• Clifford Bennett, Chief Economist | World’s most accurate currency forecaster at ACY


• 30.03.2022 12:30 pm
#stocks , Clifford Bennett has over 36 years of market trading experience and was named the 'World's most accurate currency forecaster' by Bloomberg New York. He has advised some of the world's largest organisations, billionaire investors, and political leaders and spoken at the prestigious APEC summit on reserve currency issues. Clifford is the Chief Economist at ACY Securities.

This was a budget that was very much about temporary measures to last beyond the Federal election. Just.

As expected there was negligible impact on financial markets. Stock futures and the Australian dollar trading in line with their international counterparts.

The Big Claim and The Big Disappointment.

It is important to grasp voter reaction.

The big claim has been un-employment striking historic lows. While the government claims full credit for this achievement, it really is a case of the on-going shortage of foreign workers and the usual back-packer army. Also the complete standstill of immigration. All have combined to create opportunities for Australia’s un-employed. A further dip to 3.75% would be welcome, already claimed as an achievement by the government, but there is the prospect of un-employment stabilising and drifting back up as travel comes back on line.

It is nonetheless a very welcome outcome that has also benefitted from substantial stimulus measures during Covid.

The two biggest disappointments in the Federal Budget were the halving of the fuel excise tax, delivering 22 cents at the bowser back in the pockets of voters, and one month only relief to welfare recipients.

The fuel tax should be completely scrapped. It is a regressive tax disproportionately impacting struggling working families. The levy has been halved only for six months, as Treasury believes Oil prices will go back down?

This was an opportunity for at least the slightest sign of real economic reform the country so badly needs. We are entering a full year at least of sky rocketing inflation.

The fuel tax should be scrapped permanently. We are talking about energy supply to enable a more level playing field for people to access jobs, do their jobs, access to education and healthcare. It is a taxation purely for politicians to balance their spreadsheets rather than having any justification in economics or commonsense.

For those still struggling in our society, they have been given the most poultry of payments, just $250 and once only. For one month only? Already struggling before higher energy and food prices many on welfare and in dire need of further assistance. What they have been given is recognition that prices are only higher for one month? This is a mistreatment of the least powerful. A pure window dressing to caring.

The focus here has been on what are likely to be the key voter interest subjects. Employment prospects remain high, but inflation will continue to reduce real wages. Instead of bold reform we have only been given tinkering at the edges. And temporary at that. The further claim that these costs of living increases are transitory is a rather hopeful proposition indeed.

What matters most for financial markets consideration is whether this election budget will indeed save the Coalition government. It would not appear so. At some point, markets will have to price a change of government.

A risk still not fully appreciated. The view here remains that stocks and the currency could be under pressure just before and after the Federal election, likely to be mid-may, followed by a reassuring new government rally.

Clifford Bennett
ACY Securities Chief Economist.

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.

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