Inflation

[JohnDe]

Spoke to a financial advisor this morning, very interesting conversation with some leads. One thing she mentioned is that reserve banks around the world have slowed inflation, but it is still 'sticky' and will be for a while. The EU and UK are in recession, the USA economy is going gangbusters. Australian Retail sales figures are up but units are down, take what you want from that.

Inflation war ‘isn’t yet won’: RBA; ASX up​

Bullock says 'the war isn't yet won' on inflation, RBA 'not ruling anything in or out'.

RBA keeps rates on hold at 4.35pc amid inflation watch

The Reserve Bank board has held interest rates steady for a third consecutive meeting but offered scant encouragement to struggling mortgage holders they will receive imminent relief , saying only that it “is not ruling anything in or out”.

The decision was widely expected by economists and investors, and leaves the cash rate at a 12-year high of 4.35 per cent.

The RBA board, in a statement accompanying Tuesday’s decision, said “while recent data indicate that inflation is easing, it remains high”, and that it will be “some time yet” before it is sustainably back within the 2-3 per cent target range.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable time frame remains uncertain, and the board is not ruling anything in or out,” the statement said.

RBA watchers may detect some softening in the RBA’s language, however, after the latest guidance replaced the previous month’s key phrase that “a further increase in interest rates cannot be ruled out”.

There are firm hopes that easing price pressures will give the RBA room to begin offering mortgage holders some relief in August or September via a first rate cut.

The board in its statement, however, reiterated that it remained on watch-and-wait mode, and that it “will rely upon the data and the evolving assessment of risks”.

The 13 rate hikes since May 2022 have added a notional $1815 to the monthly repayments for a homeowner with a $750,000 mortgage, and $1210 to the monthly repayments on a $500,000 loan.

The RBA board’s latest decision comes after national accounts figures showed economic growth slowed to a near standstill at the end of last year, as cost of living pressures and soaring borrowing costs crushed consumption.

Inflation, on a monthly basis, has slowed to 3.4 per cent in the year to January, although economists have warned that the “stickier” services prices were not well represented in the latest data release.

Jobs figures on Thursday loom as the next major data release, with analysts anticipating that the end of summer seasonal factors will drive a rebound in employment and push unemployment back down to 4 per cent, from 4.1 per cent.

Any disappointment in the labour force figures would add to the probability of a rate cut in the coming six months.

The two-day board meeting was the first attended by recently installed deputy chairman, Andrew Hauser, and will be followed by a press conference with governor Michele Bullock at 3:30pm, Sydney time.

 

[sptrawler]

Spoke to a financial advisor this morning, very interesting conversation with some leads. One thing she mentioned is that reserve banks around the world have slowed inflation, but it is still 'sticky' and will be for a while. The EU and UK are in recession, the USA economy is going gangbusters. Australian Retail sales figures are up but units are down, take what you want from that.

Inflation war ‘isn’t yet won’: RBA; ASX up​

Bullock says 'the war isn't yet won' on inflation, RBA 'not ruling anything in or out'.

Don't want to be demeaning John, but why would you go to a financial advisor?
What do you want from them? What do they offer that you need? Are they financially more secure than you?
I'm not saying they don't have a place and that they can't help people, but as VC shows it isn't rocket science and you seem to have your head screwed on the right way round.

 

[JohnDe]

Don't want to be demeaning John, but why would you go to a financial advisor?
What do you want from them? What do they offer that you need? Are they financially more secure than you?
I'm not saying they don't have a place and that they can't help people, but as VC shows it isn't rocket science and you seem to have your head screwed on the right way round.

I mentioned a while ago that I sold property to one of my young adult children at a reasonable price but much lower than market value, this meant that my CGT is calculated at the higher value even though my profit is not. I went to an advisor to work out the best possible outcome for my circumstances. A passable solution has been found, and my tax bill can be reduced.

 

[sptrawler]

I mentioned a while ago that I sold property to one of my young adult children at a reasonable price but much lower than market value, this meant that my CGT is calculated at the higher value even though my profit is not. I went to an advisor to work out the best possible outcome for my circumstances. A passable solution has been found, and my tax bill can be reduced.

I've done similar.

 

[greggles]

Gold can provide some inflation hedge, but you are much better owning some other assets like property that provide the exact same style of inflation hedge, while also producing income, which you can either live off or compound.

Bitcoin will eventually prove to be both a terrible inflation hedge and a terrible investment.

any asset can perform well in any year, so speculating on either gold or Bitcoin could do well in the short term, but over the long term neither will be able to out perform good income producing assets.

