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The big story of the week was what was called a “mini-revolt” of US central bank (or Fed) Presidents, where five out of 12 of these head money honchos suggested that maybe April should bring the first rate rise for the US for 2016. This was not well-received by financial markets, which had got relaxed with the thought of the first rise possibly being in June and that there were two (or maybe only one) rate rises likely for the year. By the way, these Presidents’ boss, Janet Yellen, was responsible for putting out this impression to the market.

Until these unnecessary outbursts by people who should know better, the greenback had fallen, commodity prices had risen, the share prices of materials had pulled themselves out of the doldrums and, in our case, the S&P/ASX 200 index had spiked about 10% or so from the February 10 low of 4706.

However, this thinking out loud by only one voting President on the Federal Open Market Committee (or FOMC) turned the tide for the largely positive sentiment towards stocks we’d seen recently.

Of course, there was always going to be something to justify a retesting of the lows we saw earlier in the year. However, I’m hoping we don’t go back to these lower levels on  the key stock market indexes we watch feverishly daily, as it would mean that we’d be retesting the lows on the likes of oil and iron ore prices.

Recall that I argued that the 40 or so days of market negativity this year until February 10 was a case of negative speculation outweighing reasonably OK to pretty good economic reality. The market smarties (hedge fund managers and other short sellers) held sway until reality from earnings, economic data and decisions by the likes of the Fed and the European Central Bank (as well as some moves by OPEC et al.) helped to turn around sentiment.

Locally, earnings defied the bears and economic data starred, with economic growth coming in at 3% rather than the sad 2.5% predicted by too many economists – present company excluded!

This three-month chart of the S&P/ASX 200 index shows how 5200 is one level too far at the moment. Around this benchmark, the news, the data and the decisions have to come in better than expected or else the fund managers (whose results are always on show) and traders (who can’t be sentimental) will take profit. It’s ‘sell first and ask questions later’, as they can always buy back in when BHP-Billiton sinks to $16 or so. After all, it saw $18.50 and was as low as $14.06 earlier this year, so it looks like a damn good plaything for those who aren’t long-term investors.

Of course, for the long-term investor, we are in buying opportunity territory, as long as you can wait. On that subject, I can’t wait to see if CMC Markets’ Michael McCarthy gets it right in his call that our index will see 5900 this year!

For him to be right (and you know I want him to be), we’ll have to see the QE program in Europe start to show some economic dividends. In fact, the best news of last week was on the tragic Brussels bombing day, when European stock markets rose, despite the fear and loathing that terrorists created with their selfish actions.

So how did it happen? Well, the negativity of the bombings was outweighed by the positivity of the German business sentiment, as seen in the Ifo index hitting the best level in eight months.

“The news is in line with figures from the ZEW institute released last week, showing investor sentiment in Germany rose to its highest level in just over a year in March,” CNBC reported and “the Markit Economics purchasing managers index (PMI) for the manufacturing and services sector, released Tuesday, rose to 54.1 in March from 53.3 in February.”

For this year to end up, we need to see QE deliver the overdue economic bang for the buck. Then we need to see China defy its critics and grow around 6.5% and also come up with some government decisions that impress markets. And finally, company earnings have to start looking better than expected. If these three things happen, then stock market indexes will climb higher and so will commodity prices because the global economic outlook will be on the rise as well.

Next week, there will be important economic data to move markets from Japan to Europe but the US jobs report will be the biggie on Friday. The markets drama never stops!

What I liked

• On the subject of Europe, after some good manufacturing readings, I liked this: “These numbers – the Ifo today and the euro zone PMI yesterday – show momentum for the region as a whole is strengthening,” Daniele Antonucci, European economist at Morgan Stanley told CNBC. “There are three tailwinds for the euro zone economy this year – currency weakness, lower interest rates as a result of QE [quantitative easing] and lower oil prices.”
• On Thursday, the Markit flash US services PMI was 51 in March, up from 49.7 in February.
• New US home sales rose by 2% to a seasonally adjusted annual rate of 512,000 units.
• The majority of companies reporting half-year earnings results (91%) chose to pay a dividend and 77% of these companies lifted or maintained dividends.
• The Bureau of Statistics reports that Australian home prices rose by 0.2% in the December quarter to stand 8.7% higher over the year.
• CommSec’s Craig James said: “The Sydney-Melbourne route is a key indicator of business activity. Passenger numbers in the year to January hit a record 8.65 million. Smoothed annual growth was the best in 28 months.”
• Our total household wealth stood at a record $8,622.3 billion at the end of December 2015, up $119.4 billion (or 1.4%) over the quarter. In per capita terms, CommSec estimates that wealth rose to a record $360,390 in the December quarter, up $4,025 over the quarter!

What I didn’t like

• Oil’s price was down 5% for the week.
• The US dollar was up and our dollar down, despite the fact that I don’t want our dollar any higher than 75 US cents for economic growth reasons.
• Big mouth Fed Presidents, who don’t help by speculating on rates.
• US existing home sales fell by 7.1% in February to a 5.08 million annual rate against a forecast of 5.32 million.
• The US national activity index eased from +0.41 to -0.29 in February.
• Australia’s population expanded by 313,200 people over the year to September 2015 to 23,860,100 people. Overall, Australia’s population growth rate fell from 1.35% to 1.33% – a 10-year low. Population growth is good for economic growth.

Once upon a time…

A reader asked if I could resuscitate my “Market Movers”, which I used to include on Saturdays, so here goes!

Rudi Filapek Vandyke was put on the spot by yours truly (last Thursday night on my TV show on Sky) on a good company to follow and he nominated car-related business – Burson Group Ltd (BAP.AX).

