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Hedge Clippings | 16 August 2024 Next Wednesday's July CPI result will be crucial for a number of reasons - particularly for those with a mortgage (more on that later) but also for the reputation of the Treasurer and PM, who keep spinning the story of what a wonderful job they're doing with the economy and helping overcome the cost of living crisis, while at the same time doling out financial support left, right and centre, which is helping to keep inflation around 4% a year. As the chart below from the ABS shows, in spite of what the RBA is doing to try to rein in inflation, Chalmers and Albo aren't helping the cause - probably as the "cause" in their case is the looming election. From the peak of 8.4% in December 2022, inflation fell to 3.4% a year later, only to move back up and is stuck around the 4% mark, and if anything, trending up, and not down, as the government would like you to believe. Unfortunately for them, their spin can't overcome the budget stress which various sections of the community are feeling. Even if next Wednesday's result provides a move in the right direction, the messages coming from the RBA are pretty clear: Deputy governor Andrew Hauser, one of the more colourful and entertaining central bankers to step out of Martin Place (or any other central bank for that matter), took a pot shot at market gurus (a.k.a. economists and forecasters) trying to shape or comment on monetary policy, claiming the space was "a world of winners and losers, gurus and charlatans, geniuses and buffoons" and often only good to claim headlines, or support their space on their respective soapboxes. Governor Michele Bullock was absolutely clear earlier today in her remarks to the House of Representatives' economics committee, saying it is "premature to be thinking about rate cuts" as the RBA's forecast is that trimmed mean inflation won't return to the 2-3 per cent target band until the end of 2025. Clearly the RBA has decided to leave no doubts in anyone's mind what to expect - or if it comes to that what they think of the market's speculation. Elsewhere this week the CEO of the CBA, Matt Comyn gave some insights into part of the problem with inflation and the cost of living crisis - it's not affecting everyone equally, but is particularly affecting those under 50. That sounds pretty obvious, but with much of the cost of living stress being built into mortgage repayments, and although two thirds of the population own their own home, (2020 statistics from the ABS) around 37% have a mortgage, and 30% are debt free. So without having the exact science behind the numbers, it's probably fair to say that while everyone understands prices are higher than they were a year or two ago, around half the population "just keep calm and carry on". Unfortunately, the other half aren't as lucky, but they can at least thank Dr. Jim and Albo for their help. That should really get Andrew Hauser's gurus, charlatans, geniuses, and buffoons on their soapboxes. News & Insights New Funds on FundMonitors.com Quarterly State of Trend report - Q2 2024 | East Coast Capital Management Investment Perspectives: Thinking about (REIT) timing | Quay Global Investors July 2024 Performance News 4D Global Infrastructure Fund (Unhedged) Bennelong Emerging Companies Fund |
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