Local shares and AUD rise, falling productivity shrinks national wealth

The local share market rose more strongly today, and the Australian dollar also moved up.

Transcript

00:00Investors decided that the banks had fallen far enough for the moment, so they started

00:05buying again, even though they are still very expensive.

00:08And that pushed the whole market higher.

00:10And the reason the super funds are buying expensive banks is because they have to do

00:13something with the money.

00:15Inflows into super funds since before the pandemic are up 90%.

00:19$70 billion a year is pouring in and they can't put it all in bank deposits.

00:24Japanese share market surged more than 3% today after Donald Trump announced a trade

00:28deal with Japan.

00:30The tariff is 15%, which is less than the 25% he was threatening, but more than the 10%

00:36it was.

00:37That's the beautiful thing about AMBIT claims, it's less than they feared, more than it was.

00:42Everyone's happy.

00:43Coke and coal accelerated its rally on commodity markets along with solid gains by iron ore

00:48and gold, and the Aussie dollar has popped up after a week of hovering around 65.

00:53And finally, an interesting and telling graph from Westpac.

00:57The red dots represent average growth in national income per capita, which is the true measure

01:03of national wealth.

01:04Now, in the past five years, post-COVID, it's gone below zero.

01:09That is, it's fallen.

01:11In the 80s and 90s, productivity growth and growing labour participation both contributed

01:16to income growth.

01:17Then, in the decade before the GFC, the terms of trade, basically commodity prices, also pitched

01:22in, but since the pandemic, a huge increase in workforce participation has been fully offset

01:29by falling productivity.

01:31And that's why national income per head has shrunk, leading to the cost of living crisis.

01:37And that's finance.

01:38And that's finance.