Positive but not really
by Peter Switzer
We’re now out of the woods with Wall Street, despite the positive close overnight and so the investors are now looking towards Helicopter Ben Bernanke who speaks at Jackson Hole at the end of the week.
Of course, on Tuesday the French and German finance ministers are talking about their plan for the Eurozone but no one is expecting much from these under-achievers. However, it would be great news if they could come up with something that both surprises and gives confidence to markets.
But don’t hold your breath.
For the record, the Dow was up 37.76 points, or 0.34 per cent, to 10,855 but it was over 11,000 at one stage. Meanwhile, the S&P 500 put on 0.29 points, or 0.03 per cent, to finish at 1123.8.
Given the four per cent loss last week, these indexes are really in limping mode as fears grip investors that the US is heading for recession.
Economists still say no but the money players aren’t showing much confidence in the number-crunchers’ guesses. My favourite market tipster, Abby Joseph Cohen from Goldman Sachs, is in the 'no recession' camp and she’s a good judge. I’m backing Abby on this one.
Come Friday, Mr Bernanke could mention the words QE3 but there are many who doubt whether the central bank can afford to have more monetary easing. On the other hand, if the economy does go into recession, he will have to do it anyway — maybe a stitch in time could save nine.
One good thing was the win in Libya which has sent oil prices down and this could be a real positive for the global economy if it can be sustained.
There was no economic news of consequence and so we wait on the European finance ministers and good old Ben to ride to the markets’ rescue.
One thing I know is that companies in the US and Australia are cheap and so if some good news could start turning up, we will see a big bounce in stock prices but it could take until the December quarter before we see it.
I remain positive but not really over-the-top positive while I wait on a team of losers to come up with a win in Europe.
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Published on: Tuesday, August 23, 2011
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