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CBA boss warns of ‘short sharp contraction’ headed for Australian economy

CBA boss warns of 'short sharp contraction' headed for Australian economy

The boss of Australia’s largest bank has warned that the economy is already declining and that a “short, sharp contraction” is on the way.

Late on Wednesday, the chief executive of the Commonwealth Bank of Australia, Matt Comyn, delivered the company’s annual results.

Although the CBA made an eye-watering $9.6 billion in profit over the last financial year, Mr Comyn warned that tougher times were on the horizon.

He told the Australian Financial Review that he predicted “a short, sharp contraction in the Australian economy.”

“We are definitely expecting a more challenging year ahead than we have seen in the last 12 months,” he added.

However, in some good news, the banking CEO believes a contraction is almost a certainty but a full-blown recession is less likely.

Australia is in the throes of an economic crisis as inflation rose to 6.1 per cent last month, the highest level it’s been for 20 years.

And for the first time in more than a decade, Australia’s central bank has had no choice but to increase the cash rate in a bid to stop rampant inflation.

For the last four consecutive months, the Reserve Bank of Australia has increased interest rates by 1.75 percentage points and Mr Comyn more rate increases will come.

Mr Comyn told the publication his bank predicts the cash rate to increase by another 75 basis points to sit at 2.6 per cent.

The cash rate is currently 1.85 per cent.

Once the cash rate hits 2.6 per cent, Mr Comyn said the economy would experience a contraction of 1.5 per cent.

He said he “hoped” that once the cash rate reached this point it would be enough to curb spending, adding “We need to see a slowdown in demand.”

Speaking to the ABC, Mr Comyn said “We do forecast recessions in the US, UK and Europe. We don’t believe that that’s the likely outcome in Australia.”

Already there are signs that Australians are splashing their cash less.

Mr Comyn said their customer data shows that spending is falling for both debit and credit cards.

This was significantly more for customers who had mortgages.

“It’s quite early post the immediate rate rises, [but] we are already seeing a downturn in spending across our customer base, both from a debt and credit perspective,” he said.

“Of course, that’s more pronounced with customers who have a home loan, and we expect that it will continue throughout the course of the calendar year.”

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McDonald’s worker shot over cold fries has died

McDonald's worker shot over cold fries has died

A New York McDonald’s worker who was shot in the neck in a spat over cold fries has died, authorities announced on Friday.

Matthew Webb, 23, “succumbed to his injuries” after he was shot Monday outside the Bedford-Stuyvesant fast-food restaurant where he worked in Brooklyn, the NYPD said.

The attack “has been deemed a homicide,” the force said early Friday, stressing that “the investigation remains ongoing”, The NY Post reports.

Michael Morgan, 20, has already been charged with attempted murder and criminal possession of a loaded firearm for opening fire on Webb after his mother was served cold fries.

He is expected to face upgraded homicide charges, prosecutors told a court hearing Thursday, before Webb’s death was confirmed.

The incident unfolded when Morgan’s mother, Lisa Fulmore, complained to workers that her fries were cold and asked to speak to a manager on Monday evening.

When the workers began laughing at her, Fulmore was FaceTiming with Morgan, who came to the restaurant and got into a fight with Webb that spilled out onto the sidewalk. Morgan punched Webb in the face and when he got back up, he pulled out a gun and blasted him in the neck, prosecutors alleged.

His mum later told the police that her son told her “he gotta do what he gotta do.”

The suspect’s girlfriend, Camellia Dunlap, has also been charged with weapons possession for allegedly handing Morgan the gun. She was arraigned later on Wednesday and held on a US$50,000 cash bail, after prosecutors said she admitted to possessing the gun.

Morgan was also charged with an earlier murder after allegedly confessing during questioning about the McDonald’s shooting.

He allegedly killed Kevin Holloman in October 2021.

This article was originally published by The NY Post and was reproduced here with permission.

