Australian (ASX) Stock Market Forum

Inflation

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divs4ever said:
sorry , am staying open-minded on that scenario

we are being administered by a special kind of officials
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They've barely even stopped the printers div, you think they're going to crank rates?

Rates should be about twice what they are now, you think they're going to shoot them up to 18% when they practically needed to be threatened at gunpoint to raise them to 4%?

I bet the next bull**** narrative will be something along the lines of "rate rises aren't working" and that'll be the ostensible reason why they aren't raising any further.

You just watch.
 
over9k said:
They'll turn the place into zimbabwe dollars before they do that.
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That is possible, probably not completely in the can, but it is a fast way to make Australia cost competitive.

Even that isn't a sure thing though, Zimbabwe, used to be a economic power house. 😂

An interesting read:

en.wikipedia.org

Economic history of Zimbabwe - Wikipedia

en.wikipedia.org en.wikipedia.org

The Economic History of Zimbabwe began with the transition to majority rule in 1980 and Britain's ceremonial granting of independence. The new government under Prime Minister Robert Mugabe promoted socialism, partially relying on international aid. The new regime inherited one of the most structurally developed economies and effective state systems in Africa.[2][3] In 2000, the government imposed a land reform program to seize white-owned farms which caused the economy to shrink along with mismanagement, corruption and political instability.
 
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over9k said:
They've barely even stopped the printers div, you think they're going to crank rates?

Rates should be about twice what they are now, you think they're going to shoot them up to 18% when they practically needed to be threatened at gunpoint to raise them to 4%?

I bet the next bull**** narrative will be something along the lines of "rate rises aren't working" and that'll be the ostensible reason why they aren't raising any further.

You just watch.
Click to expand...
The crunch has to come sooner or later but what did they expect?

You let people who couldn't pay a car loan off dig into their super and buy a house, great work this govt has done. :facepalm:

All your fundamental costs are high, you can never get on top of inflation this way, it's like an economy being held up by a tree stump full of termites if they don't treat the most structural part of the stump in time holding the economy up, it will all come tumbling down eventually
 
over9k said:
They've barely even stopped the printers div, you think they're going to crank rates?

Rates should be about twice what they are now, you think they're going to shoot them up to 18% when they practically needed to be threatened at gunpoint to raise them to 4%?

I bet the next bull**** narrative will be something along the lines of "rate rises aren't working" and that'll be the ostensible reason why they aren't raising any further.

You just watch.
Click to expand...
in previous times inflation came in waves , with the worker being the last one to catch up ( if they still have a job )

business is often the meat in the middle ( tries to cut costs , and pass on some costs and suck up some rises to maintain market share , but most of all stay in business ) and government to prove they care ( like everybody believes that ) starts inquiries and introduces more regulations , maybe even taxes . ( because they have already tried compulsory savings/Super )

and of course some believe 'official inflation rates ' are grossly inaccurate
 
sptrawler said:
That is possible, probably not completely in the can, but it is a fast way to make Australia cost competitive.

Even that isn't a sure thing though, Zimbabwe, used to be a economic power house. 😂

An interesting read:

en.wikipedia.org

Economic history of Zimbabwe - Wikipedia

en.wikipedia.org en.wikipedia.org

The Economic History of Zimbabwe began with the transition to majority rule in 1980 and Britain's ceremonial granting of independence. The new government under Prime Minister Robert Mugabe promoted socialism, partially relying on international aid. The new regime inherited one of the most structurally developed economies and effective state systems in Africa.[2][3] In 2000, the government imposed a land reform program to seize white-owned farms which caused the economy to shrink along with mismanagement, corruption and political instability.
Click to expand...
I wonder when they'll add a couple of zeros onto our $1 coin, you can't buy much with it anyway.



