Inflation

[divs4ever]

Illiquidity in share portfolios will be death.

why would the RBA be worried about Illiquidity in share portfolios

it knows large amounts are trapped in Super/SMSFs and managed funds , and with ETFs well we will see what happens if they face real pressure

BTW i am NOT saying i approve of the RBA decisions over the last 5 years , but hey they are on a nice salary a pretty good retirement plan , unless the masses come out with pitchforks , only politicians will feel real pain ( the RBA live in Ivory Towers , don't they ?)

i still think at least two hikes by the end of 2025 as even the rubbery figures can't hide the truth ( remember the RBA needs to crush demand ie leave the masses dirt-poor , to beat inflation )

 

[Knobby22]

why would the RBA be worried about Illiquidity in share portfolios

it knows large amounts are trapped in Super/SMSFs and managed funds , and with ETFs well we will see what happens if they face real pressure

BTW i am NOT saying i approve of the RBA decisions over the last 5 years , but hey they are on a nice salary a pretty good retirement plan , unless the masses come out with pitchforks , only politicians will feel real pain ( the RBA live in Ivory Towers , don't they ?)

i still think at least two hikes by the end of 2025 as even the rubbery figures can't hide the truth ( remember the RBA needs to crush demand ie leave the masses dirt-poor , to beat inflation )

It was the reporter that said that about illiquidity. I reckon you may be right, two hikes, or one big one. Less egg on face that way.

 

[Chipp]

Whilst there is a chance of a rate hike by EOY i dont believe the probability of it is as high as much of the media are saying ( media relies on sensationlist clickbait for revenue and fear sells ) . Based on current 30d bank rate futures the terminal rate is November '24 at an indicated rate of 4.47% . If there was a stronger belief amongst the big money the terminal rate would be further out the curve into 2025 IMO . We got some inflation relief rebates on the cards starting from next week and whilst Q2 CPI is now set in stone Q3 CPI likely to be forecast softer than Q2 . The RBA will be looking forwards more than relying on lagging data . The speech from RBA 2ic during week had the statement " It would be a bad mistake to set the basis of policy on one number and we don't do that " What i glean from that is no Rate changes are happening before Q3 CPI outside a drastic change in economic conditions . AND at this stage i think Q3 CPI will come in softer based on the rebate scenario . Naturally we need to consider this dynamically as data changes but for me i follow the 30d bank futs for guidance

And for @divs4ever re RBA renumeration

 

[divs4ever]

clickbait is what the media do ( since at least the mid '90s in Australia )

now last i heard Australia is angling for a Federal Election and unless the impartial ( !?!? ) RBA has turned against Albo they will try to take the least aggressive path until the election is done .

after that well the Government is increasing rebates and subsidies so logic says inflation will stay solid ( or grow hotter )

** at least $240,000 per year **

multiple times what my best yearly income .. when i was working

and remember even the cycling Adam Bandt couldn't live on the dole in one experiment ( try telling your future boss you don't have a car or motor-bike )

 

[Chipp]

after that well the Government is increasing rebates and subsidies so logic says inflation will stay solid ( or grow hotter )

For sure the rebates are effectively delaying inflation ( kicking the can down the road ) and i know the huge amounts of rebates in QLD starting currently are vote buying as much as fiscal relief . But nevertheless these rebates will moderate much data that otherwise the RBA may have had to act on . The inflation will not grow hotter in the short term is the key factor , once rebates end of course it becomes an issue but thats a year away from when they start . The RBA is not going to act now on rebates ending in 12 months , thats pretty well a given .

