Vanilla XJO Thread, page-3

The tone of the RBA governor's speech today was milder than previously. Some interpreted this as a signal that rate cuts might come sooner than May. XJO immediately jumped. Tomorrow the big banks will probably push the XJO higher.

In reality, inflation is now higher in Australia than in USA and UK where inflation has fallen much faster, and interest rates are still lower in Australia despite rate cuts in USA and UK. In my opinion, the RBA and most media hacks and most politicians live in a fantasy world if they think that in Australia rate cuts are now more likely than rate rises. Eventually the chickens will come home to roost, especially if Trump's economic policies spark a new round of global inflation.

Here is an example of one of the fantasies that media hacks repeatedly parrot. Trump imposes extra tariffs on USA imports from China. China economy shrinks. Australia sells less raw materials to China. Australian exports fall. GDP falls. XJO falls. Media hacks parrot doom and gloom for Australia. Wrong. In reality, USA will still need all the goods that it did before, so it will have to produce the goods themselves or import them from somewhere else other than China, or most likely just keep importing goods from China but paying higher consumer prices while Trump's coffers fill up with tariff taxes. Net global demand for raw materials will not reduce. All that will happen is that everything will become more expensive for consumers and the USA will be able to pay off some of its debt. Protectionism 101.