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Hedge Clippings | 01 November 2024 The RBA finds itself in a bind yet again. Inflation has eased somewhat, with the September quarter number just 0.2%, or 2.8% annually, down from 3.8% in the June quarter, and taking it to a 3.5-year low. However, it's still running hot enough to make the RBA think twice about cutting rates. When the cash rate decision is announced next week, most experts are expecting rates to stay steady, much to the dismay of borrowers hoping for a bit of early festive cheer, and the Treasurer Jim Chalmers, desperate to claim the credit and hopefully another three years in office come election time next year. The RBA won't be fooled either by the overall number, or Jim Chalmers desire to claim "mission accomplished" George Bush style. Prices for most goods and services rose, offset by large falls for electricity and fuel. The trimmed mean number, which excludes both, was still 3.5%, albeit below June's 4.0 percent. Only government spending is keeping the economy in positive territory, and it's only government handouts that are seriously impacting inflation - for the present. Despite the overall figure, prices of essential items like rent, childcare, and insurance have kept upward pressure on households, with many services demonstrating a particularly stubborn streak. The RBA wants to keep inflation under control without being seen as stifling economic growth, but it's no easy feat. With inflation hovering in a state of "not dead yet," the central bank is likely to maintain its cautious approach. The possibility of a rate cut before year-end remains slim, and if that's the case, borrowers, and the Treasurer, will have to wait until February for any hope of a reprieve. Meanwhile if you hadn't noticed, the United States is gearing up for Election Day next week, with seemingly the rest of the world mesmerised by the spectacle, confused by the process, and concerned about the outcome. From where we sit, it's been a bizarre lead up, with Biden slipping up (literally) and then stepping down, Trump as popular as ever among the MAGA set, in spite of - or maybe because of - multiple indiscretions and crass behaviour or reminiscences from the golf club locker room. We have no idea based on the dead heat polls, but suggest voter turnout is expected to be the key factor when the dust settles (assuming it does). Historically, US voter turnout has fluctuated between just over 50% and 62.8% over the past six presidential elections. However it is unlikely to be the overall voter turnout that will determine the result: Most states are already won or lost, thanks to the winner take all approach by every state except Maine and Nebraska, leaving the result hinged on a handful of votes in the battleground or swing states. But given the personalities and issues at play, it's not the overall turnout that will determine the result. How big a part will Roe vs. Wade play? Or the situation in Gaza, Lebanon, and Israel? And even more recently, to what extent might the Hispanic turnout sway the result? For financial markets and global stability, the stakes are high, and the outcome will not only determine the next leader but also affect the ability to govern effectively, given the divided state of US politics. Questions surrounding inflation, federal debt, and the broader economic outlook have only added to the uncertainty. Yet amazingly, the result may come down to some little known, so-called comedian's off joke. Closer to home, in political news, Prime Minister Anthony Albanese has been hitting some turbulence (apologies for the pun) following claims that he sought free upgrades from Qantas. The story, which began with whispers, has escalated to full-blown denials, with frontbenchers clarifying that Albanese did not make any requests by phone, email, or any other means of communication. The whole affair has probably been blown out of all proportion - of course airlines upgrade politicians, and Qantas made an art form of it to curry political favour. The issue is not the upgrades or perks that are handed out - it is what influence is sought or exerted in return. In this case, what input did Albo or Albo's office have on the government's decision to block Qatar Airways application for an additional 28 flights a week into major Australian airports? A decision that massively benefited Qantas' traffic, passenger loads, market dominance and profitability, at the expense of the Australian traveling public. Alan Joyce's greed and arrogance eventually cost both he and his chairman their jobs. Might it also claim his old mate Albo's come election time? News & Insights New Funds on FundMonitors.com Magellan Global Quarterly Update | Magellan Asset Management Market Update | Australian Secure Capital Fund September 2024 Performance News TAMIM Fund: Global High Conviction Unit Class Insync Global Quality Equity Fund |
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