The XJO is holding support at 5600 points and maintaining a bullish short-term price structure.
We’re cautious due to stretched equity valuations, political risks in the Euro zone, debt stability in China and low revenue growth in many industry sectors.
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To mange these concerns we’ve tilted portfolios to defensive assets and become aggressive with our covered call overlay. The bulk of our portfolio returns will come through dividends and option premium over the next short while.
Furthermore, we’re just not convinced the reflation trade the market has positioned around, will actually materielize in FY17.
