Inflation update: the September and September quarter numbers a touch stronger than expected and much higher than the RBA’s last projections (August). Headline inflation above 4%. Core inflation above 3.5%. Pretty much locks in a 25bp hike next week. Probably doesn’t add to chances of a 40bp move or a third hike in December. There is some good news in the latest data but it is swamped by the bad news. The most positive element of the latest inflation numbers is the easing in housing related price pressures. New dwelling costs and rents coming off reflecting the slump in demand for housing this year (both dwelling sales and the small lift in rental vacancy rates). If this continues it bodes well for some easing of core inflation pressures in 2027. The bad news is signs of a lift in the inflation pulse in 2026. Domestic market services is accelerating while the share of CPI basket items rising by 3% or more has risen to 2 year high of 70%. The economy is slowing, housing markets are soft and the unemployment rate is rising. But the RBA has no wiggle room. Inflation expectations are slipping above their target and cost pressures are showing few signs of easing. Their best bet of getting ahead of inflation would be to hike to 5% next week with a 40bp hike. They won’t despite their concerns voiced in a number of public forums over the past few months. Unfortunately, we are going to have to live with inflation for a bit longer. And further rate hikes in 2027 cannot be ruled out.

Inflation Watch. Car insurance renewal +24.6% on base premium from a year ago.

Nick Staikos (VIC Housing Minister) was reported on News24 today as saying “they will cut the guts out of the Victorian community”. In a week when language used by politicians is in the spotlight this highlights how ingrained aggressive language is in our political cultural. Why? Because they seek ‘cut through’. And in the absence of an intellectual offering, strong language is the next best thing I presume. This isn’t aimed at the VIC ALP necessarily but politicians more generally. But it’s an analytical point on two fronts. On ‘cut through’ and on behaviour. Behaviour is hard to change and impossible to change quickly. Nick should be cut some slack on this one is my view. Change is hard. Real leadership helps all of us navigate change. The second point on ‘cut through’ is best summarised by Bradley Cooper (Jackson Maine) in A Star is Born. He said to Lady Gaga (Ally): “Everybody’s talented…….But having something to say and a way to say it so people listen to it, that’s a whole other bag.” Rather than aggressive language maybe our leaders need to focus on real problems; and real solutions. Less ideology, less fear, less fantasy. More science, more empathy and more explanation and guidance.

Do you remember when you joined X? I do! #MyXAnniversary. To Tweet or for the twit? Fourteen years later, the question remains unanswered.

What a pair! Talking sense and the future of the Australian property industry.

Immigration and Inflation Update. With the announcement of the LNPs immigration policy there are already claims about worker shortages leading to inflation. While this is true it must be remembered that immigration doesn’t fix a macro level worker shortage. A firm can fix its worker shortage by accessing a foreign labour pool (immigration) but this does not change the macro balance. As soon as that foreign worker arrives in Australia, with family or not, they may fix the firm level labour shortage but they bring demand with them. For a house, a hospital (hopefully not), roads, Bunnings etc…. It doesn’t alter the domestic supply-demand balance. Immigration can help with our labour shortage problem to be sure but it cannot fix it. Only technology and increased labour productivity can solve for this, the primary economic challenge facing nations the world over. So the LNP policy today is not inflationary. Indeed, it will take some pressure off an already stretched economy. I believe in strong immigration, but only once the economy is rebalanced. My guess is we will be running NoM of +500k a year at some stage in the 2030s.

Credit spreads are a mathematical derivative of the equity price. When equity goes, so too will credit spreads. Next?

Six cars in 5 corners. Bliss.

It does t just happen in video games

Gold

Rubbish. Intent and content - absolute rubbish.

He might finally get an Academy Award. An incredible performance that is as funny as it is chilling. He handles the complexity of the movies themes and ideas with a consistency of performance that anchors the whole show.

Good quote from the Governor. This is what some people call “the heart of the matter”

The RBA board decision was unanimous. Wasn’t there a dissenter to the May hike? Shouldn’t they step down? Clearly not fit for the job. I suppose it could have been Harper. But I doubt it.

RBA takes cash rate to new post pandemic high. Unlike just about every other country in the world, we have an overnight rate at 15 year highs. The Fed is still more than 100bp off the 2023 high for the funds rate.

At least they are not handing out $5k to every ALP voter! I think they are not.

I am sure there is a fable related to bond markets in this. Most likely related to the actions of professional politicians as economic managers.