Down but not out
by Peter Switzer
“We have seen earnings in the US have not only been good, but dramatically better than expected," she pointed out.
She also likes the company and economic news coming out of Europe, and as the EU is America’s most important export market, this is another leg-up for those who don’t believe the double dip story.
By the way, it has been the more export-oriented US companies that have led the way in all of the reporting seasons since the GFC.
The crystal ball
Cohen’s calculations have the S&P 500 at around 1300 by year’s end, given the projected earnings growth and that says a 16 per cent gain on the stock market is a possibility.
AMP’s Shane Oliver thinks the S&P/ASX 200 can top 5000 by year’s end and that would mean around a nine per cent gain.
Cohen isn’t in the double-dip camp and believes there are a lot of potential investors on the sidelines who will rush for shares once the bad news is conclusively behind us.
The news overnight
Overnight, Wall Street couldn’t keep the surge upwards going but there was no zest in the sell-off.
But remember the US market was up seven per cent in July and there’s been a two per cent-plus addition to that for the first day of August. Profit-takers can’t help themselves.
Also, economic revelations weren’t positive but they were not wrist-cuttingly negative either.
Pending home sales were off 2.6 per cent, factory orders were down only 1.2 per cent and consumer spending and income readings were steady.
The economic sign I like is the strength of the Aussie dollar which was up overnight to 91.29 US cents.
Finally, remember the jobs report in the US at the end of the week will be the most important short-term market mover. My inkling is there is not enough great economic news out recently to do much for US jobs but as Rachel Hunter, my one-time favourite model once said, “It won’t happen overnight but it will happen”.
Long-term investors must remember this when buying opportunities arise.
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Published on: Wednesday, August 04, 2010blog comments powered by Disqus