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Wall Street shuffle

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by Peter Switzer

Another day on Wall Street and while there was little advancement, there was no substantial sell off which shows maybe the double dip concerns are already, partly, sold into the market.

It’s like we’re in a Wall Street shuffle, back and forth until some really good or really bad news happens.

It’s bad news for the instant gratification nation we have become but it should be a reality for the long-term investor.

Big call

But for anyone in a doubting and spooked frame of mind, optimistic economist Clifford Bennett from Herston Economics, who did pick the turnaround of the market in early March 2009, told me last night that he is expecting to see Dow 18,000 in the next three years! That is a very big call.

Bennett is a big believer in the China and India story and our close links as the best exposed Western country to these growing juggernauts.

This big call marries up with IBISWorld’s Phil Ruthven who told me on my Sky News Business Channel program that he expects to see a 45 per cent jump in stock prices in one of the next three years. He sees the current market hesitancy to buy as a wound up spring that will eventually open up when economies start to promise real growth.

You could say — when other Western economies start growing like Australia.

The news overnight

Of course, this is the future, I hope, but as for the here and now the Dow Jones index was up nearly five points to close at 10,014.72. The S&P 500 was only just up to 1049.33 but the Nasdaq fell around six points to close at 2114.

The Federal Open Market Committee minutes promised action if needed but no suggestion there would be a move soon. Meanwhile a number of retailers have been upgraded by analysts, so clearly these guys are not in the double dip camp.

Another good sign was the Conference Board’s reading on the August Consumer Confidence Index for August which came in at 53.5. This was up about two points on the previous month and the forecasts of economists.

Another plus was the S&P/Case Shiller index of house prices which rose 0.3 per cent in June from May. This also beat expectations.

Against this the Chicago Purchasing Managers index printed at 56.7, which was less than the expected by about a point. This August number was about six points less than July.

There is still a lot of data ahead but the big story comes on Friday when the US jobs report will give us the latest on the real health of the American economy.

For advice you can trust, contact Switzer Financial Services.

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Published on: Wednesday, September 01, 2010