Hedge funds fret ‘speculative' stock rally as short books get whacked
'The last few months have been frustrating,' McGarry wrote in the Sydney-based short seller's latest update to clients. 'When markets throw caution to the wind, lower quality and more speculative stocks can outperform established profitable businesses.'
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This markets veteran worries AI is pushing us to breaking point
Matt King has had a long and distinguished career at Citi trying to make sense of global credit markets for the bank's clients. He was among the highest profile analysts in an asset class that only tends to grab the headlines when markets are melting down. The London-based King has since left the bank and set up his own research firm: Satori Insights. He remains a keen observer of markets, and the hidden forces that power them. But in the last month, he has turned his mind to something a little different, preparing a detailed presentation for his new clients that questioned a trait that equity investors lust over: scalability.
ABC News
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When does the RBA meet next? Is a rate cut coming?
The Reserve Bank of Australia (RBA) shocked many in the finance sector when it voted against cutting the cash rate last month. The news came as a blow to people paying off home loans, who hoped a rate cut would reduce their mortgage bills. Many are now looking towards the next meeting with anticipation. Here's what you need to know before the next RBA's next monetary policy meeting. Tomorrow. But it's a two-day meeting, so we won't hear about the decision until Tuesday afternoon. We're expecting an announcement at 2.30pm AEST on Tuesday, August 12. We can't say for sure. However, many people are banking on one after the Australian Bureau of Statistics (ABS) published the quarterly inflation figures at the end of July. Those figures showed inflation was now well and truly within the RBA's preferred range of between 2 and 3 per cent. Within the inflation data, there were two main figures people were paying attention to: The trimmed mean is also called "underlying inflation". The trimmed mean is the statistic the RBA had previously said it was focusing on to measure inflation, which meant a lot of people were watching for that figure in particular. On the graph below, you can see headline inflation — the red line — has been within the RBA's target range for longer than the trimmed mean. Headline inflation reached that range in September last year. But the trimmed mean — the blue line — only reached that range in March, when it hit 2.9 per cent. Currently, the cash rate target is 3.85 per cent. This figure is often referred to as "the interest rate" in conversation, but it's not the rate people with mortgages pay. "The cash rate is the interest rate that banks pay to borrow funds from other banks in the money market overnight," the RBA's website says. "It influences all other interest rates, including mortgage and deposit rates." That's why, if you're paying interest on a loan, your interest rate is probably higher than 3.85 per cent. When the RBA changes the cash rate target, interest rates for mortgages don't automatically change — the individual banks decide that. The RBA said it was waiting on more data. Many people expected the RBA to cut rates at the July meeting off the back of monthly inflation data from the ABS. The RBA has repeatedly said it wants Australia's inflation to get down to 2 to 3 per cent — and that monthly data was within that range. However, that was monthly data, not quarterly data, which takes in three months at a time. And it's this quarterly data that's regarded as Australia's key inflation measure. At the time of the July meeting, the most recent batch of quarterly data had come out in April — and the RBA wanted to wait until the next drop of inflation figures at the end July. Now those figures are out. And they look promising for people hoping for a rate cut. No one can say for sure. If the RBA does cut the cash rate target, that doesn't mean mortgage interest rates will automatically go down. It'll be up to the banks to decide if they'll pass that cut on to customers. So if you have a mortgage, you'll have to wait to hear from your lending institution about whether your rates are changing. We typically hear from the major banks within a few hours of the RBA's decision, though, so you probably won't have to wait very long. However, there is often a lag between banks announcing they'll cut their interest rates and that cut taking effect. They usually keep charging the higher rate for a week or two before the rate goes down — meaning it could be about a fortnight before people paying off a loan start to see any savings on their bills.
