Sell Australia, the demerging market

Morgan Stanley has an excellent note today that summarises the entire business cycle ahead for mine:

Reason 1 to stay long USD: Peak bearishness on US growth? Our US economists have revised down their 3QGDP estimates for the US to 2.9%Q SAAR compared to 6.5% previously. The impact of the Delta variant has been clear in recent indicators of US consumer confidence and data more broadly in 3Q, taking the Atlanta Fed’sNowcast measure of current quarter GDP growth down to 3.7%.

However, this hit to 3Q growth and the most recent labour market indicators will probably just be temporary. For starters, our US biotech team believes that the COVID-19 case count in the US is starting to plateau and now expect a “slow bumpy path down”. Our economists see 4QUSGDP reaccelerating back to 6.7% QSAAR.

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