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Reject naysayers

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by Peter Switzer

With the Goldman Sachs story — no, drama — now spreading from Wall Street to Germany and the UK, the next local question has become — could it become an Aussie issue? And this comes as Nouriel Roubini is up to his usual tricks of spreading fear to try to make his predicted ‘disaster movie’ become a reality.

For me, I remain in the “this rally ain’t over yet” camp.

Talk the book

True to form, as soon as the Goldman story went public that the SEC was slamming charges on the investment bank, which spooked the market to a big one-day slump, the likes of Jim Rogers — regarded as a big call merchant — suggested that this could KO the rally.

After being in this game for as long as I have, you have to be careful of these guys as they have a big media following and could easily use this to talk their own book. By the way, I am not saying this about Rogers but I have thought it of others.

Then there’s the Harvard professor, Roubini, who is now saying the Greek debt tragedy will spread to other high debt countries. This guy has been credited with warning about a crash but just about every other prediction since then has looked off the mark.

And had you fallen under this guy's influence, you would have missed out on the 50 per cent plus rally in shares since March of last year.

Roubini’s claim could happen but the question is can it be managed? And that is in the lap of the gods, along with the European Union, the Obama administration and the IMF. We are certainly lucky that the likes of China, India, Brazil and other Asian economies are embracing solid growth. They have saved the global economy from the dire predictions of the bandwagon of naysayers out there.

Not phased

Wall Street again shrugged off the Goldman Sachs controversy yesterday and let earnings rule the roost. The Dow was up 0.23 per cent and the S&P 500 put on 0.81 per cent.

Energy, financials and utilities were the day's best performers and the fact that financials could do well with the Goldman cloud hanging over the sector was significant.

And this was a day when advancers outpaced decliners four to one.

Meanwhile the fear index dropped from 20 to 16, which says fear is off the agenda for now.

Better than expected

Until yesterday, 84 per cent of S&P 500 companies that had reported earnings had beaten expectations and of those, 65 per cent have shown better-than-expected revenues.

In fact, on today’s latest company reporting some 94 per cent of companies have beaten the Street’s expectations.

Then after hours yesterday, Apple shot the lights out with sales of iPhones coming in 1.25 million units higher than expected.

And the Apple news helped Asian stock markets trade up as the company’s shares shot to an all-time high.

Plenty left

These great earnings results link in nicely with Barclays Capital research in the US which has now pumped up its economic growth readings for the world’s biggest economy. This outfit have been bullish on the US economy and the market but they have recently redone their figuring — they're definitely not devotees of Roubini and his lot.

I know I have been a big call merchant on the positive side, but I still have an overwhelming sense that this juggernaut of a bull rally has plenty of petrol still left in the tank.

For advice you can trust, contact Switzer Financial Services.

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Published on: Thursday, April 22, 2010