1719449570845.png
 
This is the first time since Gough that we seem to be trying to inflate our way out of trouble, but it feels like riding a hill trolley with wobbly wheels rapidly accelerating downhill IMO.
Hopefully it levels out, but wages rising at 3% while rents and houses are increases at 7-10%, just doesn't feel right. In the past there has been a recession we had to have, where unprofitable businesses fall, unemployment goes up, prices of everything falls, then the growth starts.
This time it just feels like the middle class is paddling like mad, but accelerating toward the waterfall.
Like I say, hopefully it all ends well and soon.
At the end of the day a house is a bunch of bricks and sticks, put up by a couple of blokes, on a tiny bit of land, it shouldn't cost $1m dollars.
 
sptrawler said:
This is the first time since Gough that we seem to be trying to inflate our way out of trouble, but it feels like riding a hill trolley with wobbly wheels rapidly accelerating downhill IMO.
Hopefully it levels out, but wages rising at 3% while rents and houses are increases at 7-10%, just doesn't feel right. In the past there has been a recession we had to have, where unprofitable businesses fall, unemployment goes up, prices of everything falls, then the growth starts.
This time it just feels like the middle class is paddling like mad, but accelerating toward the waterfall.
Like I say, hopefully it all ends well and soon.
At the end of the day a house is a bunch of bricks and sticks, put up by a couple of blokes, on a tiny bit of land, it shouldn't cost $1m dollars.
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It's bad governance, there's barely a meaningful policy to help cut the cost of living. You can't make a loaf of bread for $4 and sell it for $2, it is the same with housing but the govt is also skimming with land tax and other various sales taxes.

Wage growth makes everything worse 2 fold because there's basically nothing stopping retailers and service providers from putting their prices up. What's happening is inevitable, everything will support itself until it can no longer.
 
TimeISmoney said:
It's bad governance, there's barely a meaningful policy to help cut the cost of living. You can't make a loaf of bread for $4 and sell it for $2, it is the same with housing but the govt is also skimming with land tax and other various sales taxes.

Wage growth makes everything worse 2 fold because there's basically nothing stopping retailers and service providers from putting their prices up. What's happening is inevitable, everything will support itself until it can no longer.
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market share , and turnover are the two major hand-brakes on most businesses , if turnover drops off so do the staff numbers ( short term that can be a bonus for some businesses , as long as you don't lose key skilled workers )
 
divs4ever said:
sorry , am staying open-minded on that scenario

we are being administered by a special kind of officials
Click to expand...

Funny that you mention that.

The Albanese government is preparing for an election and either does not care or does not know the inflation/interest rate pressure its actions are creating.​
​
But Australia is two nations. Victoria, and the rest.​
​
An increase in interest rates in all mainland states except Victoria will, of course, make things tougher and means those with mortgages will bear more inflation fighting blows. For Victoria it will be catastrophic.​


Brisbane is the inflation capital while Victoria languishes​

The true story behind the rise in inflation to around four per cent is not pleasant.

The capital of Australian inflation is Brisbane. The best indicator is Brisbane’s apartment building costs which are now 33 per cent above Sydney and 70 per cent above Melbourne. Many tradies who moved to Melbourne some years ago have returned to Queensland to enjoy the relaxed building style (i.e. low productivity) and high pay.

As I reported earlier this month there is a surge in retail spending around the nation except in Victoria. We have a government in Canberra who seeks re-election and is spending wildly which must be further increasing the non Victorian demand surge.

In Victoria the dismay of being saddled for two years with another version of Daniel Andrews and his wild borrowing shatters confidence.

Businesses around the land are encountering relentless cost rises particularly in services. Many enterprises can’t pass those costs on so are reducing labour costs.

But in areas where there is demand they are still passing on the costs which in April and May boosted inflation. Now in June with demand stronger in most areas of the country it will be easier to pass on costs via prices.

Into that dangerous environment the Albanese government is set to fire into the economy a three-headed stimulus rocket.

The first firing involves the tax cuts.

The second is the government advocated a rise in the minimum wage which spread its explosive material through awards and into wage negotiations. There are now wage rises galore.

Finally, those who are able to draw pensions from their superannuation funds get increased availability from July 1.

Add to that rampant Federal government expenditure including energy subsidies to artificially reduce the inflation they are stimulating.

The Albanese government is preparing for an election and either does not care or does not know the inflation/interest rate pressure its actions are creating.

It’s true that these stimulants will be offset to some extent by the lower cost of goods imported from China which is holding back inflation in most other developed countries.

Reserve Bank Governor Michele Bullock will not have yet seen details of the increased demand in June. But it will come through before the next Reserve Bank meeting in August.

