Michael Knox, Morgans Chief Economist: Recent Episodes
Morgans Financial Limited
Morgans Chief Economist Michael Knox provides macro economic updates and details the implications for investors.
The Reserve Bank of Australia (RBA) has lifted the cash rate by 25 basis points at its latest meeting, signalling the start of a more prolonged tightening cycle. While many economists believe the RBA will need only two more rate hikes, Michael Knox argues that this view does not account for structural inflation pressures already building within the Australian economy.His modelling and economic analysis suggest the real requirement is at least four rate hikes before inflation begins to ease.
In this episode, Michael Knox and Stephen Austin from the ABC unpack the economic challenges Australia faces in 2025. With electricity subsidies ending and energy supply constraints persisting, households are bracing for higher power bills and rising inflation. Here’s what’s on the horizon:
Beginning on the 1st of October 2025, the US government began its current Federal government shutdown.
The shutdown occurred because Democratic Party Senators refused to support a Continuing Resolution to provide funding for the US government. At the time of writing, Republican Senators have now put up Continuing Resolutions for funding to the Senate 11 times, and Democrat Senators have refused to support them 11 times.
On 7 July the AFR published a list of 37 Economists who had answered a poll on when the RBA would next cut rates. 32 of them thought that the RBA would cut on 8 July. Only 5 of them did not believe the RBA would cut on 8 July. I was one of them. The RBA did not cut.
Morgans Chief Economist Michael Knox says that for the RBA to get inflation down to 2.5%, unemployment must rise above 4.5% in Australia.
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Morgans Chief Economist Michael Knox says that though the FED are easing quantitative tightening, US consumer demand is still too healthy to allow rate cuts.
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Our Model of US GDP says steady growth just below trend. Just where the Fed needs it to keep US Inflation falling.
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Morgans Chief Economist Michael Knox gives an update on the Fed Funds and the RBA Cash Rate.
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Strong corporate profits drive corporate yields lower and stock prices higher.
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Inflation tells us why cash rates are where they are, and unemployment tells us where cash rates will be.
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Morgans Chief Economist Michael Knox uses the Chicago Fed National Activity Indicator to model the US economy and explain why there is no incoming US Recession.
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Following the Federal Reserve's latest two-day monetary policy meeting, Morgans Chief Economist Michael Knox says, "yes the FED rates will fall, but only so far."
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Following the RBA's recent decision to hold interest rates, RBA Governor Michelle Bullock said, "where we are now is where we need to be." Chief Economist Michael Knox gives his comments on this saying that the RBA are giving us stability for the near future.
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Following the latest meeting of the Reserve Bank of Australia (RBA), Morgans Chief Economist Michael Knox explains that the RBA minutes don’t say rate cuts are a shoo in at all.
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Morgans Chief Economist Michael Knox explains how the different dates of international financial years generate seasonal variation in the Australian and US stock markets.
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Michael explains how a boom in US corporate liquidity is driving US and Australian stock markets upwards.
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Michael Knox discusses the February 2024 RBA statement, commenting on monetary policy.
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Morgans Chief Economist Michael Knox says that Federal Reserve rate cuts later this year will be shaded by a major program of quantitative tightening.
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Morgans Chief Economist Michael Knox walks us through his model for the US Economy using the Chicago National Activity Indicator, which explains 78% of YoY growth in US GDP.
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Morgans Chief Economist Michael Knox answers eight questions from the media on his current economic outlook, including the Australian Cash Rate.
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The Summary of Economic Projections say that rates will fall until 2027.
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Morgans Chief Economist Michael Knox's outlook for the world economy in 2024 is that growth will slow; inflation will fall; and money will flow into Stock Markets.
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Morgans Chief Economist Michael Knox says that core Australian CPI numbers still suggests another RBA rate hike. However, we may not see rates rise until February 2024.
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Is the US Economy entering Deflation? Morgans Chief Economist Michael Knox responds to that question and says that, the level of the US Bond is now dependent on the German Bond.
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Big budget deficits drive even bigger US debt.
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Chief Economist Michael Knox comments on Australian monetary policy, following the latest interest rate hike by the RBA.
