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This is very close t0 the MB Fund view. The reverse bullwhip effect and inventory cycle crush margins as inflation falls.
Australia’s current round of discretionary retail bounces are a reflection of the cycle here lagging by a quarter or two and delays to the RBA tightening owing to the fixed rate reset. I expect similar dynamic to play out here in due course.
The excellent Michael Wilson of Morgan Stanley.
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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.
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