Westpac bears-up big on Australia

A couple of charts today from Westpac:

They see iron ore in the high $50s late this year and falling away to $40 late next year. It’s right but too slow. We’re looking at $40 by early next year. For coking coal they see similar to the MB outlook.

Thus for the Australian dollar they see 65 cents by the end of 2018:

I see at it 65 cents by the end of this year and in the 50s next year sometime. This scenario means no income growth, poor nominal growth, major Budget misses, sovereign downgrades and, if house prices roll over as well, quite possibly outright recession. The mystery is why Bill Evans sees no more rate cuts because if these forecasts play out and the RBA holds then look out.

The message that we take from this is that you should invest elsewhere, and be enriched by a falling Aussie dollar rather than be made poorer by it. We can help you do that at the MB Fund (launching in the next month with 70% international stocks).

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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.