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Michael Knox, Morgans Chief Economist gives his best value bets for the Melbourne Cup 2023. Our recommendation this year is for an each-way bet on horse no 6, Soulcombe. Remember our recommendation is for the best value bet rather than the highest probability of winning. Gamble responsibly.
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Quantitative Tightening is more powerful than we think.
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With Brent Oil Prices on the rise, Morgans Chief Economist Michael Knox says Europeans will find winter warmth more expensive than anticipated.
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Morgans Chief economist Michael Knox explains how the Saudis "'manage up'' the oil price.
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Morgans Chief Economist Michael Knox says that big swings in the US budget deficit are driving big swings in commodities.
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Morgans Chief Economist Michal Knox explains that faster than expected US growth is driving US bond yields higher.
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IEA numbers suggest a tight market for oil.
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Morgans Chief Economist Michael Knox thinks the RBA has paused rate hikes to allow time for Michelle Bullock to calmly take up the role of Governor from Philip Lowe.
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When will the FED start cutting interest rates? Morgans Chief Economist Michael Knox says there are still more hikes to come, following a FED rate hike of 25 points in July, as expected. Another 25-point hike is expected in September.
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People who hoped for a US soft landing should be careful what they wish for.
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Morgans Chief Economist Michael Knox gives us a debrief from the Economics Society of Australia's business lunch; where the RBA governor Philip Lowe announced changes following the RBA review, which creates "A Federal Reserve With Australian Characteristics.”
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Our model, based on the International Energy Agency's (IEA) estimates, suggests an oil price of $US113 per barrel in Q2 2024.
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The summary of economic projections for June suggests there will be two more rate hikes from the Federal Reserve. One in July and another in September. Morgans Chief Economist discusses when we may see a reduction in interest rates.
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It's Labor Governments that tend to finish tightening with the Cash Rate above the Fed funds Rate.
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Morgans Chief Economist Michael Knox says that stubborn inflation means one to two more rate hikes may still be required before the job is done by the Federal Reserve.
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The International Energy Agency (IEA) estimates world oil demand 2 million barrels a day higher than supply in the second half of 2023.
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Morgans Chief Economist Michael Knox discussed the US economy and the possibility of shutdown by the US Government and what effect that will have for the next several quarters.
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Last night the Treasurer, the Hon. Dr. Jim Chalmers MP, handed down the Federal Budget for 2023/24.
Our experienced analysts, Terri Bradford, Andrew Tang and Michael Knox have considered the implications from multiple perspectives and have provided insights on what this will mean for you.
Read their full articles here: https://www.morgans.com.au/federal-budget-2023
Timestamps:
00:08 - Economic Strategy (Michael Knox)
05:20 - Equity Strategy (Andrew Tang)
08:54 - Wealth Management (Terri Bradford)
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The International Energy Agency in its April Oil Report tells us why the oil price must rise in the second half of 2023.
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A consensus of the best US forecasters is that after a fall in output in Q2 2023, US GDP will likely rebound to slow but consistent growth.
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Morgans Chief Economist Michael Knox believes that after a pause, RBA rates should still climb toward 4.85%.
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New FED facility backs small banks and surges FED assets.
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Why the further rate hikes in the US and Australia are driven by budget deficits.
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China's recovery makes an Australian recession close to impossible.
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Why the Saudis and the Emirates control the oil price from the second half of 2023.
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We think that a shallow US recession has already begun and will continue through the first two quarters of 2023.
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In an ABC Radio interview with Steve Austin, Morgans Chief Economist Michael Knox discusses the Australian economy, interest rate rises, and how the Fed and the RBA are trying to outwit the market.
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How the Fed and the European Central Bank may avoid a sovereign crisis. Check out more from Morgans: Visit the Morgans website: www.morgans.com.au Check out our blog: www.morgans.com.au/Blog On Facebook: www.facebook.com/MorgansAU On Instagram: www.instagram.com/Morgans.Australia On Twitter: twitter.com/MorgansAU
A US housing slump in the first half of 2023 should be followed in the second half by an oil and gas boom.
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Morgans Chief Economist Michael Knox explains why the Australian Economy can keep growing when other countries have recessions.
