There were 3 surprises last week: ISM manufacturing PMI moving above 50. The 308,000 increase in non-farm payrolls in March. The equity market’s reaction to the non-farm payrolls data. Firstly, the US ISM manufacturing PMI was not only much higher at 50.3, than the 48.3 expected for March, it was the first reading above 50 … Read more
The last 10 days have certainly been exciting enough, although as capital preservation-focused investment managers we prefer boring, reliable, predictable etc. The market may well have been upset with the RBA after it left rates on hold and issued the most hawkish statement we have seen from Governor Bullock to date, but it did not … Read more
Who bought the dip? We often hear how retail money often rushes in to buy the dip in scenarios we had earlier this week. Well this time it was different. When the markets crashed on Monday, it was the retail investors who sold whilst institutional investors gradually increased their buying as the carnage rolled on through … Read more
Last week we said that it would be a huge week for economic data and certainly it did not disappoint. Chronologically we had the Australian CPI data, BOJ interest rate decision, US ISM PMI manufacturing data, US labour productivity data and of course the US non-farm payrolls on Friday night. Australian CPI quarterly data We … Read more
The narrative around a “new commodities supercycle” has received a lot of airplay in recent years. Commodities have seen a material rally in prices from their 2020 lows, which only adds fuel to the narrative. It is a worthwhile exercise considering the opposing argument in this narrative – what is the market missing? There have … Read more
The Australian employment data released last week was unequivocally strong: Employment increased 50.2k (10k expected) for the biggest increase in 4 months. This is something we expected. Full time employment was very strong at 43.3k while part time was lower than expected at 6.8k. This would reflect workers on Victorian government projects being put back … Read more
On the face of it the US CPI result that showed a monthly decline (-0.1%) and the year-on-year rate falling to 3% was very good news. The market’s reaction, however, was muted by the following issues: The market was already forecasting a decline to 3.1% following a fall in the PPI in May (flows into … Read more
The Chevron Doctrine is referring to the US Supreme Court’s decision 40 years ago, giving deference to the Environmental Protection Agency’s (EPA) answer or interpretation of environmental laws. It was coined after a landmark case, Chevron USA, Inc. v. Natural Resources Defense Council, Inc. On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the … Read more
World financial markets are addicted to liquidity to maintain the price level of assets. In a move reminiscent of the over-lending in the 2008 GFC asset bubble, Congress is voting on allowing lending on Second Mortgages by Federal Agencies in a move that could lead to a tsunami of liquidity. Congress recently approved a pilot … Read more
Remarkably there are still a number of market commentators and economists claiming that inflation is still declining. Those that are calling for the RBA to increase rates, however, will be disappointed.