Australian (ASX) Stock Market Forum

Inflation

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Well a drop in AUD actually helps exports (not entirely, it still raises the costs of inputs to produce the export) but it's the demand side that's done for with iron ore.

If you've done your DD on BHP you'll know that they started very quietly rotating over into copper and precious metals (lithium, cobalt, nickel etc) mining a year or two back. They did this for a reason and it's the same reason why twiggy's been moving FMG over to energy and so on - iron ore's day is done.

I very seriously looked into a BHP play back then as I was thinking the exact same thing that the company's execs (thankfully) were - iron ore's done and they need to move over into supplying the inputs into whatever the next boom is going to be (namely, electric cars, meaning batteries and copper electric motors) and concluded that they were just way behind the curve.

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I think we'll be back in those sub-$40 troughs before long.
am playing BHP as 'a safe haven ( liable to survive anything )

yes it is cyclical but even term deposits had a tough run for yield

i would rather be buying near $20 again , but am thinking some soon ( and claim some divs. waiting ) and add more later in the next big dip not my preferred move , but am seeing some crazy stuff in international banks

and BHP is always liable for another divestment ... maybe a coal arm next time ( having been the grateful recipient of S32 and WDS stock , i see this as a nice bonus )

my other favourite play like this is WES , but WES still seems over-priced to me , currently
 
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It will take a substantial increase in the unemployment rate before this happens. As long as people have a job they will spend on services and demand will not be affected. Once people lose jobs and have to rely on savings (if they have any) or family, that's when spending on services falls off a cliff.
This article sums it up well, it is a bit over the top, but does explain how inflation is going to brought under control, as usual clamping down on wages is the most effective method.
I guess the author is from Melbourne a bit over the top, but the sentiment is right IMO, putting downward pressure on wages while prices increase ensures the worker has to keep peddling away. Eventually the worker can't afford to maintain there spending and then prices stabilise. ;)

A summary from the article:
The war on workers is being conducted on five fronts. The first is in the labour market which is being swamped by cheap Third World workers, most obviously Indian. This is already crushing wages with growth falling away fast as jobless queues grow.

The second is the roof over their heads. The cost of renting or buying property is already skyrocketing as COVID supply shortages collide with immigration deluge.

The third front is the crush-loading of public services. There is vertical fiscal imbalance that enables Mad Albo to collect 80% of the nation’s tax revenue while shifting most of the costs to the states for the increased public services demand of a larger population.

The fourth front in Mad Albo’s war on workers is any and all goods related to energy. No fewer than five federal MPs are being daily humiliated by an east coast gas cartel that is selling its fuel for twice Mad Albo’s price cap.
Wholesale electricity prices are now up 400% from pre-Ukraine War days. This is a doubling of utility bills.

The fifth and final front in Mad Albo’s war on workers is that the above crushing of workers is softening them up for an artificial intelligence jobs shock that is coming at lightning speed.
Indeed, Mad Albo is setting a vice to squeeze Aussie workers with cut-price foreign labour on one side and multifaceted robots on the other.
 
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moXJO

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We still running close to full employment?
I suppose that's why they opened the floodgates on immigration. Bring the economy off the boil by making unemployment rise to 5%

Until unemployment rises we can expect rate hikes.
 
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We still running close to full employment?
I suppose that's why they opened the floodgates on immigration. Bring the economy off the boil by making unemployment rise to 5%

Until unemployment rises we can expect rate hikes.
Absolutely, it is much easier to control wages by bringing in more workers, than try and reduce prices by sending businesses to the wall, that's why Labor had to get in.
They are the only ones that can get away with it, if the Libs had tried it there would be massive strike action and media coverage, wash rinse repeat, the more things change the more they stay the same.
It is why our system works so well. ;)
Imagine if Morrison was still in and said we are going to hammer NDIS, we are going to have the largest influx of skilled workers on record, we are going to recognise Bombay qualifications, we are going to allow anyone access to the first home buyers grant even if they have had it before.
I'm sure the media and the mob would say, "yeh way to go ScoMo".?
Like I said, it works and that's what matters at the end of the day.
Eventually those who are being hammered, go hang on a minute this has knobs on it, I'm working my ar$e off to keep my head above water and money is being thrown around to everyone but me, by then everything is back in equilibrium and the cycle starts again.
We just have to wait and see how much the workers have to hurt, before they kick up, ah a dose of socialism where the rich get richer, the middle class get screwed and the poor get carried through.
Believe it or not that is what makes Australia great. ?
 