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A high US dollar and the prospect of falling inflation are encouraging investment in Australian and Canadian bonds.
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Back in September, we said the ASX 200 would rally as we came into October and November. Now we can again say why.
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Morgans Chief Economist Michael Knox thinks the FED funds rate will peak at 5.35% in March 2023. Meanwhile, the RBA continues to slowly follow the FED.
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Young Werther and Gold Trip are our best-value bets. Remember our recommendation is for the best value bet rather than the highest probability of winning. Gamble responsibly.
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The treasurer's main problem is distributing the benefits of the commodities boom.
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Strong growth in energy demand in the Indo Pacific not just Europe is driving up the LNG price.
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Rapid growth in the Indo Pacific is generating strong demand for Australian energy exports.
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The RBA will continue to tighten rates into our Australian Resources Boom.
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Likely seasonal weakness at the end of September should be followed by a stronger equities market in the final quarter.
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A peak in core inflation allows an easing of bond yields which together with improved earnings support US equities.
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More rate hikes are still to come this year, but the RBA is confident they will master inflation in 2023 and 2024.
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The FED lifted interest rates by 75 basis points and says that further rises will continue.
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Michele Bullock has suggested that the real neutral rate is one to one and a half percent.
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The FED needs to slow employment growth from 372,00 per month to 100,000 per month. This will likely lead to another 75 basis point rate hike in July 2022.
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The Fed and the RBA are pulling Pandemic support as rapidly as they dare.
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US slowdown, Australian boom.
Chicago FED National Activity Index: https://www.chicagofed.org/research/data/cfnai/current-data
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The ASX 200 is the most undervalued it's been since 2012 and 2013. It needs time to base. A strong rally is likely by the end of 2022.
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The Federal Reserve hikes rates by 75 basis points and tells us they saved the US economy from recession.
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The Australian cash rate is rising with the US effective fed funds rate as rates “normalise” to remove extraordinary pandemic stimulus.
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Michael shows how to use the Chicago Fed National Activity Indicator at chicagofed.org to see if a US recession is near.
Chicago Fed National Activity Index: https://www.chicagofed.org/research/data/cfnai/current-data
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Michael Knox talks us through US stocks, Australian stocks, and what a full-employment economy will be like.
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US GDP growth should slow but low US unemployment should bring rising living standards.
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Movements in the Australian cash rate have been following the “effective FED funds rate“.
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The RBA forecast for core inflation has risen to 4.75% in 2022.
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We update our models of US and Australian equities for the selloff in the US and Australian bonds.
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We show how to examine the US yield curve to find out when recession is near.
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The Fed intends to Sell $US720 billion of Treasury bonds and $US420 billion of Mortgage-backed securities per year, to force up US long-term yields and slow the US Economy.
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How US budget deficits have driven the Australian commodities boom.
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Unemployment is the lowest in decades. Scarce Labour will now drive up real wages.
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The Feds Rate Hikes and quantitative tightening haul down US inflation.
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War risk makes it impossible for ships to get insurance to load Russian cargo in the northern black sea. This cripples Russian exports of cargoes of Russia’s own oil and its own wheat.
Russians have an incentive to end the war sooner rather than later.
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Economy #Russia #Ukraine
Ukraine crisis should temper Fed tightening.
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ukraine #russia
The Germans are the important players not the Americans.
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We analyse how bearish US stock market sentiment in fact suggests heathy stock market returns.
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High Inflation drives down real wages.
The result of all this stimulus is that US unemployment in December fell to 3.9%. This is full employment on any measure. At this level of a low unemployment, the US economy is running out of people to give extra jobs to.
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The Fed is supporting the US economy first and fighting US inflation second;
ASX 200 fair value is 7350
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Jay Powell takes the long handle to strike inflation.
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We see the expansion of the US budget deficit which leads to the boom in Australian export prices and discover the best is yet to come.
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Chinese steel production Olympic dive this year, rebound next year. Iron ore prices fell with steel production this year. Both will rise next year.
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Brainard is brilliant, but Powell a better leader.
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We look at the US credit market to find two indicators of stock market health.
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We look at the RBA statement on monetary policy for November, where growth is strong but inflation is not.