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Why Canva boss, Cliff Obrecht isn’t bothered by $20 billion loss

Why Canva boss, Cliff Obrecht isn't bothered by $20 billion loss

Despite a $20 billion fall in its evaluation, a tumultuous economic landscape and a sudden string of tech companies announcing staff cuts and sharp declines, Australia’s start up golden child is not worried.

speaking to the Sydney Morning Herald, Canva’s co-founder Cliff Obrecht believed the bearish market would provide the company with lots of opportunities.

“These times of market uncertainty provide a lot of opportunity and other than the external valuation noise, it’s a huge opportunity for us to grow our business,” he said.

This comes as Australia’s largest venture capital firm Blackbird announced they had reduced the holding value of Canva by 36 per cent. Listed as Canva’s largest investor, with around a 14 per cent stake in Canva, this indicated a drop of about US$14 billion or A$20 billion, in the tech company’s estimated value.

“This holding value of Canva is the result of an independent valuation process that was completed by a big four accounting firm and adopted by Blackbird’s valuation committee, in consultation with our auditors,” the company shared in a statement to news.com.au.

Before this, Canva managed to more than double its worth in 2021. After acquiring a valuation of $19 billion in April 2021, the company skyrocketed to $54.5 billion just five months later.

In internal emails reported by Nine newspapers, chief executive Melanie Perkins said the company was set to mark its sixth year of being profitable. She also assured staff and said the company was still hiring, unlike some other technology companies.

“We had planned to dip out of profitability this year to invest in further accelerating growth,” she wrote.

“However, we changed course as soon as we noticed the macroeconomic environment changing and are now back to being profitable again this year, for the sixth year in a row.”

Founded in 2013, by Perth couple Ms Perkins and Mr Obrecht, and Tasmanian developer Cameron Adams, Canva is a free-to-use design tool that allows users to create social media posts, graphics, videos and presentations.

Since then, it’s become Australia’s most successful start-up – a title it continues to hold. For scale, Australia’s second largest start-up, online payments company Airwallex was valued at $5.5 billion in November 2021.

It’s believed Ms Perkins and Mr Obrecht hold a 30 per cent stake in the company, which given the most recent evaluation is close to $6 billion.

According to its website, Canva has more than 2000 employees and operates in 100 languages ​​and across 190 countries.

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Why Canva boss, Cliff Obrecht isn’t bothered by $20 billion loss

Why Canva boss, Cliff Obrecht isn't bothered by $20 billion loss

Despite a $20 billion fall in its evaluation, a tumultuous economic landscape and a sudden string of tech companies announcing staff cuts and sharp declines, Australia’s start up golden child is not worried.

speaking to the Sydney Morning Herald, Canva’s co-founder Cliff Obrecht believed the bearish market would provide the company with lots of opportunities.

“These times of market uncertainty provide a lot of opportunity and other than the external valuation noise, it’s a huge opportunity for us to grow our business,” he said.

This comes as Australia’s largest venture capital firm Blackbird announced they had reduced the holding value of Canva by 36 per cent. Listed as Canva’s largest investor, with around a 14 per cent stake in Canva, this indicated a drop of about US$14 billion or A$20 billion, in the tech company’s estimated value.

“This holding value of Canva is the result of an independent valuation process that was completed by a big four accounting firm and adopted by Blackbird’s valuation committee, in consultation with our auditors,” the company shared in a statement to news.com.au.

Before this, Canva managed to more than double its worth in 2021. After acquiring a valuation of $19 billion in April 2021, the company skyrocketed to $54.5 billion just five months later.

In internal emails reported by Nine newspapers, chief executive Melanie Perkins said the company was set to mark its sixth year of being profitable. She also assured staff and said the company was still hiring, unlike some other technology companies.

“We had planned to dip out of profitability this year to invest in further accelerating growth,” she wrote.

“However, we changed course as soon as we noticed the macroeconomic environment changing and are now back to being profitable again this year, for the sixth year in a row.”

Founded in 2013, by Perth couple Ms Perkins and Mr Obrecht, and Tasmanian developer Cameron Adams, Canva is a free-to-use design tool that allows users to create social media posts, graphics, videos and presentations.

Since then, it’s become Australia’s most successful start-up – a title it continues to hold. For scale, Australia’s second largest start-up, online payments company Airwallex was valued at $5.5 billion in November 2021.

