The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Friday, January 28, 2011

Happy days for the housing market: less than one rate hike priced for 2011!

If you believe the interest rate futures market, we will get less than one rate hike in 2011. That will be a huge boon for Australia's housing market, if it actually comes to pass. Our forecasts assume three rate hikes, which would make generating capital gains heavy going indeed. But if savvy fixed income investors are correct, and we don't get a rate hike in 2011, then the housing market could very much surprise on the upside with nominal price rises. We will have booming national incomes, strong employment and wages growth, and a cost of capital that is only marginally higher than the historical average. Throw in very strong economic growth in the US and China to boot. That means consumer spending should bounce back firmly by the middle of the year, and credit growth will also recover (pushed along by all the financial institutions trying to drive their credit books). Great news for the banks and housing investors...If you believe the futures market, that is, which, for the record, I don't!
at 4:00 PM