Morning Report Wednesday 27 May 2015
Don’t forget to register for today’s important Market Matters' webinar investment update at 4.30pm
Last night, US stocks had their largest fall in three weeks as strong economic data increased belief that the Fed will commence raising rates in 2015. I remain convinced that the US stock market will fall ~15% in 2015, chart 2 illustrates how last night’s pullback does not represent a “blip” on the Bull market rally we have witnessed since early 2009.
• The US economy is improving solidly, indicating rate rises to commence in 2015 – the current Fed Fund rate 0.25% compared to 2% in Australia.
With the US clearly close to pushing the button on raising rates and Australia still holding an easing bias, the recent depreciation of the $A is hardly surprising. Technically I think the $A will eventually fall well under 70c, significantly aiding companies with $US earnings. The pursuit of companies with $US earnings is a mature trend of the last few years but one I believe still has a lot further to go. Three stocks that I like with $US earnings are:
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