Westpac's Budget Invitation with Bill Evans

[Gentle_Chief]

Hiya all,

Last night I was invited to a Budget dinner with the top brass of Westpac's management team at the Sydney Convention centre at Darling harbour. I consider myself lucky to be invited by the Retail banking Regional head as there were some really big big names in the crowd. Maybe the invite was an after-thought because someonelse could not make it!

I was one amongst 200 other Westpac customers. Gail Kelly CEO opened the invite. She stressed on Westpac's core value, i.e. the Customer & it's people. She had a nice air about herself. Confident & Modest. Followed by Bill Evan Chief Economist who did a deep dive analysis of the Budget. Some of the summary points of their forecast:

- Interest Rates will rise by another 0.75% over the next 12-15 months
- House prices in Australia will see a 5-8% drop or move sideways until 2012
- Unemployment will decrease
- Savings rate will increase
- Rents will increase
- Weakening of the resources sector over the next 2 years as China slows to 8% growth (rather than the current 12% due to tightening moneary policy)
- AUD-USD will weaken to a 90 cents in the short term (in the next 6 months)
- AUD-USD will then strengthen to 105 - 115 range in the mid term (between 6 months to 2 years)

This is Bill Evans view which is endorsed by Westpac. I have attached a pdf in this thread.

I don't agree with all the points. But was a good evening mixing with the think tanks of business and commerce.

Sitting next to me was a CEO of an Iron ore company from Western Australia. Not sure if he would even remember my name after we left the dinner table. But was interesting evening to get perspectives from all sides looking at the same coin.

 

[buzzlightyear]

Thanks GC.

I do recall Bill Evans stating in early 2009, that official cash rate would get to 2%.

 

[Ausprop]

Bill actually has a shocking track record, his USD AUD forecasts have been miles out. then again he wouldn't be the only one thrown off course by the GFC

 

[Electro]

I've been to the Budget dinner before which was held in Melbourne @ Crown. I think it was about two or three years ago. I believe this years is on tonight.

Good food. Many exec's were sitting on my table and it was interesting to pick their brains after the presentations.

If my memory serves me correct I think Bills predictions at the time were pretty spot on regarding property prices, rates and the AUD.

 

[sash]

From the armchair economist called Sash....my thoughts....and comments..

I was one amongst 200 other Westpac customers. Gail Kelly CEO opened the invite. She stressed on Westpac's core value, i.e. the Customer & it's people. She had a nice air about herself. Confident & Modest. Followed by Bill Evan Chief Economist who did a deep dive analysis of the Budget. Some of the summary points of their forecast:

- Interest Rates will rise by another 0.75% over the next 12-15 months I think the opposite will happen...I see interest rates fallling by 0.5-0.75% over the next year. I am on record as saying the first cut to occur around Sep/Oct
- House prices in Australia will see a 5-8% drop or move sideways until 2012 Agree that it will move sideways...unless it is over $500k plus in which case I can see the 5-8% drop. NSW should be the exception due to the shortfall. Falls more likely in Perth and Brissie
- Unemployment will decrease Agree...but not by much maybe to 4.5%
- Savings rate will increase Can't see that happening with budget cuts and cost of living..though this will head down
- Rents will increase Absolutely...particularly NSW!
- Weakening of the resources sector over the next 2 years as China slows to 8% growth (rather than the current 12% due to tightening moneary policy) Yep....which also brings to rise why the RBA will more likely cut than increase rates.....though drop is not significant enought to affect employment growth here. As result Perth and Brissie markets will remain weaker
- AUD-USD will weaken to a 90 cents in the short term (in the next 6 months) If rates drop Aussie dollar should drop.
- AUD-USD will then strengthen to 105 - 115 range in the mid term (between 6 months to 2 years) Not if rates continue to drop...though I can't see the dollar much low than 90

 

[Ausprop]

Sash if your predictions come true then Swanny has a serious problem on his hands (and his probem will be our problem!)

 

[Gentle_Chief]

From the armchair economist called Sash....my thoughts....and comments..

