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A Global Economic and Market Outlook

A Global Economic and Market Outlook. Presented by Dr Chris Caton. October 2012. Euro-area government bond spreads (to German bonds). The two that matter have clearly improved (long-term bond yields (%)). 2012 Growth Forecasts (%). Month of Forecast. Source: Consensus Economics.

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A Global Economic and Market Outlook

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  1. A Global Economic and Market Outlook Presented by Dr Chris Caton October 2012

  2. Euro-area government bond spreads (to German bonds)

  3. The two that matter have clearly improved (long-term bond yields (%))

  4. 2012 Growth Forecasts (%) Month of Forecast Source: Consensus Economics

  5. 2013 Growth Forecasts (%) Month of Forecast Source: Consensus Economics

  6. Real GDP growth in Australia and the US Year to % change Source: Datastream

  7. It’s the developing world, stupid

  8. Australia’s Terms of trade(Index 1900-01 to 1999-00 = 100) Index Index 200 200 180 180 160 160 140 140 5 - year centred moving average 120 120 100 100 80 80 Budget forecasts/ projections 60 60 1869-70 1894-95 1919-20 1944-45 1969-70 1994-95 2019-20 Source: ABS Catalogue Number 5206.0, RBA and Treasury.

  9. Chinese steel production and iron ore spot prices

  10. The labour market went sideways in 2011 000’s % Employment (LHS) Unemployment Rate (RHS) Source: ABS

  11. Contributions to jobs growth (year to May 2012, thousands)

  12. Employment change by industry(2003-04 to 2011-12) Note: Average annual growth in parentheses.Source: ABS Catalogue Number 6291.0.55.003 and Treasury.

  13. Australian Inflation % BT Forecasts GST Effect Source: ABS

  14. Interest rate changes do make a difference!

  15. House Prices - Australia v Melbourne Index (1987 = 100) Source: ABS

  16. We are very expensive when compared with the United States

  17. But not otherwise!

  18. Prices have fallen everywhere but they may be turning

  19. Gross Domestic Product % BTForecasts GST Effect Source: ABS

  20. Mining investment is set to soar

  21. Another perspective on mining investment

  22. Global Medium-Term Economic Growth and Inflation Prospects (2012-2022) Source: Consensus Economics

  23. Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2012-2022) Source: Consensus Economics

  24. Financial Market Forecasts

  25. The Australian Dollar and US Trade Weighted Index Index AUD/USD AUD/USD (RHS) US TWI inverted (LHS) Source: Datastream

  26. Australian dollar against Asian share markets $A Asian Emerging Markets Index $A (LHS) Asian Emerging Markets Index (RHS) Source: Datastream

  27. Australian Sharemarket Performance – ASX200 Source: Bloomberg

  28. The Australian market is still cheap (p/e ratio)

  29. All sectors look cheap– resources most of all

  30. ---- cyclical industrials

  31. ---- defensive industrials

  32. ----banks

  33. World share markets are cheap (P/E ratio)

  34. Morgan Stanley Capital Indexes Developed Index Asian Emerging Markets Index Asian Emerging Markets Index (RHS) World Developed Index (LHS) Source: Datastream

  35. 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. • 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 cheap.

  36. 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.  The presentation has been prepared without taking into account any personal objectives, financial situation or needs.  It does not contain and is not to be taken as containing any securities advice or securities recommendation.  Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice.  BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation.  Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person.  Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee.  It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion 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 (Sydney time)

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