thread, what are your thoughts on iron prices for Aus? I get the impression that commodity deflation is already underway given what's happening in China

I don’t see global steel demand falling off a cliff, steel is consumed in almost everything we do, and given that our Australian Iron Ore miners are the lowest cost producers, I think they will do well throughout the cycle. They can make very decent returns with iron ore prices much lower than they are now.

When a recession happens, it’s normally the industries with the least steel intensity that are affected the most, and when it comes time to stimulate the economy it’s the steel intensive industries (construction and infrastructure) that get the bulk of the stimulus.

 

[over9k]

Will this be a case of China sneezes and we all catch a deadly flu bug.

China's flu is terminal.

 

[sptrawler]

We were in the Midland Gate shopping centre for lunch a couple of days ago.
Wouldn't have thought that too many people are concerned about inflation.
Food hall pretty full ie 11.30am, struggled to find 2 chairs together and the shops on the fringe had people coming and going while were hoeing into Chinese tucker.

We were at the Mandurah Forum today, one of the highest unemployment areas in Australia and low socio area, the shops and food hall were packed, it must be the mega mortgage areas over East that are hurting, who would have guessed.

 

[mullokintyre]

We were at the Mandurah Forum today, one of the highest unemployment areas in Australia and low socio area, the shops and food hall were packed, it must be the mega mortgage areas over East that are hurting, who would have guessed.

I may have mentioned once before on the forum that I occasionally volunteer at the local community centre trying to help people who have the financial acumen of a goldfish.
There is a reason why people are in these low socio economic groups, their ability to manage money is nonexistent, the concept of saving is non existent, and it is very difficult to get them to change their ways,
Pointing out that for the cost of what they pay in taking out the family to lunch at a food court, they could make lunches at home for a week, you can see their eyes glaze over.
Families where there is no working breadwinner will say they don't have time to cook, and the kids don't like what they cook anyway.
I had one woman saying she needed subsidised(read free) childcare so she could nick down to the RSL to play the pokies in peace once a week.
It does my head in sometimes.
Generations of low expectancy are very hard to break.
mick

 

[Value Collector]

I may have mentioned once before on the forum that I occasionally volunteer at the local community centre trying to help people who have the financial acumen of a goldfish.
There is a reason why people are in these low socio economic groups, their ability to manage money is nonexistent, the concept of saving is non existent, and it is very difficult to get them to change their ways,
Pointing out that for the cost of what they pay in taking out the family to lunch at a food court, they could make lunches at home for a week, you can see their eyes glaze over.
Families where there is no working breadwinner will say they don't have time to cook, and the kids don't like what they cook anyway.
I had one woman saying she needed subsidised(read free) childcare so she could nick down to the RSL to play the pokies in peace once a week.
It does my head in sometimes.
Generations of low expectancy are very hard to break.
mick

Last year I had a conversation with a Nephew of mine about the merits of investment, and how starting young and building up a share portfolio is a good thing.

He asked - "If I invest $1000 now, how much could I get in dividends in a year"
I said - "Well it depends on the company, but possibly 10% so $100"
He said - "Why would I want to do that when I could have the full $1000 to spend now"

I tried to explain compounding to him, and that the idea is that he would get many times more than the original $1000 over time, but I don't think it soaked in at all, he just couldn't get past the idea that he could just spend the $1000 today. it reminds me of the old experiment where you offer a child 1 jelly now but say if they avoid eating it for 10 minutes they get 3 jelly beans, most kids can't wait.

 

[over9k]

Alright growth plays are well into the green tonight as well so looks like markets could not care less. All aboard.

