Switzer on Saturday

Aussie John’s huge tip, Charlie’s angels and a porno postscript

Founder and Publisher of the Switzer Super Report
Print This Post A A A

Aussie John’s huge tip, Charlie’s angels and a porno postscript

After a week that ends the longest stretch of pre-election dread in our history, and one that has been dragging on since January 30, the big day has dawned. Personally, the election weekend got off to a mixed start with my beloved Roosters taking out the NRL Minor Premiership, but the Swans went down to the very impressive Hawthorn outfit.

On marginally more important matters, the morning brought the news that only 169,000 US jobs showed up in August in the US, which was less than the economist-predicted call of 180,000. This led to thinking that Fed tapering of QE3 could be delayed and this helped stocks head up, until Syria spooked the market.

Despite this weaker job creation, unemployment fell to 7.3%, which is a four and half-year low.

On the market, at its worst, the Dow was down 148 points, so the near flat finish on the US market indexes was a good sign.

The Darst and Switzer alliance

One of my favourite US market commentators is David Darst, the chief investment strategist of Global Wealth Management Group, who told CNBC that Adam Parker, the company’s chief equity strategist, who has been bearish for some time, now tips the S&P 500 will rise 12% over the next year! Darst says stick to the quality play and buy the dips, which is the Switzer strategy as you all should know. The long game is the go for investors.

For scare merchants pointing to the 10-year bonds in the US now in the 3% territory, remember these are still sub-normal rates, so it shouldn’t stymie the US stock market.

Asked what sector he liked and Darst said: “Apple”. When I MC’d the Xero conference last week, MD Chris Ridd asked the 900-strong audience what smartphones they had. Nearly everyone had iPhones! Apple remains huge and, as a new convert, I have to say I love my iPhone. Did I really write that? Honesty has no bounds in the Switzer Super Report!

While you were sleeping…

On Syria overnight, things got worse when Vlad Putin said Russia would send aid and make military sales to the country, if a military strike happened there. Against this, Congress doesn’t look as gung ho on Obama’s hit and run plan at this stage.

What I learned this week

Aussie Home Loans legend John Symond told me at a conference, where I was interviewing him, that there are 700 suburbs in Australia where the yield for an investor is 6.5%! I asked him to name them and he gave me one of his “sod off Switz” looks. But he did say that RP Data was the source of this. That’s a huge tip for direct property investors. I’ll seek Tim Lawless out from RP Data next week to give you some choice suburbs.

John also repeated his claim that he told me the week before that one in three investment properties bought in Australia are for Asian customers!

Further, are we getting into housing bubble territory? He says 5% loan growth now is a long way from the 13% we saw before the GFC. Have no fear on that front for some time.

Charlie’s angels

‘Me old mate’ Charlie Aitken is now rooting for the following stocks: CBA for the yield lovers in a super world; Perpetual got a jersey this week and so did AMP with a $6.10 target! He felt the vibe for JB Hi-Fi and looked for a beautiful one day, perfect the next stock with Bank of Queensland. Go Charlie as I tipped that one months ago!

Where Roger meets Charlie

The intrinsic value guy — Roger Montgomery — surprised me with the stocks he likes this week on my Switzer program on the Sky News Business channel. This is what he leans towards now: Seek; Resmed; McMillan Shakespeare — even still! — and Cash Converters.

But the big news is both Charlie and Roger both are shopping for Woolworths!

Wilson’s WAM stocks…

Also, on my Switzer show Geoff Wilson of Wilson Asset Management gave the thumbs up to Hills Industries and Transfield Services.

On the economy…

Ron Bewley — one of the best econometricians in the country — says we will stop saving like there’s no tomorrow and the Aussie consumer always makes a comeback after a surge of saving, usually after a big downturn. He says the signs are starting to show on his charts. I expect a good Christmas but it’s rough out there right now in retail land.

Fact of the week

My fact of the week had to be that China is our best export customer, buying $35.02 billion worth of exports, or 32.9% of our total overseas sales. So what does our best ally, the USA, buy from us? Try a lousy 3.62%!

On the election…

A big Coalition win will spark consumer and business confidence and our economy will kick in 2014 — that’s still my call.

On the election, Malcolm Mackerras, told me Wayne Swan should lose his seat and the PM will be under pressure to hold his. Adam Bandt of the Greens will go and so will Sarah Hanson-Young.

His final guess was 94 to Abbott, 54 to Rudd and two others.

Enjoy the election coverage tonight and look for a bounce next week if it is a decisive win to the Coalition.

A porno postscript

To explain the disappointing jobs number in the US, CNBC’s Jeff Cox, pointed to the $97 billion porno film industry. The figures showed 22,000 jobs were lost in the motion picture and sound recording industry and some think it could be linked to two high profile stars, who contracted HIV, which closed down some films. Only in America!

