Sunset Strip | Aussie market let some steam off the recent run up after weak construction data and ECB delivering more talk and less action again

Sunset Strip | Aussie market let some steam off the recent run up after weak construction data and ECB delivering more talk and less action again. Despite every broker calling for a rate rise in 2015 last month, everyone is now jumping over each other to be biggest interest rate bear by calling for the earliest and the biggest RBA rate cut in 2015. We maintain our view from three months ago that we expect 25-50 bps rate cut next year. Despite the short term government risk with tax white paper, financial sector inquiry and mid-year budget update expected in the next few weeks, we turned positive as the market bounced off fair value (i.e. on Monday's close) after pricing in very low growth outlook. History shows that Discretionary retail stocks get hammered every time RBA starts its rate cutting cycle. Given the market outlook change to rate cut, better take profit on any domestic discretionary retail stock. (VIEW LINK)