 

[TimeISmoney]

Whilst there is a chance of a rate hike by EOY i dont believe the probability of it is as high as much of the media are saying ( media relies on sensationlist clickbait for revenue and fear sells ) . Based on current 30d bank rate futures the terminal rate is November '24 at an indicated rate of 4.47% . If there was a stronger belief amongst the big money the terminal rate would be further out the curve into 2025 IMO . We got some inflation relief rebates on the cards starting from next week and whilst Q2 CPI is now set in stone Q3 CPI likely to be forecast softer than Q2 . The RBA will be looking forwards more than relying on lagging data . The speech from RBA 2ic during week had the statement " It would be a bad mistake to set the basis of policy on one number and we don't do that " What i glean from that is no Rate changes are happening before Q3 CPI outside a drastic change in economic conditions . AND at this stage i think Q3 CPI will come in softer based on the rebate scenario . Naturally we need to consider this dynamically as data changes but for me i follow the 30d bank futs for guidance

And for @divs4ever re RBA renumeration

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Banks hardly ever get it right though, even though they are on the front line of what's going on in the economy.

Most of the top 4 bank predictions for IR have been woeful over the past few years.

The writing is all on the wall, I've been saying it for 2 years now that I don't think IR will come down in a hurry.

 

[Chipp]

Dont know about hardly ever but they get it right better than most . The banks only control the overnight rate today , the futures are controlled by Interest rate hedgers and speculators just like treasury bond futures and the further out on the curve the more speculative re volatile price is . I for one only consider 30 rate futures any sort of decent guide a max of 6 months down the curve with 3-4 months the best spot . My point is i am data driven and basically take next to zero notice of opinion pieces whether thats a bank analyst or economist . Dynamic critical thinking is my way , i have zero love for a position / trade . Numbers are my alpha not chattering BS

Graphic on inflation that replaces 50,000 pundit words . Had this convo this week " inflation isnt beaten by throwing money at it "

 

[mullokintyre]

Banks hardly ever get it right though, even though they are on the front line of what's going on in the economy.

Most of the top 4 bank predictions for IR have been woeful over the past few years.

The writing is all on the wall, I've been saying it for 2 years now that I don't think IR will come down in a hurry.

The RBA have a history of overshooting then undershooting on Interest Rates.
I see no reason for the current regime to be any better or worse than its predecessors.
Treasury are the same.
Their economic forecasts are lucky to be in the same state, much less the same postcode.
If every other major economy is reducing inflation, what is the difference between us and them?
After all, we buy much of the same products, including oil, maccas and cars.
It highlights that inflation is a monetary problem - too much money chasing too few goods.
And despite what the government says, increasing money supply to help people get through a tough cost of living adjustment, is going to be inflationary.
Hence I see no reduction in rates until we see higher unemployment, a contraction in house prices, and generally blood on the streets.

Mick

 

[divs4ever]

Hence I see no reduction in rates until we see higher unemployment, a contraction in house prices, and generally blood on the streets.

sadly , i expect the same ( but hopefully i will still do well , if they don't )
a whole different ball-game in house/unit prices in Australia , we do not have 30 year fixed rate mortgages ( to lock in super-low rates )

so Australian mortgagees are under ( or will be ) under increased refinancing pressure as well as rising costs

job losses are probable as businesses try to reduce costs/losses , how many and where, are the big questions

 

[TimeISmoney]

The RBA have a history of overshooting then undershooting on Interest Rates.
I see no reason for the current regime to be any better or worse than its predecessors.
Treasury are the same.
Their economic forecasts are lucky to be in the same state, much less the same postcode.
If every other major economy is reducing inflation, what is the difference between us and them?
After all, we buy much of the same products, including oil, maccas and cars.
It highlights that inflation is a monetary problem - too much money chasing too few goods.
And despite what the government says, increasing money supply to help people get through a tough cost of living adjustment, is going to be inflationary.
Hence I see no reduction in rates until we see higher unemployment, a contraction in house prices, and generally blood on the streets.

Mick

The thing is where is the money coming from that's making prices inflate? House prices and car prices are high, and they're both still selling well. They are the 2 things that most people tend to borrow money from banks to purchase. If the banks didn't or couldn't loan them the money would they still buy at higher prices?

I had a new-car holding yard move in up the road from me on an empty block, and I'm gobsmacked at the number of cars that go through there on a weekly basis. I was eyeing off a new Suzuki Jimny but a bit overpriced at 45K, then I noticed about 30 in this holding yard and all gone within a week.

