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."

Thursday, April 8, 2010

Rory Robertson on the RBA's motives

In his proprietary research note last night Macquarie Bank's Rory Robertson made the following counter-intuitive--at least for the media and mainstream RBA watchers--observation about the central bank's recent motivations, which nicely complements my post on the Australian sharemarket's valuation below (my emphasis added):

"Concluding thought – uptrend in home prices simply not the main game

The booming Chinese economy, brighter signs from the US economy, and the steep uptrend in resource prices (chart) – on top of low and falling unemployment locally (chart) - are a big part of why the RBA went ahead with yesterday’s hike, despite the fact that retail sales reportedly fell sharply in February and now have been broadly flat over the past nine months (chart).

That is, it wasn’t higher house prices that prompted the latest hike, as some have suggested, but the fact that most everything on the local macroeconomic front is much brighter than was the case 12 months ago, when the RBA cut for the last time, to 3%.

Indeed, things generally are somewhat brighter than just 3-6 months ago. If the focus is on asset prices in particular, the RBA is responding to the fact that most key asset prices – commodity prices, share prices (chart) and house prices – continue to rise, with these happy uptrends all tending to boost local confidence and spending."

Rory's research is the best local central banking fodder going around...If you can get on his distribution list, which is generally reserved for clients only, I would encourage you to do so.