Market talking points – June 2015

Market talking points: We continue to expect US growth to recover from Q1 and remain below trend. We continue to expect volatility with Greece and Euro before reaching a short to medium term deal. We also continue to see the domestic economy struggling over the next 12 months with high unemployment, falling disposable income, falling commodity prices, asset bubbles and government inaction. We remain positive on the medium to long term market view to reach 6500 in 2016 on the yield thematic with falling rates and currency. We expect global investors to come back into the Australian equity market chasing the dividend yield thematic as the currency gets down to low 70s. Sector talking points: Financial sectors are showing good value and yield despite asset bubble risks. Resources have more downside risks after the recent bounce in Iron Ore and Oil prices. The overall ranking suggests that Diversified Financials still remains the best risk return sector in the market. The Utilities sector ranks the worst as the recovering bond yields put pressure on stretched valuations. (VIEW LINK)