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Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
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Chris Caton's Economic Preview for AIM NSW & ACT, 2013

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Chris Caton, Chief Economist at BT Financial Group, presented his economic preview for AIM NSW & ACT this week. "Share markets are still slightly cheap" is just one of the key findings. Read more in …

Chris Caton, Chief Economist at BT Financial Group, presented his economic preview for AIM NSW & ACT this week. "Share markets are still slightly cheap" is just one of the key findings. Read more in the attached slide show.

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  • 1. A Global Economic andMarket OutlookPresented by Dr Chris CatonFebruary 2013
  • 2. Euro-area government bond spreads (to Germanbonds)2
  • 3. The two that matter have clearly improved (long-termbond yields (%))3
  • 4. 2013 Growth Forecasts (%) Month of Forecast M-12 A-12 M-12 J-12 J-12 A-12 S-12 O-12 N-12 D-12 J-13 Australia 3.1 3.1 3.4 3.2 3.1 3.1 2.9 2.9 2.8 2.7 2.6 New 3.2 3.1 3.0 3.0 2.9 2.8 2.8 2.7 2.6 2.6 2.5 Zealand US 2.6 2.5 2.5 2.4 2.3 2.1 2.1 2.0 1.9 1.9 2.0 Japan 1.5 1.5 1.5 1.3 1.4 1.4 1.3 1.3 0.8 0.6 0.7 China 8.6 8.5 8.5 8.4 8.4 8.3 8.1 8.1 8.1 8.1 8.1 Germany 1.5 1.6 1.6 1.4 1.3 1.2 1.0 0.9 0.8 0.7 0.7 UK 1.8 1.8 1.8 1.8 1.6 1.4 1.3 1.2 1.3 1.1 1.0 “World” 3.2 3.1 3.1 3.0 2.9 2.9 2.8 2.8 2.7 2.6 2.6 Source: Consensus Economics4
  • 5. Real GDP growth in Australia and the US Year to % change 10 US Australia 7.5 5 2.5 0 -2.5 -5 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 Source: Datastream5
  • 6. Australia’s Terms of trade (Index 1900-01 to 1999-00 = 100) Index Index200 200180 180160 160140 140 5-year centred moving average120 120100 10080 80 Budget forecasts/ projections60 601869-70 1894-95 1919-20 1944-45 1969-70 1994-95 2019-20 Source: ABS Catalogue Number 5206.0, RBA and Treasury.
  • 7. Have iron ore prices got ahead of themselves?7
  • 8. The Labour market is close to static 000’s % 12000 7.5 11500 7.0 Employment (LHS) 11000 6.5 10500 6.0 10000 5.5 9500 5.0 9000 4.5 Unemployment Rate (RHS) 8500 4.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Source: ABS8
  • 9. Contributions to jobs growth (year to November 2012, thousands)9
  • 10. Australian Inflation % 7 Headline CPI Underlying inflation 6 BT Forecasts 5 GST Effect 4 3 2 1 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: ABS10
  • 11. Interest rate changes do make a difference!11
  • 12. House Prices - Australia v Canberra Index (1987 = 100)600 Canberra Australia550500450400350300250200150100 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12Source: ABS
  • 13. House Prices - Australia v Sydney Index (1987 = 100)600 Sydney Australia550500450400350300250200150100 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12Source: ABS
  • 14. We are very expensive compared with the United States14
  • 15. But not otherwise!15
  • 16. Prices have fallen everywhere but they may be turning16
  • 17. Gross Domestic Product % 8 Qtly growth Year-to growth Non-farm year-to growth 7 BT 6 Forecasts 5 GST Effect 4 3 2 1 0 -1 -2 -3 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Source: ABS17
  • 18. Mining investment will peak soon18
  • 19. Financial Market Forecasts Now End-Jun End-Dec (1 Feb) 2013 2013 AUD/USD 1.042 1.00 0.95 Official cash rate (%) 3.00 2.75 2.75 10 Year Bond yield (%) 3.50 3.60 3.75 ASX 200 4878 5000 520019
  • 20. The Australian Dollar and US Trade WeightedIndex Index AUD/USD 180 1.12 AUD/USD (RHS) 161 1.00 142 0.88 122 0.76 US TWI inverted (LHS) 103 0.64 84 0.52 64 0.40 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Source: Datastream20
