The Market Wrap 23-5-14

By Jason Fittler

Budget. Budget. Budget!

That is all we have heard about over the last week. We have seen students protesting in the street and the other major parties handing it out to the LNP.

But the market tells a different story.

Last week the market recovered the losses from the previous weeks and still remains strong. The ASX 200 closed around 5500 points in what was last year a major sell off week.

However, I doubt that this is all due to the budget. At least now we know the details of the budget and once again the hype proved to be worse than the actual result.

What is clear is that the economic low for individuals is now in play.

The pain of the GFC is now starting to affect individuals. Unemployment is up, and we have a budget, which is focused on cutting costs with a more pay as you go feel to it.

To me this indicates that we will start to see more efficiencies being obtained by companies.

As such I still maintain that in the next three years we will see the market back around 6800.

The expected short-term seasonal pull back is yet to occur so I will remain cautious on the market until we hear end of year results in the coming months.