Not saying some people aren't doing it tough but the disadvantaged and poor suffer through the good and the bad times. Increasing wages isn't going to help these people in the long run as the cost of living goes up with it.

A wage increase just isn't a weekly increase in someone's wage, their holiday pay goes up, their super goes up, and insurances go up, x10 workers in a small company that's a huge hit for a business to take on. Someone has to pay for it in the end or the business closes down, which means less competition to keep the prices competitive.

sadly , i expect the same ( but hopefully i will still do well , if they don't )
a whole different ball-game in house/unit prices in Australia , we do not have 30 year fixed rate mortgages ( to lock in super-low rates )

so Australian mortgagees are under ( or will be ) under increased refinancing pressure as well as rising costs

job losses are probable as businesses try to reduce costs/losses , how many and where, are the big questions

It needs to happen, house prices are way overpriced. If a recession occurred after Covid we most likely wouldn't be in the position we're in now.

I worked through the 90's in a 2 man workshop and I was the worker, the cleaner, the secretary, sometimes even my own boss when the boss stepped out of the shop, was sick or went on holiday. It was a stressful job for 8 years of my life, and very long days for the both of us but I got paid every week with no problems.

 

[divs4ever]

The thing is where is the money coming from that's making prices inflate? House prices and car prices are high, and they're both still selling well. They are the 2 things that most people tend to borrow money from banks to purchase. If the banks didn't or couldn't loan them the money would they still buy at higher prices?

I had a new-car holding yard move in up the road from me on an empty block, and I'm gobsmacked at the number of cars that go through there on a weekly basis. I was eyeing off a new Suzuki Jimny but a bit overpriced at 45K, then I noticed about 30 in this holding yard and all gone within a week.

Not saying some people aren't doing it tough but the disadvantaged and poor suffer through the good and the bad times. Increasing wages isn't going to help these people in the long run as the cost of living goes up with it.

A wage increase just isn't a weekly increase in someone's wage, their holiday pay goes up, their super goes up, and insurances go up, x10 workers in a small company that's a huge hit for a business to take on. Someone has to pay for it in the end or the business closes down, which means less competition to keep the prices competitive.


It needs to happen, house prices are way overpriced. If a recession occurred after Covid we most likely wouldn't be in the position we're in now.

I worked through the 90's in a 2 man workshop and I was the worker, the cleaner, the secretary, sometimes even my own boss when the boss stepped out of the shop, was sick or went on holiday. It was a stressful job for 8 years of my life, and very long days for the both of us but I got paid every week with no problems.

well in my opinion Covid was the rescue plan/distraction


my holdings at the end of January 2020

a few changes due to share price moves ( today )

( by $value )

1. MQG. ( 'free-carried )

2. cash ( yes i reduced WOW and bought into KGN and HPI and still have some cash left )

3. BHP ( some profit taken )

4. WES ( at full cash risk )

now if i were to bundle BBOZ and BBUS and call them say 'liquidity buffer ' they would be No. 5 , but let's stick with the boring old style ( wink )

5. JHG ( full cash risk )

6. APE ( at some cash risk )

7. CLW ( full cash risk )

8. EQT ( 'free-carried ' )

9. PME ( 'free-carried )

10. CUP ( at full cash risk )

11. CMW ( at full cash risk ) ( or 10. if you don't count the cash holdings )


just behind these are CCL and SVW


( DYOR )

former No. 1 WOW is still held but might be around No. 15 ( at a rough guess )

the holdings at the end of February 2020

some changes this month ( what have i done ? )

( by $value )

1. MQG. ( 'free-carried )

now if i were to bundle BBOZ and BBUS and call them say 'liquidity buffer ' they would be No. 2 , but let's stick with the boring old style ( wink )

2. BHP ( some profit taken )

3, WES ( at full cash risk )

4. APE ( at some cash risk )

5. CLW ( full cash risk )

6. JHG ( full cash risk )

7. API ( full cash risk )

8. LNK ( full cash risk )

9. BBOZ ( full cash risk )

10. EQT ( 'free-carried ' )

11. CMW ( at full cash risk )

the last week has really shaken the portfolio up


( DYOR )

oh BTW i held some BEAR during those months as well

why the reverse index funds ?

i was REALLY worried the banks would freeze or limit withdrawals

but history blames a virus .. and i did very nicely anyway ( despite fearing the wrong Black Swan )

 

[mullokintyre]

The thing is where is the money coming from that's making prices inflate?

