Morning Report Monday 2 February 2015
Apart from the quality high yield paying stocks over the last 12 months, a sector of the ASX200 that has had a stellar time are stocks exposed to US earnings. This outperformance is hardly surprising considering the relative position of the two economies. The recent collapse in the $A under 78c has proved this market positioning to be on the money, however when everybody is “on board a trade” reversions can be noticeably dramatic. On Friday night we witnessed a savage 250 point fall in the Dow after very important US GDP Data (Growth indicator) was lower than anticipated. I believe economic data will continue to fuel the recent decline in the DOW, accelerating closer towards my targeted sub 16,000 area i.e. approx. 10% lower. As we have witnessed over recent weeks, the ASX200 is dramatically outperforming the US market. It again appears overseas investors are chasing the Australian high yielding stocks as the weakening $A reduces their entry cost. However, if this US correction does materialise, it is likely to be the “crowded” long US earners trade that will be unwound quickly leading to excellent buying opportunities.
Show more...
