Squiz Today – Wednesday, 8 November

The Squiz

What goes up… goes up again. The Reserve Bank board has raised the official cash rate by 0.25%, taking it to 4.35%. It might feel like yesterday, but the last increase was in June, and it means there have been 13 increases since May 2022, with yesterday’s lift taking rates to a 12-year high.

But why?

Let’s dusk off this old tune… The Reserve Bank’s job is to keep Australia’s inflation within a target range – at the moment, that’s 2-3%. Currently, inflation’s running at 5.4% annually, so we’re way over the mark, and the central bank says it’s more persistent than expected. Globally, economists blame a post-COVID spending blitz combined with supply-chain issues, as well as the disruption to energy supplies due to Russia’s invasion of Ukraine. Here in Oz, it’s petrol, electricity, and housing price rises (both buying and renting) that are fuelling it. So the idea is that higher interest rates will mean taking our foot off the spending pedal, which reduces economic activity and should slow price rises. It also means a cost of living crunch, and yesterday, Treasurer Jim Chalmers said that he understands yesterday’s rate decision “will make life harder for people who are already doing it tough”.

Is that it for rate rises?

Dunno, but many of the economists who predict yesterday’s rate rise have already flagged a December bump as well… As for what the new Reserve Bank Governor Michele Bullock has to say, she noted the “significant uncertainties” in the global market – namely China’s wobbly economy and the curveballs thrown by regional wars. She says that “the Board remains resolute in its determination to return inflation to target and will do what is necessary”. As for when we’ll hit that 2-3% inflation target, officials reckon we’ll be at 3.5% at the end of next year and within target by the end of 2025. Strap yourself in…

Albanese gets some island time

Moving on from China, our ‘handsome boy’/PM Anthony Albanese has landed in the Cook Islands for the Pacific Islands Forum (PIF), where he’ll continue to position Australia as the region’s reliable mate. On the agenda: climate change, and specifically Australia’s policies. Pacific elders are calling for Australia to phase out fossil fuels and cough up some serious cash for climate funds if it wants support for its bid to host the COP31 climate talks in 2026. Managing the rise of China is another issue, as it has been at previous meetings. And if you’re not a fan of cruises, spare a thought for Albanese, who will spend a part of the coming days on a boat with his fellow leaders motoring around a lagoon… We’re not saying that’s a factor in some big guns’ non-attendance, but the leaders of New Zealand, Vanuatu, Solomon Islands, and Papua New Guinea aren’t attending the PIF this year.

Israel looks beyond the war

With both Israel and Hamas rejecting calls for a ceasefire, Israeli PM Benjamin Netanyahu yesterday said “tactical little pauses” could be used to get aid in and hostages to get out. He also said that Israel is seeking to manage Gaza’s security after the war “because we’ve seen what happens when we don’t have that security responsibility”. Israel’s military has Gaza City surrounded and is preparing to take on fighters in underground tunnels. They’re also seeking to free hostages taken from Israel during the Hamas attacks on 7 October. The US backs pauses in the fighting for humanitarian reasons and is continuing to discuss the release of hostages with Arab leaders. For the United Nations part, it has called for an immediate ceasefire, with Secretary-General Antonio Guterres warning that Gaza is becoming a “graveyard for children”.

Trump’s day in court

As we’ve talked about, former US President Donald Trump is in a bit of a legal pickle in New York. And yesterday, he gave evidence in the civil fraud trial alleging that he and his Trump Organization family/executive members inflated the value of their real estate assets to secure better terms for loans and insurance. In a fiery exchange with the judge, Trump defended the valuations, saying his personal brand added value to the properties. He also pointed the finger at the accountants for the financial reports. Former first daughter Ivanka is expected to testify in the coming day. As for how all this affects his presidential run, Trump is leading in the key polls ahead of Joe Biden in 5 of the 6 most important battleground states. But it’s not all rosy – both Trump and Biden are viewed unfavourably by voters, suggesting a rocky road ahead…

WeCrashed into more financial troubles

Co-working behemoth WeWork has filed for bankruptcy in the US following a rocky few years that included a failed public float in 2019, the exit of charismatic co-founder Adam Neumann, and the pandemic. The company lost around 99% of its market value this year and is somewhere between $10-$50 billion in the red, according to the federal court filing made yesterday – but it might not be the end… The bankruptcy process in the US gives companies some legal protection from creditors and helps in negotiations with landlords. In WeWork’s case, it’s still operating globally, but analysts say its survival hinges on renegotiating its pricey leases. It’s nothing a good offsite couldn’t solve…

And the winner is…

…Without A Fight. The 7yo gelding yesterday became the first horse since Ethereal in 2001 to win both the Melbourne and Caulfield Cups in the same year. It’s the Freedman family’s 8th training win and 41yo jockey Mark Zahra became the first rider since Glen Boss on Makybe Diva to win consecutive Melbourne Cups (note: that team went on to win it 3 times in a row between 2003-05…). Zarah rode Gold Trip to victory last year, and his decision to change horses (almost midstream…) was made on the advice of a mate – and didn’t that pay off, with last year’s winner coming in 17th… As for the fashions on the field, shorts and sneakers were a popular choice this year. You can find a gallery of all the best looks here.

And while we have you, Australia has confirmed its spot in the ICC Cricket World Cup semi-finals with a 3-wicket win against Afghanistan this morning. We were 91-7 in pursuit of 292 runs when Glenn Maxwell came to the crease and turned on 201 runs off 128 deliveries, breaking an Aussie record. He missed the last game after falling off a golf buggy…

Bob Holder (aka the Cootamundra Cat) is 92yo and has retained his title of the world’s oldest cowboy. “I just love rodeo, and I love life,” he said. What a legend…

The Aussie arm of US coffee giant Starbucks has turned a modest profit for the first time since it arrived Down Under in 2000. It’s credited to Gen Z’s appetite for the brand’s range of iced drinks – and, dare we say, tourists who haven’t tried an Aussie flat white…

Four men have been charged over the theft of a $9 million 18-carat gold toilet which disappeared from the UK’s Blenheim Palace in 2019. The art installation – which was titled America and could be used by members of the public – isn’t expected to be recovered. 

12.30pm (AEDT) – Malcolm and Lucy Turnbull address the National Press Club – Canberra

Company shareholder meeting – Magellan Financial Group; Allkem

ABS Data Release – Life expectancy 2020 – 2022

Birthdays for author Kazuo Ishiguro (1954) and celebrity chef Gordon Ramsay (1966)

Anniversary of:
• the birthdays of Dracula inspirer Vlad the Impaler (1431), astronomer Edmond Halley (1656), Dracula author Bram Stoker (1847), Chinese revolutionary Qiu Jin (1875) and Gone with the Wind author Margaret Mitchell (1900)
• the first meeting of Aztec Emperor Moctezuma II and Spanish Conquistador Hernán Cortés in Tenochtitlan, Mexico (1519)
• the first distillation of Bourbon Whiskey from corn by Elijah Craig in Bourbon, Kentucky (1789)
• German physicist Wilhelm Röntgen producing and detecting X-rays for the first time (1895)
• the landmark Harvester Decision which became the basis of Australia’s national minimum wage system (1907)
• the premiere of soapie Days of Our Lives (1965)
• Donald Trump being elected as US President (2016)