Volatility is the new BLACK!
Two weeks ago the market was below the line but last week it jumped dramatically.
So what is going on?
It is all about direction and news flow. Tensions are high as Europe continues to struggle. The fear of another GFC in Europe and bank failure has push investors to be very cautious.
Two weeks ago the Swiss stopped supporting their Franc. This saw currencies around the world fall against the Swiss Franc. The issue being no one knew how far this would reach so the market sold down.
Last week the European Union announced that they would undertake Monterey policy. Which means buying distressed debt. This provided stability in the region and share markets rallied.
Back home, we have low-interest rates with people tipping that they will go lower next week. Low oil prices reduced the cost of goods, especially around transport. And a low Australian Dollar helps sell our exports.
This is all positive for the long-term economy of Australia.
Unfortunately, we have a dysfunctional government. And the election on the weekend could have made it worse.
If some solid infrastructure projects get underway, Australia will be close to the start of recovery.