Long wait for a rate cut; is Bitcoin really worth $US100k?

1. Why the RBA won't cut rates until the middle of 2025

2. Bitcoin might be the modern day Emperor's New Clothes

3. Google's most popular searches tell a story

4. The rise of anti-wokeism

What would it take to improve the housing market in Australia for both buyers and sellers? The final episode of The Property Pendulum, presented by Domain and Fear & Greed, lists the seven steps to property nirvana - from an overhaul of auctions, to scrapping stamp duty.

Listener Rachel asks:

"Why aren’t Australia’s interest rates as volatile as other parts of the world? The US, New Zealand - we’ve seen big moves up, but equally big moves down. Why does the same not happen here?"

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

- Sean Aylmer

There are good reasons for the Reserve Bank to cut interest rates in February next year, but they won't. Instead they will opt for a rate cut in the middle of 2025. Maybe. Following a meeting of the central bank board which finished yesterday, Governor Michele Bullock talked about economic data being a bit softer than the bank expected. As a result, the board's "views are evolving". Economic growth is weak - the weakest it's been since the 1990s if you exclude the COVID pandemic. If it wasn't for government spending, Australia would probably be going backwards. But that isn't enough. The greatest evil of all for central banks is inflation, not slow economic growth. Ms Bullock went on to say that the fight against inflation is not yet over. In other words, the RBA is winning the battle against inflation, but it hasn't won the war. Full victory will take longer. Financial markets have now priced in a 50 per cent chance of a rate cut in February, and a 100 per cent chance of a cut in April. They are way too optimistic.

In Hans Christian Andersen's folktale The Emperor's New Clothes, the vain emperor is conned by two weavers who supply him with beautiful clothes that they say are invisible to the incompetent or stupid. He ends up walking the streets in his underclothes. Is Bitcoin, at $US100,000 a unit, the modern day equivalent? I can't decide. Bitcoin has no intrinsic value, but neither does an ounce of gold. Gold trades at $2660 an ounce because that what buyers and sellers say it is worth. In contrast, fiat currencies like the Australian dollar are backed by central banks and do have an intrinsic value. They can be used as a store of value or a unit of exchange and are guaranteed (albeit global supply and demand affects its value). Bitcoin has value to believers and the blockchain technology underpinning many cryptocurrencies is a breakthrough technology. But is Bitcoin worth $US100,000 a unit? There is a sense of the Emperor's new clothes in Bitcoin at these levels. No-one wants to say it isn't worth it... but many believe it is over-valued. 

Of the top 25 stocks on the ASX, none have done better than Pro Medicus, the radiology imaging company that has brought X-rays into the 21st century. Medical professionals can access, transfer and diagnose from imaging much more efficiently than before, thanks to the technology. Pro Medicus's share price is up 150 per cent this year. At the beginning of 2024, it wasn't a top 100 stock. Today it is the 22nd largest company on the bourse worth $26 billion. Big investors face an unusual problem. Because almost half the shares are owned by founders Sam Hupert and Anthony Hall, they have to keep bidding up the price if they want to be shareholders. Some passive investment funds mirror the ASX, so they need to be Pro Medicus shareholders. The dynamics are working for the company. Having said that, it was sold off nearly eight per cent on Tuesday and it is now an expensive stock. There are reasons not to like it, and if you want to invest, get some professional advice. But Pro Medicus is my favourite stock of the year.

Anti-wokeism is on the rise and there's been a couple of incidents this week from different spheres that demonstrate its impact. In the US, an anti-woke investment fund has been established by a company called Azoria Partners. It plans to not invest in S&P500 companies that incorporate diversity, equity and inclusion considerations into their hiring processes, and Starbucks is its first high-profile exclusion. The fund was launched at the home of anti-wokeness, Donald Trump's Mar-a-Lago resort in Florida. Back in Australia, Opposition leader Peter Dutton said if elected, he would never stand in front of the Australian and the Indigenous flags when giving a briefing, as Prime Minister Anthony Albanese does. His argument is that there should be one, unifying flag for all Australians. (Not sure how that works given the hatred by some of the Union Jack on the Australian flag.) Investors and politicians feel emboldened by the rise of Donald Trump to start eating away at many of the hard-won gains by minority, vilified and disadvantaged groups. Wokeism isn't about favouring some cohorts in society over others. It is about ensuring all groups at least have a say. Anti-wokeism does the opposite.

What have the words demure, solfege, vox, monticello and sobriquet got in common? They are all on the list of the five most searched words on Google in Australia this year. Until I googled the words, I only knew the meaning of two of them and I have no idea why they are the most popular words to search in 2024. Clearly there is a whole world within social media that I have little exposure to. In terms of the top "how to's", three of the top five are self-explanatory - how to watch the Olympics, watch Tyson v Paul and watch Euros in Australia. Another - how to make human in Infinite Craft - is out of my range, but understandable. But I am stumped on why so many people googled "How to mew". In fact I had to google 'how to mew' to find out what it means. Google receives 94 per cent of all search traffic in Australia and using the search engine is the equivalent of reading the newspaper for an earlier generation. Google is the proprietor of information. The big difference today is that (mostly) Google doesn't prioritise the information. Newspaper publishers and editors always decided what readers should see. Google is a good thing, though arguably too powerful. And please explain to me the "mew" craze.  

5. Pro Medicus - my favourite stock of the year

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If you haven't seen it yet, take a moment to watch this incredible run by Australian teenager Gout Gout - tipped to be the face of the 2032 Brisbane Olympics. 

The 16-year-old ran 200m in just 20.04 seconds on the weekend, smashing an Australian record that's stood for decades. And he's not far off Usain Bolt's world record of 19.19 seconds. Even the Jamaican legend Bolt himself is keeping an eye on the Aussie, saying 'he looks like young me.'