RBA to cut another 1%?

[unloadmymind]

The capex data was a complete disaster.

There is no other way to look at it.

It simply reinforces the hole left by the mining boom is huge.

So huge that no amount of residential construction or consumer spending is likely to be able to fill the gap in the current environment.

Slower growth and more rate cuts will be on the table, which is why the Aussie dollar has fallen out bed.

 

[unloadmymind]

I'm very worried about how far the AUD will drop and the impact thereof.

Indeed. But the RBA wants that drop.

It's a disaster in the eyes of FX traders. Almost 5 cents lost in a week. Wow.

And the UK Pound is now 2:1 to the AUD!!!!!

 

[keithj]

RBA to cut another 1%?

The multi trillion dollar bond market begs to differ with your sources. This was the yield curve yesterday morning.....

.....and yesterday arvo was only slightly changed. However, there is ~80% possibility of a 0.25% cut by this time next year.

Perhaps you need to improve your sources ?

 

[unloadmymind]

Futures markets are dynamic. They change every minute.

Those were the sort of graphs I've seen after the bad GDP release in December. A flat curve. Then the RBA cut happened in Feb when most were expecting a rise in 2015.

Carry on. Recession coming.

 

[keithj]

Futures markets are dynamic. They change every minute.

Those were the sort of graphs I've seen after the bad GDP release in December. A flat curve. Then the RBA cut happened in Feb when most were expecting a rise in 2015.

Carry on. Recession coming.

I'm not sure what your point is ?

You appear to be standing by your claim that a 1% rate cut is imminent based on a story by a single journalist who is barely out of Uni. And ignoring the multi trillion dollar futures market shown in the chart above.

Below are 2 charts showing the 3yr futures - the top one shows the 10 minute bars - the blip upwards at 11:30 yesterday when capex was released is obvious - looks scary to some (just like your AUD/US chart above). The one below is the daily chart of the same - when you look at the big picture it is clear that your whole premise of 'recession looming, 1% cut imminent' is just another boring data release that affects the markets v. slightly.

These data releases happen every day - try not to let them affect your big picture view.

 

[unloadmymind]

It's early days my friend. Same traders stuck their heads in the sand when the capex release was made late last year.

I don't think with consensus or what most people think. No wonder they were surprised by the Feb cut early this year. The market got it all wrong. I analyse how the RBA react to these sort of scenarios. It's one of their major inputs when making rate decisions. And their latest monetary policy statement projections are now looking too optimistic.

Ignore these "boring" macro stats at your own risk. The big picture is a huge cliff.

Anyway, carry on. At least there's someone here bold enough to tell the people a shocking emerging situation.

 

[Deltaberry]

Every boom new experts join the forum then disappear.

 

[unloadmymind]

Every boom new experts join the forum then disappear.

It's good for some brokers to spruik fixed rate products.

Last year too many brokers have confidently claimed "it can never get lower than these frixed rates" and "rates are going up next yea" and thank god I didn't believe their BS because I saw the macroeconomic statistics (used by the RBA) don't agree with what these broker "experts" were telling me. Thank god I stuck with full variable because the data set was so bad I cannot see any good reason for a hike just because the rates were low.

 

[keithj]

I don't think with consensus or what most people think

That's great. However, there is a time to think with the trend, and also a time to be a contrarian. Keen was a contrarian for a loooong time - he may be right eventually, but for contrarians timing is everything.

Ignore these "boring" macro stats at your own risk. The big picture is a huge cliff.

You misunderstand. The market is not ignoring them, they are putting them in context and adding a fragment of new information to the big picture. The big picture isn't especially rosy ATM, however, much of it is already priced into all markets.

Anyway, carry on. At least there's someone here bold enough to tell the people a shocking emerging situation.

You're not telling (most of) us anything new. There are always a few chikkin likkens squealing that the sky is falling - have a read of the Economics sub forum for 2003/4 - many of us have heard it all before.

