StanfordBrown (SB) Market Update November, TE In Hong Kong, Congratulations SB on reaching your 35th Birthday.
THE EXPATRIATE is thrilled to announce that Stanford Brown has just moved through a historic milestone many businesses are not fortunate to see. Congratulations on reaching your 35th Birthday.
Stanford Brown Turns 35.
From the jaws of the 1987 market crash, and the modest surroundings of the original Brookvale office, all at StanfordBrown , past and present, can be proud of their role in building the business into the respected and vibrant team it is today.
To reach 35 years in business means several qualities must exist, but for me, the one stand-out quality that has defined our founder David Brown over this journey, is integrity.
Congratulations, importantly to the founder, David Brown. for being a standout Financial Firm that has weathered the storm of the Stock Market Crash, the Millennium Bug, plus Global Financial Crisis and now the Covid19 Pandemic.
“And as we continue to build toward the next decade and beyond, that must remain a pivotal quality in how we provide leadership to our staff, our clients, their families, and the broader community.” Said David Brown Founder of Stanford Brown ”
THE EXPATRIATE contributors helped the SB celebrate their achievement. from left to right, Jon Sermon Your Empire, Cris Abellar StanfordBrown , Dean Crossingham StanfordBrown, Shona Stephenson THE EXPATRIATE, Adam Kingston Australian Expat Finance.
We have a fantastic opportunity for you to catch Australian Expat Mortgage Broking Specialist Adam Kingston from Australian Expat Finance and Asian Based Financial Planner James Englebrecht from St James’s Place face-to-face at the RHKYC or in appointments.
Register your interest email the button and click on the link below.
Thank you, Cris Abellar our Australian Based financial advisor and the Stanford Brown team, for their market update.
Fed officials anticipate smaller rate hikes ‘soon’
Can Black Friday spending survive collapsing confidence?
RBNZ states economy likely to enter into a recession
Point 1 - Fed officials anticipate smaller rate hikes ‘soon’
Wednesday saw the release of the U.S. Federal Reserve's November meeting minutes. This was the meeting where another 0.75% increase was agreed upon, bringing the federal funds rate to nearly 4%. However, the November minutes revealed a "substantial majority" of officials favoured less aggressive rate hikes in the coming months to allow the economy to soak up the hefty increases in borrowing costs inflicted so far in 2022.
Reacting to the minutes, markets now widely expect the rate-setting Federal Open Market Committee to likely step down to a 0.5% increase in December, following four straight 0.75% hikes. While there was still a strong message of caution in the face of inflation, some committee members expressed concern about risks to the financial system should the Fed continue to press forward at the same aggressive pace.
Markets have advanced modestly in recent days after a report signalled that U.S. inflation could be slowing, further boosting hopes that the Fed may ease up on interest rate hikes. This follows data released earlier this month showing U.S. consumer prices index rose by 7.7% (annualised) in October, down from 8.2% in September, a bigger decrease than expected.
If you strip out food and energy, underlying inflation rose by 0.3% in October, down from 0.6% in September. Annual core inflation dropped to 6.3%, down from 6.6%. It should be highlighted that the larger price rises occurred earlier in the year, with inflation subduing more than expected over recent months.
A substantial lift in rates in 2022 was needed; not only had the Fed been slow to respond in the face of surging inflation, but they also needed to bring rates back into the normal territory from essentially zero, a feat never previously attempted. The next Fed meeting is on December 13th, and then we have a longer break to the end of January. By that time, more will be known about the all-important U.S. consumer spending through the peak festive season.
Point 2. Can Black Friday spending survive collapsing confidence?
For any of you still new to this, today is Cyber Monday. We just had the epic Black Friday Sales. Black Friday is a colloquial term for the Friday after Thanksgiving in the United States. It traditionally marks the start of the Christmas shopping season in the U.S., with many stores offering highly promoted sales at heavily discounted prices and often opening early, sometimes as early as midnight. In recent years, this frenzied tradition has progressively drifted south to Australia, with retailers welcoming any opportunity to turbocharge the start of the spending season.
What makes this season more fraught is the convergence of, so far, resilient consumer spending in Australia, with markedly collapsing consumer confidence. In figures released earlier this month, the Westpac Melbourne Institute survey of consumer confidence showed inflation and interest rates were “weighing heavily on family finances”, and consumers were “unnerved” by forecasts of increases in electricity prices over the next two years. Another major factor was, unsurprisingly, interest rates.
Now at 78 points, the index has fallen below the low point hit during the global financial crisis and is only marginally higher than when the COVID pandemic first struck.
The survey revealed consumer sentiment fell most sharply among those with a mortgage, down 15.7% to 68.4 points, against the overall figure of 78. Confidence about the jobs outlook was similarly on the wane, with a growing proportion surveyed expecting unemployment to rise over the next year, indicating a turning point in labour markets. House buyer attitudes were also near historic lows, with the RBA’s November interest rate decision having a significant impact.
There has been a lot to celebrate for retailers over recent years, with travel restrictions and the COVID stimulus leading to record spending, but eventually, all good things must come to an end.
Source Reserve Bank Of New Zealand Te Putea Matua
Point 3. RBNZ states economy likely to enter a recession
The Reserve Bank of New Zealand (RBNZ) has warned the country faces a recession in 2023 as it lifted the pace of its interest rate increase cycle with an unprecedented 0.75% move on Wednesday.
Governor Adrian Orr heralded further rate increases ahead and cautioned the economy will contract for four straight quarters during what they foresee as a “shallow recession” from the middle of 2023. The timing of the recession takes on more significance as the nation heads to the voting booths next year, with Labour Prime Minister Jacinda Ardern seeking a third term in office.
“Core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near-term inflation expectations have risen,” the bank said.
Commenting on the announcement and corresponding statement, Westpac’s New Zealand chief economist, Michael Gordon, set out that “the RBNZ sees inflation as deeply embedded” and “now believes that a recession will be needed to bring inflation back within the 1-3 per cent target range.”
This week’s increase is the largest since the RBNZ introduced the official cash rate in 1999 and takes the benchmark to its highest level since December 2008.
Closer to home, RBA Governor Philip Lowe warned in a speech Tuesday that an increasing prevalence of supply-side shocks – such as a reversal of globalisation, ageing populations and climate change – meant it would be more challenging for central banks to keep inflation low into the future. Currently, markets are expecting another 0.25% rate increase from the RBA in December, bringing our official cash target to 3.1%. From there, we get a breather and an extended break until the next meeting in early February.
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