  • 21. Australian dollar against Asian share markets $A Asian Emerging Markets Index 1.2 595 $A (LHS) 1.1 525 Asian Emerging Markets Index (RHS) 1 455 0.9 385 0.8 315 0.7 245 0.6 175 08 09 10 11 12 13 Source: Datastream21
  • 22. Australian Sharemarket Performance – ASX200 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Source: Bloomberg22
  • 23. The Australian market is not nearly as cheap as it was (p/e ratio)23
  • 24. The current state of the US economy does make adifference to markets24
  • 25. The current recovery compared with previous “bigugly bears”25
  • 26. Global Medium-Term Economic Growth andInflation Prospects (2012-2022) GDP Inflation Australia 3.0 2.6 Norway 2.7 1.9 New Zealand 2.6 2.3 United States 2.5 2.3 Sweden 2.2 1.7 Canada 2.1 2.0 United Kingdom 1.8 2.8 Netherlands 1.6 2.2 Switzerland 1.6 1.1 Spain 1.6 2.1 France 1.4 1.9 Germany 1.4 2.1 Eurozone 1.1 2.0 Japan 1.1 0.7 Italy 0.5 2.1 Source: Consensus Economics26
  • 27. Asia-Pacific Medium-Term Economic Growth andInflation Prospects (2012-2022) GDP Consumer PricesIndia 7.2 5.9China 7.1 3.0Indonesia 6.1 5.7Philippines 5.2 4.4Malaysia 4.8 2.3Thailand 4.4 3.0Singapore 4.0 2.7Taiwan 3.4 2.1South Korea 3.4 2.7Hong Kong 3.3 3.1Australia 3.0 2.6New Zealand 2.6 2.3Japan 1.1 0.9Source: Consensus Economics27
  • 28. Morgan Stanley Capital Indexes Developed Index Asian Emerging Markets Index 3600 600 3300 550 3000 500 Asian Emerging Markets Index (RHS) 2700 450 2400 400 2100 350 1800 300 1500 250 1200 World Developed Index (LHS) 200 900 150 600 100 03 04 05 06 07 08 09 10 11 12 13 Source: Datastream28
  • 29. Summary Eurozone debt is a serious issue; it will drag on for a long time but is unlikely to end in catastrophe. We will always worry about China. Fiscal cliff issues have been delayed for a few months. The Australian economy should continue to experience moderate but unbalanced growth, led by mining investment. The mining boom will, of course, end eventually. The cash rate is likely to fall again. The exchange rate is above fair value. The rest of the world is still on sale for Australians. Share markets are still slightly cheap.29
  • 30. This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’and is for general information only. Every effort has been made to ensure that it is accurate,however it is not intended to be a complete description of the matters described. Thepresentation has been prepared without taking into account any personal objectives, financialsituation or needs. It does not contain and is not to be taken as containing any securities adviceor securities recommendation. Furthermore, it is not intended that it be relied on by recipientsfor the purpose of making investment decisions and is not a replacement of the requirement forindividual research or professional tax advice. BT does not give any warranty as to theaccuracy, reliability or completeness of information which is contained in thispresentation. Except insofar as liability under any statute cannot be excluded, BT and itsdirectors, employees and consultants do not accept any liability for any error or omission in thispresentation or for any resulting loss or damage suffered by the recipient or any otherperson. Unless otherwise noted, BT is the source of all charts; and all performance figures arecalculated using exit to exit prices and assume reinvestment of income, take into account allfees and charges but exclude the entry fee. It is important to note that past performance is not areliable indicator of future performance.This document was accompanied by an oral presentation, and is not a complete record of thediscussion held.No part of this presentation should be used elsewhere without prior consent from the author.For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydneytime)30

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