It is likely that hawks around the Reserve Bank board table, who have wanted to raise interest rates for some months, will now press much harder.

But Australia is two nations. Victoria, and the rest.

An increase in interest rates in all mainland states except Victoria will, of course, make things tougher and means those with mortgages will bear more inflation fighting blows. For Victoria it will be catastrophic.

Making the impact worse will be the fact that in many areas job insecurity is set to return.

During April and May, when sales were stagnant, costs were still going through the roof, and a vast number of national enterprises began to realise that the only way they could maintain profits in the face of resistance to price rises was to relook at their cost structures. And we are seeing this strategy applied over many large companies including the banks, Telstra, Bunnings, The Seven and Nine networks and so on.

The June rise in sales outside of Victoria will not halt that cost efficiency process because companies realise that if inflation momentum continues interest rates will rise to eventually snuff out the retail resurgence. It is therefore important to get costs under control. Moreover, on August 26 the Industrial Relations act comes into operation which is designed to increase costs and lower productivity and therefore underwrites long term inflation.

It is important for the nation that the Reserve Bank makes it very clear that the biggest contributor to any rise in interest rates is the Federal government.

Assange release
Full marks to the Albanese government for its work in securing the release of Julian Assange. And it’s also good to see the opposition supporting the government on this issue.

But as I set out earlier this week both parties suffer from rank political hypocrisy. We have our own homegrown Julian Assange, Richard Boyle, who told the truth about the terrible abuse of small business people by the ATO.

The truth was verified and, as a result of Boyle’s truth telling, the ATO changed many of their methods. The Coalition wanted him jailed for the term of his natural life for this truth telling. The Albanese government changed the act but then exploited a loophole they created.

For the current government, telling the truth now involves a penalty of 20 to 30 years jail- – about equal to murder. Surely there must be somebody in the government with a conscience about the treatment of our home grown Julian Assange.
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There's a pullback in spending and a lot of business going to the wall. Rates will hold then drop.

These unemployment figures are cooked. I'm seeing a lot of lay-offs this past week especially in the trades. It's across the board. As far as I'm concerned it would be called a recession if they weren't diddling the numbers.

RBA should of went harder earlier. It's a slow wallet mog the way it's being done. Albo isn't helping with the cash splash.
 
moXJO said:
There's a pullback in spending and a lot of business going to the wall. Rates will hold then drop.

These unemployment figures are cooked. I'm seeing a lot of lay-offs this past week especially in the trades. It's across the board. As far as I'm concerned it would be called a recession if they weren't diddling the numbers.

RBA should of went harder earlier. It's a slow wallet mog the way it's being done. Albo isn't helping with the cash splash.
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but will the rates drop sooner .. or too late ( after massive carnage )

the RBA is doing a lot of jaw-boning ... but once trust is gone they have hardly any tools left ( the rates needed to be 6% plus to give them wiggle room in the cuts )
 
divs4ever said:
but will the rates drop sooner .. or too late ( after massive carnage )

the RBA is doing a lot of jaw-boning ... but once trust is gone they have hardly any tools left ( the rates needed to be 6% plus to give them wiggle room in the cuts )
Click to expand...
It's a very fine line, but the RBA still seems on the wire. I think it will hold till the end of the year. Should see cuts by the end, or early next year.
The media screeching for a head when the RBA was first jacking up rates is the reason why we didn't go higher earlier.

The US hasn't dropped rates but someone mentioned they started QE again. US will devalue their dollar I suppose?
It's the only way they can address the debt.
 
Big attack on the RBA today in the AFR, by the reporter Chris Joyce.

His main points are:
Underlying inflation is intolerably high and Australia is the only G10 country where Underlying inflation has increased since December-(Phil Donegue Deutsche).

Quarterly inflation looks like coming in at 1 to 1.1% , materially above the Reserve Bank target of 0.8%.

Underlying inflation is up 0.4% since May, average decline is 0.9% in the G10.

Global peers raised interest rate by at least 1.75% above neutral, we have only raised ours by 0.75%.
( I understand this to a certain extent as we are more sensitive but that is still a big difference. )

Conclusion: Australia will be forced into a second humiliating rate cycle because the RBA is patently not willing to do its job.

Illiquidity in share portfolios will be death.
 

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