It’s believed Ms Perkins and Mr Obrecht hold a 30 per cent stake in the company, which given the most recent evaluation is close to $6 billion.

According to its website, Canva has more than 2000 employees and operates in 100 languages ​​and across 190 countries.

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RBA interest rates: Westpac decreases fixed rates as three big banks pass on full 0.50 percentage point rate hike

RBA interest rates: Westpac decreases fixed rates as three big banks pass on full 0.50 percentage point rate hike

Westpac Bank has made a surprising move, choosing to spare some customers from escalating price hike pain.

The big bank has announced it will be decreasing its four-year owner occupied fixed interest rate by one per cent, down to 4.99.

Westpac is the third of the big banks to announce its rate changes following the Reserve Bank of Australia’s decision to increase the official cash rate by 0.50% per annum (pa) on Tuesday.

The big bank has unsurprisingly followed its rivals the Commonwealth Bank and ANZ in increasing its variable home loan interest rates.

The interest rate changes will come into effect for new and existing home loan variable rate products on Thursday, August 18.

Earlier today, ANZ joined CBA in announcing it will be passing on the hike to variable rate mortgages and one savings account by the full 0.50 percentage points.

The major bank said its up-scaled up mortgage rates will come into effect for both new and existing customers from Friday, August 12.

The lowest variable rate will now be increased to 3.69 per cent – ​​just under that of CBA, which pumped up its lowest rate to 3.79 per cent.

Both rates are at three-year highs.

The ANZ decision also included increasing the rate on its new ANZ Plus Save account by 0.50 percentage points to 2.50 per cent for balances up to $250,000, which will come into place on Monday.

The move came just hours after Australia’s biggest bank, the Commonwealth Bank, announced it will pass on the full 0.50 percentage point hike to its variable home loan customers and some savings customers.

CBA will bring its occupier principal and interest standard variable home loans rate to 5.8 per cent.

Uncharacteristically, Australia’s other big banks have been slow off the blocks following the RBA’s decision on Tuesday, with CBA’s competitors Westpac, NAB and ANZ yet to make their announcements.

Mortgage rates for new and existing customers at CBA will rise by 0.50 percentage points on August 12, with investor rates rising to 6.38 per cent.

Research director at RateCity.com.au Sally Tindall said while the CBA’s decision comes as no surprise, for customers who are already feeling the heat, this fourth hike is a “difficult pill to swallow”.

“From next week, CBA’s basic variable rate will hit a three-year high of 3.79 per cent – ​​a huge increase from three months ago when it was just 2.19 per cent,” she said.

For an owner-occupier with $500,000 debt and 25 years remaining, the 0.5 percentage point hike means they will see their monthly repayments rise by $140.

To ease the strain, Commonwealth Bank is cutting its lowest four-year fixed rate to 4.99 per cent – ​​a drop of 1.60 percentage points.

This special rate, which comes into play on Friday, is strictly for owner-occupiers paying principal and interest on a package rate ($395 annual fee) for a limited time.

While Ms Tindall said the “whopping cut” will make it the lowest in its category, she warned it may not necessarily be a good idea.

“People should think carefully about whether they want to lock up their mortgage for the next four years because there can be significant consequences if they decide to break their loan,” she said.

For those with a NetBank Saver account, who will see the full rate hike, the research director said an ongoing rate of just 0.85 still won’t cut it.

“In this market, where we could see ongoing rates over 3 per cent, these savers are still getting paid peanuts,” she said.

But Ms Tindall said there are signs things could be turning around.

“On Tuesday, Macquarie announced it was making significant cuts to its fixed rates and now CBA is following suit,” she said.

“We expect this will trigger further fixed rate cuts from other lenders in response to both evolving market expectations and competition among the banks.”

Read related topics:westpac

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Australian tech company Appen’s future uncertain as shares plunge by 27 per cent

Australian tech company Appen's future uncertain as shares plunge by 27 per cent

Shares for an Australian tech company have plunged after their earnings were 69 per cent lower than expected.