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Economy #RBA #Inflation
Remember our recommendation is for the best value bet rather than the highest probability of winning. Michael Knox details his perspective with the Morgans network.
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Michael Knox discusses how a slowing Chinese GDP is a structural problem, because of slowing labour force growth.
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ChineseGDP #China #Chineselabour #Chineseeconomy
We think GDP Fell 0.8% in Q3 2021 but will be up by 5% in the year to Q3 2022.
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Economy #AusGDP #Finance
There is more to monetary policy than just increasing the cash rate. Michael Knox discusses how there are many more variable elements to consider when understanding monetary policy.
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Quantitativeeasing #Economy #Cashrate
US corporate tax payments and US political uncertainty are generating
a modest equity market correction that could continue in November. Michael Knox discusses his views with the Morgans network.
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ASX #Economy #USCorporateTax #Form1120
Our Model of the US oil price is based on EIA oil stocks, and the pause announcement.
The chance of the pause announcement having no impact on the oil price is 2 chances in 10,000.
Michael Knox Morgans Chief Economist discusses with the network.
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Oil #Commodities #Economy #Biden
The Australian economy will accelerate out of this shutdown with very strong growth in 2022. Michael Knox discusses with the Morgans network.
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Economy #GDP #Employment
We think Chinese currency regulation is a firewall for the world against the Chinese domestic crisis. We also think iron ore prices should recover after February next year. Michael Knox discusses his views with the Morgans network.
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Currencies #China #Building
The US is considering big hikes in corporate tax rates in the coming weeks. Will the market take fright? Michael Knox Morgans Chief Economist.
High prices for Australian metals and farm exports will generate higher living standards, and lower unemployment over the next three years.
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Economy #Trade #Resources
Morgans Chief Economist Michael Knox discusses how lower iron ore stocks relative to Chinese consumption, should support iron ore prices around the current value.
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Commodities #ironore #Stocks
Strong commodities provide the risk that the Aussie dollar will rise. Michael Knox discusses his views with the Morgans network.
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Commodities #AUD #USdeficit
US advance retails sales are drifting down to long-term trend, as US emergency income supports end. Michael Knox, Morgans Chief Economist explains.
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Retail #Sales #USretail
A surge in the demand for Australian resources from Japan and India, boosts commodities as Chinese demand stabilizes. Michael Knox discusses with the Morgans network.
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Economy #Commodities #Australia
Rising commodity prices push up nominal GDP, allowing employers to give more jobs to more people. Michael Knox, Morgans Chief Economist shares his views with the network.
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Commodities #Wages #Economy
Nowcasting the Australian economy on employment and hours worked shows us the rebound is still strong. Michael Knox discusses his views with the Morgans network.
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Economy #Employment #Inflation
The RBA believes it must drive down unemployment, to drive up real wages and hit their inflation target. Michael Knox discusses his views with the Morgans network.
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RBA #Economy #Employment #Inflation
Low cash rates and QE are both necessary to keep unemployment low enough to generate wage and price growth. Michael Knox discusses his views with the Morgans network.
The RBA must continue quantitative easing until after unemployment has fallen below 4.5% and after the RBA inflation target is already being hit. Michael Knox Morgans Chief Economist discusses his views with the Morgans network.
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RBA #Unemployment #Quantitativeasing
Michael Knox, Morgans Chief Economist discusses with the Morgans network how the Aussie dollar should rise, to catch up with rises in commodity prices.
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Jay Powell thinks that rapid US employment growth is the standout issue in the US economy, not inflation.
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TheFed #Economy #JayPowell
A tight market for iron ore generates more income to employ more Australians, and lift GDP. Michael Knox discusses with the Morgans network.
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GDP #Iron #China
US output and inflation for the next four years.
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The US economy gets moving again. Michael Knox Morgans Chief Economist explains.
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USCPI #Economy #USEconomy
Growth surprises on the high side, inflation surprises on the low side. Michael Knox details his perspective with the Morgans network.
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Growth #Inflation #Economy
Very high US growth in 2021 could help Australia to outperform. Morgans Chief Economist Michael Knox discusses and answers questions from the Morgans network, regarding Australia's growth in 2021.
