This note looks at the timing of the economic recovery globally and in Australia, how strong it might be and the implications for shares. The key points are as follows:

– The improvement in economic indicators is consistent with an economic recovery by year-end.
– While tight credit markets and ongoing deleveraging will most likely result in slow recovery initially (around 2% growth next year), the severity of the global recession and the amount of stimulus pumped into the global economies means that a ‘V-shaped’ recovery (with 5% or so growth next year) cannot be ruled out.
– After strong gains, shares are at risk of a correction increased volatility in the months ahead as investors start to fret about the strength of the recovery. However, we expect the broad trend to remain up.

Read More

Leave a Reply