• Clifford Bennett, Chief Economist at ACY Securities


• 23.12.2021 10:30 am
undisclosed

The RBA will either raise rates or completely blow up the economy by not responding to inflation and asset bubble pressures until these events are appearing in history books.

Christmas!

It is the holidays for most of us and Christmas too for some of us.

Each year I do like to take the time and wish absolutely everyone of all faiths and not so much faith too, a very Merry Christmas!

One of the most beautiful aspects of this planet is precisely how different we all are!

I am a BIG believer in celebrating our differences, the variety that brings to and how it enriches all our lives.

Please allow me to wish each and everyone a blessed and Merry Christmas and I hope to share your celebration in all faiths throughout the year!

All the best to your family and friends and colleagues and to the strangers you pass in the street. There is plenty of room in this world for just giving.

Wild and Wooly Christmas Markets.

Appropriately Christmas colours for the SP500 daily candle chart from Finlogix.com.

Significant rally testing every fibre of my bearish view, but still in the range. This is where I say, the bearish view is only just hanging in there. And it is. In truth we are simply continuing to see big swings in both directions, up and down, every few days.

Even though I am still bearish, we will all have to respect the range break direction that eventuates. There are now established big bets on both sides of the market and one side will have to unwind those positions as we move though and into January 2022.

Fundamentally, absolutely nothing has changed. Economic data is a little chaotic but there are entrenched softening trends in both Europe and China. The USA is jumping around a bit more, but I still see below trend growth in 2022 in the order of 2.5%. Way below the Federal Reserve and consensus expectations.

For Australia expect nothing but surprises to the downside. As the whole getting back to normal thing devolves into anything but. GDP is likely to be around 2.5% though the calendar year but will be volatile quarterly.

The RBA will either raise rates or completely blow up the economy by not responding to inflation and asset bubble pressures until these events are appearing in history books.

Trade data will also trend less favourably than the wildly optimistic forecasts of the institutionalised.

What of January 2022?

Here are my back of the envelope ideas on market directions in 2022, so you can get back to your Christmas preparations...

Think of these as first overall movements, as anything can happen these days, and I would be wrong on my bearish equity calls if all indices in the US again made new highs.

2022 Forecasts Risk Accentuated

SP500  4,080

AUS200  5,900

EURUSD (in case you did not notice, as well as the AUD call from .7745 to 70 cents, we also got the Euro right with a 1.12 then still risk to 1.07 forecast made several months ago). 1.0500

AUDUSD  .6500  (Risk .5800 just something to consider)

GOLD  US$2,250

West Texas Oil   US$51.50