“All our indicators in US dollar liquidity point to it being in decline…Commodities are more sensitive to emerging markets growth and emerging markets are funded by capital inflows moving in. Emerging market growth will slow and that’s going to negatively impact commodities,” he said.
Here they come, from the AFR, Atul Lele, chief investment officer at private bank Deltec:
“Canada is a fantastic six month preview of what’s going to happen to Australia,” says Mr Lele, an Australian who is based in the Bahamas. “The Australian dollar, it’s going below US70¢ in the next six months quite easily. More importantly, it’s not bouncing back any time soon. I can easily see a scenario where it goes into the US50s.
“I think clearly monetary easing needs to take place, fiscal easing needs to take place as well, not enough has been done on the fiscal side.,,There’s an inevitability around what’s about to happen, the Australian economy’s going to have to go into recession,” Mr Lele said.
And that, my good friends, is the great Australian adjustment described at MB since 2011. Interest rates will fall. The dollar will fall. Higher unemployment, a recession and a property bust are all in the pipeline.