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Economy #USeconomy #Auseconomy
The Covid-19 rescue bill contains sweeping reforms to the US social safety net. Michael Knox discusses the implications of the bill, with the Morgans network.
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USWelfare #Biden #Covid-19 #USpayments
Economic Strategist Michael Knox outlines how the US deficit (almost the largest since WW2) will drive a boom in international trade in 2021 and 2022.
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The US budget deficits of 2020 and 2021 drive the $US down and commodity prices up. Chief Economist, Michael Knox shares his latest thoughts with the Morgans network.
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BudgetDeficit #Commodities #Economics
The Fed now intends to run inflation above 2% for some time. Michael Knox Morgans Chief Economist explains what this means for the bond market in two to three years’ time.
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Why the decline of US feedstock oil is allowing a rise in oil prices? Michael Knox shares his insights with the Morgans network.
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We estimate Australian GDP grew by 2.7% in Q4 2020. Michael Knox, Morgans Chief Economist discusses how the Australian economy is recovering, following the Covid-19 pandemic in 2020.
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GDP #Economy #Morgans #Australia #Unemployment
Surprising strength in hours worked, suggest surprising strength in GDP. Michael Knox explains how the recovery in the Australian economy is unfolding post Covid-19.
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The RBA will need to keep quantitative easing in place for at least three years and probably four. Morgans Chief Economist Michael Knox, shares his thoughts with the Morgans network.
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The US economy is strong, but Biden's tax policy could derail earnings.
Morgans Chief Economist, Michael Knox, touches on how he believes the Biden program may influence both the US economy and after-tax earnings in 2021.
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TaxPolicy #Risk #Opportunity #Morgans
Michael Knox discusses how the falling US oil stock levels and a falling US dollar will help oil trade upwards over the next quarter.
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Oil #Brent #Morgans #OPEC
A falling US Dollar and cheap US rates should generate increased US dollar finance for trade-in emerging economy exports.
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US Election still subject to recounts and court action, Equities blind to value risk, but big US Budget Deficit will drive US Dollar down and commodity prices up. Morgans Chief Economist, Michael Knox analyses what could possibly happen in the US economy, following the presidential election.
The RBA tells us that Australian rates will not go negative, Michael Knox explains why.
With the US presidential election taking place next week, Morgans Chief Economist Michael Knox, explains how both programs -from Trump and Biden- produce large stimulus. Unfortunately, the Biden program includes large business taxes and business regulations.
These damage employment, GDP, and living standards.
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Trump cuts Tax, Biden lifts Tax: both add deficit stimulus. Morgans Chief Economist, Michael Knox details the implications on the US deficit by either potentially elected presidential candidate.
Mark Zandi of Moodys, estimates that the Biden Program achieves 4.1 % unemployment in 2023.
Chief Economist Michael Knox discusses the latest model predictions on the victor of this year's US Presidential election.
"It took enormous work by both Central Banks and Governments to stop the Pandemic turning into an extended financial crisis." Morgans Chief Economist, Michael Knox, provides the network with his latest macro-economic perspective.
The sharp fall in initial jobless claims, record-high retail sales, and the stunningly high nowcast of US third-quarter GDP all suggest that this crisis was a natural disaster, not a recession.
Morgans Chief Economist Michael Knox discusses how two researchers from the New York Fed, have found the economic effect of the pandemic has had a similar impact as that of hurricane Katrina in August 2005.
A rise in the Euro Area Economic Sentiment Index suggests a rapid early lift in Euro Area GDP.
Morgans Chief Economist, Michael Knox explains the reasons why he believes the government will outperform its own estimates for both 2020 and 2021.
A rapid recovery in US advanced retail sales suggests a more rapid recovery for the US economy.
Michael Knox Morgans Chief Economist, discusses how just as in the previous business cycle, expansion in the US budget deficit should see a fall in the US dollar and a rise in commodity prices.
Michael Knox, Morgans Chief Economist discusses how the Australian and US economies will recover rapidly, but the US equities market has moved too far ahead.
