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It’s been a week when central bankers have not screwed up the newfound optimism on stock markets but undoubtedly there will be tests ahead. That said, the S&P/ASX 200 index at 5,183.1 on Friday afternoon is a lot better than the February 10 low of 4,706 – a lot better!

The rise is 10.1% in a little over a month, so we should not be whinging, but I think we deserved to do better than 0.3% for the week. However, that kind of thing happens when your dollar goes as high as 76.81 US cents. Obviously, stocks that have surged on a lower dollar have lost a bit of that surge as the currency steps up to higher levels and yes, you can blame Janet Yellen and the market worrywarts who have forced her hand to go soft on US rate rises.

It’s good to know that we have paid the price for Wall Street resuming it’s onward and upward life of rising. That said, the S&P 500 rising and the greenback falling, causing higher commodity prices, has more chance of delivering the “green on the screen” that my colleagues at Sky News Business love to talk about and (I have to admit) I love hearing and seeing each morning when I wake up at 5am and again at 4pm before driving out to Sky for my TV shows. (Yep, I have two shows Monday to Thursday – my usual at 7 pm live and The Final Count at 6 pm which I co-host with Carson Scott.)

So last week gave us four up days and we have seen three weeks in a row of rises and two big central banks have been critical – the European Central Bank with its Mario “Whatever it takes” Dragi and the Fed’s Janet “I don’t have nickname” Yellen.

However, that did not stop her cutting the potential rate rises from four to possibly two and that’s why the greenback slumped and the Oz dollar went to a eight-month high.

The end-result was great for banks with the CBA up 2.3% and the ANZ up 2.5%. The other recent losers, energy stocks and materials, have had a reverse of fortune with BHP-Billiton up 4.7% t $18.10 but I still think the chairman, Jac Nasser, should retire or be sacked over that broken promise on the progressive dividend. Sure, the capital gain softens the crime but you don’t make a promise to investors, retirees and wealth-builders then break it and get off scott-free, in the non-market world. (The promise was stupid, sure, but they made it and the buck stops with the chairman.)

Back to the big issue – can this rally keep on going higher? – Wall Street was higher again.

“You’ve had every major central bank in the world (say) something in the last week and it’s all been stock supportive,” said Jeremy Klein, chief market strategist at FBN Securities on CNBC and that pretty well sums it up, but there has been something else aside from the greenback’s drop and the commodity price turnaround and it’s really important – there has been some OK to good economic data readings in recent times.

The 2016 early year sell-off of stocks was linked to fears about the US economy and what four rate rises could mean. The usual suspect doomsday merchants and some economists pulled out the R-word and markets reacted accordingly but the speculative story is being trumped – sorry about the pun but I can’t resist nowadays – by the economic reality.

It has happened here with our economy shooting the lights out and making those dope economists who predicted sub-2% growth or even a recession looking like what they are – dopes! But it hasn’t helped our share prices and what an irony that the newspaper group that most plays a negative economic headline game – the Fairfax Group – continues to bleed so badly that it needs to cut 120 staff? (I feel sorry for those who have lost their jobs but the management team really has had a shocker on many fronts – the buck stops with the guys who write the cheques, as Rupert Murdoch famously said many decades ago.)

But back to my main point – the QE economies of the USA, Japan and Europe have to see a good economic bang for the buck that they have put out there in huge proportions or else this positivity will turn again to negativity. That’s what I am watching and it was why I doubted the stocks sell-off this year and the economic test remains the big issue.

Kevin Costner style, if the they can build a better economy spitting out better growth, then stock buyers will come.

What I liked

• Myer coming out with the best sales growth in six years – it’s nice for Myer having an 8.8% share price jump but has to be a plus for the economy.
• And what about Oroton? It reported a 73% spike in net profit and its share price went up a huge 22.7%!
• The turn out to our Investor Strategy days in Melbourne and Sydney and the revelations, which I will share with you on Monday. However, I loved the news from the Economist Intelligence Unit that we have 5 cities in the most livable city category. Most countries had one with the USA’s being Honolulu, which nearly seems like cheating!
• The psychological plus of unemployment falling from 6% to 5.8% even if a fall in the participation rate mostly explained the good story.
• The weekly ANZ/Roy Morgan consumer confidence rating rose by 1.6 points (1.4%) to 116.4 in the week to March 13 – the highest reading since November 2015. Confidence is up 5.1% over the year and above the average of 111.4 since 2014. Did your regular media outlet tell you this?
• New vehicle sales fell by 0.1% in seasonally adjusted terms in February to be up by 5.1 per cent on the year but we near record highs. Sales of SUVs (418,691) hit record highs in annual terms and accounted for a record 45.1% of combined passenger car and SUV sales in the year to February.
• US housing starts rose by 5.2% in February to a seasonally adjusted annual pace  of 1.18 million – the highest level since September. That’s a good story.

What I didn’t like

• The Fed’s projection for economic growth was downgraded in 2016 from 2.4% to 2.2% and its 2017 guess fell by 0.1% to 2.1%. The only plus is that these guesses have been made by economists who have a good track record of being wrong!
• US retail sales fell by 0.1% in February against expectations of a 0.2% fall, so it was a better than expected negative result.
• The rise in the Oz dollar, which looks like this:We have to watch this rise and the experts I respect think the RBA won’t cut interest rates until it goes to 80 US cents! Even then, it might not work because just about every other sucker is cutting rates into negativity territory!

This could be a big issue.

Top stocks – how they fared

 The week in review

(click the blue text to read more)

My favourite charts

Has Yellen lost the dot?

Here is a dot plot of the FOMC’s assessment of “appropriate” monetary policy in the short, medium and longer term. Each dot represents an individual FOMC member’s judgement of the “midpoint” in a target range for the rate over these time frames.

Here’s how they plotted their points at the same time last year.

Philly Fed gallops ahead

The closely watched Philadelphia Federal Reserve survey is in positive territory for the first time in seven months, going from -2.8 in February to 12.4 in March. This survey tracks the health of manufacturing in the Philadelphia Fed Reserve district.

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Recent Switzer Super Reports

Thursday, 17 March, 2016: Playing the megatrends

Monday, 14 March, 2016: Bulls and bears

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