Is Australia the next big 'Big Short' for global investors?

When the Reserve Bank trotted out its most recent robust prognosis of the Australian economy there were more than a few sceptical eyebrows raised.

The RBA’s quarterly Statement on Monetary Policy (SoMP) nudged up GDP growth to 3.5 per cent by the end of the year and has it still motoring along above 3 per cent well into 2020.

Westpac’s veteran chief economist and RBA watcher, Bill Evans, adopted a rather Sir Humphrey Appleby tone on what looks like a courageous call from Martin Place, particularly given the housing market’s well chronicled funk.

“There appears to be a degree of, in my opinion, over confidence around the current dynamics of the housing market and the potential impact on activity and inflation from these developments,” Mr Evans said of the SoMP’s outlook.

“Indeed, we assess that the growth momentum has already eased significantly from the 4 per cent annualised pace in the first half of 2018 and therefore find it entirely reasonable to expect the slowdown to extend into 2019.

That slowdown, coupled with a rethink on the US economy and interest rates, has seen Mr Evans and Westpac take a knife to their forecast for the Australian dollar.

Westpac binned its target of the Aussie dollar trading at 72 US cents by the end of next year, and replaced it with “a further leg down” to 68 cents by next September.

If Westpac is correct, then there is a fair bit of easy money to be made shorting the little Aussie battler.

To short, or not to short

Global investment strategist Gerard Minack spends a lot of his working day (and night) talking to seriously big investors around the world.

He says while there are risks aplenty in Australia, he’s not convinced it is worth taking a

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