Have a look at its one-year chart, which shows it defied a lot of the negativity of the past year and the early months of 2016.

This isn’t a company I follow but I’ll be chasing up its CEO for an interview on my TV show ASAP and I’ll share his reflections with you!

That’s an impressive chart and it might be worthwhile to see if Rudi is on the money with this one. It’s 52-week high was $5.06 and it’s now $4.64 and might be worth watching, with markets likely to be in a little negative phase.

Top stocks – how they fared

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The week in review

(click the blue text to read more)

• I gave you the 5 best investment insights from our Switzer giants at the recent Investor Strategy Day. Your portfolio might thank me for it!
• Paul Rickard revealed the tax secrets every investor must know.
• Mark Arnold gave you 3 growth stocks for tomorrow – including Domino’s Pizza Enterprises (DMP), REA Group (REA) and SEEK (SEK).
• The brokers liked Medibank Private and The Reject Shop but gave Myer the thumbs down. Our second broker report upgraded Caltex and Graincorp but Tabcorp got a downgrade.
• Gary Stone explained some of the headwinds facing our market – can we go up from here?
• Our Super Stock Selectors liked National Australia Bank and Rio Tinto.
• Charlie Aitken shared 7 structural growth themes he believes and invests in.
• Tony Featherstone gave you 5 attractive income-fund options to consider including the Australian Leaders Fund (ALF), Plato Australian Shares Income Fund, Cadence Capital, SPDR MSCI Australian Select High Dividend Yield Fund (SYI) and iShares Treasury ETF.
• Our Professional’s Pick came from PM Capital’s Paul Moore who explained why the global bank Wells Fargo is a quality business.
• And Tony Negline outlined the traps for SMSFs in buy and sell agreements.

What moved the market

• Wall Street and European shares initially fell on the Belgium terror attacks before ending relatively flat.
• Comments by Fed Reserve officials, who suggested more interest rate hikes than the two expected, also weighed on commodities prices.
• The ANZ announced that credit losses for the latest half would be at least $100m higher than expected – and the market went into overdrive and thumped the banks.

The week ahead

Australia

• Wednesday March 30 – Weekly consumer confidence
• Wednesday March 30 – Migration & regional population
• Wednesday March 30 – Engineering construction (Dec qtr.)
• Thursday March 31 – Private sector credit (January)
• Thursday March 31 – Job vacancies (February)
• Friday April 1 – Performance of Manufacturing (March)
• Friday April 1 – Home value index (March)

Overseas

• Monday March 28 – US Advance trade data (February)
• Monday March 28 – US Personal income (February)
• Monday March 28 – US Pending homes (February)
• Tuesday March 29 –US CaseShiller home prices (January)
• Tuesday March 29 – US Consumer confidence (March)
• Wednesday March 30 – US ADP employment (March)
• Thursday March 31 – US Challenger job layoffs (March)
• Friday April 1 – US Non-farm payrolls (March)
• Friday April 1 – US ISM manufacturing (March)
• Friday April 1 – US Consumer sentiment (March)
• Friday April 1 – US Auto sales (March)

Calls of the week

• PM Malcolm Turnbull made the call to bring his May budget forward to the 3rd and threatened to call a double dissolution election if the Senate does not pass laws to combat trade union corruption.
• ASX boss Elmer Funke Kupper called it quits after investigations were launched into his knowledge of an alleged bribery payment of $200,000 paid to the family of Cambodian Prime Minister, Hun Sen. The payment was allegedly made in 2009 when Kupper was chief executive at Tabcorp.
• On a lighter note, one US vet showed that even the smallest of creatures matter by crafting gold braces for… wait for it… a gold fish! The little floater named “Mr Hot Wing” was born without a lower jawbone, so the savvy vet made a brace to help him breathe!

Food for thought

“Don’t count the days, make the days count.”

— Muhammad Ali

Last week’s TV roundup

• Should we take some actions before budget night to avoid potential losses to our nest egg? To discuss, Paul Rickard joins Super TV.
• Simon Conn of Investors Mutual is always on the lookout for good companies – so what’s in his good books right now? Find out here.
• Graham Richardson joined us at the recent Switzer Investor Strategy Day in Sydney to talk about Turnbull’s election prospects and the importance of agreeing to disagree.
• And does George Boubouras from Contango Asset Management think the market can continue to defy gravity? He talks about this and the stocks he likes.

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, Mineral Resources was one of the biggest movers with its short position increasing by 1.42 percentage points to 11.2%. (Latest percentage taken on Thursday 24 March 2016).

My favourite charts

Bubble bubble toil and trouble?

This week, the fourth quarter house price index was released by the RBA. Switzer expert Michael McCarthy used this chart to show that there aren’t the steep and sustained prices rises to support a housing bubble in Australia. Most of the heat in the housing price rises has clearly come from Sydney, but McCarthy says there’s no ‘’blow off top’’ (a large rise then immediate fall) to suggest that this market is having bubble fever either.

High-flying numbers on key business route

Did you know the Sydney-Melbourne air route is the third busiest in the world? CommSec says the route is also a key measure of business activity and according to the Bureau of Infrastructure, Transport and Regional Economics, passenger numbers hit a record 8.6 million in the year to January. Business is looking good!

Top 5 most clicked on stories

• Charlie Aitken: The China growth opportunity
• Paul Rickard: The tax secrets every investor must know
• Peter Switzer: 5 investment insights from the Switzer giants
• Mark Arnold: 3 growth stocks for tomorrow
• Rudi Filapek-Vandyck: Buy, Sell, Hold – what the brokers say

Recent Switzer Super Reports

• Thursday 24 March: Don’t invest in the past
• Monday 21 March: Investing with the experts

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.