Vimal Gor is calling for the complete annihilation of the Australian dollar, based on the premise that the Australian central bank will be forced to lower rates. In turn, foreign capital will flee and the currency will halve. I cannot get my head around this line of thinking. It just seems retarded to me.
Is Mr. Gor simply smoking opium in his offices, while writing newsletters?
His basis for this destruction is a resumption of the drop in crude back to the lows, followed by a deleterious economic decline, forcing retardation to afflict all of those in charge at the RBA.
Vimal Gor, who oversees the equivalent of about $11 billion in fixed-income assets at BTIM in Sydney, predicted in a newsletter published Thursday that the Reserve Bank of Australia will be forced to cut its cash rate from 1.75 percent to 1 percent or lower. He pointed to what he described as the “weakness” in the composition of Australia’s most recent economic growth figures and the risks posed by the country’s reliance on foreign capital.
“The Australian dollar is at far more risk than most people think,” wrote Gor, the fund manager’s head of income and fixed interest. “A shock downside could easily see it move to 40 cents against the U.S. dollar if current trends continue, commodities fall to lows again and economic growth deteriorates.”
Gor, who said last month that it was a “distinct possibility” the RBA would follow its peers in Europe and Japan in taking rates below zero, has views that are at odds with a majority of analysts. The swaps market is currently pricing in just one quarter-point reduction in the cash rate over the coming 12 months, according to data compiled by Bloomberg.
Gor underscores the risks posed by the twin deficits in Australia’s current account and its budget as the RBA lowers rates and said that the country’s top credit rating is likely to be put on review within the next few months.
“The move towards zero for the RBA will be the first for a country so reliant on foreign capital,” he said. “Low rates in an economy like Australia will genuinely be a test of the stability of an economy that has a very specific relationship with the rest of the world.”
I’m done for the night. I can’t deal with these people any longer.
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Any thoughts on Goog pager investing pstash on flying cars verses whatever the cooker is doing with Aapl?
Flying cars is an absurd idea.
All these doom and gloom forecasts there seems to be a lot coming at us. Some of them could be right. Which ones? Wish I knew. Nobody really knows.
What a load of horse. Ozzie buck is a commodity buck. One cannot get in one’s gold mine and shrive Ozzie.
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There is no retardation quite like forced retardation.
After reading Fly’s post on Site Traffic I figured I better post something to help the numbers and stop this Bull Rally that shouldn’t be occurring. This market should be down the 300 points I was expecting on the SPX by the end of June. For the Aussie, if he is correct, then OMG the Kiwi would be even bloodier. But fwiw, even though I been following such a huge commodity glut since it started to form, I don’t think the RBA could act that drastic. One, their Housing is already in a bubble and lower rates would just kill them…the Loonie has the same catch 22…Yuan too. The World IMHO is coming to the point that Central Bankers Monetary Polices are just not working, just ask Abe and Kuroda.