Top stocks and how they fared

Numbers that moved the market

The latest GDP figure was released on Wednesday. Our economy expanded by a seasonally adjusted 0.6% in the June quarter. According the ABS, the industries that drove the bulk of the growth were finance and insurance (0.2%), mining and construction (0.1% each).

Below trend economic growth and a falling Aussie dollar were two of the factors the RBA considered when they left the cash rate unchanged at 2.5% on Tuesday. According to the board, the historically low rate is still appropriate in fostering our economic growth.

Chinese PMI came in at 50.1 for the month of August – the first time in three months that the HSBC recording has been above the decisive 50 mark (which denotes an expanding economy). The reading is up from an 11 month low in July of 47.7.

The reading is also noteworthy because it is the first time since April that both the HSBC and official Chinese PMI (the official number for August was 51.0 for August) pointed to an expansion of the economy.

The week ahead

September 9 Housing finance (July)
September 9 Job advertisements (August)
September 10 NAB business survey (August)
September 11 Consumer sentiment (September)
September 11 Lending finance (July)
September 12 Employment/unemployment (August)
September 12 Credit & debit card lending (July)

September 8 Chinese trade data (August)
September 9 Chinese inflation data (August)
September 10 Chinese economic data (August)
September 13 US Retail sales (August)
September 13 US Producer prices (August)

On Wednesday, the August consumer sentiment number is out. We’ve been trending sideways all year – the mean figure for 2013 is 104.36 – so it’ll be good to see something north of that. I’d imagine with the election out of the way and Spring in the air, September will be a better month for consumer sentiment.

The other one to look out for this week is the employment/unemployment numbers from August, released on Thursday. Unemployment has been rising slowly but surely all year, but CBA’s Craig James predicts the number to remain flat at 5.7% this month.

Calls of the week

Rupert Murdoch’s estranged wife is a Chinese spy, according to senate hopeful Clive Palmer. Palmer also said in the contentious interview that he’s expecting to win around 10 senate seats.

Anthony Albanese during a ‘true or false’ segment on The Hampster Decides this week:

Julian Morrow: “The fact that you are on this show three days out from the election means you don’t actually think you can win”
Anthony Albanese: “True”

Watch the video here (skip to around 19:25 for Albo’s interview).

Paul Rickard’s call last month to take Leighton Holdings as a yield play. The day of his article Leighton closed at $16.98. On Friday, it closed at $18.30, after touching $18.71 intraday.

Last week’s TV roundup

Is the market poised for a sell off or is it positioned to head higher? In the wake of the federal election, this is the million dollar question investors are asking. To find out, I spoke to Geoff Wilson, Chairman and Portfolio Manager at Wilson Asset Management.

Earnings season gave us plenty of data on how listed companies performed over the past 12 months. To crunch the numbers into a prediction of what sectors are set to benefit moving forward, I caught up with the sector superman, Ron Bewley.

The reporting season is all done and dusted, so what were the stand out stocks and which missed the mark completely? Rudi Filapek-Vandyck, Editor of FNArena, gave me his controversial conclusions.

Paul Rickard is joined by Geoff Wilson, Chairman and Portfolio Manager at Wilson Asset Management, in August’s Switzer Super Report monthly webinar.

One of the biggest question marks brought about by the digital revolution is the future of the media industry. Today, both News Corp and Fairfax have live paywalls on their sites, but no one knows whether consumers will be happy to part with their hard earned for something they can get free elsewhere. Joining me to discuss the future of the media is Tim Burrowes, Editor in Chief of mUmBRELLA and Encore Magazine.

Favourite charts

What happened to follow the leader? Australian stocks vs US stocks, since 1 July.

Cleanseas Tuna has had a blinder these last three months, climbing from 1.3 cents at the start of July to 4 (will update at market close) cents today. In the last week alone it’s jumped over 60%!

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. The table also shows how this has changed compared to the week before. Notable movers are JB Hi-Fi and Flight Centre (shorts closing), and increasing short positions in Myer and Fairfax.

Last week’s Switzer Super Reports

Thursday, 5 September 2013: It’s starting to look a lot like Christmas
Monday, 2 September 2013: Australia needs Buffett

Top five clicked on stories of the week

Peter Switzer: What would Rudd/Abbott/Buffett do?
Paul Rickard: Switzer portfolios continue to outperform
Charlie Aitken: Time to go shopping – JB Hi-Fi and Woolworths
James Dunn: Election play opportunities – Qube and the airlines
Rudi Filapek-Vandyck: Buy, Sell, Hold – what the brokers say