Come on, Australia - spark up

1. Unfortunately, Australians are a miserable bunch

2. The housing crisis has a long way to run

3. Why it's okay for Telstra to lift prices for mobiles

4. Is Network Ten going the way of the dodo?

THIS WEEK'S BIG STORY

Crazy times for Aussie dollar, Bitcoin, gold and oil

Bitcoin has lost nearly 20 per cent of its value in the last month and fell to its lowest level since February. The surge in demand for US Bitcoin exchange-traded funds has waned. More significantly, the administrators of the failed Mt Gox exchange are returning up to $US8 billion worth of Bitcoin to creditors. The Japanese-based Mt Gox was once the biggest exchange in the world. Then it failed and bitcoins went missing. Now some of the Mt Gox Bitcoin is being sold.

AUD appreciating

After what seemed like months of inactivity, the Aussie dollar is suddenly trading around 67.5 US cents. It's well below the long term average of around 72 US cents, but it's trading at its highest level in six months. The reason: interest rates in the US are expected to fall before they drop locally. The greenback has been the dominant currency around the world for many quarters and there are signs that is fading, with several analysts forecasting a strong Aussie dollar this year.  

Bitcoin struggling

Brent crude pushed above $US86 a barrel over the weekend, up about eight per cent over the past six weeks as the weather had its say on oil prices. The first factor was Hurricane Beryl, which blew through the Caribbean and eventually into Texas. It meant oil companies had to shut down operations, or at least slow flows. The second factor was bushfires in Alberta, Canada. Production in the region was threatened by the raging wildfires. It's a timely reminder that we still operate at the whim of the environment.

Gold keeps rising

Gold is fetching just under $US2400 an ounce. Apart from briefly in mid-2020 and then April-May last year, the price of gold has never been more than $US2000 an ounce. Yet the precious metal has traded consistently above that level since November last year. Gold's run shows how worried investors are about the economic outlook and interest rates. The precious metal is a store of value and when there's uncertainty in markets, people flock to gold. Analysts reckon there is still a way for gold to go.

Oil hit by storms and fires

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In our bonus series Ask Fear & Greed, listener John wants to know how much of the high inflation is driven by services versus goods. He says he sees wages going up and business owners have no choice but to pass these costs on. How does that impact CPI figures?

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Emma, via F&G's TikTok,  questioning reports that the rental crisis may ease soon:

"I just received notice that my rent will be going up by 15% for the second year in a row."

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Thanks for reading my opinions on the week's biggest stories.

- Sean Aylmer

There are plenty of reasons to be optimistic about the economy. The labour market is strong with the unemployment rate at four per cent. People have jobs. Inflation is falling. I concede it is a rocky road, and there have been a few scares along the way, but the trend is down. Workers have just received tax cuts as part of the Stage 3 taxation changes. Even interest rates are not that high, from an historical perspective. Before the 2007 global financial crisis, rates were always way above what they are now - it's just that we got used to a good thing during COVID and we are now suffering an interest rate hangover. Yet consumers are pessimistic. Grumpy even. The Westpac-Melbourne Institute Consumer Sentiment survey for July shows people are stuck in a deeply pessimistic mood. Middle income earners - the ones with jobs - seem to be particularly sombre. People are worried about more interest rate rises. The mood does nothing to help the economy because grumps (mostly) don't spend as much as happy people. Come on, Australia - spark up. 

The more you look into the housing crisis, the worse it becomes. For people like me, who have a mortgage but have been paying it off for years, the crisis is slightly removed (apart from having adult children determined to stay at home). There was both good news and bad news this week. The good news: Domain’s June Quarter Rent Report shows the weakest quarterly growth for house rents since 2021 in Sydney and Melbourne, and since 2020 in Brisbane, Adelaide and Perth. It is a similar story for units. Lower immigration and more availability is helping take the heat out of the market. The bad news: the value of new housing loans fell during May, according to the ABS, with first home buyers being pushed out of the market. Australia needs new home loans to buy new homes. At the moment we are running at about 160,000 new homes a year, way short of the government's target of 240,000, and an estimated demand of 250,000. The housing crisis is a long, long way from being solved, even if rent pressures are easing.

This week's instalment of the global sitcom "Leaders looking like geese" involved US President Joe Biden hitting back hard against Democrats seeking to replace him as their nominee in this year's election. Over the past 24 hours Democrats have failed to reach a consensus on what to do about Mr Biden, following his disastrous debate with Donald Trump. The President's mental fitness is in serious doubt, acording to critics. It comes as NATO leaders meet in Washington, and as Republican nominee Donald Trump remains quiet (news in itself). Meanwhile Russian leader Vladimir Putin has been chatting to China's President Xi Jinping and Indian Prime Minister Narendra Modi, looking very statesman-like. Mr Modi flew to Moscow just as a Russian bombing killed at least 41 people in Ukraine, including at a children's hospital. When the two met, they hugged. Mr Putin called Mr Modi "my dearest friend". This is the same Mr Modi (and India) that Australia has a Quad diplomatic partnership with. WTF?

Yes. Well at least as we know it, unless the government decides to prop it up. This week the owner of Australia's number three free-to-air network, Paramount, was sold to Skydance, an independent studio controlled by billionaire David Ellison, who happens to be son of Oracle founder Larry Ellison. Paramount owns CBS, MTV and the Paramount movie network in the US, as well as overseas assets like Network Ten. Paramount is bleeding money and has about $US14.6 billion in debt. Skydance has promised to put in $US1.5 billion to pay down some of the debt. It is inevitable that the new owner will clean out the cupboards, and Ten is hiding in the back corner of one of the drawers at the moment. Ten in Australia is working hard to cut costs. It doesn't own its regional stations, relying on distribution from joint venture operations, and that might be where the cost cutting starts. Media has speculated about its future in Tasmania and Northern Territory while there have been reports that the federal government approved a $32.9 million grant to keep Ten on air in Western Australia. Some of Ten's programming isn't working either with both The Bachelor and The Masked Singer recently axed. Ten is the weakest of the weak free-to-air sector. Will it survive as we know it? The odds are against it.

Telstra this week announced a range of price hikes for its mobile plans, from pre-paid to post-paid, with the biggest increases nudging ten per cent. Before becoming too outraged, Optus and Vodafone, the numbers two and three providers, did something similar earlier in the year. While I don't like paying more for mobile phone plans, at least there is competition in the marketplace. I don't have to use Telstra, or Optus or Vodafone. I can use an Aldi plan, or some other reseller plan. In the Aldi case, it rents space on the Telstra wholesale network, so mostly the service is the same. And because it is easy to take your mobile number with you, it really is a competitive market. Little things in life - like the ability to shift your number across providers - reflect microeconomic reform in Australia over recent decades. Microeconomic reform is aimed at improving living standards through increasing productive and allocative efficiency. Often where there is microeconomic reform, as in the case of legislation ensuring people can take their mobile numbers with them when changing carriers, competition is introduced into the marketplace. Consumers are better off but so too are the businesses, who have greater freedom to do what they want. Telstra has every right to put prices up, and I have every right to stop using them as a carrier service.

5. Biden flails while Putin shines