We expect to see the full commencement of QE in Europe

We expect to see the full commencement of QE in Europe. In doing so, we should also witness a further weakening of the euro potentially leading to capital flows into the US and Australia. It is this overflow of liquidity that is holding up the $A and restricting a much-needed depreciation. Despite the buoyancy in some major equity markets (particularly Germany), no one should discount the perverting effects of QE across the globe. As we enter 2015, it is worth remembering that we are 15 years past the internet bubble and subsequent crash and 7 years past the height of the GFC. It would not surprise us, based on market cycles, if some form of asset market crisis emerged once again. History suggests that extremely overpriced asset markets will bear the brunt of a price correction, and the European bond market is most at risk. (VIEW LINK)