Well it’s taken four weeks to get an up-week for stocks but I have to say I wasn’t convinced by Friday’s finish. That said, I think long-term investors shouldn’t get too emotional about the market antics at the moment, as fund managers and other smarties play around with stocks as the news headlines ebb and flow.

The reality is there’s nothing to make this market really spike higher. On the flipside, there’s no real appetite for this market to sell off, despite the fact that a 5%-10% drop in US stock markets usually shows up around every quarter, which means they’re a long way overdue.

What makes me laugh is one week the banks are out of favour then this week they’re back in the good books. These quality companies are good playthings for fund managers because even if they time their buy and sell moves incorrectly, they’re still holding good assets that pay good dividends!

The Friday fall of 43.7 points (or 0.76%) for the S&P/ASX 200 Index, which takes the market benchmark to 5695, meant that we put on a lousy 0.4% for the week. I reckon we deserved more but that turkey in North Korea fired another missile and that’s no help to market confidence.

But we’re wimps, with Wall Street managing a positive finish. The Yanks seem focused on the main game as JJ Kinahan, chief market strategist at TD Ameritrade observed: “People are always looking for a reason for the market to go down but stocks keep going up and earnings remain strong.” (CNBC)

Not helping was another sensational news headline that the other three banks have a laundering problem and that story took the gloss off a good week for the banks. For the week, however, financials were up 2.9%, which justified my bellyaching when the market kept punishing the big four, following CBA’s good report and then its terrible run of bad headlines.

Thank God Macquarie came out with good news and a good outlook. This meant the fair weather friends of the banks decided to re-love those dear little dividend payers.

The really good news for the week (which again hasn’t got the heralding it deserves) was the jobs number. We’ve created over a quarter of a million jobs in six months and this will be a precursor to a tighter labour market and then rising wages. It will also show up with better profits. So those outlook statements that weren’t very optimistic in the recent reporting season could prove to be too conservative, and profits going forward could easily be ratcheted up and drive share prices with them.

Regular readers know I’ve been on to the improving economy story for some time and if that damn dollar can sneak lower, then we could see a double whammy for stocks of better economic growth and a lower currency.

And if Donald Trump, with his newfound ‘buddies’ called the Democrats, can come up with an acceptable tax reform plan before Christmas, then we might be popping French champagne over the festive season.

While a lower dollar and better economic growth would be little bangs for our bucks, Donald getting a tax reform package through Congress would be a big bang box of joy for Wall Street and the cheer would spread worldwide, including here in Australia.

What I liked

• Employment rose for the 11th straight month, up by 54,200 in August, after rising by 29,200 in July (previously reported as a rise of 27,900 jobs).
• Full-time jobs rose by 40,100, while part-time jobs rose by 14,100. (Economists had tipped a 15,000 to 20,000 increase in jobs.)
• Hours worked rose by 0.4% in August and were up by 2.6% over the year. Trend hours worked rose 2.7% over the year, equaling the fastest growth in 6½ years.
• The unemployment rate was steady at 5.6% but that’s due to the participation rate, which went up by 0.2 percentage points to 65.3%.
• The NAB business conditions index rose from +14.1 points to a 9½-year high of +15.2 points in August but the business confidence index fell from +11.7 points to +5.1 points, which might prove a rogue one-off result.
• The Westpac/Melbourne Institute survey of consumer sentiment rose by 2.5% to a 4-month high of 97.9 in September. The confidence index is down 4.4% on a year ago. A reading below 100 denotes pessimism.
• News that damage caused by Hurricane Irma was likely to be less than earlier thought.
• The Yanks not getting spooked by the latest missile madness out of North Korea.
• The solid inflation number in the US of 1.9%, which puts a US rate rise back on the table, which will help our dollar. The money market bet has a rise in December as a 52% chance. These are all good tidings for financial stocks.
• This from Deutsche Bank, with the broker putting a “buy” recommendation on Aristocrat, Star, Tabcorp, Tatts and a “hold” on Crown. It sees the outlook for the sector improving after a “disappointing” year and Chinese tourism is an important element in their story. (Fairfax)

What I didn’t like

• Another terrorist train tragedy in London!
• The exit of Fortescue CEO Nev Power. That’s a big loss for FMG.
• Annoying stories that link higher-than-expected inflation in the UK to some secret collusion of central banks to raise interest rates, which is a pretty crappy secret if finance journalists are on to it.
• Credit Suisse equity strategy is trimming its exposure to commodity stocks, removing South 32 from its hypothetical long portfolio and introducing Computershare. “What else can go right for the miners,” asked strategist Hasan Tevfik. (Fairfax) I hope they’re wrong.
• Total new lending commitments (housing, personal, commercial and lease finance) fell from 7-month highs in July, easing by 3.8%. Loans to buy used cars are at 12-year highs.
• Weaker-than-expected Chinese production data led to lower base metal prices and weaker prices for key miners.
• US retail sales for August fell 0.2%. Economists polled by Reuters expected a 0.1% gain but Hurricane Harvey had a bit of an influence on the numbers.
• US industrial production was down 1% in August.

