VIEW: ING note that AU "business investment.....>

RBA: VIEW: ING note that AU "business investment in 2Q18 was very weak, and it

now appears that the extraction industries have not fully finished downsizing,

with plans for slower investment over the coming 12 month period, and likely

softer investment outside the extraction industries. The RBA's focus on the

tightness of the labour market seems misplaced, as this is the most lagging part

of the economy. The housing market is slowing in nearly every large metropolitan

district, with excessive construction leading to an unhelpful build-up in

inventories. Very high and growing household debt ratios provide a further

hurdle for any tightening of policy. The RBA's expectation that the next rate

move is bound to upwards seem to us to lack solid support. We still do not know

the extent of damage to the primary sector as a result of the drought in parts

of the country, And the loss of livestock and incomes is unlikely to be quick to

recover. In consequence, we think that market pricing would be more accurate if

it were closer to flat over the coming 12-18 months, and we would not need much

persuasion to view the next RBA move as downwards, though this still seems a

step too far today."