Morgans Chief Economist Michael Knox, discusses how he prepared 4 questions for the RBA Deputy Governor Guy Debelle, at an event hosted by the Economic Society of Australia (QLD) and Morgans Financial on 30 June 2020.
The Governor's answers, surprised our Chief Economist.
Aggressive rate cuts by the Fed led the US dollar to fall and the Australian dollar to rise.
Morgans Chief Economist Michael Knox discusses how the second-quarter earnings will likely disappoint.
Morgans Chief Economist Michael Knox, discusses how Fed research show that negative interest rates damage the ability of the banking system to provide liquidity in times of crisis.
They also damage the return on assets of banks even in normal times.
Chinese crude steel production is up 0.2% over a year ago. The output of steel products is up by 3.6%
Morgans Chief Economist Michael Knox, discusses how a horrific fall in US GDP in Q2 of 2020 will be followed by stability and a little growth in Q3. Growth then rapidly accelerates as we move into 2021.
Morgans Chief Economoist Michael Knox discusses how a recovery in the Chinese and US economies, will generate an increase in oil demand and begin a recovery in the oil price.
Michael Knox Morgans Chief Economist discusses how the Chinese economy is almost back to full production, based on the view that they have already overcome the pandemic.
Morgans Chief Economist, Michael Knox, discusses how the Australian fiscal multiplier, is twice as large. Well, it is all because interest rates are near zero.
Morgans Chief Economist Michael Knox, discusses how 2020 will be tough, 2021 and 2022 will be boom years.
Morgans Chief Economist Michael Knox discusses how Keeping workers employed now, should enable a rapid recovery of the Australian economy in the second half of calendar 2020.
Michael Knox, Morgans Chief Economist discusses how an extra USD 454 Billion of Treasury Reserve, dramatically expands the Fed lending ability.
Fiscal expansion in both Australia and the US should support the economy in an otherwise bad second calendar quarter. Morgans Chief Economist, Michael Knox, details the impact of current government intervention in both Australia and the United States of America.
The RBA has cut rates, started Quantitative Easing and begun a funding for lending program to support bank lending to business
US Health Czar Dr. Anthony Fauci tells us that July is the longest this emergency can last. Morgans Chief Economist, Michael Knox, touches on this and the Fed's most recent decisions in an attempt to extinguish the ongoing effect of COVID-19.
The market is being sold down by machine trading programs focused on momentum. This fall will be brought to an end by a surge in Fed Liquidity.
Both the US and Australian governments and their Central banks will support growth through the year ahead.
The economy of China is sick, but the stronger US economy will support world capital markets. Morgans Chief Economist, Michel Knox, discusses his perspective on the current macro situation with the Morgans network.
Where might it have come from; how fast is it growing; what are its effects on the Australian Economy?
In January I attended presentations by Robert Kaplan, President of the Dallas Fed, and Ben Bernake, former Chairman of the Fed. Kaplan outlined a stable short term view. Bernake discussed the long term...
An armistice in the US-China trade war has allowed an easing US dollar and a rise in oil prices.
What the RBA has told us about the conditions which will lead it to begin quantitative easing.
How changes in the structure of the US economy have changed the structure of US earnings.
We think the RBA will begin to refinance part of the stock of Commonwealth debt as it rolls over, to lift Australian inflation to its 2-3% target.
Economists generally have enough sense to know that they know nothing about horse races. There are people who do. They are called tipsters. Every Melbourne Cup Day, their tips are published in major newspapers. Today we have taken the tips published in The Australian newspaper. There are nine tipsters in all. From these tipsters we construct our most favoured rating.
First, China must import large amounts of grain to rebuild its pork production.
Secondly, China need to import capital to finance its current account.
We think the ASX 200 has a fair value of 6630 points with support between 6150 and 6300 points.
The RBA needs to get unemployment down to 4.00%, before it can raise core inflation to 2.5%
The US will likely maintain sanctions but attack Iran's capacity to conduct such strikes in the future.
The distance between Yemen and eastern Saudi Arabia suggests that an attack by Yemeni rebels is implausible.
Rising US tariffs on Chinese imports have caused a falling Chinese RMB,
which in turn has lead to a flight of Chinese capital into US Treasury bonds.