1. Good US inflation number
The US registered a better-than-expected CPI reading and Wall Street had an unexpected reaction. The November inflation reading came in up 0.1%, while economists thought the number would be 0.3%. This took the annual inflation story down to 7.1% from 7.7% in October and 8.1% in September. Excluding volatile food and energy prices, so-called core CPI rose 0.2% on the month and 6% on an annual basis, compared with respective estimates of 0.3% and 6.1%.
2. Wall Street’s reaction to CPI surprising
The first reaction to the November CPI coming in lower than expected was an 800 plus rise for the Dow Jones futures and the real life index surged early but then there was a sell-off! Those trying to work out why the change of heart about the number says the services component of the CPI remains high — 7.3% — and the Fed’s boss, Jerome Powell, has said that this is an important indicator he needs to see slide before he can tip rate rises are near an end, or words to that effect.
3. Confidence says RBA’s job is nearly done?
Interest rate rises from the RBA have been designed to lower inflation and if you look at business and consumer confidence, those rate hikes are working to stop the country’s spenders — consumers and business. The Westpac-Melbourne Institute consumer confidence index rose by 3% in December to 80.3 points but its long-run average is 101.2 points and any number under 100 means pessimists are greater than optimists. Meanwhile, the National Australia Bank (NAB) business confidence index fell from -0.2 points in October to an 11-month low of -4.4 points in November (long-run average: +5.3 points). These bad news readings would be good news for the RBA’s Dr Phil Lowe and mortgagees praying that AMP’s Shane Oliver is right when he says the RBA’s rate-rising job might be done!
4. CSL has a new boss
The AFR reports: “The country’s third-biggest company, blood products giant CSL, will start a new chapter in its storied history after the promotion of chief operating officer Paul McKenzie to chief executive on Tuesday.” The in-house appointment will be a plus for the company that has been a great stock market performer and another plus for the business and the stock price, the current CEO, Paul Perreault, will remain a strategic adviser to the company until September when he retires.
“Dr McKenzie said he looked forward to returning CSL to “sustainable and profitable growth”, after the company took a 5% hit to net profit in the year to June 30 due to a hangover effect of lower plasma donations during the COVID-19 pandemic.
5. ASX to cop competition
The Australian says the Albanese Government has the ASX’s monopoly in its sights. “Acting on recommendations by the Council of Financial Regulators, the government is pushing forward with a spate of measures including providing the RBA with powers to intervene and resolve a crisis at a domestic clearing and settlement facility,” Joyce Moullakis reports. “The government will also outline on Wednesday plans to introduce legislation to boost competitive outcomes, where the ASX has a near monopoly in clearing and settlement, delivering the competition and corporate regulators additional powers. It wants more competition in the clearing and settlement of cash equities trades, following a turbulent operational period for the ASX.” By the way, the news did not hurt the company’s share price which rose 1.35% to $69 yesterday.