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!