If we're talking ourselves into a recovery, then so be it.
PERHAPS it's too soon to say the worst is over for the sharemarket but you'd never forgive me otherwise.
After all, the best part of a bull market is always the first few weeks.
Bull market? Already? Surely not.
But how else do you explain consumers, investors and even central banks becoming suddenly upbeat, egging each other on in a national mood swing apparently even more infectious than swine flu?
I'll have some of what they're having please. What's more, even normally reliable doomsayers have signed on.
The latest, brought to Australia last week by Treasury Asia Asset Management, is the Hong Kong-based uber bear Marc Faber ??? famous for his The Gloom, Boom & Doom Report, which is predominantly gloom with a good, or I should say bad, dash of doom while the boom is reserved for gold prices.
So does doom loom? Of course, or he wouldn't be Marc Faber, but it's in a form that you could come to like. He sees share prices rising an average 7 per cent to 8 per cent a year and by a lot more in emerging markets, even though "I'm ultra bearish about the world", predicting the mother of all crashes coming in the next five years.
Which would seem to put a cap on that 7 per cent to 8 per cent, only he sees future economic growth swinging between sudden surges and then busts thanks to the low interest rates and easy money policies of central banks around the world. But before year zero, share prices ??? or any other investment for that matter except government bonds which have to man the floodgates ??? must rise with all that liquidity being pumped into the global economy.
Rising commodity prices, a stronger dollar, surging share prices ??? you name it and it's part of a giant money bubble. They're all feeding each other so maybe it's more hot air balloon than bubble. Mind you, if we're talking ourselves into a recovery that's fine by me.
But maybe a money bubble isn't the only reason the sharemarket has jumped about 40 per cent since its March low.
It tracks the economy about a year in advance and, in putting the recovery in the early new year, its timing hasn't let it down.
As one engine conks out another fires up the economy. Just as the Government's cash splash is subsiding, its infrastructure spending takes over.
Ultra low interest rates are still doing their thing, especially for property prices, while the stronger dollar is pulling money into the country and keeping the banks profitable.
China is spending big again ??? possibly more in a speculative way rather than an economic frenzy but who's looking a gift dragon in the mouth? And even if that fizzles out, the US is forecast to recover later this year. Sure, the prices of exports have dropped but we're selling more.
As for jobs, on the whole bosses aren't hiring but they aren't firing either. Even the sharemarket is kicking in. Bubble or not, it's another confidence booster to pull the economy up. So you may as well go along for the ride, bumpy as it will be. Besides, a cash management trust earning 2 per cent ??? that 7 per cent a year ago looks positively generous ??? or about 4 per cent in an online account, won't make you rich after tax and inflation.
Source
No comments:
Post a Comment