Australian dollar loses the plot on Australia

The Aussie dollar barely budged as consumer confidence, housing finance and the NAB survey rained bad news on the Aussie economy:

Bond yields have actually lifted today despite RBA cuts now being all but certain:

XJO only managed a modest bounce tracking world markets despite everything exposed to domestic demand being in trouble:

Dalian launched out of the blocks this morning on shite Chinese credit:

Big Iron lifted, too, despite the iron ore price obviously already having massively overshot anything resembling fair value and likely going fall away from here regardless of Chinese stimulus:

Big Gas is up as Labor prepares to take it down:

Big Gold copped it:

Big Banks are loving the crash of their underlying collateral:

Big Realty is marking time:

The obvious conclusion is that the threatening Australian recession is fully priced already.

Or that markets have lost the plot on Australia.

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. 


  1. Its a matter of figuring out what other currency (and economy) is more safe? There is not a lot of options out there. In regards to the RBA, they wont move until umemployment shoots up, GDP negative and inflatiom still soft. They are behind the curve

    • If the AUD falls further the vibrants will demand more money from Australian employers to meet their weekly remittance quota. Hence the AUD cannot fall.

  2. Pull up a 1 year chart of Australia’s largest mortgage lender, CBA.

    If someone was to look at that chart, would they guess that Australia is experiencing its worst housing slump in 40 years (from historic bubble highs)?

    Not only has CBA effectively been range bound for an entire year of worsening property and credit conditions, but the last +4 months has seen it in a sustained upwards trend off the back of a fast deteriorating housing bust.

    The market hasn’t priced sh!t.

    Dividends are still healthy, unemployment and defaults remain in check, the RBA appears unfazed. Check, check, check. The R word is reserved for crashnik use only.

    • St JacquesMEMBER

      It’s the delusion premium, it’s proportionally the inverse of the general deterioration of things.

    • I believe the usual practice is for things to remain irrational for far longer than anyone thinks possible (followed by a crash no-one could possibly have seen coming).

      With corresponding implications for one’s solvency.

  3. Couldn’t it just be that the market is getting off, short term, on crashing Chinese credit…which means they are expecting massive CCP injections of the same, soon-ish?

  4. The worse the news, the higher the likelihood the government will use ‘unorthodox’ methods to prop up the economy. This is the market telling you that large scale intervention is all but baked in. Things are too bad to do anything else. We saw the same behaviour during and after the gfc and every single european scary-movie episode since.

    Bad news was a buying opportunity. Every single time. Really bad news was a really good opportunity to buy.

    In the long run, of course its boned. But in the short term… well, didn’t they just open up the visa rorts more? And there will more measures like that. Welcome to the bull trap.