September 09, 2013
This blog post has been taken entirely from a great article released this morning by Peter Switzer on his "Switzer Daily" website. You can find the original link beneath the text below. His blog is worthwhile subscribing to (also see link below). It's topical, has great points and, as always from Peter, well written. Why reinvent the wheel???
Today will be an intriguing test for the impact of our new Prime Minister Tony Abbott, who declared that Australia is “now open for business”, and these words couldn’t come at a better time where green shoots for a potentially stronger economy are definitely in need of some Canberra-sourced ‘watering’.
The first test will be the stock market today given the Dow lost a measly 15 points while the S&P 500 was virtually flat, though Syria concerns could cause some headwinds to some post-election euphoric stock-buying.
Helping the market
Also helping should be the weaker than expected US job numbers — 169,000 rather than the expected 180,000 — which made many investors think that this QE3 tapering could be delayed. This actually helped European stocks head higher with the FTSE Eurofirst 300 index up 0.5 per cent on Friday and an optimistic 2.9 per cent for the week.
By the way, BHP was up 0.4 per cent in UK trade but Rio was just down. This should help the local market today. So will the Chinese trade surplus data,with the August balance going from US$17.82 billion to US$28.61 billion. Better still, exports were up 7.2 per cent while imports — a measure of economic activity in China — up a good seven per cent.
So the scene is set for a good day for stocks, but we have done well recently and so will it be an old case of “buy the rumour, sell the fact”?
Well the retailers are optimistic after Saturday’s poll with Russell Zimmerman of the Australian Retailers Association saying yesterday morning:
“As Mr.Abbott forms his new Cabinet and implements his election policies, the Coalition needs to put at the forefront of their 100-day action plan the economy and small business.“Retailers should start feeling a little more positive about the future under the Coalition’s small business policies as they are implemented.
”Meanwhile, the Australian Bankers Association welcomed the new Government with: “The ABA particularly supports the incoming Abbott Government’s election commitment that there will be a moratorium on new financial services regulation while the major inquiry into the financial system is underway.
”They have argued the many changes have been costly to business, and while there are two sides to a story, the bottom line is this election result is bound to raise confidence that things will be better and easier for business.
But of course, now Tony Abbott and Joe Hockey have to turn words into action!
Provided that there’s no external curve ball, or some left field event comes, say, out of the Middle East, then I think the combo of low interest rates, a lower dollar, an improving Chinese economy and a new Government will help bolster confidence.
I predict the best Christmas retail sales period in ages, and after talking to Gerry Harvey yesterday, I think I will be on the money with this tip.
If stock markets were a sensible place with rational people, you’d expect stocks to head higher today, but stock markets are a very weird place in the short-term. However, in the long run, they do follow economic trends and therefore higher or lower profits, and all of the forecasts for Aussie bottom lines are looking very positive.
On the week ahead, on the local front we get housing finance, job ads, the NAB business confidence survey, consumer sentiment, the latest unemployment read and lending stats, so Tony and Joe Hockey will get to see what they have won!Overseas there are more Chinese stats — inflation, retail sales, production and investment — which will be closely looked at, while in the USA we see retail, producer prices and consumer sentiment.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.