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, August 2, 2012

Retail booms--another blow for gloomers calling for rate cuts

And, yes, we had industry leaders arguing this week that the economy was in the hole. Taking the Q1 GDP together with the underlying household consumption data, the unemployment rate over the last year, and, yes, house prices, the credibility of those economic bears must surely be shot to pieces. Here is a tight summary of today's stunning retail data from one top strategist:

Retail was +1%m/m nominal (surprising the market expectation of +0.7%), with prior revised up +30bps to +0.8%m/m. No freaking retail recession here!

This took Q2 real retail to +1.4%q/q v. market's guess of +0.9%q/q (though Q1 was rev'd down 40bps to +1.4%q/q).

It is awfully hard to get sub-trend GDP with retail +1.4%q/q. In fact, the RBA's GDP forecast for Q2 should probably be revised up to *above trend*, and Q4 might get bumped up too.

This could flow through to the RBA's inflation forecasts. Anyone suggesting the RBA needs to cut rates on the back of this is rather kookie.