New Zealand political playbook to play out in Australia? If so, supports economy Author: Eamonn Sheridan | Category: News
The Australian federal election is in May this year. These have lately been a Tweedledumb vs. Tweedledumber contest, but maybe not this time.
Which introduces political risk in Australian markets. That's the implication of this take from TD anyway:
the political situation is unfolding along the lines of the New Zealand experience
- If the Opposition ALP wins the May election, expect higher minimum wages, tax cuts for middle Australia and higher welfare payments, all straight out of the NZ Labour Party playbook
Despite soggy "protest" business confidence, New Zealand is fully employed, consumer spending is strong, and inflation is close to target due to these policies.
- We expect a similar response from Australian households, spending such 'liquid' fiscal stimulus.
- In contrast, consumers are likely to be spooked by an 'economy is faltering' rate cut, already seen in yesterday's slump in consumer confidence.
That's from a longer note from TD, found it interesting.—This from TD on the AUD:
- Despite global market volatility and uncertainty the AUD is trading remarkably well at $US0.70-73 in recent months, and compared with $US0.78 a year ago is supportive for trade. There is no need for a lower cash rate to dampen the exchange rate either.