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Pinch me. Is this a dream? Everything is going right!

Peter Switzer
17 July 2015

By Peter Switzer

In a week when a lot could go wrong and in a world where we often say “sh—t happens”, it didn’t with Greece, China, Iran and the Federal Reserve in the US getting it right when we really needed them to.

Pinch me! Am I dreaming? Everything is going right with even the Test cricket team 1 for 337!

And so far the stock market is up over 180 points in three days and so July, which has a good reputation for making money for investors, looks like it is set to conform with history.

Let’s recap before I reveal the next big watch that could add to the positivity or could bring in some negativity.

On Greece, while they will have to cope with the repayments, the mountain of debt, its political challenges and its very real economic obstacles such as tax evasion, excessive pensions and low productivity, this week’s resolution means Europe can concentrate on getting the whole region growing.

Overnight we learnt that car sales and registrations went ballistic — even in Greece! How does that happen in an alleged impoverished country? Overall the whole region saw car sales up 14.8%!

Meanwhile China’s 7% economic growth has knocked the naysayers for four, not six, as they doubt the figures, but it did teach those who live on negativity that the Chinese stock market is not the Chinese economy. Also the readings on exports, retail sales and industrial production were also promising.

To Iran and the deal with the US over the nuclear threat should increase the supply of oil on world markets, which will be bad news for oil/energy stocks but costs of production worldwide will fall and that has to be great for growth, jobs and ultimately confidence.

Consider this, Europe needs to grow to beat its post-GFC problems and lower petrol costs is a really good start.

Not surprisingly the Yanks delivered with the central bank boss, Janet Yellen suggesting that she expects interest rates to rise this year, which means she expects the US economy to get stronger, despite some mixed data at the moment. This news pushed the greenback up and our dollar into the 73 US cents region, which is good for many stocks — exporters, import-competing companies and those who earn a lot of income overseas such as Macquarie, QBE, CSL, etc.

On top of that, the NAB business conditions reading went to a eight-month high and business confidence rose to a 21-month high. On top of that the Deloitte CFO survey of our top company bean counters also revealed rising confidence for these important players in the country’s biggest companies.

The only negative story was consumer confidence which came in at 92.2 after a 3.3% slide but even Westpac’s chief economist, Bill Evans, said this number was affected by the survey time which was when most of us were panicking about Greece’s referendum and China’s 30% slide of the stock market in a month! In all of the concerns it was hard for more level-headed people like yours truly to point out that this stock market, which is more like a casino at times, actually rose 150% in a year!

The next big thing that could make or break this rally is reporting season that starts in earnest in August. I’m not expecting great news but I will be looking at the outlook statements from our important companies and if they are looking increasingly more positive, then we could see the stock market go for another nice ride up.

Undoubtedly, we need consumers to go positive and I suspect that will happen in coming months if the run of news can remain as good as it was this week.

I love great news — our stock market needs it — and I’m praying silly politicians and excessively negative media outlets don’t get in the way of positivity in coming months, if only for money reasons!

In case you were wondering, European stock markets and good old Wall Street were up overnight, which should help us keep it positive today.

We’re having a dream run and I’m loving it.

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