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17 Nov 2023 - Hedge Clippings | 17 November 2023

By: FundMonitors.com

    

Hedge Clippings | 17 November 2023

No sooner had the RBA hiked interest rates for the 13th time (unlucky for some) to 4.35% in the face of falling - but persistently higher than they'd like - inflation, than the US posts some encouraging news for their October inflation figure of 0.0% month on month, taking the 12 month number to 3.2%, down from 3.7% the previous month, both numbers being 0.1% below expectations. Core CPI increased 0.2% month on month, and 4.2% over 12 months, again below the market's expectations. Much of the drop was the result of falls in energy prices, with notoriously volatile fuel prices falling, in spite of increased global tensions. In any event, expectations of a rate hike in the US evaporated, hitting the US$, and boosting the little Au$$ie battler.

That's all well and good for the US, and will of course give the RBA some encouragement that the worst is over, at least globally. However, the RBA board wouldn't have been as happy with the inflationary outlook based on the release of Australian wage data, which grew 1.3% over the September quarter, the largest increase in the 26 year history of the ABS Wage Price Index, which was also higher than the local inflation rate of 1.2% over the same period. In other words, wages grew faster than inflation at a time when the RBA is trying to dampen demand, not fuel it.

Then along come employment figures for October at 3.7%, flat on trend terms, and up slightly seasonally adjusted. Prior to being appointed to the top job at the RBA Michele Bullock indicated an unemployment rate of 4.5% would be required to tame the inflation dragon, but maybe as that didn't appear to be eventuating she felt the need to cause pain elsewhere?

Either way, and as we've noted before ad nauseam, both unemployment and interest rates only affect a proportion of the population, and in the case of interest rates, unevenly at that. Added to which is the lagging effect of higher mortgage rates, and the fact that higher interest rates benefit a different group of consumers, generally those less impacted by inflation to boot!

We're in agreement with the RBA that inflation is far too persistent, and not only for the sake of the economy, and the welfare of those most affected, and least able to bear the cost. On a purely selfish level, in addition to seeing increases of 20 to 25% in the price of our daily caffeine fix, we're sick of writing about it every Friday! In times gone by there were political characters who were easy targets for Hedge Clippings' brand of cheap humour, or local or global political issues to have a crack at.

The world is sadly in far too serious a place for that kind of stuff, and opinions on both sides are too entrenched, and intolerant, to venture onto that stage, or soap-box.

Where's Scomo, Boris, or even The Donald when you're looking for a little light-hearted fun and cynicism to end the week? The answer of course is that Donald hasn't really gone, he's just gearing up for another tilt at the White House, which isn't looking as far fetched as it might have been four or five years ago!


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