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Rabobank analysts note that the Aussie retail sales this morning  rose only 0.1%  vs. expectations of a 0.2% increase.

Key Quotes

“As things stand now a nice tax cut of just over AUD530 is about to be ‘mailed out’ to around 10 million people, which should ensure that the next few months’ figures look better, unless consumer sentiment has  really  soured. Yet those with the highest marginal propensity to consume, who earn up to AUD37,000 a year, will only get AUD200; those on AUD37,000-47,999 will get AUD200-530; and only those on AUD48,000-90,000, who are more comfortable anyway, will get the full AUD530. However, if legislation is passed this week as the government wants, then the total cheque in the mail would rise to AUD1,080 for 4.5 million Aussies.”

“Yet what when that cash has been used up, by say October? (Assuming there is not a one-off splurge on flat-screen TVs that essentially hands Aussie taxes over the China.) Back to sluggish sales growth we go – and businesses will know it well. Yes, that shot of tax-back is scheduled to be repeated in 2020, 2021, and 2022. But again, it will still be a series of little lump-sum: is that really going to inspire Aussie businesses to invest and raise wages at long last?”

“So, yes, this is another fillip to Aussie growth in H2 following the RBA, and the out-of-this-world rally in iron ore that seems to be based on a view that China is booming and not struggling. However, there is still plenty to rain on the Aussie parade ahead too, trust me, and the RBA is not done yet. (Though as they welcome rain Down Under that idiom doesn’t fit.)”