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."

Tuesday, May 3, 2011

McCrann suggests June, and gives me another label!

Terry McCrann is one seriously smart commentator. And I mean cross him intellectually at your considerable peril. He also has a fondness for dreaming up new labels for yours truly...Today I have the warmer appellation of 'iconoclast'. Here is Terry today is the Herald Sun...

"Expect first sign of an RBA gear change today
Terry McCrann
From: Herald Sun
May 03, 2011 12:00AM

THE much, much more striking news for your future came from the Reserve Bank yesterday [the soaring commodity price index, up significantly even in AUD terms].

The impact on you could start very soon. After a similar rise in our commodity price index last October, I wrote the RBA would raise interest rates that month. It waited a month until November.

The same is likely now. Although arguably, just as in October, the RBA should move to raise rates immediately. Today. That's the view of iconoclast economist Christopher Joye.

More likely is that the RBA will all-but announce a rate rise this afternoon and deliver it in June.

Any suggestion that it should 'wait' until August for further evidence on the inflation front, was swept away by the tsunami of money that is pouring across our shores, implicit in those commodity prices.

That's, raise rates, absent some cataclysmic global event in the next few weeks. Either economic or financial - unlikely. Or 9/11-like as a consequence of the other news yesterday,

Now, that 'Osama impact' which sent share markets and the US dollar up sharply, will likely fade pretty quickly.

It ain't going to create a single job in the US, or boost housing values, far less solve the mammoth US debt and deficit problems. It will do even less for the European issues. And that's before contemplating any negative 'blow-back'.

Setting that question aside we will quickly return to the reality - realities, plural - that prevailed on Monday morning.

Including this extraordinary level of commodity prices - a consequence of a cocktail of good real news, the China demand story; and bad news, the US trashing of its currency, fuelling an extra demand for hard commodities.

The US dollar keeps going down in either reality construct. Either because the world gets gloomier about trashed paper money. Or because, increased optimism promotes the appetite for risk - that's, non-US investments.

The further surge in the gold price reflected this twin confusion. It was a further affirmation of distrust of paper and a touch of post-Osama fear.

It was also further evidence of demand for commodities and expectation of strong, inflationary, global growth.

Our dollar will be back over $US1.10 and heading higher. Driven increasingly by its own high Aussie interest rate China story, on top of the weak greenback dynamic."