December 11, 2022

Sunday afternoon

December 11, 2022

Hello everyone,

Are you comfortable and relaxed and in control of all your finances?

Well, you are very fortunate, as most of the Aussie population is struggling with rising rates, inflation, and cost of living pressures. If you own your home outright, you are in a great position. Consider those who bought their new home in 2019 or 2020 and are now paying thousands more per year for their home. The average wage in Australia is around $52, 338 according to the Australian Bureau of Statistics (ABS). As it stands today, to comfortably afford a $500,000 loan, you would need to be earning a minimum income of just over $180,000 per year. So, even with two people working, it would not be enough to cover the loan repayments. And if the RBA hikes to 4%, the income needed to afford repayments on a $500,000 loan would jump to $203,358. How is the average Aussie going to afford that? Additionally, about 2-5 Aussies are living payday to payday – running out of money in between…

Are we “The Lucky Country” as Donald Horne’s book describes us? If you haven’t read the book, please do. It is an illuminating and insightful text, even though it was first published in 1964. It is an indictment of a country mired in mediocrity and manacled to its past. The book is key to understanding the anxieties and dissatisfactions in Australian society today. We have come a long way since the sixties, but some of Horne’s criticisms are still relevant.

What’s waiting for us this week?

The CPI and the FOMC.

What’s expected?

Hopefully, a lower reading on the CPI and a more accommodating Fed. Nothing is guaranteed.

But the Fed may jolt you out of your comfort zone next year. Peak rates are likely heading higher than what the market has priced in for 2023. The problem is that the market doesn’t believe the Fed and currently sees rates at just 4.6% by December 2023. So, the numbers are something to keep an eye on.

Crypto exchanges are walking a delicate tightrope now. I would advise all crypto holders to take their funds out of exchanges and put it into wallets. It is highly likely that more exchanges will fall over before the rout is over.

Have a wonderful week.

Take care.

Cheers,

Jacque

"The big lesson in life, baby, is never be scared of anyone or anything." - Frank Sinatra

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