7NEWS
3 hours ago
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Fears FIFO work will turn gold towns into ghost towns
As mining executive Ron Heeks spruiks a major project to investors, he makes a pointed effort to highlight an attribute unrelated to the massive returns it will bring. 'Importantly, it's not a FIFO (fly-in, fly-out) operation,' he tells the mining industry's annual Diggers and Dealers gabfest in Kalgoorlie. Heeks, who spent 16 years working and living in the WA Goldfields hub, has been disheartened watching it be 'destroyed by FIFO'. He doesn't want to see the NSW Northern Tablelands town of Armidale — 23km west of Hillgrove — suffer the same fate. Larvotto Resources has fired the starter's gun on the development of a $140 million antimony mine at Hillgrove, with production to begin next year. 'You drive through Kalgoorlie now and, you know, the bottom half of Hannan Street, every second shop - or nearly all of them - are shut. It's very, very sad,' the Larvotto managing director said.. 'I think the industry as a whole does not do a particularly good job of putting back.' Despite the huge boon miners have pocketed in recent years, with soaring gold prices delivering billions in windfall revenues, the permanent residents of Kalgoorlie feel little benefit has flowed their way. The town's resident population has declined by about a tenth over the past decade to just under 30,000, but housing is scarce, with much of it taken up to accommodate FIFO workers. A recent application by goldminer Northern Star, which owns the mammoth open-cut mine that looms over the town, to build an 800-bed workers camp for staff working on a mill upgrade was met with concerted local opposition. The project was approved by council in a three-two vote, despite 144 out of 148 submissions by members of the public opposed to the application. The vast majority were concerned FIFO accommodation resulted in a lack of connection and contribution to the local community. The workers would not support local businesses, they feared. 'Get people to come and live here instead of FIFO. Get the population up, instead of down, otherwise Kalgoorlie will be a ghost town. Is that what we really want?' one submission asked. The assessing officer noted Northern Star had proposed operating a daily shuttle bus transporting workers to and from the local shops to improve social and economic connections to the town. 'Our priority is always around residential workforce,' Northern Star chief executive Stuart Tonkin told reporters during a visit to the Kalgoorlie Super Pit site. But the reality was the resident workforce could not support construction and other short-term jobs on its own, he said. 'We are filling up local facilities and hotels and utilising local places, as well as those temporary camps.' Local businessman Murray Leahy fought tooth and nail to avoid using FIFO workers for his Kalgoorlie-based mining services company MLG OZ. But as the business took off, he hit a crossroads: bring in employees from out of town or stop growing. 'We started putting people in houses, and we established a structure whereby we'd fly you in and out for six months and if you wanted to transition your family in, we would pay for you and your family to move to Kalgoorlie,' he said. 'We would provide a house for you free of charge for six months and after that you could salary sacrifice it, so we were transitioning people from being flyers into being residents. 'Then we ran out of houses to do that with and the market became so strained that we had to stop that program.' Leahy said ideally all the company's 450-odd workforce would be full-time residents, but he was still relying on 200 or so FIFO workers. There was a desire among workers to join the community. About 14 of MLG's FIFO employees were looking to move their families to live in Kalgoorlie residentially but simply could not find a house, he said. 'Fundamentally, the issue that the Goldfields community has stems purely from the fact that we have had very poor state and local government planning over a long period of time,' Leahy said. The state has been 'immensely slow' in releasing land to alleviate the situation, while provision of water and power to enable development has also been lagging. The current council was working hard to try and rectify the issues, 'but they are dealing with a 15-year legacy here of poor planning and poor management'. 'To effectively make the change that's needed, it's 100 per cent reliant upon our state releasing land and key services to be able to drive development.' The government was investing significantly in the Goldfields region, said WA Mining Minister David Michael. The WA budget included $16.8 million in funding to boost development-ready land in Kalgoorlie. Planning was also underway to redevelop Kalgoorlie Health Campus, the state developer was selling houses at its Karlkurla estate project for as low as $205,000 and a new $150 million vanadium flow battery was being installed to secure Kalgoorlie's energy supply, 'Government agencies are also working together, and with industry, to ensure there is sufficient land for housing across our state,' Mr Michael said. 'Land and housing development in the regions is constrained by contractor availability, infrastructure capacity and upgrade timing constraints, native title and higher development costs.' Ballard Mining chairman Simon Lill said he would like to see the government provide more tax incentives for living in Kalgoorlie long term. 'I would love to, and I think Northern Star would love to, see more people in Kalgoorlie. And Lynus would love to see more people in Kalgoorlie. But in the current FIFO world, I'm not sure I can see that happening,' he said. 'Can they make life in Kalgoorlie tax-free for a period or no stamp duty on houses or something like that? 'It is sad to walk down the main street and see so many of the shops boarded up.' Leahy also called for a more generous regional zone tax offset to incentivise people to live there permanently. Kalgoorlie residents can currently claim $57 off their tax through the scheme. Michael said Kalgoorlie residents could already access generous stamp duty concessions, which the government expanded in the recent budget, and complemented other incentives like low-deposit loans for modular homes.