I was one amongst 200 other Westpac customers. Gail Kelly CEO opened the invite. She stressed on Westpac's core value, i.e. the Customer & it's people. She had a nice air about herself. Confident & Modest. Followed by Bill Evan Chief Economist who did a deep dive analysis of the Budget. Some of the summary points of their forecast:

- Interest Rates will rise by another 0.75% over the next 12-15 months I think the opposite will happen...I see interest rates fallling by 0.5-0.75% over the next year. I am on record as saying the first cut to occur around Sep/Oct
- House prices in Australia will see a 5-8% drop or move sideways until 2012 Agree that it will move sideways...unless it is over $500k plus in which case I can see the 5-8% drop. NSW should be the exception due to the shortfall. Falls more likely in Perth and Brissie
- Unemployment will decrease Agree...but not by much maybe to 4.5%
- Savings rate will increase Can't see that happening with budget cuts and cost of living..though this will head down
- Rents will increase Absolutely...particularly NSW!
- Weakening of the resources sector over the next 2 years as China slows to 8% growth (rather than the current 12% due to tightening moneary policy) Yep....which also brings to rise why the RBA will more likely cut than increase rates.....though drop is not significant enought to affect employment growth here. As result Perth and Brissie markets will remain weaker
- AUD-USD will weaken to a 90 cents in the short term (in the next 6 months) If rates drop Aussie dollar should drop.
- AUD-USD will then strengthen to 105 - 115 range in the mid term (between 6 months to 2 years) Not if rates continue to drop...though I can't see the dollar much low than 90


Hi Sash,

I agree with all your forecasts. Except for the Interest Rates drop. Can't see that happening when the Economy is heading into a full employment cycle.

Note that a 96% and higher employment figures is considered full employment. As the rest 4% of the working population may be:

a. In maternity leave
b. Illness, Injury
c. Taking a break from work to consider their next move
d. Seasonally adjustment to statistics
e. etc

Mix a high employment scenario with a dropping Interest Rate and we will have hyper inflation..... and asset price bubbles.

This is a scenario any Government would not want on their hands...

 

[Ridin-High]

Un-employment figures

Australia 4.9
Japan 4.6
Mexico 4.6
Vietnam 4.6
Taiwan 4.4
Austria 4.3
South Korea 4.0
Denmark 4.0
Hong Kong 3.4
Switzerland 3.3
Norway 3.1
Ukraine 2.2
Singapore 1.9
Thailand 1.0

 

[tom32]

You have to be carefull comparing international unemployment figures. In countries that do not have strong social welfare systems unemployment is generally lower in part because there is no reason to report yourself as unemployed if you get nothing for it and further you are more likely to take a subsistance wage even if it is shining shoes at the train station. Indeed you have no choice but to take on a job at a subsistance wage...

 

[Nathan]

Hi GC,

I was at the wednesday breakfast one and was listening to the presentation.

Apart from me being out of bed so early it was a good presentation.

A few points I took were that the stats and figures are all based on what ifs and can go multiple ways.

The way I saw it was that the global climate is meant to cool a little, and the AUD to fall and the rates going up, and commodities to go down in 6 months.

I didnt agree with everything that was presented, but can see where their viewpoint was coming from.

It is interesting to be there as you can get a feel of where the general sentiment will be but there is always inner and outer markets.

Nathan.

Its good getting invites to these events and mingling with other industries.

 

[BayView]

Unemployment will not decrease any time soon.

If you are an employer in the retail world in Aus, you will already know how bad retail is here across the board. Retail is shedding jobs left right and centre. Don't be fooled by any Pollies diatribe on ACA or in The Sun.

Most here on this site are not employers, so wouldn't really know the depth of it.

Our manufacturing industries are closing down in Aus at a rate of knots due to our uncompetitive labour market,

The dollar is at an all-time high, so the tourism industry is suffering as overseas visitors stay away.

 

[Ridin-High]

BV i'm not an employer but i can see that retail is being F'ed in the A

 

[Gentle_Chief]

>>bump<<

This thread was posted in May 2011 i.e. nearly 10 months ago as to where Australia will be in 2012.....

except for a point or two, the 'experts' seem to be on track...

 

[Ausprop]

>>bump<<

This thread was posted in May 2011 i.e. nearly 10 months ago as to where Australia will be in 2012.....

except for a point or two, the 'experts' seem to be on track...

a point or two, or three, or four

I would have slapped that Gail if I'd been there. her condescending remarks to the public during the height of the GFC that took the public for fools still makes my blood boil. then Swann just lapped it up, like a little lap dog - lap lap. One of the private bankers I deal with at St george got the chop today - presumably they cleared the entire office out I am not sure? Gail wanted to bury that business the day she got it, but has had to slowly whittle it away. not that anyone would be insane enough to borrow from them anyway after they liquidated half of the developers in town

 

[Aaron_C]

Part of the consolidation process Ausprop....you have private bankers in WBC, why do you need them at SGB?