International News (Issue 392) – 24 March 2016

In offshore markets this week the most concerning news-flow obviously related to the bombings in Brussels, however the sad reality is investment markets are now increasingly unmoved by events of this nature unless they occur in places like New York or London.

Sad but true.

The new Apple i-phone launch this week was seen as underwhelming and a move unlikely to arrest the ‘technological saturation’ most consumers now face with smartphone and tablet technology now struggling to break new boundaries.

It would not surprise me to see Apple shares fall a lot further despite the stock having $200bn+ in cash and a P/E of 11x.

I have said before, but Australian investors should understand that all technology product companies trade on lower multiples as their product cycle wanes simply because the risk of product obsolescence is scarily real – anybody own a Blackberry, Nokia or Ericsson mobile phone?

In the US, some slightly better economic news and some hawkish remarks from a Federal Reserve Governor (Bullard) saw some commentators posit the view the market is too complacent on Fed rate hikes, this in spite of an overtly dovish Fed only a fortnight back.

Again, the uncertainty here is massive and it will continue to contribute to ongoing volatility in markets until a clearer path for US interest rates emerges.

Next week Chinese bank profit reporting is due and this will be a very important measure of the credit quality of China’s financial system.

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