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Don't judge this book by its title

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by Peter Switzer

Today the Yanks got, just in time for Christmas, the most exciting, boring sounding book of all time. It is called the Beige Book and you would have to think that only a group of accountants, economists and public servants could come up with a name like this.

Beige is one of the most unemotional colours imaginable. It lacks the boldness of brown — an ordinary hybrid colour in its own right but it has the guts to be what it is. In fact, beige is a dependent colour relying mainly on white with red, yellow and a spot of blue, which are all fair dinkum, say-it-as-it-is colours.

Sexy material

Enough of me showing off my limited art training, and back to the sexy world of economics. You see, the Beige Book does carry some sexy material that can get stock market players excited.

And the latest edition has been billed as the most positive in, wait for it, two years. The timing of this couldn’t be better as the Doubting Thomas brigade raise doubts over US economic growth and warn of that old pain-in-the-butt threat of a double dip recession.

The Beige Book comes from the US central bank — the Federal Reserve — and it is a collection of regional reports on what the local economy is doing. It pointed to a rise in consumer spending but nothing over-the-top and better readings on home sales and construction. Commercial real estate still challenges and the job market isn’t promising to repair itself in a jiffy.

The bottom line view was that the economy had grown or improved even only slightly across most of the US between October and November. Improvement in consumer spending and manufacturing were the two best stories.

More data

Meanwhile, the jobs market news elsewhere continues to improve with job shedding figures coming in better than expected. And Black Friday retail figures from ShopperTrak have come in better than last year.

Also Cyber Monday readings, which look at online sales after the Thanksgiving weekend, when workers are back at work and using their bosses’ faster computers, also came in on expectations.

Friendly trend

In investing, there’s an old cliché that the trend is your friend. The trend for the US economy and therefore for shares is still up and improving.

I should add that some smarties have added to that trading rule of thumb to say: “The trend is your friend until it bends”. And that bend is what I will be looking for on your behalf, so watch this space.

For advice you can trust contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Thursday, December 03, 2009