Equity markets will be down for the year. The round of big bank results (ANZ, NAB, WBC) starting this Thursday will meet expectations but David Murray has a compelling argument bank regulatory capital ratios need to rise. Banks should be able to retain the extra capital by lowering dividend payout ratios, suggesting possible pressure on dividend growth over time. Republicans are likely to win control of the US Senate and retain their current majority in the House of Representatives, increasing their political muscle to use against President Obama in the last two years of his presidency. The resulting conflict could dampen sentiment on equities - remember the cliffhanger in markets early last year over the shutdown and whether the US Government would default on its debt? This situation could return. Retailers are struggling due to weak consumer confidence and government needs to respond with a consistent, credible policy agenda. The benefits of A$ depreciation are starting to flow and we should hear more optimistic commentary from affected companies at their meetings. Watch video: (VIEW LINK)
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