Here it is, halfway through the year already and nothing seems to be going according to plan.
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A straw poll I did of economists at the start of the year had the sharemarket racing past 6000 and, incredibly, interest rates rising. Property was supposed to cool down as unemployment rose.
On these there was near universal agreement which just goes to show that what investors should fear most is a consensus about the outlook. Only the dollar is behaving as expected – as distinct from what's wanted – unusual in itself.
Let it be said AllianceBernstein's Guy Bruten did predict the two rate cuts we've had so far this year – though he could yet be wrong if there's a third.
So who'd be silly enough to predict what this new financial year holds?
Oh, all right.
The source of the gloom and doom about the economy is the figure for GDP, especially the slump in investment. But job numbers, while nothing brilliant, are much brighter. The unemployment rate fell in May to 6 per cent which nobody saw coming.
Even the Bureau of Statistics began to harbour self-doubts, wondering if there was something wrong with its sample, though changing the wording of a crucial question about seeking a job was an own goal.
The reason economists are sceptical about the job numbers is that it takes up to six months between a change in economic conditions facing a firm and its decision to hire, fire or outsource. That means going on jobs growth is looking in the rear vision mirror.
So how come growth sagged in the second half of last year to less than 2 per cent – or zilch in per capita terms – yet employment has picked up?
The official line is that wages are falling in real terms so more small businesses can afford to hold on to staff or even hire. By the way, low wage rises and interest rates are also good for the sharemarket.
The fastest growing sectors – housing construction and services – are the most labour intensive as well.
But maybe there's something wrong with the GDP figure too. Either it's not counting something – perhaps all the goings- on in the digital economy – or the seasonal adjustment process is a bit wonky.
Funnily enough, it's when the GDP figure does tally with the labour market – growing at an annualised, job creating 3.6 per cent in the March quarter – that eyebrows are raised.
Even the forecast drop in investment this financial year needs to be taken with a grain of salt. This is based on the ABS capital expenditure or "capex" survey which is known around the markets as the "crapex" survey, and for good reason.
To wit, its salient feature is being always wrong, though that doesn't stop economists fiddling around with the figures for something to say. Never mind most of the services sector isn't even asked what it might be doing.
Mind you, the less capex spending by listed companies, the happier the market seems to be since there's more for dividends.
Even as mining investment is falling off a cliff, LNG exports are reaching a peak. Over the next year they'll add 17 per cent to global demand according to Deloitte Access Economics.
An index compiled by the CBA from every sale through its eftpos terminals suggests the "strongest three-month gains in 15 months".
So if the economy is doing a bit better than the official figures suggest, what's that mean for this financial year?
Much depends on the dollar. Or I should say it's all about the fortunes of the US dollar which is being propped up by expected rate hikes. There's likely to be one in September but that'll be it for a while.
Needless to say, whatever the US does, or doesn't do, about rates will have an impact on Wall Street, which has enjoyed an extended sugar hit of cheap money.
While investing in Wall Street stocks has been a boon for Australian investors, the big winner so far this year is commercial property.
For example, Charter Hall's Direct Office Fund returned 35 per cent in the past year, just ahead of Wall Street's S&P500 in Australian dollars.
Listed property trusts gained about 20 per cent including distributions, still leaving the rest of the market for dead.
The reason? A surge in foreign investment and record low interest rates, neither of which is likely to change in the foreseeable future.
Residential property is also running its own race in Sydney and parts of Melbourne. You'd have to think that with a lending clampdown on investment properties, the sheer level of prices, and sluggish wage growth the best is behind it.
