The headline in the AFR reads “Auction activity down by a third as spring selling season kicks off” and it follows a run of local economic data that has economists calling out for a rate rise or two. There are more financial curve balls to report on but nowadays, compared to when I ‘dumped’ academia to be a media commentator, my calls on our financial future aren’t just for readers. I have financial advice clients who trust me to get it right with their super and other investments.
And this week, my analysis of our economic destiny will be ‘on show’ for the finance and mortgage brokers for YBR, as Mark Bouris and I share our economic and financial crystal balls, and views around whether the RBA will raise rates on September 29 will be the hot topic we need to be right on.
Throw in the unpredictable calls of Donald Trump, the stubbornness of Iran on the Strait of Hormuz, the threats as well around the opportunities of AI, will the Fed raise interest rates on September 16. And then there’s the history of September being the ‘worst month’ for US stocks, such that there’s something called the September Effect.
Oh yes, then there are stories, such as this one in the SMH on Saturday by Shane Wright that kicks off this way: “Enormous government budget deficits and technology companies’ insatiable demand for cash are threatening to create a credit crunch that could precipitate a wave of global economic turmoil.”
Right now, the demand for money from governments and business is very strong. That’s why interest rates are more likely to rise rather than fall and that will hurt a lot of consumers, businesses and investors. And many of them know that as rates rise, eventually stock markets fall and business go backwards, taking the economy with it.
So as an adviser I have to work out when I have to make my clients’ portfolios more defensive. But if I go too early, my clients might get a 5% return, when the average rise from less defensive investors could be 10% or more.
At times I reflect on the advice of the great Australian fast bowler and former WWII fighter pilot, Keith Miller, who they say dated Princess Margaret, Queen Elizabeth’s sister. On pressure he said: “I’ll tell you what pressure is. Pressure is a Messerschmitt up your arse. Playing cricket is not.”
That always brings my pressure down, however, it does make me committed to being more right than wrong with what could happen on financial markets. And let me say that the arrival of a very unique US President in Donald Trump has not made my life easier.
Right now he is pressuring his appointed central bank boss, Kevin Warsh as the head of the Federal Reserve, and if the CPI on Friday is high, following a jobs report that showed 162,000 jobs were created when economists expected 53,000, then Trump’s man might be forced to ignore his boss.
That would be a market-rattling decision, especially as Trump has said if the Fed raises rates, he will punish those countries that have a trade surplus with the US. The assumption is that these countries have been swindling the US and have caused inflation. That’s a strange one, even for Donald J. Trump.
Locally, our RBA is looking at stronger-than-expected inflation, growth and spending but there are question marks over some of this data and then there’s the negative effects on housing of the Budget, with the AFR telling us today that: “Auction activity down by a third as spring selling season kicks off”.
This is what Sarah Petty reported: “Across the capital cities, 1462 homes were taken to auction at the weekend. This was 31.1 per cent lower than a year ago, and the fourth week in a row when the auction volume was down by more than 30 per cent compared with the same time in 2025, according to Cotality research.”
Here are some important facts she and others revealed:
- The clearance rate has been below 60% 18 weeks in a row.
- It’s been about 18 weeks since the Budget.
- Agents say the number of homes up for auction are expected to rise.
- A September rate rise could reduce buyers in a market short of buyers.
The Spring home sales will be an important real life indicator the RBA will look at to judge how the combined impact of their three and maybe four rate hikes, on top of the Budget’s negative effects, have hurt the net wealth vibe of Australians.
Both the US and Australian economies are at critically important points with both confronting rate rises that could turn 2026’s general stock market positivity into something more negative.
Right now I don’t expect a bond market backlash to hit our wealth portfolios, though Australians have become less rich because house prices are falling. Every action by central banks and what economic data drops will be watched by people like me, because we are in a pressure situation, though it’s still not like a “Messerschmitt up your arse!”
That said, I will be vigilantly looking for monetary missiles that could hit and hurt our stocks and super, so watch this space.
On the plus side, US company reporting season was one of the strongest ever, which at least says (though there has been a lot of companies building up debt, especially related to AI) that profits are coming in to cover that debt, many times over.
And this is a really good thing!
