We have been cautious on Australian equities and we maintain that stance. While there are pockets of support beneath the surface, the domestic backdrop presents a number of meaningful headwinds that we think will keep the ASX200 bouncing within its twelve-month trading range of 8,400 to 9,100 for some time yet. We are conscious that being cautious has now become a consensus call and that does make us a little nervous, because the consensus has had a poor track record in recent years. But there is a time to be anti-consensus, and while we are happy to back ourselves against the crowd, we don’t think the current risk-reward balance argues for that now.