 

[farmerge]

I may have mentioned once before on the forum that I occasionally volunteer at the local community centre trying to help people who have the financial acumen of a goldfish.
There is a reason why people are in these low socio economic groups, their ability to manage money is nonexistent, the concept of saving is non existent, and it is very difficult to get them to change their ways,
Pointing out that for the cost of what they pay in taking out the family to lunch at a food court, they could make lunches at home for a week, you can see their eyes glaze over.
Families where there is no working breadwinner will say they don't have time to cook, and the kids don't like what they cook anyway.
I had one woman saying she needed subsidised(read free) childcare so she could nick down to the RSL to play the pokies in peace once a week.
It does my head in sometimes.
Generations of low expectancy are very hard to break.
mick

Mick not unbelieveable but I class them as the Andy capp's of th world, and unfortunately these types tend to breed the next generation of "I want"
Andy Capp and Florrie, classic British comic strip of my teens and later.

 

[farmerge]

We were at the Mandurah Forum today, one of the highest unemployment areas in Australia and low socio area, the shops and food hall were packed, it must be the mega mortgage areas over East that are hurting, who would have guessed.

We occassionally visit the Midland food hall , maybe 1/2 dozen times a year, and are mesmerised by the lard that generally waddles past filling their oversized bodies with sugary drinks and that super healthy take-away.

 

[sptrawler]

Not a good look Albo, you are causing the inflation and trying to blame the RBA for the situation will backfire IMO.
Morrison copped at lot of flack for trying to palm off responsibility, it will be interesting to see how this pans out IMO.

Not the only wrong call on interest rates: PM lashes RBA

Prime Minister Anthony Albanese has taken a swipe at Reserve Bank governor Philip Lowe’s pandemic-era promise to keep interest rates low.

www.theage.com.au

 

[sptrawler]

Not a good look Albo, you are causing the inflation and trying to blame the RBA for the situation will backfire IMO.
Morrison copped at lot of flack for trying to palm off responsibility, it will be interesting to see how this pans out IMO.

Not the only wrong call on interest rates: PM lashes RBA

Prime Minister Anthony Albanese has taken a swipe at Reserve Bank governor Philip Lowe’s pandemic-era promise to keep interest rates low.

www.theage.com.au

Just to highlight the issue, of the Govt inflating away its deficit, while blaming the RBA for the pain, another master stroke.

Labor’s tax take to hit 15-year high

The federal government’s tax take is poised to hit its highest level since 2008 thanks to soaring resource profits and bracket creep delivering more income tax.

www.afr.com

The federal government’s tax take is poised to hit its highest level in 15 years thanks to soaring resource sector profits and inflation pushing workers into higher tax brackets.

Veteran budget watcher Chris Richardson expects the May 9 budget to reveal tax revenue as a share of the economy will reach 23.8 per cent next financial year, which will be the highest level of collections since 2008.


If the media was going to be honest, the RBA has been pretty gentle with interest rates, when compared to most other major countries IMO.



And historical:

 

[frugal.rock]

If the media was going to be honest, the RBA has been pretty gentle with interest rates, when compared to most other major countries IMO

I'd really like to see Brazil on that chart. ?

 

[SirRumpole]

Landlords will just up and sell and what then.

They have to sell to someone.

Maybe that's the idea.

 

[SirRumpole]

Yep, the whole point of raising interest rates is to lower demand and raise unemployment, so that supply and demand can be brought in line with each other, and there is less upward pressure on pricing.

As most of the inflation is in essential services not discretionary i think raising interest rates does more harm than good to most.

Not that I'm complaining, as a saver I've had a hard time recently with low rates.

 

[farmerge]

They have to sell to someone.

Maybe that's the idea.

Our rentals over the past.
Sold one house and a few acres to local cops.
Other house finished as a C18. ie a house in the country 18 inches high. Scum drug infused tenants burnt it to the ground.
3rd house lies empty here on the farm.
Amen to having tenants, not any more for us.

 

[SirRumpole]

Our rentals over the past.
Sold one house and a few acres to local cops.
Other house finished as a C18. ie a house in the country 18 inches high. Scum drug infused tenants burnt it to the ground.
3rd house lies empty here on the farm.
Amen to having tenants, not any more for us.

Bad news about your destroyed house. I hope the perps were caught and suitably punished.

 

[farmerge]

I'd really like to see Brazil on that chart. ?

That would be on the next page somewhere wouldn't it.