Recent economic indicators reflect a subdued but positive economic outlook for the US and slightly better for the major European economies. This, together with emerging positive news in these markets has seen some sustained market improvement.

Australia is in excellent economic shape as are our major trading partners in Asia and the
emerging markets. If the federal government doesn’t make a mess of it, our outlook is nothing short of brilliant.

Here are some facts to ponder:
·    Australians came through the economic crisis better than any other developed economy. Not because of pink bats and school gymnasiums, because our economy was already in massive surplus and corporate Australia was in good shape.

·    Australia’s banking sector is the envy of the world because of good regulation and good management.

·    Australia is a resource rich country so is a net benefactor of the emerging growth sectors of the world led by China.

·    The recent economic downturn has seen corporate Australia decrease debt to unprecedented low levels, pursue bargain priced acquisitions and is now poised to take advantage of recovery.

·    The US is still the largest economy in the world and is 70% consumer driven. Despite its debt it is still an economic power house which largely controls its own destiny.

·    Large US corporations like Microsoft, Johnson & Johnson and McDonalds are world market leaders whose market-place is not confined to the US.

·    The major European economies of Germany and France are in positive territory with healthy order books from emerging economies.

·    The EEU cannot let one of their members go bankrupt, so there is no option but bail them out whilst, at the same time, demanding responsible regulatory action.

Whilst there is no doubt that US and European economic growth is likely to be subdued, that does not directly translate to subdued sharemarket growth. In fact we would argue that fundamentally, it supports dramatic sharemarket growth.

The only conclusion that can be reasonably reached from all of this is a strong market
recovery.  Our message is simply to keep watching this space…