Business News

Positive but not really

| More

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.

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 23, 2011

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer and Paul Rickard the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

Dow to reach 20,000 – can you believe it?

It’s not All Too Hard, it’s More Joyous!

Abbott deserves a Tony Award for that speech!

When do we dump stocks?

Abbott’s budget reply: is he really trapped?