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Hedge Clippings | 04 October 2024 The seasonally adjusted August Household Spending Indicator results released by the ABS earlier today - produced from source data of credit card spending from participating banks, supermarket transactions, and new vehicle sales - were unchanged month on month, with the July and June results re-adjusted downwards to -0.5% and -0.1% respectively. Given recent wage increases, energy assistance, and Stage III Tax cuts, all the indications are that consumers are keeping their hands in their pockets - at least when it comes to reaching for the plastic, or doing the weekly grocery shop. Over 12 months the number was +1.7% - best described as muted, particularly given annual inflation is running at double that figure, depending on which number (Seasonally adjusted, excluding volatile items or annual trimmed mean) one looks at. Household spending has been declining from a post COVID induced high of 29% in August 2022, with the latest figure particularly driven by goods (-0.3%) vs. services, including air travel, catering, and accommodation (+0.4%). Peering through the breakdown, it seems Australia's two speed economy, or two speed demographics is real. Those doing it tough are doing without, while those that can afford travel, catering and accommodation are still doing OK. As the ABS numbers are only "experimental" and cover credit card spending and supermarket data it will have to wait until the next set of Retail Trade numbers are released on 31 October, a day after the next CPI result. The RBA will then have a few days to consider the numbers prior to their next meeting scheduled for the 4th and 5th of November, the second day of which inconveniently clashes with the Melbourne Cup. With the RBA announcement at 2:30 and the Cup starting at 3:00, there are going to be some conflicts of attention, except of course in Melbourne itself when Race Day is marked by a Public Holiday. Prior to that, and starting next week, there are multiple speeches, remarks and panel appearances from various RBA members, including Deputy Governor Hauser, and Assistant Governors Christopher Kent and Sarah Hunter, which are only likely to maintain the Bank's current stance - inflation is the number one game, and they won't be hurried into cutting rates until they're certain it's been put back in the bottle. Over in the US it looks as if inflation might have been tamed, with market watchers waiting to see the US jobs report for September, due to be released overnight tonight to gauge if the Fed's next cut will be another 0.5%. The median forecast is for 150,000 new jobs in September, leaving the unemployment rate at 4.2%, in which case the Fed might only cut 0.25%. While the US economy seems on the right track, a combination of the port workers' strike which started this week, and critical escalation of the conflict between Israel, Hamas, Hezbollah, and Iran, could derail that. Meanwhile, the Trump and Harris camps continue to trade claim and counter claim, while spending untold millions on advertising in what looks like a photo finish for the White House - also on Cup Day, November 5th - which from a distance looks too close to call. News & Insights New Funds on FundMonitors.com 10k Words | Equitable Investors August 2024 Performance News Delft Partners Global High Conviction Strategy |
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