Why a soft landing is unlikely, and Macquarie runs the ruler over the builders

The Morning Wrap

Livewire Markets

Welcome to Charts and Caffeine - Livewire's pre-market open news and analysis wrap. We'll get you across the overnight session and share our best insights to get you better set for the investing day ahead.

NOTE: Due to the start of daylight savings in parts of Australia, US markets now shut at 7 am AEDT, rather than 6 am, AEST.


  • S&P 500 - 3791 (+3.06%)
  • NASDAQ - 11176 (+3.34%)
  • CBOE VIX - 29.05
  • USD INDEX - 110.14
  • US 10YR - 3.64%
  • FTSE 100 - 7086 (+2.57%)
  • STOXX 600 - 403.03 (+3.12%)
  • UK 10YR - 3.867%
  • GOLD - US$1730.50/oz
  • WTI CRUDE - US$86.52/bbl (+5.2%)


  • US markets surge again, Dow up 800+, S&P up 3%+

  • US employers say labor supply, wage growth are easing

  • Eurozone pledges temporary support to avoid making inflation worse
  • IMF says global recession can be avoided if right fiscal policies are put in place
  • UN agency cautions excessive monetary tightening can spark stagnation and economic instability
  • Analysts have yet to see a full capitulation, say investors should be on alert for spike in selling volume
  • JPMorgan's Kolanovic says increasingly hawkish central banks and Nord Stream setback will delay US equity recovery
  • Cabinet ministers say PM Truss will struggle to push through economic growth plan
  • Analysts downgrade 2023 UK growth forecasts in wake of mini-budget fallout
  • Credit Suisse in market spotlight despite moves to calm concerns
  • US coal prices rise above $200 for the first time on strong global demand
  • EU price cap on Russian oil sales the remaining hitch in new sanctions package
  • EU prepares for possible power cuts and other emergencies as energy crisis intensifies
  • Expected OPEC+ production cut threatens to drive up gasoline prices, posing headache for Biden ahead of midterms 


The charts this morning come courtesy of Shane Oliver and AMP. The first shows the speed and magnitude of the current RBA hiking cycle. As can be seen, the 250 basis points added over six months is the fastest series of hikes since 1994 - commonly accepted as the only time central banks (particularly the Fed) have ever managed to engineer a soft landing. 

This second chart is what grabs our attention. As mentioned above, economists generally only accept 1994 as a soft landing and even that was not without its issues. Every other time the Fed has embarked upon a tightening cycle, it has ended in some sort of crisis - not a great track record and it makes one wonder why anyone would be confident that they can pull it off this time. The good news? Well, we're all still here to tell the story and with volatility comes opportunity. 


Short and sharp this morning after Macquarie ran the ruler over the builders. What is there to get excited about? Not much, according to the latest research. Uncertainty remains high following a recent US road trip, with inflation readings and interest rate moves adding to the tough outlook. Macquarie cut circa 10% off their CY22 and CY23 single-family housing starts estimates. James Hardie (ASX: JHX) and Reliance Worldwide (ASX: RWC) are the preferred picks with OUTPERFORM ratings, due to their pricing power and attractive valuations. It is slim pickings however, with nothing else in the sector any better than a hold.

Chris Conway wrote today's report. Hans is on leave.


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The Morning Wrap
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Livewire and Market Index's pre-opening bell news and analysis wrap. Available weekday mornings and written by Kerry Sun.

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