Mathan Somasundaram

Sunset Strip | Aussie market delivered a flat day despite the positive global lead. We continue to be negative in the short term as we have not seen any substantial earnings upgrade to change the valuation bands. We remain positive long term, but short term bumps are expected when market runs too far ahead of reality. ECB now has to deliver or the markets will pullback substantially. US economy is holding up on below trend growth while Euro is in a lot of trouble. Locally house prices and budget woes gets media play. How many economists does it take to work out consumer sentiment? Only one...but he or she has to live in a suburb where the average house does not have a water view and have to use public transport to come to work. Trading idea of the day: Henderson Group (HGG). Tuesday's Retail Stock Pick: Woolworths (WOW). (VIEW LINK)



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Mathan Somasundaram

That is true, it is a bit like being negative on the market. Things all move in cycles, it is a matter of where you are in the cycle. House prices for me are driven by return on investment of the asset and underlying growth in real disposable income to support the asset. Once both branches are over done, I think it is a matter of time before the correction comes. If the argument is that the Chinese are parking their savings, I think US and Europe offering better risk/return than Australia. The question you have to ask is who is positive on house prices and their motives...Brokers, Governments and central banks have to hope that they hold up till the global growth picks up or it could get very messy.

James Marlay

On Sydney property... If you say it is a bubble for long enough one day you (might) be right.