One big black ‘Swan’ dislike

The Swans-v-Cats game! The Swans surprise poor showing makes barracking for stocks and the Aussie economy look like a more valuable use of my time! My game makes me always be on the lookout for dangerous developments but this was a black swan I never expected this year!

The week in review

• I shared a ‘risky’ tip: buy retailers and passionate people’s companies!
• One way to invest offshore is through a managed investment vehicle. Paul Rickard looks at actively managed investments and how to choose an active manager.
• Looking for something to read? Look no further. James Dunn shares five of the best books about investment.
• Along with the new super rules came a new set of words that trustees need to be across. Read Marjon Muizer’s guide to understanding the terms.
• In the first Buy, Sell, Hold – what the brokers say, Telstra received an upgrade while Regis Resources was downgraded.
• And in the second Buy, Sell, Hold, Macquarie Group was upgraded while Bank of Queensland was in the not-so-good books.
• Charlie Aitken recommended Kidman Resources at the end of last year – so how has the stock performed since then?
• Tony Featherstone updated the takeover targets, adding iSentia to the list.
• Adacel’s products include air traffic control and simulation systems, and the company has been able to capture market share and drive innovation, says Ellerston Capital’s David Keelan.
• Paul Rickard responded to reader queries about income outside the share market and La Trobe Financial.
• Among this week’s likes and dislikes in Hot Stock Picks were a miner, a TV station, an investment management business and an insurance company.
  

Top stocks – how they fared

What moved the market?

• Employment rose in August for the 11^th month in a row, increasing by 54,200. Full-time jobs were up by 40,100 and part-time jobs gained 14,100.
• The Dow Jones closed at a new all-time high on Thursday of 22,203.48.
• North Korea fired another missile over northern Japan on Friday morning.

Calls of the week

• I made a ‘risky’ call: buy retailers and passionate people’s companies!
• Charlie Aitken revisited his Kidman Resources call he made before Christmas 2016 and said shares could head higher over the next 12 to 18 months.
• The Coalition secured a deal with Senator Nick Xenophon over media ownership reforms. The package’s centrepiece will allow a proprietor to control more than two out of three platforms in one licensed market.
• Paul Rickard said ASIC needs to act on short sellers.

The week ahead

Australia

• Monday September 18 – New vehicle sales (August)
• Tuesday September 19 – Reserve Bank Board minutes
• Tuesday September 19 – Weekly consumer confidence
• Tuesday September 19 – Residential property indexes (June)
• Wednesday September 20 – Business sales index (August)
• Wednesday September 20 – Speech by RBA official
• Thursday September 21 – Speech by RBA Governor
• Thursday September 21 – Detailed job data (August)
• Thursday September 21 – Reserve Bank Bulletin

Overseas

• Monday September 18 – US Capital flows data (July)
• Monday September 18 – US NAHB housing market index
• Tuesday September 19 – US Housing starts (August)
• Tuesday September 19 – US Import & export prices (August)
• September 19 & 20 – US Federal Reserve meeting
• Wednesday September 20 – US Existing home sales (August)
• Thursday September 21 – US Philadelphia Fed index
• Thursday September 21 – US Leading index (August)
• Thursday September 21 – US Monthly home price (July)
• Friday September 22 – Markit ‘flash’ indexes (September)

Food for thought

I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over. Warren Buffett

Last week’s TV roundup

• G8 Education’s Gary Carroll joins Super TV to help understand the company and where it’s heading (broadcast on Tuesday 12 September, 2017).
• Centuria is a listed company engaged in a range of activities from property development to investment bonds. To discuss the business and outlook, CEO John McBain joins Super TV (broadcast on Tuesday 12 September, 2017).
• Paul Rickard explores the investment theme of why dividend growth and franking matter in 2017 at the 2017 Switzer Listed Investment Conference.
• Perpetual’s Vince Pezzullo shares his views on the stock market and where he sees value at the 2017 Switzer Listed Investment Conference.
• Contango Asset Management’s George Boubouras looks at investing for income and growth, and shares the stocks he’s watching right now at the 2017 Switzer Listed Investment Conference.
• NAOS Asset Management’s Sebastian Evans shares his views on what to look for in a fund manager at the 2017 Switzer Listed Investment Conference.

Stocks shorted

ASIC releases data daily on the major short positions in the market. These are the stocks with the highest proportion of their ordinary shares that have been sold short, which could suggest investors are expecting the price to come down. The table shows how this has changed compared to the week before.

This week, one of the biggest movers was JB Hi-Fi, with its short position increasing by 0.96 percentage points to 13.1%.

Source: ASIC

Chart of the week

CommSec’s Craig James says over a quarter of a million jobs have been created over the last six months, the strongest result in 17 years.

Top 5 most clicked stories

• Paul Rickard: Choosing an active manager for your international shares
• Charlie Aitken: Kidman Resources (KDR): my no.1 lithium play
• Peter Switzer: A risky tip – buy retailers and passionate people’s companies!
• Rudi Filapek-Vandyck: Buy, Sell, Hold – Telstra upgraded
• James Dunn: 5 must-read investment books

Recent Switzer Super Reports

• Thursday 14 September – Company revisit
• Monday 11 September – Are we overestimating Amazon?

Important: 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. Consider the appropriateness of the information in regards to your circumstances.