Carvana, the USA’s biggest dealer of used cars took an absolute bath(share price) as the demand for second hand cars has plummeted in the states.
A pretty good sign that they are peaking inflation wise in America.
Which is good news for the rest of the world(given the ■■■■■■■ export all their inflation given how widely used the USD is)
Is the FTX liquidity crisis just a case of nominative determinism for its CEO, Sam Bankman-Fried ?
A notice on its website still reads: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”
Should have acted on my own observation…. Wall Street soars on cooling inflation, setting up ASX to jump
Yeah massive day in the green yesterday, what caused that spike?
Feels like hopefully we are coming to the top of the inflation curve but plenty of pain to come as interest rates bite in the next 18 months
Much better than expected official US inflation figures.
Dropped from 9 to 7.7 percent quarter on quarter so there’s some hope around it’s peaked in the states.
That means it’s closer to the end of interest rate hikes and they may start doing what we are doing. Smaller increases to keep hopefully inflation trending down.
Very good for all your tech and speccy stocks who tend to have a stronger reliance on debt or clients willing to spend up.
…and it’s gone.
Turkey!
Yeah they are cutting interest rates while the rest of the world hike them.
So if I got an interest only $500,000 loan for a property in Turkey today, I’d only owe the equivalent of $269,541 in 1 year’s time, and I’d only pay 10% for the privilege?
At that rate, in 10 years, I’d only owe $1036 for the house in today’s dollars.
EDIT: Including 10% compounding interest, I’d owe under $3000 in today’s dollars. Either way, high inflation kills debt owed very fast with such low interest rates.
Are their wages actually increasing, though?
Lithium: Nothing high alert worthy, just some interesting goss. We know that Goldman Sachs released a note last week suggesting the lithium market will enter a surplus in 2023. At the same time, they boosted their ownership in Lithium Americas by 48.1% or US$9.8m, according to [Fintel]https://fintel.io/so/us/lac/goldman-sachs-group
recession looms?
Nov 17th 2022
Arare surge of optimism is running through financial markets. For most of the year America’s high inflation has proved troublingly persistent, Europe’s energy crisis has threatened a deep recession and China’s economy has been plagued by covid-19 lockdowns and a property bust. Investors are now cheering developments on all three fronts. America’s annual inflation fell from 8.2% to 7.7% in October. Europe’s natural-gas prices are down by two-thirds from their peak in August. China has loosened some restrictions associated with its “zero-covid” policy and on November 11th unveiled measures to ease the financial pressure on embattled property developers. This flurry of news has sent global stocks up by 13% since mid-October, as traders priced in fewer interest-rate rises by central banks and caused the dollar to fall.
Alas, investors are getting ahead of themselves. America’s inflation is coming down because pandemic-related disruptions to supply chains are dissipating. A year ago dozens of ships were anchored outside Los Angeles waiting to be unloaded, and semiconductors and second-hand cars were in short supply. Today the anchorage is empty, there is a glut of chips and car prices are falling. These improvements are likely to continue. And from March 2023 comparisons of prices with a year ago will also no longer look back to before Russia’s invasion of Ukraine, when oil was cheaper. That will cause headline inflation to fall further.
Yet as inflation subsides, it will get harder to fight. American wages are growing at an annual rate above 5%, because the labour market is still exceedingly tight; there are nearly two vacancies for every unemployed worker. The Federal Reserve’s 2% inflation target is compatible with wage growth of only about 3-4% (reflecting inflation, productivity growth and perhaps a rebound in workers’ share of economic output). Although job growth has slowed, the Fed is therefore likely to keep raising interest rates until the labour market is much cooler. Some disinflation might come easily today, but a return to 2% will almost certainly require a recession.
Europe’s energy crisis is going through a similarly illusory reprieve. Natural-gas prices have plunged because storage levels are high and the weather has been mild. Yet Europe’s economy is probably shrinking nonetheless—and it is only at the start of an energy crunch that will span at least two winters. Next year Europe could have to refill its storage without any piped Russian gas. The weather could be colder, and global liquefied-natural-gas prices could be higher. Worse, the inflation that has hitherto been caused by energy prices seems to be becoming entrenched. Britain’s annual inflation reached 11.1% in October; excluding food and energy, it was 6.5%. Across Europe wage growth is rising and inflation expectations are creeping higher, making it harder to balance fighting inflation with supporting the economy.