We already know that income growth is low, unemployment stubbornly staying highish, that capex was actually forecast to fall (just not quite as much), our main export prices have fallen. Everybody knows this including the RBA & the markets.

If you really are 100% convinced of a 1% fall in IRs (& you are right) then you will soon be a multi billionaire - the market has trillions of $$$ that is just waiting to bet against you.

 

[willair]

It's early days my friend. Same traders stuck their heads in the sand when the capex release was made late last year.


Anyway, carry on. At least there's someone here bold enough to tell the people a shocking emerging situation.

The real test of whether you really understand what's happening is if you tunnel into the future in six months 12 months spans,the huge cliff you and several others talk about has been around this site for all the time prior and after I joined this site,plus one can have a over supply of information combine that with non investing academia opinions,and as some have found out the hard way from various fast buck that have come and gone in this site to bankrupt any investor just give them information and stand alone charts that no one understands till it's too late..

 

[MTR]

That's what many commentators are saying. We might have a recession soon, thanks to the Mining Bust, Capex Cliff, Budget Black Hole and Failed Rebalancing.

Today's Capex statistics is a disappointiing tale of recessionary proportions. The RBA will have no choice but to cut rates further.

http://www.businessspectator.com.au/article/2015/5/28/australian-news/holes-economy-just-got-bigger

There are other ways, already in the pipeline - APRA

Here is a link from SMc if anyone is interested in this

http://www.propertyinvesting.com/slow-down-the-real-estate-market?infuse=1

 

[natedog]

If these APRA things come ino reality AND it dulls new investment in IP, I can only see one direction for rents

 

[jerrybee]

If these APRA things come ino reality AND it dulls new investment in IP, I can only see one direction for rents

Don't keep me in suspense. What direction? My rents suck at the moment.

 

[Aaron Sice]

Futures markets are dynamic. They change every minute.

indeed they do.

wonder why you're sticking to your FOREX/CAPEX argument if the market is that fickle.

 

[Aaron Sice]

At least there's someone here bold enough to tell the people a shocking emerging situation.

We've never had someone give us a "reality check" before. It's so refreshing to have a quiet voice of reason amongst these land-lubbin' specufestors.

It must be the same person - welcome back, nonrecourse. I've missed our banter.

 

[Scott No Mates]

Why MUST rates go down? Increasing rates will improve the attractiveness of Oz to invest capital as returns are lower elsewhere. Banks will be flooded with cash & looking to borrowers to book build.

Yes it'll hurt local investors who are in passive asset classes but for those sitting on money in banks or with a lower cost of funds are laughing.

 

[Tim86]

Why MUST rates go down? Increasing rates will improve the attractiveness of Oz to invest capital as returns are lower elsewhere. Banks will be flooded with cash & looking to borrowers to book build.

Yes it'll hurt local investors who are in passive asset classes but for those sitting on money in banks or with a lower cost of funds are laughing.

It almost seems a bit like a self fulfilling prophecy, all the doom and gloom talk.

Maybe they should just tell everyone the economy is awesome so they are raising interest rates and then everyone will be confident enough to spend again.

 

[BayView]

Maybe they should just tell everyone the economy is awesome so they are raising interest rates and then everyone will be confident enough to spend again.

I suspect they have been doing this anyway for a couple of years...

 

[unloadmymind]

Why MUST rates go down? Increasing rates will improve the attractiveness of Oz to invest capital as returns are lower elsewhere. Banks will be flooded with cash & looking to borrowers to book build.

Yes it'll hurt local investors who are in passive asset classes but for those sitting on money in banks or with a lower cost of funds are laughing.

The flood of hot money will cause the AUD to go back to parity.
Not a good thing when exporters are struggling and iron ore is down down down.
How could banks book build at higher interest is just contradictory.

 

[WattleIdo]

Iron ore isn't the only thing we do here.
There's plenty of other industries that've been biding their time waiting for the mining boom to finish.
Come spring time, no more doom & gloom.