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  On Tuesday, the Reserve Bank of Australia (RBA) raised the cash rate to 0.35 percent.  The measure is intended to combat rising inflation, which has reached a 21-year high.  RBA Governor Philip Lowe stated that, while inflation had risen faster than expected, unemployment was low and there was evidence that wage growth would improve.  In a statement, he said it was time to withdraw “some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic.”  Despite the fact that Australia’s economic outlook remains positive, Mr Lowe predicted that interest rates would rise further. The last time loan costs rose during a political race was in 2007, when it was broadly seen to adversely affect John Howard before he lost power. Prime Minister Scott Morrison dismissed suggestions that the decision would have an impact on his re-election chances on May 21.  The hike, according to Labor, demonstrated that...

  Japan On April 8, Japan will hold an auction to sell oil from its reserves. Roughly 1.89 million barrels, or 300,000 kilolitres, of oil will be auctioned. At the moment, this is just under half of Japan’s daily oil consumption. In other words, it makes no difference. For what it’s worth, the supply will be made available to the winning bidders on May 20. China Chinese equities make a strong comeback on the day The Hang Seng tech index is up roughly 20% today, sending the main index up by 8% as sentiment in Chinese stocks improves after a dismal few weeks. The Shanghai Composite is currently up 3% on the day. Notably, the Hang Seng is finding support from its 2016 low. However, the rebound coincides with some encouraging remarks by China Vice Premier Liu on talks between US and Chinese regulators. Since the beginning of the year, the tech selloff has wiped out nearly a third of the market capitalisation. If nothing else, today is a good indication that investors ar...

  Aussie Dollar:  The Australian Dollar found support after the RBA raised the cash rate target to 0.35%, an increase of 0.25% from 0.10%. The market had anticipated a move of 0.15%, although several analysts scoped out 0.25% or possibly 0.40% in the aftermath of accelerating inflation.   A move of 0.25% is seen as neutral, against the backdrop of the current federal election campaign. Moving rates by 0.25% has been the standard measure since the inflation targeting regime was mandated in 1993. Crude Oil: Oil prices are pacing higher on Tuesday through Asia-Pacific trading as energy prices extend gains from April amid supply concerns stemming from Russian products. The European Union (EU) is reportedly drafting an embargo on Russian oil exports. Hungary and Slovakia, two members highly dependent on that oil, would likely be given an exemption under the embargo. That would help ease some supply pressures in Europe overall, but the net impact would likely...

Buffett, 91, spoke at length about one of his favourite targets for criticism, investment banks and brokerages, at his annual shareholder meeting on Saturday.  Berkshire Hathaway CEO Warren Buffett has chastised Wall Street for encouraging speculative behaviour in the stock market, effectively turning it into a “gambling parlour.” “Wall Street makes money in some way, catching the crumbs that fall off the table of capitalism,” Buffett explained. “They don’t bring in cash except if individuals get things done and they get a slice of the pie.” People who bet get undeniably more cash-flow than the individuals who contribute.” Buffett lamented the fact that large American corporations had “become poker chips” for market speculation. He cited the increased use of call options, claiming that brokers make more money from these bets than from traditional investing.  Buffett stated that Berkshire spent an incredible $41 billion on stocks in the first quarter, releasing h...

  According to a statement, India’s anti-money-laundering agency took control of Xiaomi Technology India’s bank accounts under the provisions of the Foreign Exchange Management Act.  In the latest clash with a Chinese company over market activities, India accused Xiaomi Corp. of violating the country’s foreign-exchange laws and seized 55.51 billion rupees ($726 million) from a local unit of the smartphone maker.  According to the Enforcement Directorate, the company’s local unit remitted money to three foreign-based entities with ties to Xiaomi, falsely claiming it was for royalty payments.  “Xiaomi India purchases completely manufactured mobile sets and other products from Indian manufacturers,” the agency stated in a statement. “The company also provided false information to banks while remitting funds abroad.”  Since the two countries’ troops clashed in 2020, India has taken a hard line against Chinese companies operating within the country. Mo...

  China Beijing has announced that another three rounds of COVID-19 testing will be conducted in 12 districts. The tests are expected to take place between the 3rd and 5th of May, and will include Beijing’s Chaoyang district, which previously stated that two rounds of mass testing would take place on the 1st and 3rd of May. At this point, one has to wonder if China will ever draw a line in the sand regarding the economic costs of its current “zero COVID” policy. However, given its sense of pride and ego, it may not be until the infection spreads to a much larger global audience. Otherwise, it will appear that Xi’s strategy has failed, which he will not tolerate. For markets, this simply means that more disruptions to supply chains in general will occur, and the ramifications of higher raw material and shipping costs will be felt for a longer period of time. RBA The RBA will need to do more to help the Australian dollar recover. This week is all about central banks. Re...

  A senior Russian security official said this week that tying the rouble to gold could give Russia more “sovereignty” over its financial system, which has been battered by Western sanctions since Moscow sent troops into Ukraine on February 24.  Russian President Vladimir Putin is discussing with officials the possibility of pegging the rouble to gold and other commodities, according to the Kremlin on Friday.  When asked about the plan during a press conference, Kremlin spokesman Dmitry Peskov said, “this question is being discussed with Putin.”  Russia mines about 10% of the world’s gold each year and is a major producer of oil, gas, metals, and grains. Russia’s central bank announced in March that it would buy gold at a fixed price of 5,000 roubles per gramme until June 30 in what some saw as an attempt to link the rouble with gold.  However, two weeks later, after the rouble had risen sharply, it reversed course and stated that it would only bu...