It’s a new month and I’ve always hoped that the last quarter of 2017 could be good for stocks — we started the year at 5773 on the S&P/ASX 200 Index and we’re now at 5681 — so we need a big finish.
Corporate profitability is on the improve here and overseas, and global stock markets, as well as their related economies, are going well, but our economy has a few challenges. These ‘little issues’ include a too-high dollar, weak wages growth and consumer sentiment that’s not encouraging.
In the getting better category, we’ve seen great jobs growth in the past six months after a worrying start to the year and plans for business investment are even making the most pessimistic economists a little more positive.
Meanwhile, there are concerns about a slowdown in the housing sector but while price rises in Sydney and Melbourne don’t seem so likely after an unbelievable three or so years, the worries about housing construction might be too much and/or too soon.
Undoubtedly, I’m worried that US stock market indices are at record highs and President Trump needs to get his tax plan through, or at least look likely to be passed by Congress before year’s end, if we want Wall Street to have one of their legendary Santa Claus rallies, which would give our stock market that big finish I’ve been sweating on.
So if the US ‘ducks’ line up, will our economy be poised to give key stock market influencers the drive to take our share prices and stock market indices higher?
I had a weekend conversation with a lawyer mate, who doesn’t devote much time to economic analysis. He had the feeling that our economic outlook was pretty dire but I explained to him that I thought the opposite was the case. The signs are looking better and there are a lot of records and statistical highs that normal people are missing.
I hope this little run of economic positives will turn you into a true believer of what the Oz economy could do. Stand by to be impressed:
I could go on with this optimism-creating stuff but that will do. I could also go looking for negative stuff and in economics, it’s always there, but my mates in the media do that every day, so I thought I’d paint the positive picture.
Before I sign off, there have been two surprises for even me, with the weekly ANZ/Roy Morgan consumer confidence rating falling by 0.6% to 114.1, after rising 4.6% to 7-week highs in the previous week. However, the confidence rating remains above short and long-term averages. And happily the wage bill rose 1.2% in the June quarter – the biggest lift in two years!
Anyone who argues we have a solid case for being negative has not fanatically looked at the facts about my favourite ‘footy team’ called the Aussie economy.
Go Aussie go!
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