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I can’t wait for September

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by Peter Switzer

As the old Pyramid song goes, I “can’t wait for September” and it’s because that’s when we will get some market action. I only hope it’s in the right direction!

Markets were negative overnight, but in reality “nothing is doing” and so markets are simply drifting up and down driven by traders who need something to do. We’re in a holding pattern waiting for early September when it is expected that the European Central Bank (ECB) will act, but if they don’t deliver, something will be doing — it will be a sell-off.

The deal

Last night on my Switzer program on the Sky News Business Channel, Michael Knox, chief economist at RBS Morgans explained the process that he expects will happen in early September. For those who want details, I suggest you look at my interview, but the bottom line is that the ECB will wrangle a deal to buy Spanish and Italian bonds in cahoots with one of the European rescue funds and the end-result should be cheaper money to the key countries involved in this debt disaster. It will also result in an expanded money supply for the eurozone.

Putting Knox on the spot, I talked about Charlie Aitken of Bell Potter, who thinks the bear market is over and that a bull market lies ahead. I asked Knox if he thought the news in September could KO the bear market?

Now Knox, unlike Aitken, is a very measured and unexcitable fellow, but when pushed he answered in the affirmative!

This is huge and I hope he’s right but it all explains why I can’t wait for September.

News overnight

For those of you who need news, no matter its relevance, here goes:

The Dow lost 38.52 points to 13,169.43
The S&P 500 had its first down day in six sessions losing 1.76 points to 1404.11 but as you can see it’s hardly a real loss
The fear index or VIX is below 14, which means share players are feeling braver and braver
Bank of America cut its forecast for China from eight per cent to 7.7 per cent which would be a worry if you could trust economist’s forecasts and you can’t
Japan grew at a weak 0.3 per cent while 0.6 per cent was expected and this is way down from the 1.3 per cent reading in the previous quarter but on the other hand, Japan is not as an important story for world growth as it used to be.

As you can see, there are some slightly negative yarns around but the hope for September and the ECB is keeping it either positive or not too negative. Gee, I hope those Europeans don’t let us down again!

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.

Watch more from Peter on SWITZER TV.

Published on: Tuesday, August 14, 2012

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