STILL GOING

If you have read our work for a while you probably know that we have a pronounced bullish bias towards Australia. With significant geographical hurdles and commodity export dependence to deal with, the land down under has consistently shown resilience through the level headed policy of central bankers there through the good times and swift government stimulus actions during the bad.

Today's GDP release for Q1, 0.4%, looks positively robust in the current global environment as order flow from "the client" and government spending have kept unemployment relatively stable, combined with stimulus checks, which have encouraged consumer spending to stabilize.

The numbers also reveals some real pain however, with private investment declining by 1.6% and imports off by over 10% the expectation that the positive overall trend can continue hinges in large part on recovery in the sectors not directly linked to energy, agricultural and industrial commodities to provide confirmation.  While plenty of worrying factors remain (the financial sector continues to be a concern for us with the recent increase in bad loan provisions by major financials, and commercial real estate remains a minefield) the improving housing market and a comparatively robust equity syndicate calendar seem to bode well for the broad equity market.

We continue to like Australia and will be looking to go long the equity market there via the EWA ETF if presented with a favorable entry point. As always our trading will be informed by price action as well as fundamentals.

All props to Mr. Seamus Quick, our man in Sydney.

Andrew Barber

Director

STILL GOING - austr