Hi hone,We should always have an eye on the DJIA as we largley...

Hi hone,
We should always have an eye on the DJIA as we largley take our cues from it. Kohler referring to the jaws of death is interesting. The issue as I see it is not that simple i.e. negative. At some stage the US must start tapering, increasing rates etc as their economy will / must start to stand on its own feet in the absence of stimulus. This will have an impact on markets through sentiment but also through the currency position of the $A / $US. If bond buying supported by money printing is wound back and eventually interst rates start to rise in the US, the $A will fall as a consequence. This will see overseas investors in the Australian markets exit their positions, as they have been, in order to avoid currency losses on their investments. This pulls out stock prices down, temporarily, until the $A finds support on the way down as it does, and overseas investors see our market as viable i.e. currency losses not such an issue.

Meanwhile, local investors reap the rewards in the companies they own if they are exposed to a lower $A i.e BC Iron. Profits will rise, assuming the IO price remains above say 120 / t.

The new year in the US will involve renegotiating the debt ceiling which a few commentators are saying will not be as painful as last time as politics will give way to sense. If this can be done and stimulus is slowly undone so as not to upset markets, then we may well have a prosperous 2014.

I see where the US is headed and the resulting lower $A as a good thing, despite some pain that may be inflicted during the process.

Crystal ball would still be handy though!

Interesting times as always.