Fundamentals haven't changed, page-599

What's of interest coming out of the RC is that WBC has the most delinquent potentials of 1 in 4 mortgage loans. The comments I hear is that 25% of their loan books have disposal income of $250 to live on each month which is either misleading by the applicants of understating their income or worse case scenario, over stating income! Coupled with the Foreign speculative money moving in at high rates to Syd/Mel apartment investing, Chinese stamping out the flow of money out of their monetary system and macro prudential controls by APRA, I am very surprised that there wasn't more retreat of the property prices in general!

The spread between the 10 & 2 year notes in Oz is a worry as they are contracting. This Is one of the reasons I feel the AUDUSD isn't likely to be going back up on its continual down trajectory and RBA is lukewarm in signalling any rate rise in the year ahead. This seems to tie in with why ASX200 is so bullish even relative to the performance of US markets ever since that Feb sell off. Without the RC on banks making up a quarter of the weighting, we would most likely be breaking that 6000 mark on a breakout.

Domestic goldies should perform well in this environment with margin expansions all things being constant. The dilemma is whether the banks are worth considering when all the bad news are investigated and reported to the market. The very common Q is where are the growth coming from if the money markets are pricing more expensive cost of capital in the wholesale markets benchmarked through US10. Can the Govt keep pumping disposal income through tax cuts flowing through corporates and eventually into wage growth? Sometimes when a big 4 has been thrashed down to the floor, it is wise to just not think of the future and buy it!