In the past we have often stated that the longer term is much easier to forecast than the shorter term

In the past we have often stated that the longer term is much easier to forecast than the shorter term. Today it seems that this statement is even truer as we consider the outlook for Australia's economy and therefore its investment markets in 2015. We see a rocky road ahead for the Australian economy and equity market in the first half of 2015. In some respects, the recent pullback in the market from early September reflects the difficult outlook. Markets are predictive and will normally price in a downturn well before in eventuates. In this cycle the downturn is being magnified by an elevated currency and sharply weakening commodity export prices. Thus, it will be a weakening currency that will ultimately offset lost commodity income and cushion the Australian economy. It is interesting to note that the Australian dollar price of iron ore has actually risen in the last month despite a US$ spot price decline. (VIEW LINK)