CLW might be producing a 7% return to investors but its share price is in a long term downtrend and is down over 50% in the last 5 years. It could easily go much lower.

It's a very different investment to precious metals, but I firmly believe that gold and silver will return a lot of more than a 7% return to investors in the next five years. Time will tell if I am correct.

 

[noirua]

UK consumer price inflation was cooler than expected in February, according to new data from the Office for National Statistics on Wednesday. The consumer price index rose 3.4% in February from a year before, having increased 4.0% annually in January. Inflation had been expected to decelerate to 3.6%, according to FXStreet-cited market consensus, meaning that the reading was below expectations. Consumer prices rose by 0.6% in February from January. They had been expected to rise at a monthly pace of 0.7%, according to FXStreet. Prices had fallen by 0.6% in January from December. The UK inflation rate hit a recent peak of 11.1% in October 2022. The Bank of England has a 2% inflation target, with the current rate still significantly higher than that. The BoE will announce its next interest rate decision on Thursday. Markets are expecting the central bank to keep rates unchanged.

LONDON BRIEFING: UK inflation cools to 3.4% in February; Eyes on Fed

(Alliance News) - Stocks in London are expected to open slightly lower on Wednesday, as investors ...

www.morningstar.co.uk

 

[noirua]

Down to 2.8% in the EU

Overview​

The euro area annual inflation rate was 2.6% in February 2024, down from 2.8% in January. A year earlier, the rate was 8.5%. European Union annual inflation was 2.8% in February 2024, down from 3.1% in January. A year earlier, the rate was 9.9%. These figures are published by Eurostat, the statistical office of the European Union.
The lowest annual rates were registered in Latvia, Denmark (both 0.6%) and Italy (0.8%). The highest annual rates were recorded in Romania (7.1%), Croatia (4.8%) and Estonia (4.4%). Compared with January, annual inflation fell in twenty Member States, remained stable in five and rose in two.

Annual inflation down to 2.6% in the euro area

Overview The euro area annual inflation rate was 2.6% in February 2024, down from 2.8% in January. A year earlier, the rate was 8.5%. European Union annual inflation was 2.8% in February 2024, down from 3.1% in January. A year earlier, the rate was 9.9%. These figures are published by Eurostat...

ec.europa.eu

 

[noirua]

US inflation unexpectedly increased to 3.2 per cent last month, highlighting the challenge faced by the Federal Reserve in the “last mile” of its fight against rising prices. Economists polled by Bloomberg had expected annual consumer price inflation to remain unchanged from January’s rate of 3.1 per cent. But Tuesday’s rise, largely stoked by services such as motor insurance and health, triggered warnings that the Fed may have to wait longer than previously expected before cutting interest rates from their current 23-year high.

Subscribe to read

www.ft.com

 

[noirua]

 

[Value Collector]

CLW might be producing a 7% return to investors but its share price is in a long term downtrend and is down over 50% in the last 5 years. It could easily go much lower.

It's a very different investment to precious metals, but I firmly believe that gold and silver will return a lot of more than a 7% return to investors in the next five years. Time will tell if I am correct.

View attachment 173079

gold could easily halve over the next 5 years with out paying A dime in dividends, while CLW could double and still be paying dividends.

look, the only reason CLW has gone down in share price is because interest rates rising increases the return expectations of other assets.

for example if a $10 stock is paying a 50 cent dividend, that’s a 5% return, but if the market decides it wants a 7% return that $10 stock has to drop to $7, that is all that’s happened at CLW, but interest rates can’t keep rising for ever but the income from their leases will keep rising, so CLW share price has probably bottomed already, and people buying now get he new higher return, and a windfall profit when interest rates drop again.

But interest rates and expectations are constantly moving, so once interest rates stabilise so will CLW‘s share price, but it will pay dividends throughout. Gold doesn’t.

CLW‘s rents will keep rising over time, this will eventually cause the share price to rise, if with the markets slightly higher expectations For income.

 

[Prepper Pete]

The dollar tumbles but their is massive amounts of money being put through the shredder too.

 

[divs4ever]

The dollar tumbles but their is massive amounts of money being put through the shredder too.

would be more convincing if the grater was around the other way ... but modern laptop hard-drives do have exposed innards either

as you see briefly near the end

but maybe that is how the White House tries to destroy evidence

 

[JohnDe]

Sticky inflation, what causes it?

