Economic and Sharemarket Insights

I recently had the pleasure of listening to Chris Caton, Chief Economist at BT Investment Management.

A summary of his views of the current volatile market are as follows:

• The global economic recovery continues, albeit slowly.

• The threat of a double dip recession has been exaggerated.

• The Australian economy should grow well - led by mining investment.

• Interest rates will probably rise further. The forecast is 5.25% by 30 June 2011 from the current 4.50% (or 3 rate rises of 0.25%).

• The exchange rate is above fair value. The forecast is 0.83 AUD/USD from the current 0.898 (or 8% lower).

• The sharemarket is cheap. The ASX 200 is currently 4,470 and is forecast to rise to 5,000 (or 12% higher) by 31 December 2010 and rise to 5,250 (or 18% higher) by 30 June 2011.

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.