China’s economy has the biggest potential to spring a pleasant surprise in 2023, because it has been so damaged by zero-covid policy and a housing crash. The authorities have unveiled 20 tweaks to their covid rules and 16 measures to help property firms. Yet on both fronts the road ahead will be long and hard. Rising infections mean more lockdowns could be imminent. A managed end to zero covid would boost growth, but a chaotic “exit wave” of infections, in a population that has barely been exposed to the virus, could cause panic and further damage the economy. The property measures have helped developers and reduced the chance of a financial collapse, but demand for housing, and thus property’s contribution to growth, is likely to remain subdued. The world economy’s problems are still severe. It will not just shrug them off.
Buy gold…that ■■■■ is finite and is easily fungible. When the economy collapses (and that is definitely ■■■■■■■ going to happen), gold will skyrocket.
As a bloke who makes booze the answer is absolutely yes.
Uh Oh
Australia is goody two shoes
Australia’s central bank forecasts a 20% fall in house prices, which would be the biggest decline in four decades.
Nov 24th 2022
Ahousing crash sent the global economy into recession between 2007 and 2009. But three countries—Australia, Canada and Sweden—cruised through the commotion. Even as property prices plummeted elsewhere, all three recorded double-digit growth. Some of this was good fortune. A commodities boom propped up the economies of Australia and Canada, for instance. But smart policy helped. Each country was held up as a shining example to other crisis-stricken places, their officials effusively praised. Mark Carney, then Canada’s central-bank governor, was dubbed by one British newspaper as the “biggest babe in banking”.
Across the rich world, house prices are now starting to fall after years of vertiginous growth. And it is overheated markets, like those in Australia, Canada and Sweden, that are facing some of the sharpest drops. A mortgage binge fuelled by rock-bottom interest rates has left each country with enormous quantities of household debt. As a share of disposable income, such debt sits at 185% in Canada, 202% in Australia and 203% in Sweden. By contrast, debt levels have shrunk in countries that bore the brunt of the last crash, including America, Ireland and Spain (see chart).
Housing busts and recessions that are preceded by this sort of debt build-up tend to be more severe. Excessive leverage makes people more vulnerable to job losses, interest-rate rises and falling house prices, as was demonstrated by America during the Depression and the more recent financial crisis. With central banks now raising rates at the fastest pace in more than four decades, countries drowning in mortgage debt will once again be exposed to nasty consequences.
In Australia, Canada and Sweden home prices have more than doubled since 2007, compared with rises of 50% in Britain and 61% in America. High levels of immigration in all three countries mean that, since the turn of the millennium, population growth has exceeded the average in the oecd, a club of mostly rich countries. In Australia, the population has grown by a third; in Canada, by a quarter; in Sweden, by a sixth. Shrinking households are also pushing up prices. According to the Royal Bank of Canada, a rise in the number of people living alone or with smaller families has increased the number of households in Canada by around 30,000 a year since 2016. Nearly 30% of Canadians now live by themselves.
As a result of skyrocketing prices, Canadian households added a record C$190bn ($150bn) in new mortgage debt last year, more than double the amount in 2019. Meanwhile, Swedes took on an additional 370bn kronor ($40bn) of such debt in June, compared with the same month three years before. Easy credit has also attracted speculators, and inspired people to look for holiday homes. One in six homeowners in Ontario—which includes Toronto, Canada’s most expensive market—now has at least two properties. One in five Swedes owns a summer cabin.
It is thus no surprise that the riskiness of loans has risen, despite efforts by lenders and regulators to tighten credit standards. Australia’s financial regulator estimates that 22% of mortgages taken out in the second quarter of this year put the holder in a vulnerable financial position, based on them having a debt-to-income ratio of six or greater. In Canada, mortgages with a debt-to-income ratio of four-and-a-half times or greater—the measure Canada’s central bank employs to assess risk—made up 27% of new mortgage lending at the start of this year. In Sweden, such loans rose to more than 14% of new mortgage lending in 2021. Stefan Ingves, governor of Sweden’s central bank, has described this build up of debt as being “like sitting on top of a volcano”.
Rising interest rates or falling property prices may prompt the volcano to explode. Australia’s central bank forecasts a 20% fall in house prices, which would be the biggest decline in four decades. Prices in Canada could plunge by as much as 14% from their peak, according to the Royal Bank of Canada. Lots of the debt in the three countries is held by richer households and, for now, unemployment remains relatively low. But if job losses begin to mount, as seems likely, the situation could rapidly deteriorate. After the global financial crisis, Australia, Canada and Sweden were hailed as examples for countries the world over. This time round, they look rather more likely to serve as a cautionary tale.
