Summary: It is time for the US to start increasing interest rates and I think rate rises will be modest. Any sharp rate rises would cause a fall in bond prices and boost the US dollar, which could snuff out the US recovery. Meanwhile, China is trying to curb steel manufacturing, but I think the curbs will be less than many expect which will help our commodity prices. In Australia, we are almost certainly going to see a further decline in interest rates, and bank depositors are turning to the share market for income.
Key take-out: Certainly there is downside risk in our share market but that doesn’t mean that you have to bail out of everything.
Key beneficiaries: General investors. Category: Shares.