Bull Market posts, posts that support the Bull Case, page-155

I bought BBOZ yesterday in anticipation of FOMC's 0.75% rise, and have now sold.

Todays big XJO fall is all about the direction of USA interest rates. While the FOMC now says that interest rates must go higher than previously expected, the RBA with its token 0.25% rate rises is clearly saying the opposite.

The RBA has demonstrated through its actions that it is strongly biased in favour of low interest rates. (The reason why is anybody's guess. It is an undisclosed mystery.) The RBA is firmly set on its course and seems quite happy to spew out fine-sounding rhetoric such as acting according to the incoming data, something that it clearly does not do. Therefore, if inflation levels out or starts to fall then the RBA will probably pause its rate rises and might even start to lower rates. When this happens, the XJO will react very positively, even though inflation will still be above 7%.

Of course, when the RBA predictably pauses its rate rises while inflation is still above 7%, it is quite likely that inflation will take off again. Maybe there will be some serious consequences then, both for the RBA as well as for the XJO. But that chapter is some way further down the track. For the short term, I predict that the XJO will soon shrug off todays FOMC-induced setback.