Banks claim SME support; ASX hits 6-month low; Trump calls female reporter “Piggy”

Banks claim SME support; ASX hits 6-month low; Trump calls female reporter “Piggy”

News in brief

Wages growth is contained, notwithstanding a tight labour market, but remains a cause of inflationary pressure in the economy. The wage price index rose 0.8 per cent in the September quarter and 3.5 per cent for the full year, unchanged from three months earlier and pretty much in line with RBA forecasts.

 

Lucky the local market had the mining stocks yesterday. While share prices of the gold diggers and the big resource and energy companies rose, much of the rest of the market fell, pushing the S&P/ASX200 to a near six month low, down one quarter of a per cent to 8,448 points.

 

The federal government is considering forcing super funds to contribute to the Compensation Scheme of Last Resort that could compensate consumers for poor financial advice.

 

The White House has defended President Donald Trump for shushing a female reporter and calling her piggy. In an interaction on board Air Force One, Bloomberg White House reporter Catherine Lucey asked Trump a question. He pointed a finger at her and said: “Quiet. Quiet, piggy.”

 

Scientists are warning that the mass commercialisation and global growth of ultra-processed foods is posing a threat to public health and is contributing the development of chronic diseases.

Fear-o-meter

Over the past two days, the bosses of the big four banks have appeared before House of Representatives economics committee, and we have learnt a fair bit about four of the five biggest companies in the country.

 

On the economy, the CEOs were generally confident things were going in the right direction. However, while Westpac boss Anthony Miller said there was likely to be two interest rate cuts next year, Commonwealth Bank boss Matt Comyn and National Australia Bank’s Andrew Irvine reckoned the rate cutting cycle was over.

 

On renewables, the banks supported net zero but were not shying away from lending to gas producers. They all agreed energy was a major challenge for Australia.

 

All four big bank bosses argued that competition for the high-margin small business customer was hot, and mortgage lending wasn’t as profitable as it once was.

 

While they acknowledge APRA’s introduced some tough standards around lending, they insist there is money available for small business and mortgages. The lending standards have the benefit of ensuring bad loans were very low, relative to other countries and that’s good for the economy.

Fear & Greed Q+A today

One of the fathers of index investing on his extraordinary career, a new documentary called Tune Out The Noise, and whether Warren Buffett is the exception to the rule when it comes to stock pickers vs index investing:

 

"He could be the exception. See, the problem is, if you have all the thousands of money managers that are out there, just by sheer luck, a few of them are gonna have exceptional returns. It turns out the number that have exceptional returns are fewer than you would expect by chance. So we can't tell you that somebody had great performance. We can't say it wasn't a skill. We can't say it wasn't luck either. So that's a difficulty.

 

I'm happy to give Warren his due and say, okay, maybe he may have been the exception. And there may be others. You know, efficient market hypothesis is just, you can think of it as being a model. And like all models, it doesn't explain everything. But I do think for the average person, if there's no evidence the pros can beat the market, why do you think you can beat the market? I think that is the question."

ANZ boss Nuno Matos yesterday told a parliamentary committee that competition in the small business sector was strong, pushing back on critics that claimed the banks were focused on big business, not small. While capital standards insisted on by the regulator sometimes made lending to smaller businesses tougher, the sector was the hottest part of the market. Matos said two things might help the process of SMEs getting finance: a standard definition of small business and greater availability of tax information. His counterpart at National Australia Bank, Andrew Irvine agreed that APRA’s conservative risk settings restricted business lending. But Irvine, like Matos, added it wasn’t a bad thing, with loan losses in Australia lower than other jurisdictions.

Greed-o-meter

Risk Category	1 Mth (%)	CYTD (%)
All Growth	1.6	12.0
High Growth	1.3	10.3
Growth	1.2	9.3
Balanced	1.0	7.9
Conservative	0.8	6.2

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Super funds advanced for the seventh consecutive month in October with the median growth fund returning 1.2% over the month. Chant West estimates that with only 6 weeks of CY25 remaining, the median growth fund return is still sitting at a solid 7.8%. Although with markets a touch jittery right now, there are no guarantees.

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Source: Chant West