Market Update June 2010

Stand clear… the rollercoaster is approaching the platform for another trip around… stand clear.

Well it has been a bit like that approaching midyear for 2010 on the ASX, and I suspect it may persist until the year`s end.

Taking profits as they present is still the prudent approach in trading this current market.

The huge business transformations that I observed and spoke of back in January are still playing out on a global scale and are now in both the Private and Sovereign arena`s.

No, the business of Government has not escaped sweeping changes either. Many clients I have spoken with applaud this fact too. It has always been an inherent risk in my view in relation to Government management that any ``amateur`` can rise amongst the political to a level that he or she can cause huge financial instability and create more unrest.

The action`s of the current Government of Australia have demonstrated this inherent risk regrettably, affecting us all.

Despite the above, we are still an economic envy and I feel that will be sustained by our natural wealth going forward.
Australia`s interest rate sensitivity is still a big risk for the property sector and we are the only developed economy not to experience a significant correction so far in property.
We are still at 6 to 8 times annual income levels for residential property and this might not be sustainable if rates maintain their march upward.

The opportunities are still in commodities (hard and soft) and the energy sectors in my view; I believe the vast amounts of central bank money creation will support both sectors.

The big question is …..Is it enough (money creation) to allow a self sustained recovery big enough to attempt to unwind some of these huge global imbalances?
 Time will tell.

Ok….it’s time for me to hop back on, fasten my seatbelt and get back to work.