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Is Rudd really important?

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by Peter Switzer

Monday usually encourages me to look back on the market’s performance for the past week and to look at the big upcoming news stories that could make or break stock prices in the week ahead.

However, as the Labor Party Caucus will today test the love for Prime Minister Julia Gillard, and the hate for ex-PM Kevin Rudd, the question for money-makers is — does it really matter who wins?

On the policies that really matter to stock prices — the carbon tax and the mining tax — I would argue that Rudd has implied that there will be no change. That said, the alignment of Martin Ferguson, the mining minister, could be a promising sign as he’s well regarded by the industry.

Look at the numbers

But put this all aside as the political number crunchers say Julia will win, and Kevin has said he won’t challenge again but that doesn’t mean he won’t replace her! Clearly, if Julia’s ratings don’t improve then later this year Kevin could be asked to lead the party in much the same way as Julia got the top gig.

And herein lies the importance of today — if Kev does win 30 or more of the votes, then speculation over the leadership will continue and this will affect business as well as investor confidence.

The only thing that could save us from this outcome would be Julia learning how to talk to the country she leads such that she wins them over, making it easier for Aussies to forget her backstabbing of K.Rudd and her carbon tax lie.

On Wall Street

As for Wall Street over the weekend, the S&P 500 ended up 2.28 points to 1365.74, which was the highest reading since June 2008. The index is now up 8.6 per cent for the year.

On the good news front, the latest consumer sentiment reading was the best for a year and the G20 look set to promise US$2 trillion to help Europe cope with its debt challenges. And even the Germans seem more predisposed to seeing the EU bailout funds get more liquidity.

This is all pretty positive stuff but I worry about oil at US$110 a barrel thanks to Iranian supply issues.

What’s ahead?

On the big news stories for markets this week, in the US, we see durable goods, consumer confidence, home prices, economic growth and the Beige Book, which sums up the emerging economic picture. Meanwhile, locally we get retail trade, construction, house prices, credit numbers, business spending and building approvals.

This should give us a good idea about the calibre of the RBA’s decision to leave interest rates on hold.

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: Monday, February 27, 2012

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