Aussie market started positive with miners before banks joined in to push it even more to close just above the psychological 5000 mark. The morning strength in miners was due to recent strength in Iron Ore, but the main catalysts are post Chinee New Year re-stocking and some supply side issues. Oil price showing positive signs in Asia, but really can’t see that holding up. OPEC is still holding fire on supply while non OPEC countries are screaming for a cut. Both Iron Ore and Oil likely to trend down in the short term, but market is betting on limited downside risk. RBA jawboning the currency down remains weak as currency war by the big 4 central banks are putting upward pressure on AUDUSD. RBA will be forced to cut rates as the unemployment rises with slowing economy. Property prices are going to go down as more banks move on rates out of cycle. WBC joined NAB and ANZ while we see this trend playing out a few more times in 2016..…. (VIEW LINK)
The fall in the US participation rate over the past seven years would surely largely be due to the fact that the number of retirees has started to exceed the number of new people entering the job market?. If this is taken into consideration, the falling participation rate may not necessarily reveal much about the state of the US economy.
That has been a trend globally with demographic change, but the drop in US has been a lot higher than Australia in the same period. Even if we assume that is the case, then that sets up other issues regarding the sustainability of the US economy and debt with lower workforce. These are issues faced my all the major economies, but US as the shining star is pricing in too much optimism. US is growing, but likely to grow slower than what the market is expecting for the next year or two. This will put real pressure on US Fed to stay on the sidelines in 2016.
I rode IFM up and rode it back down. To stay in or get out? I'm in two minds.