GARY - Growth At Reasonable Yield | Even GARY needs a breather after recent performance

We maintain a bullish long term view on the Australian equity market to reach 6500 in 2016. The RBA’s move in February saw equities as the preferred risk/return option for investors wanting more than a 3% return in a rising cost environment. We see short term profit taking risk in the market after trading above post GFC premium valuation levels (i.e.5900) with yield trade getting squeezed by rising global macro risks and local bond yields. The RBA will be better served to keep the rate cuts to stimulate the economy after the budget. Despite jawboning the currency down, the RBA is unlikely to further fuel the asset bubbles linked to historical high household debt in an effort to stimulate a benign job market. GARY Industrial picks are: small cap (FXL, CWP and GDI), micro cap (HFA and GJT). GARY Resource and related picks are: small cap (RCR). (VIEW LINK)