Morning Report Monday 15 September 2014
Is QBE the best way to chase relative strength in the US economy?
Most analysts are in agreement that the Australian economy will lag significantly behind the US economy over the next few years. The weakness domestically is obviously due to the “end of the mining boom”, as Iron Ore falls towards US$80/tonne after being above US$180/ tonne in 2011. I would add that I get a little concerned when all economists agree. However, as I have said repeatedly over recent months, I believe US interest rates will rise, implying an improving US economy and China is consolidating at best, putting short term pressure on the domestic economy. My conclusion is at present, the economists are on the money this time.The questions we then ask ourselves, is the rallying QBE the best way to benefit from this economic divergence?
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