"Don’t ever wrestle with a pig. You’ll both get dirty, but the pig will enjoy it." — Cale Yarborough
The market hit a new short-term high this week closing at 4585.
Is this the end of the Bear market or just investors chasing the yield and pushing the market higher?
The telling tale is that once it reached the high the market remained flat for the rest of the week.
If you couple this with the current economic issues which played out this week the risk remains to the down side.
The major stories were the Federal Reserve banks advising that they will continue to print money. This means that in Australia our dollar is likely to remain high for some time to come yet.
A high dollar means less for our exports, which will flow through to the bottom line in making our economy harder.
The Labor party is now looking to move away from the promised surplus.
It is clear that the mining sector, which under pins our economy at present, is struggling with the high dollar and the slowdown from China. Because of these factors the taxes raised from this sector are reducing.
Then there is the Fiscal Cliff, which I doubt will be resolved in the next two weeks.
Monterey policy in Australia now has limited benefit given the cash rate.
I also expect retail sales over Christmas to be down on previous years.