Heard this on the radio yesterday -

The estimated cost to redevelop the Payneham Memorial Swimming Centre has tripled from $20 million to $60 million in three years, as a South Australia-based firm wins the project contract.​

​

Norwood Payneham & St Peters Mayor Robert Bria said the council was “satisfied it will be able to meet its financial obligations” despite the significant blowout in costs for the redevelopment.​

​

Plans are largely the same as first announced except for a newly-added zero-depth water play area.​

​

the cost of the build had “escalated significantly”, and attributed the $40 million increase in costs to “the economic landscape, most notably interest rates, inflation and skill shortages and supply chain issues” which “had serious knock-on effects to the nation’s construction industry”.​

​

“Notwithstanding this, in making this decision the Council commissioned an independent Prudential Report which included a detailed review of the potential impacts of this project and its ongoing financial sustainability,” Bria said.​

​

“The Council is satisfied that it will be able to meet its financial obligations and continue its financial sustainability without unnecessary impact on our ratepayers.”​

​

The council is expected to be supported by the Local Government Finance Authority of SA to pay for the redevelopment. The body provides investment and lending solutions to local governments in the state.​

​

The state government was contacted by InDaily for comment on its position regarding the higher cost for the redevelopment. A spokesperson said the government was committed to the $5.6 million grant for the swimming centre.​

Payneham pool redevelopment bill springboards to $60 million - InDaily

www.indaily.com.au

 

[JohnDe]

Double edged sword, and a dagger - recession or inflation, immigration and jobs.

"Migration boom, housing shortage create ‘perfect’ storm. Record migration helped keep Australia out of technical recession, but set against a housing shortage, it’s becoming a policy nightmare."

We are already seeing the problem of housing and rental shortages, builders can't keep up, and companies that specialise in renovations are finding it more lucrative to get into the house building industry because it is easier and more profitable.

Nation’s migration intake surges to record high​

Australia’s migration rose sharply to a record net 548,800 arrivals in the year to September, with official figures showing a jump of 60.3pc on the previous year.​

Migration and the housing crisis are converging to become a singular and politically potent problem for the Albanese government.

While the failures in immigration detention have been acute, there is a more chronic issue now confronting the government and it appears it will only get worse. Having been on the slow burn for the past 18 months, it is one that is now starting to gain traction in the community.

It has also finally dawned on the Coalition more broadly that it has a powerful political weapon at its disposal.

The official ABS Estimated Resident population numbers released on Thursday for the September 2023 quarter confirm that last year recorded the most rapid population growth since the post World War II boom - or close enough to it.

For Treasurer Jim Chalmers this has been a godsend. The high migration numbers are perhaps the only reason Australia has remained out of technical recession.

The 170,000 quarterly rise was much higher than 150,000 the government was forecasting.

But when set against the crippling housing shortage, it is rapidly becoming a policy nightmare.

The government has two lines on a graph that are pointing in opposite directions. It will argue that it has already moved to address the migration issue with actions that have already brought down the net overseas migration rate which the ABS numbers won’t take into account.

It claims that net overseas migration will drop by half by next year, representing the “largest decline in migration in Australia’s history, outside of pandemic and world wars”.

The housing industry would counter that argument that even with zero migration, there still won’t be enough dwellings built to meet demand.

The Australian revealed this week that the net migration intake is now outpacing new dwelling constructions by four to one.

Migration policy and housing don’t have to be strictly hypothecated to the point that you need to build a house for every new arrival. But there must be at least some link to supportive infrastructure to accommodate a bigger Australia and that includes housing infrastructure.

Peter Dutton planted a marker in his budget reply speech last year by asking the simple question of the migration numbers, citing migration numbers of 1.5 million over the next five years, equivalent to a city the size of Adelaide: “Where are they all going to live?”

The Liberal leader is now starting to seize on the magnitude of the problem and how potentially damaging it could be for the government. It was the first question he asked in question time on Tuesday. He will continue to chip away.

Some colleagues are reported to have been a bit twitchy in shadow cabinet last year when the idea of cutting migration rates as policy was raised. But most are now convinced of the new orthodoxy – that there needs to be alignment of migration and housing policy.

Opposition housing spokesman Michael Sukkar and immigration spokesman Dan Tehan have been pushing this barrow internally – and publicly – for the past 18 months. What has changed is that the problem is now looming worse.

If people think there is a housing crisis at the moment, they haven’t seen anything yet. The last time dwelling approvals were this low was in 2012. The official population numbers have a long lag time but will at least give an indication of what the population numbers look like for 2023.

Of all the problems Albanese has, this is the one with a longer risk profile and goes directly to cost of living, considering the impact it has on driving up rents. And the minister now in the headlights over the immigration detention failures, Andrew Giles, is in the middle of this one too.

