If business confidence surveys are to be believed, the economy should soon be coming off the boil. Certainly, some of the data supports that view.

But wait, somebody has forgotten to tell the sharemarket, which this week hit another record high, continuing on with a bull phase that started all the way back in 2012.

ANZ's Confidence Composite gauge is pointing to GDP growth of around 2 per cent, compared with the last recorded outturn of 2.9 per cent in calendar 2017.

And the bank's latest Business Outlook showed its aggregate activity indicators were flat to falling. While the economy had "good tailwinds", it may be tiring nonetheless, ANZ said.

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In addition, the Auckland real estate market looks to be flattening which should, in theory, have an influence over the property-sensitive retirement village stocks.

Once again, the big guns in that sector — Ryman, Metlifecare, Summerset — are soldiering on regardless.

"Given the valuation ratios in New Zealand, they (share prices) seem as extended as they have been for many years," Salt Funds Management managing director Matt Goodson says.

"It is interesting that the New Zealand market continues to be strong," he said. "It has certainly shaken off the volatility of the March quarter and that's despite a few little warnings signs for the economy."

ANZ's take on the state of play should be a little concerning, but for the moment the share market doesn't want to know.

Yet sharemarkets are supposed to be forward-looking and priced to reflect earnings that may or may not materialise in the future, so what do investors know that economists don't?

Glass half full

Rickey Ward, JBWere's New Zealand equities manager, said it was par for the course for the market to start the year with an optimistic bent, and for it to be re-rated later when reality starts to bite.

On that score, Ward says it looks like the analytical community has been tempering its earnings growth expectations.

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But Ward says that more circumspect view of earnings hasn't shown up, as the market has remained skewed towards the handful of stocks that investors have singled out for special attention — the a2 Milks and F&P Healthcares of this world.

"There is a bit of a disconnect between the 'headline' return for our market, relative to the underlying earnings that we have seen from the majority of corporates," he said.

"The rate of earnings growth is showing signs of slowing, relative to initial expectations. "The 'headline' returns have been driven up by a select few," he says.

"But I think if you unravel that, you would find that the return from the market is somewhat different. If you stripped out that handful of stocks, it would show there are number of companies treading water, paying their dividends, but providing little in the way of capital return."

Or half empty

Fonterra's units have been under downward pressure since the co-operative gave the market a business update on May 23 and they are now well below their issue price.

While the $7.00/kg farmgate milk price forecast for 2018/19 is encouraging for farmers, clearly it's bad news for the units, which give investors access to Fonterra's dividend flow.

The higher milk price — Fonterra's biggest input cost — puts pressure on the co-op's earnings in a year that is already proving challenging due to the payment to Danone and the impairment of its Beingmate investment.

Fonterra has revised its forecast normalised earnings per share guidance range down to 25-30 cents per share and its forecast dividend range for the full year down to 15-20 cents per share.

The units closed yesterday at $5.15, down from its September, 2012 issue price of $5.50 and its initial trade on the NZX of $6.66.