CLIFFORD BENNETT
GLOBAL FORECASTER
Australia
There is a recession coming, may already be here, and it will be a serious one at that. High immigration at record levels for over a century and high government spending are masking a significant private sector slow down. Corporate profits have been falling sharply for six months now. Highlighting the additional risk now at play for the nation's equity markets.
GDP
GDP is below historic norms despite the above mentioned factors, and looks set to continue to slow. Private sector growth was flat last quarter, and the current Q4 is likely to prove negative.
AUS200 8425. 11 December 2024
We did very well to go immediately short again yesterday. And it continues to look very heavy indeed. You could probably even sell more today.
Good morning,
The RBA is behind the curve by a big margin, as is standard practice. I suspect the margin is in the order of 12 months.
Yesterday, as we have been saying had to happen, the RBA finally moved to a more neutral stance. In order to support the economy however, it should probably have already cut rates for the fourth time yesterday. Their high school economics approach of being data driven is a function of the Peter Principle at work. This institutionalises always being late to do anything. Up or down.
It means the normal ebbs and flows of the economy become an exaggerated roller-coaster affair. This is why I am such an avid critic of this defunct organisation and advocate for fundamental change of the institution itself.
This is important from a market perspective, because we have to understand the RBA will be too late to save the economy or the market. Too late, means rate cuts make no difference to the psyche of businesses and the population at that point, and therefore recessions can become entrenched and elongated as a result.
Leaving us with no choice, but to yell warnings from the rooftops to protect your well built portfolios.
Everyone is vulnerable in a significant down-turn period.
Clifford Bennett
Quick Overview
Australian Stock Market
Our short AUS200 is now up over 200 points.
Not bad when all the financial media was bullish back up there.
This is not a bull market. We are back where we were in October.
And the fundamentals look dire to me. Employment may look strong at the moment, but with six months of sharply declining corporate profits the new year could see some reckoning on that front, unfortunately.
Long called for changes at the RBA are happening, but far too slowly to save Australian families from experiencing a significant recession in 2025. While government spending, strong immigration, and the big spending wealthy set struggle to keep the economy afloat.
As the wealth gap accelerates the aggregate data becomes less and less reliable to get a read on how things are going for most Australians. It is not good.
This current weakness could turn into something even more profound in 2025.
This downturn seems inescapable with an RBA asleep on the back seat, no one driving, and if I am correct on this, will definitely see a change of government at the up-coming Federal election.
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