It is with a somewhat heavy heart that I pen this column (or blog as they call it in an online world nowadays) because I’m conflicted. On one hand, my upbringing tells me I shouldn’t boast and, even more importantly, I shouldn’t tease even my tormenters. However, I will test your compassionate side and simply do a modest “cock a doodle doo!”
I know a few people may have been cheesed off that my 6000 call didn’t turn up within the calendar year 2014 and I didn’t like the fact that it didn’t. I’m not a grandstanding big call merchant and always have your best interests at heart. Now though, after 13 days of rises and an S&P/ASX index at 5820, I’m feeling pretty good, so good that I’m ready to forgive those who teased my call, for they know not what they do!
I even forgive one Doug T who emailed me, quite cleverly, with: “Santa Claus rally Peter? Ho!Ho!Ho!” Another guy even emailed six days ago with a Roger Montgomeryism that pooh poohed the current rally! Using a colleague like Roger against me? That’s way below the belt!
The bottom line is that no one can accurately time markets but someone like me and my good mate in market ‘guestimating’ Paul Rickard, knows that our job is to do our best to work out if stocks can keep on rising. Along the way, our aim is to direct you to the right ones.
2014 wasn’t a great year but we kept telling you to “buy the dips”, chase banks, other dividend payers and stocks that benefited from a lower dollar. In fact, recently, a subscriber emailed asking us to give him the date of the next dip because he’d made so much money from the December one! Love his support and confidence in us but that’s a huge ask!
By the way, I know 5820 isn’t 6000 but my team here encouraged me to crow this morning because they say this is a moral victory. Love my team.
If you look at your return over 13 months rather than 12, the market is up nearly 9%, plus dividends and franking credits. Let’s call it 16% for keeping the faith in Switz! Hope you did (my Monday piece will outline the educative take out messages from this latest 13-day rally, which I hope will ready us for the rest of this rally).
What I liked this week
- I didn’t expect it but I liked the rate cut and what it did to the dollar and the stock market!
- The prospect of another cut. History shows the RBA often does a double cut. Given the fact I don’t think we needed even one, what this means for growth in the second half of 2015, looks like a ripper for the economy, profits and whoever is PM come Tuesday!
- The Yanks created 257,000 jobs in January when economists expected 230,000, and average hourly earnings rose 0.5%, though unemployment did go up to 5.7% but it was because the participation rate rose. This is a positive sign for an economy.
- The good week for oil prices after the near six-year low last week, with prices looking to have stabilised in the $US50 plus range for both Brent and US crude.
- The Greeks showing (as George Boubouras told me on my TV show) that the new Government would be more reasonable in power than they sounded pre-election.
- Putin ‘the pest’ apparently engaging in some promising negotiations concerning the Ukraine conflict with EU leaders. Europe needs all the positivity it can muster.
- This chart of the German DAX showing the plus effect of the ECB’s QE program plus the lower concerns linked to Putin and Ukraine:
[1]- I’m talking about a 10.8% rise since the start of 2015! It’s gotta be a good omen. The Germans are not excitable Italians or Spaniards.
- The RBA’s economic growth guess for 2015, which ranges from 2.25% early but could get to 3.25% by year’s end (I think their 2.25% is a bit low but I like the 3.25% figure by next Christmas).
- I feel sorry for Tony Abbott and the leadership battle he faces on Tuesday but the issue has to be settled quickly for consumer and business confidence reasons. I want a big win for Tony or Malcolm to take over ASAP, again, purely for economic and market reasons. The Deloitte CFO survey showed Canberra problems are killing CFO confidence and CFOs control company purse strings!
- The spike in JB HiFi. Why? Well, the December retail number was only up 0.2% but for the quarter it was up 1.5% – the best quarterly result in two years. Importantly, the official category of “Electrical, Electronic & Gas Goods Retailing” was up 10.6% – the strongest result in 14 years!
- The Australian Industry Group says the Australian Performance of Services index rose by 2.4 points to 49.9 in January, taking gains to 6.3 points over the past three months. The services sector is expanding when the number is over 50, so this is a good sign.
- The CoreLogic RP Data Home Value Index of capital city home prices rose by 1.3% in January – the biggest rise in six months. Australian home prices rose by 8% over the year (the RBA has to watch this, especially in Sydney).
- The Abbott National Press Club speech that suggested that the next Budget will be more stimulatory. People (including misguided, untrained media commentators) think you beat government debt by spending cuts and/or tax cuts alone. You need economic growth in order to reduce spending on the dole and to bump up tax receipts. Once the economy is growing, the Government can cut even more spending because the private sector is booming.
- Brisbane Broncos’ new but old coach Wayne Bennett, who ordered his players to leave their smartphones at home! He said they had no place at work. Love it when the old world trumps the silly new world but I hope they do well this year or else Bennett’s fuddy duddy ways might be held responsible.
What I didn’t like
- The Greeks giving up on their reasonableness on debt repayment later in the week and the negative response of EU stock markets, with the German Dax down 0.73% overnight.
- The US market negativity over the S&P debt downgrade of Greece from a B to a B-. Moody’s already have the Greeks at Caa1!
- The typical market worries that the good US jobs report had investors concerned about the possible closeness of the first interest rate rise by the Fed.
Couldn’t resist throwing this pic in!
[2]
Cock a doodle doo, again!
Top stocks – how they fared
[3]
The week in review (click the blue text to read more):
- Is it time to buy more BHP and Rio [4], or time to cut your losses? I told you whether you should persevere with the iron ore majors.
