Words by: Jonathon Davidson
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[For my personal website]—G'Day! Welcome to the end of week 26, 2023. Before I start complaining about asinine editorialists from Sydney (skip to the last paragraph or so), first, the big news: Australian inflation is coming down! So long as fuel and food stays low, anyway. Housing remains an issue, so, right now, everything is in flux. Don't let a vague sense of optimism become too comfortable—but regular readers will know my bear proclivities, so make of that what you will.
Case in point: Australian business insolvencies are on the rise beyond the construction sector but, is that even really news at this point?
The ASX had a rough start to the week, too, given that it looked like back on Monday Russia was about to descend into civil war. What is real, or was is not? Who cares? Russian oil remains stranded at sea (not as much as it was earlier this year, but still pretty bad,) and these shipments are being sold to only the wackiest of developing countries. We've got a pretty good idea of how badly the MOEX is going (-19% since they made the troglodyte decision to invade Ukraine,) so let's just not even bother.
JP Morgan, meanwhile, are warning of a shaky 2HCY2023 (or 1HFY24) coming ahead. That's curious, because Goldman Sachs last week said that we're heading into a good period to launch an IPO. I have my own thoughts about that, as do you, probably, and I'm guessing JP Morgan definitely do, too.
Something else that caught my eye: a Sydney-based Journalist advocating for a removal of penny stocks from the ASX. I don't really respect the opinions of anyone who comes from Sydney, the grease trap of Australia, and I therefore don't even know what to say, beyond the fact this private schoolboy's attempt to please a long dead professor is stupid beyond words. Hopefully he stays off the keyboard and keeps looking for a closet to live in in Toorak.
Let me linger on this poor journalist's words, for they have me flummoxed, even though I know he just wrote this shit to get a reaction. Regardless, and this is important, it appears he honestly believes the general shrinking of the ASX in recent years—an effect of macroeconomics, seen across many international bourses at this very time in economic history—has to do with largely WA-based mining explorers. To quote a New Zealand politician of historical disrepute, I predict Mr. Richardson's brain could rotate within a peanut shell for a thousand years without ever touching the sides. Should you be reading, Mr. Richardson, please, get in touch. We shall start a podcast.
Two more things: milk prices set to stay high, and, good old trust-worthy democratic China have begun to silence finance journalists who report the truth. That truth being the country is kind of fucked. Business as usual.
Australian inflation comes in lower than expectations at 5.6% growth, down from 6.8%
TradingEconomics
The monthly Consumer Price Index (CPI) indicator in Australia advanced 5.6% in the year to May 2023, slowing from a 6.8% rise in the year to April 2023, and below the market consensus of 6.1%. It was the lowest annual inflation rate since April 2022, due mainly to a softer pace in the growth of both housing and transport prices. Cost slowed for transport (0.8% vs 7.1% in April), with automotive fuel prices falling (-8.0% vs 9.5%); housing (8.4.% vs 8.9%), namely, new dwellings (8.3% vs 9.2%), which was the lowest annual growth since November 2021; recreation & culture (3.5% vs 6.4%), mostly holiday travel & accommodation (7.3% vs 11.9%). Meanwhile, food and non-alcoholic beverages inflation was steady (at 7.9%). The monthly CPI indicator, excluding volatile fruit and vegetable items and fuel, was down to 6.4% in May from 6.5% in April. Inflation remained well above the Reserve Bank of Australia's target range of 2-3%.
It's not just construction: businesses collapses in Oz spreading to all sectors
AFR
Business collapses have hit the highest monthly level in more than seven years, as failures spread beyond property construction to retail, healthcare, childcare and mining. Higher interest rates, weaker consumer spending and directors throwing in the keys after a temporary pandemic reprieve are the main reasons for the jump in insolvencies.
Baker McKenzie partner Maria O'Brien says insolvencies are hitting some unexpected sectors. Oscar Colman Insolvency and restructuring appointments hit 868 last month, the highest monthly result since November 2015, according to analysis of Australian Securities and Investments Commission data.
