Let’s keep this short
by Peter Switzer
One thing I never want to do is write for the sake of writing. My daily blogs are to keep you informed so you can make the best decisions with your investments, but if the relevant news is sparse on the ground, then I will keep it short.
Overnight, Wall Street was negative and this is consistent with the growing view that a pullback is overdue after stocks have done so well for eight months and since mid-November.
For the record, the Dow was off 42.47 points or 0.3 per cent to 13,944.05 while the S&P 500 index was down 2.73 points or 0.18 per cent to 1509.39.
Why Wall Street fell
Some US reports say it was European concerns and sequester worries with Congress that have dragged markets down, but these are just reasons offered on a slow news day.
The real reason is that a pullback is simply overdue and the Yanks are on track for a negative week on the stock market. That has not happened for yonks.
The European Union (EU) concern was linked to the European Central Bank (ECB) boss Mario Draghi, who said the risks were to the downside for Europe’s economic outlook. However, this was him jawboning to try to weaken the euro and it worked!
That said, he didn’t move his base interest rate, which is at 0.75 per cent, and if he’s so worried, why wouldn’t he have cut the rate?
The short-term news
On EU news, there’s a summit over the next two days and this could provide some fodder for news headlines and market moves ahead.
On the data front, German industrial production was up 0.3 per cent against a market tip of 0.2 per cent, and this was the first rise in five months. Also, the UK got good growth news, which means they might avoid another recession (the third in five years!). Ireland secured a loan extension on its bailout package and its eight-year bond yield pushed down below four per cent for the first time since 2007!
In a nutshell, the short-term news won’t avert a pullback, but the full summary of the most important economic news out there for right around the globe isn’t budging me from the position that 2013 will be good for stocks, despite the fact there will be moments when you will think I am wrong but that will be a buying opportunity.
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.
Published on: Friday, February 08, 2013
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