On Tuesday, Sydney-based artificial intelligence firm Appen posted its results for the first half of 2022, but that had a detrimental impact on its share price.

The company, which provides important data to tech giants around the world including Facebook, Google and Amazon, has been struggling in recent months.

According to The Australian, when its earnings were taken into account before interest, taxation, depreciation and amortization, it had made 69 per cent less than the same period the year before.

Appen generated $8.5 million in net profit over the last six months compared to $12.5 million in the same like period in 2021.

To top that off, the Aussie firm also posted a net loss of $3.8 million.

In total, it suffered a revenue drop of seven per cent to $182.9 million.

As a result, Appen’s share price dropped 27.3 per cent to $4.15 on Tuesday. At time of writing on Wednesday morning, it had recovered slightly, up by two per cent to come in at $4.24.

Appen’s CEO Mark Brayan blamed the poor performance on global market conditions as well as a weaker appetite for digital advertising.

During the earnings call, Mr Brayan said, per the Sydney Morning Herald: “With no improvement in July trading, there remains uncertainty about a continued slowdown of spending from our global customers and their exposure to weaker digital advertising demand.

“As a result, the conversion of forward orders to sales is less certain this year compared to prior years.”

Mr Brayan added in a statement to the ASX that conditions were “challenging” and that they were seeing a “flow-on effect” as customers spent less on advertising.

With lessening demand for their services, Appen also revealed that costs had blown out as the day to day running of the business became more expensive.

It cited investment in product and technology, heightened employee expenses, recruitment, and IT costs as another avenue where money was lost.

Like many other tech companies around the world, Appen has taken a dive, as its share price has fallen 62 per cent this year following massive gains at the height of the pandemic.

At their peak, Appen’s shares were worth around $43.50, back in August 2020. It is now trading at $4.24.

Appen first started on a downward trend in June, after its rival, Canadian IT firm Telus, scuppered a takeover deal.

The Canadian business had proposed a $9.50-per-share takeover bid for Appen, which would have made the Australian company worth $1.2 billion.

It’s unknown why Telus canned the deal.

News.com.au has contacted Appen for comment.

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Melbourne single mum struggling to pay extra $360 a month after RBA interest hike

Melbourne single mum struggling to pay extra $360 a month after RBA interest hike

A single mum’s “dream” of becoming a homeowner has become more like a nightmare as she struggles to survive amid the rising cost of living.

Jodi Cameron, 40, from Melbourne, currently has nothing in her bank account after building her house cost more than expected. She can’t even afford to complete the house, with her driveway unfinished because she ran out of cash.

On Tuesday afternoon, she was hit with more bad news; the Reserve Bank of Australia had increased interest rates again, for the fourth month in a row.

It means the single mum, with two daughters aged four and eight, must now fork out an extra $140 every month to pay back her mortgage.

In total, since the central bank started increasing interest rates in May, the family is now paying back an extra $360 a month — money it desperately needs.

“It’s just horrible,” Ms Cameron told news.com.au.

“I do find myself in a situation where paying rent and a mortgage and daycare fees, there’s nothing left.”

Currently, her savings account stands at $0, she said.

The mum worked throughout the Covid pandemic as a disability support worker and blames her current predicament on one thing — missing out on a government grant.

She had factored in receiving a $15,000 grant to help her build her own home but missed out, leaving her financially wrecked.

“I just wanted to own my own home,” Ms Cameron explained.

“It’s just disgusting, it’s so frustrating, I work my guts out, all I wanted was the great Australian dream.”

Her variable interest rate has gone up from 2.79 per cent to 4.5 per cent in the past three months, and is set to go up even further after the rate hike on Tuesday.

“I’m not on a fixed mortgage, I don’t know how I’m going to do it,” Ms Cameron said.

“I’m probably going to have to pull my [youngest] daughter out of daycare because I can’t afford daycare. That also means, how am I meant to work from home with a child?”

As a single mum with no family to fall back on, Ms Cameron had resigned herself to renting but in 2020, she was given hope that she might be able to break into the property market.

The federal government announced the HomeBuilder grant scheme in a bid to increase the disruption to the economy and the building sector during Covids, where eligible homeowners received $15,000 to form part of the payment for a building project for their primary residence.