Perceptions of a vague Russian civil war pushes ASX down to three month lows
AFR
Shares posted their fourth straight days of losses on Monday as investors sold stocks after a chaotic military uprising in Russia over the weekend threatened to stoke a global conflict. "Geopolitical events have caused markets to take a 'tread carefully' approach to start the week," said Tim Waterer, a market analyst at KCM Trade. "Investors are also having to factor in the chance of escalation on the geopolitical side of things, which is adding another layer of uncertainty to the equation."
The grand US tech index appears to be wobbling in its stance as favoured holdstead
Bloomberg
The Nasdaq 100 dropped 1.4% Monday, sliding for a second day after suffering its worst week since March. Profit taking in the technology sector continued as some of the year's hottest names including AI-favorite Nvidia Corp. and Facebook-parent company Meta Platforms Inc. dipped. Tesla Inc. slumped 6.1% after Goldman Sachs Group Inc. joined the list of brokers turning less bullish on the electric-vehicle maker following this year's blistering rally.
AI investment hype buzz is dimming somewhat
Reuters
The rapid adoption of generative artificial intelligence has boosted markets this year, but after the initial euphoria, investors are waking up to the possible risks, including the need to be highly selective in stock-picking. Businesses ranging from IT services and consulting to media, information and education are now under portfolio managers' microscopes to assess the potential for AI disruption. The overall impact for corporate profitability is seen as hugely positive. Yet beyond Nvidia (NVDA.O) and other obvious winners in the chip sector, analysts warn there might also be losers across Europe and the United States.
Oz milk prices to stay high as less labour means farmers are getting rid of cows
AFR
Mr Irvin was in the Gippsland region in Victoria on Tuesday visiting farmers, and said there was anecdotal evidence that some were now milking 500 cows on their farms, down from 700, and still able to make a decent living. They simply could not find the labour needed to milk the higher numbers of dairy cows previously kept on their properties. "Higher prices don't always encourage a lift in volumes of milk," he said.
China is coming after finance journalists who write negatively of the country's performance
AFR
China banned a prominent finance writer and two of his peers from social media platform Weibo for commenting about the country's stock market and unemployment rate. Wu Xiaobo and two other writers who were not fully identified "attacked and undermined" Chinese policy and spread "negative and harmful information," a Weibo statement said yesterday.
JP Morgan warns of challenging H2 CY2023 ahead
AFR
JPMorgan's equity strategists are reiterating their view that headwinds are poised to gather strength. "We expect a more challenging backdrop for stocks in H2 and believe risk-reward remains unattractive, given the decelerating economy and a likely recession starting in 4Q23/1Q24, softening consumer trends (excess COVID savings are expected to be exhausted by October, and restarting student loan repayment becomes a $US10 billion/month headwind), investor complacency, and the significant re-rating of stocks so far this year (P/E has expanded by 14 per cent)."
One AFR ideologue—from fucking Sydney, of course—says ASX should ban penny stocks
AFR
Penny stocks are rearing their ugly heads on Australia's flagship S&P/ASX 200 Index with alarming regularity, in a reflection of the market's deteriorating quality, as the ASX shrinks for the first time in 18 years. Last week, Australia's flagship index resembled a penny stock casino, with shares in lithium explorer Lake Resources crashing 38 per cent to 29.5¢ after it revealed a six-year delay to its Argentinian lithium project. Speculative biotech Imugene finished the week at just 8.9¢, with tech hopeful BrainChip losing 13.8 per cent over the week to 34.5¢.
Weak consumer spending in China keeps the great Gloom Gahn rolling
AFR
China's consumer-driven recovery is showing more signs of losing momentum as spending slows on everything from holiday travel to cars and homes, adding to expectations for more stimulus to support the economy. Domestic travel spending during the recent holiday for the dragon-boat festival was lower than pre-pandemic levels, according to official data released this weekend. Home sales figures are below the level in previous years, while estimates for June car sales showed a drop from a year ago.
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