Bears not so bearish?
by Peter Switzer
Ahead of President Barack Obama’s make-it-or-break-it speech on what he can do for jobs in the US and what he can do for his own job, Wall Street was down but it was on light volume, which is seen as a positive sign. It also comes when a lot more market players are warming to a contention I have been running with for a long time — the US should avoid a double dip recession.
End of year rally?
I don’t want to get ahead of myself but an end-of-the-year rally looks more possible today than a week ago but this goal could have been made easier if the hopeless European Central Bank had cut interest rates overnight. Maybe they are waiting for a better time but it worries me that more bad news could be coming and that’s why the ECB have kept a couple of rate cuts in their locker. Of course, the central bank didn’t help much by telling us that Europe was heading for slower growth, though that shouldn’t surprise many investors given the B-grade foreign film that its debt debacle has been in since May.
In the US, better-than-expected trade data had Goldman Sachs lift its GDP outlook, while oil prices continue to rise and even the US dollar has gained.
Growth forecast upgrade
Bob Pisani, the CNBC floor reporter who I met while in New York when I took SWITZER to the NYSE, says Nomura has raised its third quarter economic growth forecast from 2.4 per cent to 2.6 per cent. If they are right, we will see a rally before Santa turns up.
Two other forces worked on Wall Street overnight — Ben Bernanke’s speech where he talked about a soft US economy and where he didn’t talk about QE3.
Against this were the hopes for something special out of President Obama’s speech after the close, which traders expect should have some kind of market impact.
The Dow lost 119.05 points, or 1.04 per cent, to 11,295.81 while the S&P 500 gave up nearly 13 points, or 1.06 per cent, to 1185.9.
I reckon the big news was the improved trade data, which has meant economists have lifted their economic growth forecasts. If Obama can deliver something, then September might prove a lot better than many expected!
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Published on: Friday, September 09, 2011
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