The Global Fight Against Inflation Has Turned a Corner
Kanebridge News
    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,613,207 (-0.60%)       Melbourne $969,484 (-0.54%)       Brisbane $991,125 (-0.15%)       Adelaide $906,278 (+1.12%)       Perth $892,773 (+0.03%)       Hobart $726,294 (-0.04%)       Darwin $657,141 (-1.18%)       Canberra $1,003,818 (-0.83%)       National $1,045,092 (-0.37%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $754,460 (+0.43%)       Melbourne $495,941 (+0.11%)       Brisbane $587,365 (+0.63%)       Adelaide $442,425 (-2.43%)       Perth $461,417 (+0.53%)       Hobart $511,031 (+0.36%)       Darwin $373,250 (+2.98%)       Canberra $492,184 (-1.10%)       National $537,029 (+0.15%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 9,787 (-116)       Melbourne 14,236 (+55)       Brisbane 8,139 (+64)       Adelaide 2,166 (-18)       Perth 5,782 (+59)       Hobart 1,221 (+5)       Darwin 279 (+4)       Canberra 924 (+36)       National 42,534 (+89)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 8,638 (-81)       Melbourne 8,327 (-30)       Brisbane 1,728 (-19)       Adelaide 415 (+10)       Perth 1,444 (+2)       Hobart 201 (-10)       Darwin 392 (-7)       Canberra 1,004 (-14)       National 22,149 (-149)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $820 (+$20)       Melbourne $620 ($0)       Brisbane $630 (-$5)       Adelaide $615 (+$5)       Perth $675 ($0)       Hobart $560 (+$10)       Darwin $700 ($0)       Canberra $680 ($0)       National $670 (+$4)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $590 (-$5)       Brisbane $630 (+$5)       Adelaide $505 (-$5)       Perth $620 (-$10)       Hobart $460 (-$10)       Darwin $580 (+$20)       Canberra $550 ($0)       National $597 (-$)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 6,197 (+313)       Melbourne 6,580 (-5)       Brisbane 4,403 (-85)       Adelaide 1,545 (-44)       Perth 2,951 (+71)       Hobart 398 (-13)       Darwin 97 (+4)       Canberra 643 (+11)       National 22,814 (+252)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 10,884 (-22)       Melbourne 6,312 (0)       Brisbane 2,285 (-54)       Adelaide 357 (-14)       Perth 783 (-14)       Hobart 129 (-14)       Darwin 132 (+6)       Canberra 831 (+15)       National 21,713 (-97)                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.64% (↑)      Melbourne 3.33% (↑)        Brisbane 3.31% (↓)       Adelaide 3.53% (↓)       Perth 3.93% (↓)     Hobart 4.01% (↑)      Darwin 5.54% (↑)      Canberra 3.52% (↑)      National 3.34% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND         Sydney 5.17% (↓)       Melbourne 6.19% (↓)     Brisbane 5.58% (↑)      Adelaide 5.94% (↑)        Perth 6.99% (↓)       Hobart 4.68% (↓)     Darwin 8.08% (↑)      Canberra 5.81% (↑)        National 5.78% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 0.8% (↑)      Melbourne 0.7% (↑)      Brisbane 0.7% (↑)      Adelaide 0.4% (↑)      Perth 0.4% (↑)      Hobart 0.9% (↑)      Darwin 0.8% (↑)      Canberra 1.0% (↑)      National 0.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 0.9% (↑)      Melbourne 1.1% (↑)      Brisbane 1.0% (↑)      Adelaide 0.5% (↑)      Perth 0.5% (↑)      Hobart 1.4% (↑)      Darwin 1.7% (↑)      Canberra 1.4% (↑)      National 1.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 29.8 (↓)     Melbourne 31.7 (↑)      Brisbane 30.6 (↑)        Adelaide 25.2 (↓)       Perth 35.2 (↓)     Hobart 35.1 (↑)      Darwin 44.2 (↑)        Canberra 31.5 (↓)     National 32.9 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 29.7 (↓)       Melbourne 30.5 (↓)     Brisbane 27.8 (↑)        Adelaide 22.8 (↓)     Perth 38.4 (↑)        Hobart 37.5 (↓)       Darwin 37.3 (↓)       Canberra 40.5 (↓)       National 33.1 (↓)           
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The Global Fight Against Inflation Has Turned a Corner

Falling inflation across industrialized countries opens the door for central banks to start cutting interest rates next year

By Tom Fairless and Paul Hannon
Thu, Nov 16, 2023 4:28pmGrey Clock 5 min

Inflation is falling faster than expected across advanced economies, marking a turning point in central banks’ two-year battle against surging prices.

