Morning Report Monday 16 January 2015
The Market is betting heavily on a US correction, but is it premature?
We are witnessing a phenomenal rally in equities which has been led by the US, and Australia is finally aggressively playing catch up – the S&P500 has rallied 95% since October 2011, but the ASX200 only 56%. The current rally is being fuelled by “free money” making quality high yielding equities the best game in town – if you buy Commonwealth Bank (CBA) today you are likely to receive well over 6% fully franked dividends over the next 53 weeks, attractive compared to Australian 3-year bonds trading at 1.85%. Finally this rally is getting air time in the press, although not from cab drivers like in the ‘80’s! This bull market is probably the least participated rally in history as investors remain deeply scarred from the GFC; hopefully people will not jump on board too late and be burnt again.
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