See the latest Australian dollar analysis here:
Everyone except the lunatic RBA is racing in one direction now, including NAB’s Alan Oster:
“We now think that the RBA will make two rate cuts in 2019.
Growth appears to have lost significant momentum, placing at risk further improvement in the labour market at a time when inflation poses little constraint on policy and financial stability risks have abated.
We have pencilled in one 25 basis point cut to 1.25% in July and a further 25 basis cut to 1% in November.
With monetary policy being forward looking, we think the RBA will act this year on a ‘no regrets’ basis to boost economic activity and to offset a likely increase in unemployment in 2020.
It is possible that further policy adjustment will be required in 2020.”
Yep, my bet is no fewer than four rate cuts over the next eighteen months as the economy refuses to bounce with any vigour.
As usual, AUD is bid in Asia for no reason. This happens with such regularity that something structural must drive it. Perhaps its the RBA’s nonsense or Mr Watanabe or the Kangaroo bond market. I just don’t know:
Bonds are roaring with much more ahead. I see the long end at 1% next year:
XJO is sagging:
Dalian is another nothing burger as Big Iron cops it on RIO downgrades:
Big Gas is down too:
Big Gold is still a sell. Watch out for tonight’s NFP:
Big Banks have reversed course as their valuations look stupid approaching 14x forward EPS into a housing crash:
Big Reality is not excited by RBA action either:
Avagoodweekend and, if you’re on the roads, watch out for idiot economists driving trend lines into head on crashes.
David Llewellyn-Smith is chief strategist at the MB Fund and MB Super which is long international equities and local bonds that will benefit from a weakening Australian economy and dollar so he is definitely talking his book.
If the ideas above interest you then contact us below.