Shortlisted – dollar daze

Editorial director of Switzer
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The market finally appears to be taking the pick up in the US economy, and therefore the US dollar, seriously. But with a lot of geopolitical risks on the table, who knows what will happen next.

The dollar

We anticipate our call on Aussie dollar sensitive stocks will start to show fruit soon and any dip could provide opportunities to buy good stocks cheap.

Peter Switzer has pointed out that market laggard QBE would indeed do well if the dollar fell and last week it was up by 4%. It’s not necessarily on our shortlist though. SSR expert Paul Rickard gave up on it a few months ago and Peter points out that it’s still for the thrill seekers. But stay tuned, he is also trying to get the CEO Colin Fagen on Switzer TV to find out what’s really going on.

The economy

Westpac chief economist Bill Evans made an appearance on Switzer TV last week, after that massive jump in employment numbers of 121,000 jobs. He points out that’s the same amount of jobs that we usually see in a year and he expects some revisions next month.

“What worries me is that hours worked didn’t increase,” he says.

“[But] the lead indicators are suggesting that the labour market is improving a little bit.”

On consumer confidence, he also notes a gradual increase but says consumers are still concerned that budget measures haven’t been resolved.

“By far the most negative feelings are around the overall state of the economy,” he says.

He predicts a drop down to 90 cents for the dollar and dismisses fears that we have a housing bubble, pointing out that incomes have been improving in line with house prices over the last 20 years.

“At this stage, house prices are not really out of line with income,” he said.

A sell off?

We’re not predicting a market rout, although things might look a bit murky, but if there was a little bit of a correction, Peter has his eyes on Woolworths.

“Goyder is a smart CEO but as Woolworths heads into the $35 region, I’m getting close to going long this long-term good performer that has had difficulties mastering Masters,” he said on Saturday.

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.

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