Australian dollar to soar, bellows bull’s bull

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From CNBC, Clifford Bennett, perhaps Australia’s most irrepressible bull, has some good news for you:

Australia’s economy has been clouded with negative forecasts in recent weeks with some even warning of a dip back into recession, but a recent report argues the economy is poised for a rapid acceleration in the coming months.

According to Clifford Bennett, chief economist of the financial services firm White Crane Group, which publishes the White Crane Report, Australia is set for a major domestic boom next year with gross domestic product growth estimated at 4.5 percent – levels not seen since before the financial crisis – supported by a big wave of investment expected after the Federal election in September.

“We were one of the first to warn of this slowdown in the domestic economy some two to three years ago, and it appears we are now among the first to recognize there will be a major domestic economic boom next year, as well as an on-going resources boom,” he said.

Australia’s economy has held up relatively well since the financial crisis but in recent times, some economists have turned bearish on its prospects. An excessively strong domestic currency, speculation over a peak in mining investment and a slowdown in demand from major trading partner China, have all raised concerns.

As a result, major investment banks including Bank of America Merrill Lynch and Goldman Sachs have recently moved to downgrade their forecasts for Australian growth next year, to 2.4 percent from 2.9 percent, and to 1.9 percent from 2.7 percent, respectively.

But Bennett is adamant the more negative forecasters have falsely interpreted the end of the mining boom and are under-estimating the positive impact that the Federal election outcome on September 14 will bring.

The hotly contested election could give victory to the opposition – the Liberal/National Coalition party led by Tony Abbott – and see the exit of the current ruling Labor party led by Prime Minister Julia Gillard, which has fallen out of favor especially with business voters due to the deeply unpopular and controversial mining tax introduced in recent years.

According to Bennett, many are holding back on investment pending the outcome of the election.

“They [other economists] really do not seem to get that the resources boom is not over, and the Australian businesses are hording cash waiting to invest on a Coalition win,” said Bennett.

“We are further encouraged that the Australian economy will accelerate sharply within months. This will be a rare acceleration historically,” said Bennett.

Bennett is currently forecasting an Australian dollar at a ludicrous $1.13 to the USD:

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I am keeping a straight face.

 

 

 

Comments

  1. Deus Forex Machina

    It gets better people, check out this tweet from the following day…and Jazzkatz retweet of it just now

    http://www.macrobusiness.com.au/?attachment_id=113866

    This is why I became a strategist in 1998 because so many calls blew people up and cost them money and then those same folk only ever talked about the ones that they got right.

    I abhor this type of stuff – on June 14 the AUD was just under 96 cents. Anyone who bought 100k would be 300 points out of the money or $3000 per hundred thousand.

    Now of course they would not have a stop cause its going to 1.13 isn’t it.

    I do not usually play the man but this lacks integrity I reckon…

    Anyway…rant over, sorry

    Cheers

    Greg

  2. danielvsheehan

    The result of the election is already known, it is completely illogical to claim the business community is waiting for change of government to invest the horded cash. Why not go now and get a 3 month head start on your competitors?

    • notsofastMEMBER

      daniel,

      Maybe the election result might already be decided but I can’t see Tony Abbott lasting any more than 12 months as Prime Minister. When the economy tanks and he tries to blame the government debt accumulated under the Rudd/Gillard era he will be laughed at first and then people will start to get upset. This will be the opportunity for his party to turf him out. Besides most people already know he won’t be able fulfil his “stop the boats” rubbish.

      So in a sense we still do have electoral uncertainty.

      Who will be Prime Minister in September 2014? It won’t be Tony Abbott.

  3. reusachtigeMEMBER

    Phew, I was just about to buy $US to protect me against the falls but I’ll wait now for that $1.13 later this year.

    • You’ve got plenty of time.

      “Hi yes it comes from my making similar calls about the Dow Jones over the last few years, AUD could spend 3 decades 95-1.20”

  4. What in the hell is this guy smoking? Their is a thing called arrogance but then their is stupidity…..

  5. notsofastMEMBER

    The only way I can see this happening, is if China puts in place a significant new stimulus package.

    Sure it is not what we are hearing from China, but it has happened before when China was slowing, and is not out of the question. China after all is still, and perhaps is only becoming increasingly so as foreign demand for their exports continues to flag and domestic consumption fails to pick up, a “command economy”.

    But I don’t think we should hold our breath on this one. It is obvious to me that we need to change our economy so it is less dependent on the Chinese roller coaster.

  6. No. When the AUD continues to fall its not that the forecast of 1.13 is wrong, it’s just a cheaper opportunity to buy…and cheaper…and cheaper….

  7. His Twitter page declares him to be the “world’s most accurate currency forecaster”. I wonder if that’s an awarded or perhaps a self-imposed title.

    • It was given to him by the same mob who gave Swanny his World’s Best Treasurer award.

      Or perhaps it was given to him by a magic 8-ball. “Magic 8-ball, am I the world’s most accurate currency forecaster?”…”YES”

  8. This is downright irresponsible. I don’t think anybody can be this deluded can they?

    It’s going to take a bunch of Hail Mary data/news releases to make this happen any time soon…

    Also the GDP call at 4.5% is just fanciful. In the real economy the head wind from a quickly withdrawing mining investment component may well add at least a point or two to the deficit before we even start digging dirt on some of these new projects. That’s a whole lot of low cost, unimproved commodity product you’ve gotta shift to fill the hole this leaves. Add to this the drag in the other components of the economy – I can’t say there are too many other exports we produce in copious quantities which are trading their little heads off right now.

    As far as his claims that business is sitting on money, I’d suggest you only need refer to the trend in business finance and lease commitments (here), and the latest numbers from D&B on business receivables (here) to know that he’s taken a decent dose of hopium. Downward trends in commercial and lease finance commitments combined with an increase in receivables does not paint the picture of a business community sitting on piles of cash and getting ready to spend. Cashed up businesses typically don’t continue to stretch their trade creditors for the sake of it, so it leads me more to believe that they can’t afford to spend.

    I’m more worried that without any change to the current trends, we’ll be in recession by the end of 2014 or the first quarter of 2015.

    My 2c worth anyway. I hope I’m wrong but I’m preparing for the worst regardless.

  9. Makes a bit more sense now. It’s all about the newsletter.

    http://www.whitecranegroup.com.au/

    “It became clear to us that there was an urgent need for people, for YOU to hear a more optimistic and indeed far more accurate view of the world.

    How do you manage your investment portfolio, your SMSF, your assets, the basic building blocks for the security of your financial future, if your only source of news is the consensus view that is often wrong – and then sensationalized by the main stream media?

    There Is An Easy Solution, Join The White Crane Group For Less Than $3.00 A Day”

  10. I’ve seen Clifford Bennett a few times of Sky Business. He’s always spruiking stocks and the dollar.

    • migtronixMEMBER

      I’m guessing this is exactly the same as Goldman Sachs prop traders.

      Every time they tell their clients to buy its from them they are buying.

      I’m guessing this Cliff Bennett has a large AUD to position he wants to unwind quickly

  11. Mark Out West

    Well he’s gotta have some bunnies to sell his AUS to or he will have to sell his Ferrari.

  12. Alex Heyworth

    Just like any of thousands of RE spruikers. At least they don’t have the cheek to call themselves ‘economists’.

  13. thomickersMEMBER

    lol he’s deleting his twitter comments. its like the last 2 days never happened…rofl