Ms Cameron met all the criteria for the grant so bought a $263,000 block of land in Lang Lang, a regional town southeast of Melbourne, in August 2020 in the hopes of setting herself up financially for the future.

“I got on the low deposit scheme, I didn’t need a massive deposit,” she explained.

Then in March the following year, she signed a build contract which cost $300,000 for a four-bedroom, two-bathroom home.

She only needed a 5 per cent down payment for the land and the build contracts and was expecting the extra $15,000 from the grant to provide a helpful buffer to afford the progress payments.

But then she logged back onto the HomeBuilder online portal and was devastated to discover she had missed a key due date — which her broker and bank had never mentioned to her.

“I missed a portal cut off date that was never shown or advertised anywhere,” Ms Cameron lamented.

As a result, she was not able to be part of the scheme.

Near the end of her build, the mum ran out of funds and couldn’t afford to pay for a driveway.

“I’ve got no driveway, it’s just mud, I can’t afford it, it’s not nice to have that money you relied on ripped away from you,” she added.

“I owe the real estate the last month’s rent which I can’t pay.

“I assumed I would have this $15,000 to help me out, I don’t have it. This grant meant a lot.”

The mum is now waiting with bated breath as the Reserve Bank is expected to keep hiking interest rates till the end of the year.

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North Carolina woman goes TikTok viral for living in her Honda Civic

North Carolina woman goes TikTok viral for living in her Honda Civic

The “Van Life” movement may conjure impressions of a freeing nomadic lifestyle in a nicely designed vehicle that looks great on social media, but a North Carolina woman has taken to TikTok to show the honest side of living on four wheels.

As reported by the new york postNikita Crump, who boasts 1 million followers on the app, has documented her experiences of living in her Honda Civic, which reportedly came from absolute necessity.

After struggling to pay her rent on time and skipping meals to save money – all the while going into debt despite working two jobs – she decided to call her car her home to avoid falling further into financial ruin.

Crump moved into her Honda in late 2019 and has lived in it ever since – and despite her candid discussions of what it takes to live this way, it is a way of avoiding today’s exorbitant costs of living, as inflation continues to boost food prices and , yes, rents.

It’s a way of saving money, but a number of her videos come with TikTok disclaimers saying, “Participating in this activity could result in you or others getting hurt.”

Crump discusses safety measures she takes. In a video from May, which earned more than 3 million views, she shows the window covers she uses at night-time to block out any views inside, which she says in the caption are handmade and “are effective when it comes to stealth, safety and insulation”.

Reflective and insulated materials coat one side of the covers, while another has black fabric, which goes against the window.

“It’s totally inconspicuous,” she says in the clip. “Nobody knows I’m in here.”

Two months later, on July 4, Crump posted another video showing her ways of finding places to sleep each night. She uses satellite view on Google Maps to locate “nice” neighborhoods, or those whose aerials show big properties with their own pools.

Then she zooms in to see if other cars are parked on the streets. The next step, she says, is to go at night-time to check it out for herself.

“The neighborhood is clean, nice and quiet – and I can blend in,” she says of one area in an undisclosed city where she spent a recent night next to an ivy-covered brick wall.

Other videos show her sleeping in parking lots, covered windows, and document the practicalities of living in such a small space on four wheels. On July 5, viewers can see her start the day by removing the window covers after folding and tucking her bedding onto her back seat.

She then heads into a Planet Fitness, whose parking lot she spent the night in, for a shower. She tugs a toiletry kit with her inside to wash up and brush her teeth.

Next comes eating. In that same clip, she shows a small, black tray that attaches to her steering wheel that she uses as a makeshift table to eat canned fruit, peanut butter sandwiches – or even take-out orders from Subway.

Later on, she shows the only way laundry can get done: in a laundromat at a stop along her way to Oregon.

“I always fold my laundry in the laundromat – that is not something that I’m trying to do in my car,” she says.

What’s more, there are storage containers in her trunk and portable devices to keep her electronics charged.

“Here’s things in my car that just make sense for homeless life,” she says, classifying her life candidly.