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Absolutely, it is much easier to control wages by bringing in more workers, than try and reduce prices by sending businesses to the wall, that's why Labor had to get in.
They are the only ones that can get away with it, if the Libs had tried it there would be massive strike action and media coverage, wash rinse repeat, the more things change the more they stay the same.
It is why our system works so well. ;)
Imagine if Morrison was still in and said we are going to hammer NDIS, we are going to have the largest influx of skilled workers on record, we are going to recognise Bombay qualifications, we are going to allow anyone access to the first home buyers grant even if they have had it before.
I'm sure the media and the mob would say, "yeh way to go ScoMo".?
Like I said, it works and that's what matters at the end of the day.
Eventually those who are being hammered, go hang on a minute this has knobs on it, I'm working my ar$e off to keep my head above water and money is being thrown around to everyone but me, by then everything is back in equilibrium and the cycle starts again.
We just have to wait and see how much the workers have to hurt, before they kick up, ah a dose of socialism where the rich get richer, the middle class get screwed and the poor get carried through.
Believe it or not that is what makes Australia great. ?
and check throw the pecuniary interest of the parliamentarians and see how much they ( officially ) own and realize Labor feather their nest just as much as the 'rich party '



re working the butt off and seeing the handouts go everywhere else ( and the incompetent get promoted ) , now you know why a grabbed the disability pension and ( actually ) retired ,

the question of the heart damage is interesting one professor surmised i might had it since birth .. but the lesion was new ( probably a result of the aneurysm self-correcting in the time it took to arrange the delayed angioplasty ( bung in a stent )

the workers just need to get angry enough the ditch the unions ( and starve the ALP ) and stand up for actual conditions
 

over9k

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We just have to wait and see how much the workers have to hurt, before they kick up, ah a dose of socialism where the rich get richer, the middle class get screwed and the poor get carried through.
This implies that the average person actually knows what's going on and, well, have you met the average labor/greens voting idiot lately?

I mean the libs are evil and halfish of the general public vote for them but nobody's under any illusions about what they're voting for with the libs. 99% of liberal voters know full well what they're going to get/what's going to happen when they tick the liberal box on election day.

Labor/greens voters however, jesus...
 
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House prices in Sydney/Melbourne are rising again, Qantas has a record profit, consumer spending still holding up, aged care workers record pay rises, strike action on the rise for pay rises, but we have inflation under control.
As if.
Well if the pollie bum poishers think inflation is good then wages are not. Everyone seems to be crying out "Can I have more please, Sir"
 

over9k

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Fixed income is currently pricing a 25 at the next meeting. Fed comments before the last jobless numbers were about 50/50 on pausing at the next meeting and then the numbers came out and fixed income repriced another hike. The last dot plot showed one more but again, that was pre data dump.

As smurf has pointed out, history suggests they'll just keep hiking until something breaks/the jobless numbers can take no more but we're living in, shall we say, unusual (historically unprecedented if I'm honest) times.

IMHO rates need to go far higher but I'm not the one making the decision.
 
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Get those printing presses oiled, greased and up and running.
If they can afford the electricity to run them with.....

Circa 25% price hikes in a single shot for something that practically every adult directly purchases and which is also a cost embedded in just about all businesses and thus the pricing of goods and services.

That's a huge jump.
 
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Fixed income is currently pricing a 25 at the next meeting. Fed comments before the last jobless numbers were about 50/50 on pausing at the next meeting and then the numbers came out and fixed income repriced another hike. The last dot plot showed one more but again, that was pre data dump.

As smurf has pointed out, history suggests they'll just keep hiking until something breaks/the jobless numbers can take no more but we're living in, shall we say, unusual (historically unprecedented if I'm honest) times.
I haven't crunched any numbers but look at a good selection of charts from randomly chosen stocks in the ASX300 or the S&P500 and there's an awful lot of weakness out there even now. Some are trending up sure but there's plenty trending down and overall the indices are going broadly sideways.

An important question I think is going to be how the Fed and other central banks react to a significant decline in the stock market. At some point that's going to happen almost certainly in my view and the reaction to it will be important.

I'm speculating there on a scenario where the Fed has two choices - either they sacrifice the stock market or they sacrifice inflation but they can't win both. :2twocents
 
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The stock market is not the economy...

But we all know the fed has political masters and the political masters have big business masters sooo...
Who weilds the biggest stick and says jump. The respondent then asks how high and how often.
 
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Fixed income is currently pricing a 25 at the next meeting. Fed comments before the last jobless numbers were about 50/50 on pausing at the next meeting and then the numbers came out and fixed income repriced another hike. The last dot plot showed one more but again, that was pre data dump.

As smurf has pointed out, history suggests they'll just keep hiking until something breaks/the jobless numbers can take no more but we're living in, shall we say, unusual (historically unprecedented if I'm honest) times.

IMHO rates need to go far higher but I'm not the one making the decision.
No matter what.
At the next election the peasants will let the pollies know if they are happy or not.
Comes to mind "Not Happy Jan (Albo)"
 
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