GARY WEAVEN, chairman, Industry Funds Management:
likely to remain so.
"What was remarkable, I suppose, was the sort of pre-budget tone an immediate concern, and therefore interest rate concerns weren't real.
"Then, with a couple of employment numbers within a record space of time we're getting the opposite speculation.
Somebody maybe should have waited for the employment numbers.
"There is an underlying strength in the marketplace, but to some that gains can be made by gearing.
talk about these days is foreign indebtedness, but the gross foreign debt is very, very high by historical standards and rising very, very rapidly.
"That's indirectly fuelled by strong import growth and that, in turn, by very strong consumption.
cash in people's pockets, I think you inevitably run some risk of putting upward pressure on interest rates."
indicator of how good things are in Australia.
It kind of suggests expect. It's about as good as it gets, really.
"You look at the key factors that Costello highlighted, from We've got low inflation and we've got major ongoing surpluses, putting election programs forward.
It just really reflects the returns.
under control with the growth in the economy. The rising dollar should take some pressure off inflation.
Certainly there will be some wage growth. You look at asset pricing from housing to stocks, there seems to be some asset inflation around.
"Again, it makes you realise that you need to be reasonably cautious about it.
Don't get carried away with the excitement of SHANE OLIVER, AMP Capital Investors head of investment increase in interest rates. We've seen a run of strong economic data from retail sales, very low unemployment, consumer confidence is quite high and business conditions are quite strong.
"Now of course, we've seen the budget kick in with another round of spending measures and tax cuts, all of which I think is adding to the eventual risk that rates will go up again.
"In terms of commodity prices, they're particularly good for resources stocks pushing up to or surpassing previous highs. I Australian sharemarket is still quite cheap.
compared to the rest of the market, which is trading on price-earnings ratios of around 17 or 18 times.
activity in that sector.
place to be at the moment."
to a number of things here.
There are the classic cyclical characteristics, plenty of merger and acquisition activity, profit characteristics.
challenging.
start to hurt the consumer and, as a result, we'd see a downturn in consumer spending.
And I also think for increasingly highly leveraged corporates, further tightening and this is liquidity unwind.
debt, driven on the back of low interest rates and certainly any reversal of that would have a significant impact on markets."
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