Inflation headache
Plus: Labor's evasiveness on the Voice and Qantas; The $300m gold and copper play on the block; Big Tech's WFH backlash; Judo's IPO regret.
The Future Fund’s latest portfolio update today was striking for its downbeat tone. On a day when monthly inflation figures came in weaker than expected and the ASX rose quite sharply, the national sovereign wealth fund was expressing concerns about overly complacent markets and ongoing risks of recessions in developed economies.
Who is viewing things correctly? The fast money bidding up stocks on the ASX in response to monthly data, or the patient capital of the $250 billion sovereign wealth fund? They are two very different types of investor operating on different timeframes, of course. But normally you'd lean to the latter. Today I'm not so sure.
The inflation puzzle will dictate markets for the foreseeable future, and the weaker than expected figures today solidified expectations the RBA won't raise rates next week.
On a deeper level, there are two ways to view today’s reading, which showed consumer prices rose 4.9% in the year to July (below analyst expectations for a print of 5.2%). The optimistic view is that it’s the third straight month where consumer prices have fallen, a sign that inflation is not just moderating but on the way down. The more sober view is that inflation remains stubbornly above the RBA’s 2% to 3% target range.
