Sunset Strip | Aussie Afternoon Institutional Market Wrap

Aussie market opened up very positively before the very negative business capex data took the shine off to end up with a smaller positive close. The business capex shows that despite all the talk from business lobby groups, the reality of the outlook for the economy is relatively bearish. The overly negative capex outlook will further fuel the fire that the unemployment fantasy data will get worse from here and RBA will be forced to cut rates in 2016 as the reality of the Treasury downgraded growth outlook creates a reality check. We continue to feel that the corporates will react to the AGM feedback through a big layer of cost cutting (i.e. laying-off staff and consolidating operations) in the next 3mths before the February result season. US goes into holiday mode with Thanksgiving tonight and most will take Friday off and make it a long weekend. The market ran on the yield trade as the capex data supported rate cuts in 2016. Despite few days of profit taking, it still looks like we are having the Christmas rally!!! (VIEW LINK)