This week has once again been dominated by Donald Trump as the former US President’s close call with a bullet in the head last weekend puts him in the centre stage. Just for emphasis: we’re all talking about Trump, again. Especially because he wrapped up a Republican convention speech only about an hour ago.
The benefit is that if he’s busy in the spotlight of centre stage, at least this time he isn’t in the centre of a scope, I suppose. His choice of VP was also interesting – right now its JD Vance, a man who once despised Trump then apparently had a change of heart.
Given the last Trump Presidency’s staff turnover rate, perhaps someone should start livestreaming a head of lettuce.
The Trump assassination attempt is widely perceived to have boosted his election chances, but it also drowned out something closer to home.
Long story short: China’s latest all-of-government meeting fell flat. Iron ore, gold, and crude oil all dipped overnight as hopes for stimulus were dashed once again. So did Chinese markets, which helped inform a red Friday for the ASX that wiped off Week 29’s all time highs.
If you’re asking “what Chinese government meeting?,” don’t worry, you’ve noting to be embarrassed about.
You’d be forgiven amidst walls of Americo-centrism for missing China held its Third Plenum this week – one of the few times per year Xi Jinping gets in front of all his other government members whose names he definitely remembers and discusses the direction of China’s economy.
There’s a lot of words I could use to describe the Chinese economy this year and none of them HR will approve of. So let’s just say it’s “troubled” – sort of like a whole-of-government economic conference that hinges largely on one man’s presence rather than what he actually says.
Speaking of actions being louder than words, that’s basically the case for all of China’s attempted stimulus measures this year, most of which targeting its mammoth property sector (and thereby construction.) Don’t forget City Garden, Evergrande, and other large Chinese builders still remain shadows of their former selves.
Despite a lot of coverage on the Third Plenum this year (nowhere near as much as what Trump’s receiving,) there’s been little word on what was actually said or agreed upon or actioned or even memorandum-of-understanding’d.
All in all: a non-event. And that iron ore price doesn’t look like it’s going to the moon anytime soon, either – meaning Canberra’s deliberately-lowball iron ore expectation for CY2025 as lined out in the budget could be closer to the truth. (With that said, the iron ore price isn’t anywhere near going sub-US$90/tn.)
At the same time, however, the AUD is basically a bellwether for the Chinese economy, and it’s been a while since we’ve bought more than 67 US cents per unit.
And so what about Australia proper?
We got the June unemployment figures from the ABS this week and the country’s unemployment rate is flat. The rate increased less than 0.1% to a headline of 4.1% – still too low for the RBA to cut according to some analysts.
The ASX200 slightly dipped on Thursday but did not meaningfully respond either way, suggesting the news wasn’t necessarily taken as an omen.
Other analysts wondered aloud (via the written word) whether the data would encourage the RBA to raise rates in August, but so far, this doesn’t appear to be an overwhelmingly popular expectation.
But as anybody paying attention knows, things can change quickly in the space of a week.
And so why is Oz unemployment taking so long to bump upward? Let me explain it simply: nobody has figured out a simple explanation yet.
Not helping anything is that traditional economic indicators used through history (up until COVID) don’t really seem to work anymore, and we probably won’t have a collectively agreed upon answer to what’s going on for a few years yet.
That’s the nature of retrospect, so at least something has’t changed.
It goes without saying: all eyes on the RBA in August, and the Fed and ECB in September.