27 November 2020
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It's not all beige

It's not all beige

Peter Switzer
10 September 2009
Dr John Hewson once advised me, when he was my boss at the University of New South Wales and before he took on Bob Hawke and Paul Keating in the rough and tumble of Canberra, that economists were “simply accountants with a personality”.

Actually, it was a time of contrast for me in the 1980s, working with the likes John Hewson by day, and being political and business commentator for one of the most respected and ‘respectable’ men in Australian radio — Doug Mulray on the then-killer radio network called Triple M.

Breakfast radio

In those days, Doug could rate 25 per cent of the Sydney breakfast audience and in Melbourne, where I also appeared, there was another team doing breakfast who rated similar figures. Those guys were the D-Generation, who were the guys from The Panel, Thank God You’re Here, The Hollowmen, Frontline plus Mick Malloy and Tony Martin, as well as a young sports reporter called Eddie Maguire!

One thing these wonderful communicators taught me was to make my important information and advice entertaining. Doug, who was not known for his excessively polite ways, once said when it comes to radio that you have to “Put a prick up their ears!”

Exciting content, boring title

This very introduction shows that I have learnt my lesson well and it’s all for a good cause — the Yanks released a really important economic assessment on the US economy with the deadly boring title of the Beige Book. You can see an economist was responsible for selecting the colour of this ‘exciting’ book, though as an economist, I suspect it was an accountant.

The simple summary was that this book, which collates the economic health checks of the 12 districts that the Federal Reserve —the US central bank — monitors, saw evidence the US economy had improved by the end of August.

It was not fantastic news as labour markets remained weak and retail sales were not going higher but it raised question marks over those who say the US economy is not recovering.

Most districts were either improving or stabilising and only St. Louis was still in declining territory but at a slower rate.

"Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive," the Fed's Beige Book survey said.

The residential housing and manufacturing reports were leaning to the upbeat and this is a good omen.

Commercial property was not a great story and there was some scepticism that when government stimulus peters out, for example the ‘cash for clunkers’ program, then the economy could turn sour again.

That said, while the overall labour market was still negative there were positive signs in segments such as more demand for temps and layoffs were easing.

Great result

In reality, this report is actually a very beige one. It’s not red hot or positively purple, but it’s an OK colour like beige which is quite neutral but considering what we faced — Armageddon, hell in a hand basket, Great Depression Mk II, etc. — this is a great result and should continue to raise our level of optimism for the global economic recovery and reduce our fears that the stock market is going to collapse to levels last seen in March, before the market shot up over 40 per cent!

Cash on the sidelines

On my program, I talked to the Commonwealth Bank numbers man Professor Ron Bewley. This guy dreams in numbers and his calculations can see a market pullback but not a big one as he thinks there are lots of buyers with cash on the sidelines ready to get in and to make up for missing this rally.

This ‘exciting’ Beige Book reading should give these cashed-up investors on the sidelines the confidence to be buyers when profit-takers decide to sell the market down. And that conclusion keeps me excited and still an optimist.

As Uncle Doug used to end his radio show each morning, it’s time for me to say: “I’ll cop you later!” (Excuse the nostalgia and the Mulrayisms.)

For advice you can trust contact Switzer Financial Services.


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.


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