- Our portfolios [5] enjoyed a strong January with our SSR income portfolio returning 4.00% and our growth-oriented portfolio up by 3.87%.
- CEO performance [6] often correlates to a company’s performance, so James Dunn gave us 5 big bosses we should know about – including Don Meij of Domino’s Pizza.
- The top 10 holdings of Warren Buffett [7]‘s [7] Berkshire Hathaway, were revealed by Penny Pryor.
- Beadell Resources and Fortescue Metals were upgraded [8] by the brokers this week, while Australian Pharmaceutical Industries received a downgrade. APN News & Media and Echo Entertainment Group also received upgrades [9] this week.
- Residential property, Fairfax and what Charlie Aitken likes to call “Applestra [10]” are all looking good after the recent rate cut.
- And oil stocks Santos and AWE have been added to Tony Featherstone’s list of takeover targets [11] this month.
What moved the market (click the blue text to read more)
- The RBA cutting interest rates [12] by 0.25% to a record low of 2.25%!
- A lower Aussie dollar [13] (down to 76.63 US cents just after the rate cut) and oil price rebounds also helped the market go higher this week.
- And European stocks rallied [14] after Greece’s new government announced plans to renegotiate debt bailout resolutions with its creditors.
The week ahead:
Australia
- Monday February 9 – ANZ Job Advertisements (January)
- Monday February 9 – RBA Governor speech
- Tuesday February 10 – NAB Business survey (January)
- Tuesday February 10 – ABS House price index (Dec Quarter)
- Wednesday February 11 – Consumer sentiment (February)
- Wednesday February 11 – Housing finance (December)
- Thursday February 12 – Employment/unemployment (January)
- Thursday February 12 – RBA Assistant Governor speech
- Friday February 13 – Testimony by RBA Governor
Overseas
- Sunday February 8- China Exports and imports (January)
- Tuesday February 10 – China inflation (January)
- Tuesday February 10 – US Wholesale inventories (January)
- Thursday February 12 – US Retail sales (January)
- Thursday February 12 – US Business Inventories (December)
- Friday February 13 – US Consumer sentiment (February)
It’s been a big week for the Reserve Bank but they still occupy a hell of a lot of our calendar next week. On Friday, the Governor will appear before the House of Representatives Standing Committee on Economics. Employment and unemployment data on Thursday will also be closely watched.
Overseas, Chinese trade and inflation for January are released during the top half of the week. The key US take-out will be the retail sales for January, released on Thursday.
The company reporting season really gets under way this week in Australia. The calendar is set out below, and first up, its Cochlear and Domino’s who will deliver their interim results on Tuesday. Market leader CBA reports on Wednesday.
[15]Calls of the week (click the blue text to read more):
- My colleague Paul Rickard [16] deserves to crow this week with his “Commonwealth will hit the $88 level” call – shares are now at levels around $93!
- As leadership speculation [17] ramped up this week, Malcolm Turnbull and Julie Bishop broke down Ben Fordham’s “fact’’ posted on Twitter on an alleged “meeting’’ together, by tweeting selfies and comments that showed they were in fact in very different places!
- Chief Minister of the Northern Territory Adam Giles [18] refused to sign his resignation letter after he got the chop by his parliamentary colleagues in a late-night party room coup this week.
- Charlie Aitken [10] coined the term “Applestra!”
- And unfortunately for chocolate lovers everywhere, Cadbury [19] announced plans to reduce the size of their family chocolate blocks by about 10% (that’s one delicious row!) in a bid to save costs – and perhaps our waistlines. And if the Facebook comments are anything to go by, Cadbury fans aren’t happy campers.
Food for thought
Yesterday is not ours to recover, but tomorrow is ours to win or lose.
– Former US President, Lyndon B. Johnson
Last week’s TV roundup
What’s the main reason behind the oil price slide and how low will it go? Find out [20] how you could play it with the latest Super Sessions update.
When the market vibes start getting very positive (or negative), I like to look to the charts to see if there’s a trend that will be our friend, or a trend that will bend! Gary Stone [21] from Share Wealth Systems is just the person to consult on market trends and he gives us his big picture view, on Super TV.
Switzer Super Report expert Geoff Wilson gives his two cents on the RBA’s surprise decision on rates. Is he still as bearish as last year? He tells all [22] on Super TV.
And Terry McCrann [23] of News Limited has become a legend of interest rate calls – so just how does he do it? I probe him on how he’s able to keep up this fantastic record!
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 also shows how this has changed, compared to the week before.
This week, one of the biggest movers Metcash – its short position increased by a significant 2.09% to 14.10%. Another big mover was Fortescue with its short position increasing by 1.25% to 10.67%.
[24]Source: ASIC
My favourite charts:
Bank on the Big Four
[25]The big four have shown a phenomenal performance during the past five days, with Westpac and ANZ up over 7% and almost 6% respectively.
Aussie market on a high
[26]The market has delivered its best winning streak in history with 12 straight days of gains. It’s now at levels over 5,800 – let’s hope this market continues to grind higher and delivers the goods for the rest of 2015.
Top five most clicked on stories
Peter Switzer – BHP and Rio – buy more or dump them? [4]
Charlie Aitken – Applestra, residential property and Fairfax looking good [10]
Charlie Aitken – High conviction picks and upgrade for Macquarie Group [27]
Penny Pryor – Buffet’s top 10 stocks [7]
Paul Rickard – Portfolios enjoy a strong January [28]
Recent Switzer Super Reports
Thursday, 5 February, 2015: He told you so [29]
Monday, 2 February, 2015: Nerves of steel [30]
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.