A macro earthquake is building

Advertisement

The next few months of Australian macro circumstances are suddenly coming into focus and it’s all appearing rather epic. I think we can expect the following:

  • new capital standards for banks when the Murray Inquiry is released this Sunday. There’s speculation around SMSF leverage bans but I reckon that’ll be a bridge too far;
  • APRA is likely to follow Murray before or after Christmas with macroprudential tools that slow interest only loans for investors (possibly everyone) and boost bank affordability calculators;
  • Joe Hockey’s MYEFO will spill red ink everywhere but not cut;
  • all surveys are predicting shite Christmas sales;
  • into the New Year, the excellent recommendations of the inquiry into foreign buying of Australian realty will begin to be implemented;
  • unemployment will continue to rise as retail disappoints, housing slows, mining and LNG accelerate cuts into the capex cliff;
  • the RBA will cut interest rates in February and a second time in the first half (with more cuts in H2 if I’m right about iron ore still falling);
  • thence it’s on to the May Budget and a new red ink explosion and probable cuts;
  • the Australian dollar is going to keep sinking, possibly much faster than it has to date.

Hold on to your hats!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.