Global slowdown
We may be about to discover that interest rates globally have gone more than far enough, with a slew of data out of China and Europe pointing a sharp slowdown (and for some countries - such as Germany - the possibility of an outright recession).
The Scutt missile Dave Scutt flags the triumvirate of global PMIs pointing the way down...
There tends to be a lag from monetary policy, and a wide range of indicators suggest that demand in the economy is falling away sharply now.
As global supply chains continue to recover, France has all but declared victory over its battle with inflation, while financial markets are pricing for interest rate cuts next year in the US, UK, the Eurozone, Canada, Mexico, and New Zealand.
Australia is a bit further behind on this journey, having kept the international borders closed for a long period.
Locally the central bank hiked interest rates yesterday from a position of relative confidence, given that we have a free-floating currency plus the knowledge that monetary policy transmission tends to be swifter and more effective here (than, say, in the US, where most household borrowers use fixed rate mortgages).
Meanwhile, oil prices have fallen significantly to the lowest level in several months as demand has weakened, which should translate to lower fuel prices over the months ahead.
Crude oil prices are now down by 20 per cent from their September highs, reflecting the weaker economic data.
With American gasoline demand expected to hit two-decade lows, the AFR reports that petrol prices in Australia should henceforth recede into the 180 cents range, which would be welcome news indeed for the inflation outlook, perhaps as soon as next quarter.
It would be jolly nice if those stubborn diesel prices wanted to calm down a bit as well!
This has translated into a significant rally for bonds this month to date.
If too many building firms go bust in Australia over the next few months - which to be honest looks like a serious possibility - then the RBA could potentially be in a position to cut interest rates next year if required.
---
Jobs ads plunge 20 per cent
Michael Janda at ABC News Business highlighted how job advertisements are plunging, dropping sharply by another 5 per cent last month, according to the latest figures from SEEK:
Source: ABC News Blog, SEEK
Over the past year job advertisements are down 25 per cent in New South Wales, and 27 per cent in Victoria.
The Aussie economy wasn't tracking particularly well pre-pandemic, and based on the latest trends job ads may have fully retraced to 2019 levels in the new year.
---
P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:
- Boom or Bust in 2023 – 20 minute online workshop for investors
Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here
You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.
- Subscribe to our Top 10 Podcasts for Investors
Listen in to our podcasts
The Australian Property Podcast is one of Australia's biggest business podcasts.
And our enormously popular Low Rates High Returns Show is also available on Spotify.
- Subscribe for my free daily blog
Subscribe for my free daily blog with well over 3.4 million hits here.
You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers.
- Work with me privately
For a limited time you can book in a free diagnosis call with me here.
