a balanced view

My fellow MBL punters...I have been very bullish on MBL but I will also not leave your asss hanging in the wind...

The article below suggests a need for future caution and when you work so hard for profits, it is not a bad thing to take some from time to time.

Since 1970 the sharemarket has returned an average of 11.2 per cent between December 1 and May 31, compared with 2.5 per cent between June 1 and November 30. It is generally good to invest between November to May.

MBL is going to have a cracker May, but I will consider upon the outcome of the following events selling down 50% of my entire portfolio. 50%, because if I am wrong well I just take half profits and if right I am half capitalised to buy lower and preserve profits.

1. Mar jobs data this Thursday
2. Mar quarter CPI on Apr 26
3. AUD in the coming month,
4. RBA next meeting May 2 (unlikely to raise rates but stronger wording indicating 'coming' would be no surprise)

Happy puntings..

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http://www.theaustralian.news.com.au/common/story_page/0,5744,18726015%255E2702,00.html

Growth puts pressure on rates
David Uren, Economics correspondent
April 06, 2006

THE Reserve Bank is likely to raise interest rates over coming months if the signs of renewed strength in the economy are confirmed.

The dollar and short-term interest rates jumped yesterday in response to a report published by Macquarie Bank on Tuesday night that said the Reserve could raise rates as soon as its next meeting, on May 2, a week ahead of the federal budget.

The dollar gained a cent to US72.2c, with market analysts tipping that it will rise further if today's scheduled release of March employment figures show further gains in jobs.

The Reserve Bank announced yesterday that it was keeping rates steady for the 13th consecutive month, but financial markets now estimate that a rate rise before the end of the year is a certainty.

The author of the Macquarie Bank report, interest rate strategist Rory Robertson, said that besides the employment numbers, the central bank's board would also have the March quarter consumer price index to consider at its next meeting.

If both numbers are surprisingly high, the Reserve Bank may raise rates again ahead of the May budget. However, it is more likely to await further confirmation of the new trend in consumer spending.

The Reserve Bank has been counting on business spending to remain strong, but consumer spending to remain relatively weak. A consumer revival would change its outlook.

Its biggest concern is likely to be that labour shortages will push up wage costs, with average wage figures for the first quarter to be published in May.

Deutsche Bank chief economist Tony Meer said yesterday that although the gathering strength of the economy would certainly push the budget surplus to $15 billion or beyond, he did not believe that the Government would contribute to further interest rate rises if it distributed some of the surplus in tax cuts.

He said Reserve Bank Governor Ian Macfarlane had clearly stated there was no connection between decisions on tax cuts and decisions on interest rates.

"The Government would only be returning part of the surplus in tax cuts. The household sector has had tax cuts over the past few years, but it has not translated directly into spending, with some directed to improving personal balance sheets," Mr Meer said.

Mr Meer said the market had become complacent about interest rates remaining fixed for the rest of the year, despite several statements by the Reserve Bank that the next move in rates is more likely to be an increase than a fall.

Mr Meer said stronger consumer spending was not the only reason why the Reserve Bank would consider another interest rate increase.

The world economy is also performing much more strongly than at the end of last year, led by surprisingly rapid growth in Japan and Germany.

As a result, world interest rates are rising. The faster growth in the world economy is also pouring more income into Australia through higher commodity prices.

Mr Meer, who used to work for the Reserve Bank, said the bank would be unlikely to be worried about the awkward timing of raising interest rates either just before or just after the budget.

"If it is appropriate to move the bank will move," he said.