Charlie Aitken sees Australian dollar swoon

See the latest Australian dollar analysis here:

Macro Morning

I can’t bring you this news directly after I was cut from Charlie Aitken’s mailing list following some prophetic criticism of his disastrous oil and iron ore forecasts but at least he still appears to be reading MB. From the SMH:

Both the Baltic Dry Index and RBA cash rate are below levels seen at the peak of the GFC. I now believe it’s only a matter of time before the AUD/USD cross rate re-correlates to GFC levels.

On that basis this morning I am downgrading my medium-term AUD/USD price target from 75 US cents to 68 US cents.

Last week the RBA joined the global currency war. This is a very important development that requires a medium-term forecasting reaction. “We have now become the latest country to adopt competitive currency devaluation as a monetary tool. Welcome to the global currency wars.

Make no mistake, this was a big decision for the RBA. To suddenly change tack with the cash rate already below GFC crisis levels, and abandon ‘a period of stability’ in favour of a new aggressive easing policy, is a monetary event which should not be taken lightly. Clearly, it surprised many economists and some institutional investors. However, against a global backdrop of deflationary forces and competitive currency devaluations, I think there is a very real possibility of the cash rate with a “1” handle at some stage over the next 12-18 months. I know that prospect is hard to imagine. But instead of asking “why”, ask yourself ” why not.”

As the ‘the once in a century’ windfall of from the mining boom becomes a distant memory, it doesn’t require a huge leap of faith to envisage our economy experiencing the same anaemic growth as the rest of the Western bloc in the aftermath of the GFC. As such, it is absolutely critical for the RBA to target a lower cash rate and a lower AUD. Unfortunately for savers and retirees, that means an extended period of very low ( or even lower) cash rates and fixed interest returns.

Outside of downgrading my medium-term AUD/USD forecast today I am also upgrading my forecast for median residential property price gains to +10% from +5% in 2015 and upgrading my ASX200 trading range forecast to 5500-6000 from 5000-5500.

Correct in the medium term, though I’m suddenly wondering if it’s not time to go long the Aussie in the short…

David Llewellyn-Smith
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Comments

  1. “I can’t bring you this news directly after I was cut from Charlie Aitken’s mailing list following some prophetic criticism of his disastrous oil and iron ore forecasts ”

    Go Australia????

  2. I too got cut from his Ringing the Bell pub. Seemed strange; I (and others) were paying him a fat $600 p.a. MB much better value for money and got the iron ore call right.

  3. I’m with JOhn D.
    I was onboard since UTSC and RTB and paid $600pa.
    And then BP cut the list, my understanding was they had a few thousand people paying $600pa.

    All because he didn’t like people sending the info out.

    Sadly am yet to find better value apart from Grant Williams (I don’t see MB providing the same value for money with specific ideas as Charlie did).

    • CatfishwolfMEMBER

      It depends if you are a trader or an investor.
      But I find Morningstar good value and fits my investment style personally. Combines with MB economic perspective… its a good combination.

  4. “I can’t bring you this news directly after I was cut from Charlie Aitken’s mailing list…..”

    Your ex-communication list must be growing fairly large by now H&H? 🙂