Equity investors have endured myriad challenges since the US stockmarket whipsaws began in August 2015. These volatile windows lined up with the US interest rate cuts and a respite in the US Dollar advance. The base case for Australian equities remains sound. An ERP of ~ 6.1% makes equities a better bet than bonds. The recent reporting season confirms Australia’s corporate vigour, nowhere more impressive than the resources sector, where companies are rapidly adapting to falling commodity prices. Our conservative federal government is readying for a second mandate post-July 2, and there remains ample scope for interest rate accommodation if/when the RBA feels so inclined. The technical analysis of equity markets is constructive across a broad range of indicators. The Australian market scrubs up particularly well in this regard, small caps especially so. Read the full article below.