Declines in consumer price growth, to below 5% in the U.K. last month and around 3% in the U.S. and eurozone, are fueling expectations that central banks could take their feet off the brakes and pivot to cutting interest rates next year.

That would provide welcome relief to a global economy that is struggling outside the U.S., increasing the prospects of a soft landing from a historic series of interest-rate increases without large increases in unemployment. Europe, in particular, is on the brink of recession.

Yields on government debt in Europe and the U.S. have slumped as investors start to price in earlier interest-rate cuts.

For months this year, economists puzzled over why growth and inflation hadn’t slowed more in response to interest-rate hikes. Now, there is growing evidence that higher borrowing costs are biting hard with a delay.

“It’s definitely a turning point for inflation,” said Stefan Gerlach, a former deputy governor of Ireland’s central bank. “Investors may be surprised at how rapidly central banks cut interest rates next year, maybe by one-and-a-half percentage point.”

The sharp declines in inflation across continents underscore how common factors drove up prices in the first place, especially the Covid-19 pandemic and Russia’s war in Ukraine. These crimped global supply chains, reduced the number of people in the workforce and fueled energy price increases, especially in Europe. As those forces subside, price pressures naturally ease.

Inflation was also given a boost by demand-side factors, such as trillions of dollars of government stimulus spending in the U.S., as well as pent-up demand and savings from consumers that accumulated during the pandemic. That, economists say, is why underlying inflation remains strong nearly four years after the start of the pandemic, and why rate increases were needed to bring it down.

Lower inflation “shows the effect of increasing rates by 4 or 5 percentage points,” Gerlach said. “Team Transitory were wrong,” he added, referring to a debate among economists over whether high inflation would subside by itself, a camp to which he belonged. “Our idea was that inflation would fall back without an increase in interest rates.”

Even countries where inflation has proved the most stubborn, such as the U.K., have started to show progress. Consumer prices rose 4.6% in October compared with the year-ago month, a drop from the 6.7% rate of inflation recorded in September and the slowest increase since October 2021, the statistics agency said Wednesday. Economists had expected to see a decline to 4.8%.

“The U.K. no longer looks like such a major outlier when it comes to inflation,” said Bruna Skarica, an economist at Morgan Stanley.

News of the U.K. decline followed Tuesday’s report of a larger than expected drop in U.S. inflation to 3.2% in October. The eurozone also reported a decline in inflation to 2.9% in October from 4.3% in September. Consumer prices were lower than a year earlier in Belgium and the Netherlands.

The cooling of consumer prices has persuaded some European policy makers that the battle to tame inflation has been won, and in a shorter period of time than in the 1970s, when a comparable surge in prices occurred.

“We’re in the process of exiting the inflationary crisis,” said France’s Bruno Le Maire before meeting with his fellow European Union finance ministers last week. “In a little under two years, Europe will have managed to control inflation, which weighs on our citizens, which weighs on households, especially the less wealthy.”

Investors are also more optimistic. They are pricing in interest-rate cuts by the Federal Reserve and European Central Bank starting next spring, and by the Bank of England next summer, according to data from Refinitiv.

Markets had priced a 30% probability of another rate increase by the Fed, from its current level of 5.25% to 5.5%, until publication of U.S. inflation data on Tuesday. That probability has now fallen to 5%, according to Deutsche Bank analysts. The prospect of a Fed rate cut by May soared from 23% on Monday to 86% by Tuesday‘s close.

Central bankers are more cautious after being surprised last year by the persistence of inflation. The Bank of England last month said it is too soon to think about cutting interest rates, having forecast that inflation would reach its 2% target in late 2025. Central bankers also point to the still-rapid rise in wages and the risk of higher energy prices if the conflict between Israel and Hamas spreads to other parts of the Middle East.

Morgan Stanley’s economists expect to see the Bank of England start to cut rates beginning next May, followed by the Federal Reserve and the European Central Bank in June. Regardless of the exact timing, there is a growing consensus that inflation is on the wane and lower interest rates will follow.

“We expect widespread declines in inflation and interest rates in 2024 across advanced economies,” Michael Saunders, a former BOE rate setter, wrote in a note to clients of Oxford Economics.

If so, it would raise the question of whether central banks overdid it with rate increases, especially in Europe.

Economists say those hikes are working their way through the economy, weighing on lending and spending. Job creation is slowing and unemployment is edging higher on both sides of the Atlantic, curbing wage growth. Households are becoming more reluctant to spend, as higher interest rates make it more advantageous to save, economists say. That weighs on growth prospects over the coming months.

