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Can we believe this optimism?

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by Peter Switzer

Just about all of the experts on my program over the first two weeks of the year have come with tidings of joy. And that’s the only thing that worries me — how come we are getting so much agreement?

I can’t get out of my head, despite the fact I have tried, that John K. Galbraith, who was an eminent economist in the US but was actually Canadian, once warned: “In economics, the majority is always wrong.”

Right now my charts guy on my Sky News Business Channel program, Lance Lai from Accountancy Invest, can see a pullback happening, but even he’s more optimistic for the overall year ahead.

Caton’s view

Last night BT Financial Group’s chief economist, Chris Caton, another highly respected economist, said he had a target for the S&P/ASX 200 of 5250 for awhile but he says he’s inclined to raise this up rather than bring it down.

He says he doesn’t lose sleep over the debt of governments around the world and reminds us that this debt is seen as assets and many businesses — especially financial ones — are programmed to buy it!

He’s confident that the Aussie economy, which does look a bit soft now, will power home over the course of the year. And he’s more confident that the China story and therefore the resources story of being stronger for longer holds true.

However, he warns this is his long-term view and there could be some challenges along the way but that would be more a short-term issue.

Company reports

One last comment — yesterday CBA reported better than expected and I wouldn’t be surprised to see Telstra do well in its reporting today. My contacts suggest they’re actually doing better where it should count, at the retail coalface.

If I’m right, there could be an overdue spike in its share price — let’s hope so!

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Published on: Thursday, February 10, 2011