The federal Coalition parties were last night working hard to mend fences and again join forces, ahead of today’s parliamentary session and as One Nation support in the electorate grows.
The federal Coalition parties were last night working hard to mend fences and again join forces, ahead of today’s parliamentary session and as One Nation support in the electorate grows. Liberal leader Sussan Ley and Nationals leader David Littleproud held peace talks aimed at reuniting their two parties, despite clear tensions between the two leaders, and internal divisions within each party.
Away from the politics, there’s policy to consider.While the government’s gun laws have passed federal parliament, state parliaments need to do their part. The next few months is likely to focus on the state of the economy – interest rates, government spending, budget deficits and the cost-of-living. The energy transition will also be front and centre, as will the growth of AI, and the social media ban.
It is probable that this afternoon that the Reserve Bank will lift interest rates, hitting householders, businesses and anyone with debt. However, there is some good news for mortgage holders. Competition is heating up in the home lending market, and that’s good for borrowers.
Australian job advertisements recorded their strongest monthly rise in almost three years in January demonstrating strength in the labour market.
Jamie Pherous, the boss of Corporate Travel Management, the company that’s been in a trading halt for five months because of what was initially called some “minor” accounting issues, has quit the business, enraging investors because he is leaving with a six-month consulting deal.
A growing number of countries around the world are looking at banning social media accounts, following Australia’s lead at the end of last year. One of the latest supporters of a ban is France with President Emmanuel Macron saying he’s aiming to get mobile phones and scrolling out of high schools by September.
The Melania Trump documentary Melania debuted with a better-than-expected US$7 million in ticket sales over the weekend. It is a dreadful debut for a film that cost probably around $100 million in rights and marketing and production, but it is a decent number for a documentary.
Fear-o-meter
The Reserve Bank board is in the middle of a two-day meeting – a meeting which will, in all probability, result in an interest rate hike at 2:30pm today.
That’s bad news for mortgage holders, good news for many retirees. Along with Japan, Australia is the only developed nation with an interest rate tightening bias.
So are we in trouble?
No. Quite the opposite. While inflation is a bit too high, the economy is growing as demonstrated by the jump in job advertisements yesterday. That is good news. People have jobs. Housing is still a problem, but the cost-of-living crisis has eased somewhat.
Interest rates around current levels, or a bit higher or a bit lower, is the new norm. It is much more like the pre-global financial crisis period. What was abnormal was the period from 2008 until COVID when rates were much lower.
A rate hike today isn’t something to fear. It just suggests we are back to normal economic activity after about 15 years of abnormally low interest rates.
Fear & Greed Q+A today
A wide-ranging interview on the outlook for investors this year:
“My view is the AI dream has already been bought — that’s done. The actual productivity gains, the payoff, that needs to be proven. We saw last week, for example, Microsoft dropped 10% in a single session — which is dramatic — while the rest of the market was down about half a percent. So it could be that even though the AI bubble pops, it doesn’t bring the whole market down, and instead we see kind of a plodding along of the rest of the market somewhere between 0 and 12%.
But having said that, the US dollar is weakening thanks to Trump’s policies and that’s why gold [has been] at record highs. And that US dollar declining means that even if you make 12% on US stocks, if the US dollar falls by 12% this year, well, you’ve made nothing. So diversifying out of particularly those large-cap US companies where you’ve made profit — maybe locking in some of those profits and diversifying this year — makes a good deal of sense.”
*Seek professional advice tailored to your circumstances before making investment decisions.
We talk a lot about the extraordinary sums being spent on AI by the tech giants, but this chart from Statista sums it up beautifully. Last week Meta - owner of Facebook and Instagram - announced full year revenue of $US200 billion, and an 80 per cent increase in capital expenditure as it pursues its vision for AI. And it's expecting to see similar spending growth this year.