U.S. retail sales fell 0.1% in October from a month earlier, the Commerce Department said Wednesday. That is the first decline since March and comes after a 0.9% increase in September. In the eurozone, industrial output declined by 1.1% in September from the previous month, official data showed on Wednesday.

The decline in inflation will be welcome news for political leaders, even if it has yet to boost their popularity.

While global factors contributed to the worst of the inflation surge and most of the recent decline, domestic economic conditions are likely to matter most as central banks enter the final stage—the so-called “last mile”—of getting inflation down to their targets of around 2%.

In the U.S., inflation is ebbing, as the labor market and consumer spending cool but remain solid. This has bolstered forecasts that price pressures will keep easing without a recession.

In Europe, the economic backdrop is more challenging. The continent faces headwinds to growth, from slowing global trade and sluggish growth in China, a critical export market, to efforts by governments to slow spending. Germany’s constitutional court on Wednesday ruled against a move by Chancellor Olaf Scholz‘s government to repurpose €60 billion in unused pandemic funds to finance green energy initiatives, creating a large hole in the state budget.

European households have also been more reluctant than their U.S. counterparts to spend pandemic-era savings. All that could lead to a deeper downturn and sharper drop in inflation in Europe, prompting earlier rate cuts by the ECB.

Despite the likelihood of lower interest rates ahead, a return to the period of ultra low interest rates that preceded the pandemic is deemed unlikely by many economists and investors, reflecting rising geopolitical tensions and demographic pressures.

Workforces are likely to shrink across major economies, including China, over the coming years as millions of baby boomers retire, driving up wages. And friction between China and the West will likely raise manufacturing costs as companies shift factories to other countries.



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The Top 10 highest paid CEOs of the ASX 200 revealed

Along with pay rates, the latest report from the ACSI shows bonuses are no longer based on exceptional results

By Bronwyn Allen
Tue, Jul 23, 2024 2 min

The CEOs of the ASX 200 were paid a little less in FY23 compared to the year before, but bonuses appear to have become the norm rather than a reward for outstanding results, according to the Australia Council of Superannuation Investors (ACSI). ACSI has released its 23rd annual report documenting the CEOs’ realised pay, which combines base salaries, bonuses and other incentives.

The highest-paid CEO among Australian-domiciled ASX 200 companies in FY23 was Greg Goodman of Goodman Group, with realised pay of $27.34 million. Goodman Group is the ASX 200’s largest real estate investment trust (REIT) with a global portfolio of $80.5 billion in assets. The highest-paid CEO among foreign-domiciled ASX 200 companies was Mick Farrell of ResMed with realised pay of $47.58 million. ResMed manufactures CPAP machines to treat sleep apnoea.

The realised pay for the CEOs of the largest 100 companies by market capitalisation fell marginally from a median of $3.93 million in FY22 to $3.87 million in FY23. This is the lowest median in the 10 years since ACSI began basing its report on realised pay data. The median realised pay for the CEOs of the next largest 100 companies also fell from $2.1million to $1.95 million.

However, 192 of the ASX 200 CEOs took home a bonus, and Ed John, ACSI’s executive manager of stewardship, is concerned that bonuses are becoming “a given”.

“At a time when companies are focused on productivity and performance, it is critical that bonuses are only paid for exceptional outcomes,” Mr John said. He added that boards should set performance thresholds for CEO bonuses at appropriate levels.

ACSI said the slightly lower median realised pay of ASX 200 CEOs indicated greater scrutiny from shareholders was having an impact. There was a record 41 strike votes against executive pay at ASX 300 annual general meetings (AGMs) in 2023. This indicated an increasing number of shareholders were feeling unhappy with the executive pay levels at the companies in which they were invested.

A strike vote means 25 percent or more of shareholders voted against a company’s remuneration report. If a second strike vote is recorded at the next AGM, shareholders can vote to force the directors to stand for re-election.

10 highest-paid ASX 200 CEOs in FY23

1. Mick Farrell, ResMed, $47.58 million*
2. Robert Thomson, News Corporation, $41.53 million*
3. Greg Goodman, Goodman Group, $27.34 million
4. Shemara Wikramanayake, Macquarie Group, $25.32 million
5. Mike Henry, BHP Group, $19.68 million
6. Matt Comyn, Commonwealth Bank, $10.52 million
7. Jakob Stausholm, Rio Tinto, $10.47 million
8. Rob Scott, Wesfarmers, $9.57 million
9. Ron Delia, Amcor, $9.33 million*
10. Colin Goldschmidt, Sonic Healthcare, $8.35 million

Source: ACSI. Foreign-domiciled ASX 200 companies*

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