“I’ve been homeless by definition most of my adult life,” she says. “I’ve even lived in my car before, briefly.

“So I’m not that unfamiliar with being in uncomfortable situations and being homeless.”

Despite the serious nature of her situation, she receives an array of comments on her posts – including “This looks so lonely” and “Hotel Civic.” Others, meanwhile, support her.

“I love your resilience,” one commenter wrote in a July video, while another recent clip had another tell her, “Supporting your journey through and through!”

One even learned tips of the trade.

“Thank you for this,” another commenter replied. “I need to leave my place unexpectedly. This is unbelievably helpful.”

This article originally appeared on the New York Post and was reproduced with permission

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Cost of living: Inflation bites as vegetable and fruit prices rise, pork drops

Cost of living: Inflation bites as vegetable and fruit prices rise, pork drops

There’s a place that gives me the shivers: And not just because it’s cold. The fresh section of the supermarket has become terrifying.

I’m not frightened of the vegetables themselves. What’s different is the numbers on the price tags. They suddenly make vegetables look like luxury goods.

The latest consumer price inflation figures are out and they tell a shocking story.

As the next chart shows, the price of vegetables has gone supernova. It’s hardly the only product to have shot up. Your breakfast cereal and the sandwich in your lunch box are also much more expensive than before. Only one product category fell in price in the most recent data: pork.

The price of vegetables went up a lot between March and June this year because in winter, we get our veg from Queensland, and the state got flooded in March. Fields that would usually be full of happy young lettuces were instead knee-deep in filthy floodwater.

The basic law of economics says when things are in short supply, the market starts raising prices. Only buyers who really want something – and who can afford it – are left buying. The rest of us stop buying. This is what markets do – change prices to make sure demand equals supply. Sometimes that means raising prices a lot to scare off most buyers.

I was definitely put off buying my favorite fresh vegetables by high prices. I bought frozen veg a few times, and even bought brussels sprouts instead of broccoli at one point – talk about desperate times!

The price of fruit

Fruit was up by a lot in the three month period too. It rose 3.7 per cent, which is significant. Berry crops got hit by bad weather too. But fruit inflation would have been a lot higher if it wasn’t for avocados. Those guys have their seed on the inside, so they count as fruit, and they have tumbled in price. Who among us hasn’t shoveled in a lot of guacamole in recent times?

Avocado farmers seem to have gone on a planting spree back when jokes about smashed avo were at their peak. It takes five years or so for an avocado tree to grow enough to make fruit, and now the farmers are pulling in massive crops. Jokes about smashed avocado are over in 2022 however, and in a grim irony, it’s avocado prices that are now toast.

“The additional [avocado] trees started producing fruit around the middle of last year, leading to oversupply and sharp price falls,” said a spokesperson from the ABS when I asked about why fruit prices were not as high as vegetables.

She explained avocados are often eaten in cafes and restaurants, so when we eat at home more the avocado industry takes an extra hit.

“Reduced demand from the food service industry due to lockdowns also reduced demand for avocados during the later parts of last year,” she said.

That adds up to cheap avocados. I bought a bagful yesterday for well under a dollar each.

Pork on your fork

The outlier in the graph above is pork. Why is it cheaper, I asked? The answer seems to be cheap imports. I went digging for data and found the Australian pork industry published loads of information on pork imports. They say that by May 2022 we had brought in a lot more pork – 22,000 tonnes instead of 13,000 tonnes by May 2021. Our extra bacon is especially coming from Denmark and the Netherlands.

That extra supply has helped eased prices after a period early in 2022 where pork prices got a lot higher.

But why are the Europeans suddenly sending us so much pork? The answer is a fascinating one – pigs don’t graze grass like cows – you have to feed them (not unlike people!) and as the next chart shows, the cost of feed as a percentage of the eventual price of the pig got very high in early 2022.

Pig farmers have the choice to either make money by turning pigs into bacon, or spend money keeping on feeding them. They are choosing the former. So ironically, high food prices in Europe may be helping keep down the price of Australian pork.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.

Read related topics:Woolworth’s

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