The lonely optimist
by Peter Switzer
The typical fare we cop in the media are sensational stories that range from natural disasters to unnatural human beings who behave appallingly to politicians who have an enormous capacity to disappoint. Oh yes, I nearly forgot, we do get the kitten rescued from a tree by the fire department stories, so it’s not all bad news.
Business- or economics-wise, the current worries being exploited are the vulnerability of economies from Greece to the UK, with the latest try on by the money movers of the world to short the British pound.
Meanwhile, we have double dip recession merchants of doom out there who can see America slipping back into recession despite the current 5.9 per cent economic growth pace the US statistician revealed over the weekend.
Sure, the Yanks have had some ordinary economic news lately including consumer confidence, jobless claims and durable goods orders but there has also been some good news too.
"These numbers are not stabilising," said Kathy Boyle, president of Chapin Hill Advisors in New York on CNBC. "We're two-thirds of the way through the first quarter and the jobs numbers are worse...I just look at all the signs of these things and I don't see us getting out of this."
While she might end up being right, Boyle has been negative since 2007!
I think the way stock markets have withstood the sovereign debt concerns shows that the big market-makers believe in shares at these prices. They believe that Federal Reserve chairman Ben Bernanke’s commitment to keeping interest rates low for an extended period of time will underpin growth of the US economy, company profits and share prices.
The big worry is the willingness of US consumers to spend but Macquarie’s crack team of analysts have been tipping for months that America would have an investment-led recovery and eventually the US consumer will turn up but it will happen when the recovery creates jobs.
I suspect it will be in 2011 that we will see a more sustainable US recovery and it will line up with Europe starting to come good.
The bull run
So, with all of this negativity about the place it was great to hear well-known UK fund manager, Trevor Greetham, tell a Melbourne finance conference that he believed in the recovery.
The message was to hold your nerve as well as your shares and believe in the bull-run correction.
While he conceded that the market will be choppy over 2010, he pointed to the strongest synchronised V-shaped recovery since 1975.
And bravo to Trev in pointing to the likes of Nouriel Roubini — the New York professor — and Marc Faber, the publisher of the Gloom, Boom and Doom Report, who both remain very negative on the global economy’s prospects, and who he says “are just wrong".
Trevor Greetham is my kind of guy!
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Published on: Tuesday, March 02, 2010blog comments powered by Disqus