Money Minute – December 5 2017 Tech Drives Cheap Prices

Tech Drives Cheap Prices

Everybody listen – there is little doubt technology drives the way we live , the prices we pay and now its showing up in our economy and our interest rates

Just one example Iron Ore last night went through $72US a tonne.

Commodities – Copper, Iron Ore, Nickle, Lithium, and Cadmium – they are all soaring at the moment. The last of those – Lithium, cadmium, and Nickle – are all key in battery technology. Think that big battery in South Australia and Elon Musk they opened last week. All those electrical cars, the hybrid vehicles. Normally if commodities run, so does the Australian economy. And there is forecast out there this year is running about three per cent.

Now, that’s not a boom but its healthier than its been.

Normally if the economy runs, there’s demand for labour – jobs – and that starts the rise. They feel better sop they start to spend. Prices rise, there is inflation. Once there is inflation, interest rates rise. The issue is right now there is no real wage growth to speak to. Consumer rises are as flat as a tack. There is not inflation uplift so rates are on hold for the foreseeable future – we get that decision today.

So what’s this all about?

Well – part of it is technology. Amazon, of course, starts today. I’ll explain shortly how it works but it promises significant savings across a number of goods.

But it also offers small businesses access to a larger customer base without actually opening a shop and no rental agreement.

Also opening today is the world’s largest sports retailer – Decathlon. It had an online presence here for months but it’s now got a warehouse in Sydney, and shortly in Melbourne. It offers it own brand sporting goods, under one roof, at prices more than 50 per cent cheaper than typical brands.

In both cases, in the case of foreign retailers, consumers get cheaper prices. And cheaper prices mean lower inflation. This in turn adds to the pressure for interest rats to stay low. Technology, you see, is driving the economy right now.

Markets

Overnight the Dow Jones Index of US Shares up 135 points. The Dollar just under 76 Us Cents.

Quicklinks to recent Money Minute progammes

Money Minute – December 4 2017 Rates on Hold

Money Minute – December 1 2017 Banks Commission

Money Minute – November 30 2017 Bitcoin Boom

Money Minute – November 29 2017 Economy is ‘Robust’

Money Minute – November 24 2017 Myer Crisis Meeting

Money Minute – November 22 2017 Tourist Dollar Battle

Money Minute – November 21 2017 Who Pays for Tax Cuts?

Money Minute – November 20 2017 Bank Royal Commission?

Money Minute – November 17 2017 Job Prospects Brighter

Money Minute – November 16 2017 The Big Squeeze

Money Minute – November 15 2017 High Noon At CommBank

Money Minute – November 14 2017 Crisis Bites

Money Minute – November 13 2017 Where’s the Money?

Money Minute – November 9 2017 Teflon Bank

Money Minute – November 8 2017 Markets Fire Up

Money Minute – November 7 2017 Rates, Cup and Fights

Money Minute – November 6 2017 Tax Scandal Breaking Today

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