It is potentially one of the most toxic issues over time for Labor in the outer suburban electorates. And the Coalition now looks like finally diving into it aggressively.

https://www.theaustralian.com.au/commentary/the-population-boom-and-record-low-building-approvals-loom-as-the-pms-next-political-nightmare/news-story/c0cf421582319c00a1742d42b5986652

 

[qldfrog]

Double edged sword, and a dagger - recession or inflation, immigration and jobs.

"Migration boom, housing shortage create ‘perfect’ storm. Record migration helped keep Australia out of technical recession, but set against a housing shortage, it’s becoming a policy nightmare."

We are already seeing the problem of housing and rental shortages, builders can't keep up, and companies that specialise in renovations are finding it more lucrative to get into the house building industry because it is easier and more profitable.

Nation’s migration intake surges to record high​

Australia’s migration rose sharply to a record net 548,800 arrivals in the year to September, with official figures showing a jump of 60.3pc on the previous year.​

And look how we are sorting housing :
From our ALP geniuses in Qld

Qld renters’ identities kept to themselves under proposed law changes

Long-awaited Queensland reforms will crack down on information requests from owners and agents.

www.brisbanetimes.com.au

Everything to ensure no sane person becomes a landlord

 

[qldfrog]

And look how we are sorting housing :
From our ALP geniuses in Qld

Qld renters’ identities kept to themselves under proposed law changes

Long-awaited Queensland reforms will crack down on information requests from owners and agents.

www.brisbanetimes.com.au

Everything to ensure no sane person becomes a landlord

And if you think going to Victoria will help:

https://www.news.com.au/finance/real-estate/renting/victorian-government-taskforce-to-crack-down-on-dodgy-landlords/news-story/bf6ea8acc3dc578c1e1c86764093759e

This is just this week: naughty landlords, do you understand??
So inflation or RE thread..humm got the feeling both are relevants

 

[divs4ever]

And look how we are sorting housing :
From our ALP geniuses in Qld

Qld renters’ identities kept to themselves under proposed law changes

Long-awaited Queensland reforms will crack down on information requests from owners and agents.

www.brisbanetimes.com.au

Everything to ensure no sane person becomes a landlord

another bullet dodged when i sold the 'family home ' ( i inherited ) and was renting out , early last year

will be very difficult to get me to invest in another rental property ( at least let out for human habitation )

PS lots of folks think i am a little crazy ( or worse )

 

[farmerge]

another bullet dodged when i sold the 'family home ' ( i inherited ) and was renting out , early last year

will be very difficult to get me to invest in another rental property ( at least let out for human habitation )

PS lots of folks think i am a little crazy ( or worse )

no, no never ever!!

 

[mullokintyre]

Some countries still see gold as the best source of protection of wealth against inflation.
From Kitco gold

Doubt if Bitcoin will get a look in amongst the vassals in Turkey.
Mick

 

[Knobby22]

Sticky inflation, what causes it?

Heard this on the radio yesterday -

The estimated cost to redevelop the Payneham Memorial Swimming Centre has tripled from $20 million to $60 million in three years, as a South Australia-based firm wins the project contract.​

​

Norwood Payneham & St Peters Mayor Robert Bria said the council was “satisfied it will be able to meet its financial obligations” despite the significant blowout in costs for the redevelopment.​

​

Plans are largely the same as first announced except for a newly-added zero-depth water play area.​

​

the cost of the build had “escalated significantly”, and attributed the $40 million increase in costs to “the economic landscape, most notably interest rates, inflation and skill shortages and supply chain issues” which “had serious knock-on effects to the nation’s construction industry”.​

​

“Notwithstanding this, in making this decision the Council commissioned an independent Prudential Report which included a detailed review of the potential impacts of this project and its ongoing financial sustainability,” Bria said.​

​

“The Council is satisfied that it will be able to meet its financial obligations and continue its financial sustainability without unnecessary impact on our ratepayers.”​

​

The council is expected to be supported by the Local Government Finance Authority of SA to pay for the redevelopment. The body provides investment and lending solutions to local governments in the state.​

​

The state government was contacted by InDaily for comment on its position regarding the higher cost for the redevelopment. A spokesperson said the government was committed to the $5.6 million grant for the swimming centre.​

Payneham pool redevelopment bill springboards to $60 million - InDaily

www.indaily.com.au

Government spending has to reduce to stop sticky inflation. The federal government has been doing that but these massive state government initiatives which were announced and signed during low inflation period are going to take years to complete and will keep adding to the problem.

There isn't enough competition and there are skill shortages as per the article.

New works need to be discouraged, held off for a year.

Thought the Queensland cancellation of new stadium was a good start. Victoria is broke so that will stop them.