From the latest RBA figures, we can see t it all began with the massive injection of funds post covid.
Mick

 

[Smurf1976]

If every other major economy is reducing inflation, what is the difference between us and them?

An issue in Australia is we have a lot of structural inefficiencies and bottlenecks particularly in key industries that influence most other businesses as well as consumers. Eg utilities, transport, real estate, trades etc, that all impacts pretty much the whole economy.

 

[qldfrog]

An issue in Australia is we have a lot of structural inefficiencies and bottlenecks particularly in key industries that influence most other businesses as well as consumers. Eg utilities, transport, real estate, trades etc, that all impacts pretty much the whole economy.

We are a one horse economy which has been spoiled for too long, with as stated above so many layers of inefficiency, bureaucracy and leeches that no entrepreneurship, innovation or even just thinking or hard work is rewarded.
The whole population as a result behaves as teenagers brats, and politicians do not have the balls for any real deep fundamental reform or geopolitical change toward any vision.
AFter all, this would prevent reelection so.
Just woke trends following decision: green iron, net zero, DV, native titles..nothing about about increasing actual wealth or productivity, reducing costs, various colour tapes or layers of government,/ costs.

What we get now is just consequences of the above, which are not only ALP restricted btw.
And i am afraid only a war, horrendous recession or shock could change that, with a lot of misery, unemployment,power blackout and inflation ahead

 

[qldfrog]

NBN price hikes could impact up to seven in 10 homes

www.9news.com.au

And that will not help as unless going to starlink, there is no competition in Australia so another inflation hit .
I suspect even 4/5g plans probably rely partly on NBN

 

[sptrawler]

An issue in Australia is we have a lot of structural inefficiencies and bottlenecks particularly in key industries that influence most other businesses as well as consumers. Eg utilities, transport, real estate, trades etc, that all impacts pretty much the whole economy.

So true, the Govt can only increase the tax take from the consumers, or from the miners, there really isn't any other taxable sector as there is minimal manufacturing.

if they increase the tax take on resources, it could have huge ramifications, if it caused a contraction.

So the working class are wearing it, give them some money, so that they can just keep up with the increases in costs, but the appreciating assetts(housing) moves further away.

Which really just moves them down the middle class ladder.
Most other first world countries have a broader tax base, manufacturing, tourism, larger population to land area, more mature economy.

 

[divs4ever]

NBN price hikes could impact up to seven in 10 homes

www.9news.com.au

And that will not help as unless going to starlink, there is no competition in Australia so another inflation hit .
I suspect even 4/5g plans probably rely partly on NBN

i believe you are correct for 'backhaul '

 

[farmerge]

So true, the Govt can only increase the tax take from the consumers, or from the miners, there really isn't any other taxable sector as there is minimal manufacturing.

if they increase the tax take on resources, it could have huge ramifications, if it caused a contraction.

So the working class are wearing it, give them some money, so that they can just keep up with the increases in costs, but the appreciating assetts(housing) moves further away.

Which really just moves them down the middle class ladder.
Most other first world countries have a broader tax base, manufacturing, tourism, larger population to land area, more mature economy.

Throw peanuts at the consumers (look at what we are giving you) while we are being taxed till blood is drawn.
Little wonder the cash economy is so good.

 

[divs4ever]

Throw peanuts at the consumers (look at what we are giving you) while we are being taxed till blood is drawn.
Little wonder the cash economy is so good.

yes there are two swear words during high inflation periods ...... bracket creep

when surviving bankruptcy places you in a higher tax bracket

 

[TimeISmoney]

Jimfaltion hahahaha!