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Zombies in NYC, calling a correction and come dine with me
Wall Street not selling off, a shooting in LA airport, a drone takes out a Taliban leader, insurance companies cancel millions of health policies because of Obamacare and Halloween zombies takeover the subways of New York City — just another day in the USA!
My interest in NYC is usually Wall Street-biased but I’ve been checking the weather as well, as this time last year Hurricane Sandy and Mayor Bloomberg cancelled the New York Marathon. My son Marty was there to race at the time, and after training another year for this marathon, it looks he’ll be running. Friday’s temperature was 22 degrees and it’s raining but Sunday will be a brisk 2-11 degrees and sunny!
The four-legged lottery
Back home, it’s Derby Day and I suspect some of our subscribers could be reading this on the train between Flinders Street station and Flemington. Though some will be doing the form and might return to the more reliable conveyance for making money — shares — on the trip home, with slightly lighter wallets and purses!
This time it’s different
This week two big events took me out of my usual routine. The first was an Odyssey House lunch with WAM’s founder, Geoff Wilson, who has joined Investor Mutual’s Anton Tagliaferro in thinking a correction is coming. He says our market is up about 36% since June 4 last year and therefore is due for a correction or pullback.
Here we had four days down out of five and the ASX200 index went from 5441 to 5411, that’s down 30 points or 0.5%, which reconfirms to me that we’re going to need a decent trigger for the overdue correction, whether you call it 5% or 10%.
Regular readers know I can’t see a trigger, so as Geoff pointed out, it might be a left field X-factor event, which by definition, is unforeseeable, until it happens!
They’re expecting a correction on Wall Street as well, as Paul Nolte, managing director at Dearborn Partners told CNBC.
“I think the markets are in a correction phase after a nice run from mid September to late October,” he said. “Earnings are okay, and as a whole have beaten lowered expectations. Revenues are not fabulous, so it’s still managing expenses, which companies are doing a good job of. Top-line growth is a lot harder to come by in the current environment.”
But maybe this time it’s different because of an odd thing called QE3 tapering.
Bob Doll, who used to run equities for the world’s biggest fund manager, Blackrock (who I interviewed in New York a few years back, when I took my Switzer show to the Big Apple), says tapering creates a ‘can’t lose’ situation.
“I don’t want to act like I can win both ways, but in a sense I can,” he told CNBC late last week. “If [the Fed] keeps providing all this liquidity, it’s great for the stock market, and if they begin to taper, it’s because the economy is doing better. Then I get a better ‘E’ on my earnings front. So I’m reasonably sanguine.” (Doll is now senior portfolio manager at Nuveen.)
This is why I say a correction is overdue but it might be a small pullback because many investors see 2014 just like Doll. So, every dip becomes a buying opportunity and thus the dips are shallow. Only an X-factor event will change that.
A night with Rupert
On Thursday, I went to the Lowy Institute night at the Town Hall, where the star attraction was Rupert Murdoch, who delivered a very positive speech about Australia’s opportunities. It was a monkey suit affair and there were blasts from the past, which included Col Allan, the Editor-in-Chief for Rupert’s NY Post.
Col is the guy who allegedly put the Daily Telegraph’s front-page headlines on steroids during the election, and is a legend of the newspaper game.
The inspirational end line was Murdoch’s, who told us: “We must be leaders, not followers.” Leadership in this country and the companies we invest in is critical — ask David Jones, Treasury Wines and others that have disappointed lately.
Best line of the night went to the head of the Lowy Institute, Dr Michael Fullilove, who, in referring to the international consternation over the US phone tapping, pointed out that the Germans were outraged that their leader’s phone was tapped, while the French were outraged that their leader’s phone wasn’t!
For a recap on Charlie’s week, this is what he thinks is heaven sent. He’s taking out insurance with AMP. He’s still charging at the banks, and that’s no bull! He’s teasing the short sellers with JB Hi-Fi’s sweet sounding profits this week, and restated his belief in Cameron Clyne’s work at NAB, which now has a $40.80 price target!
Please pummel the Poms
Quote of the week came from Brian Smith, former Wallaby and coach of London Irish, who threw out a lifeline to the troubled James O’Connor, whose Wallaby contract was torn up recently: “Young men are the same whether they’re from my generation, my father’s generation or this generation. They’re ambitious but sometimes they need direction.”
Quote everyone should hear: “Everyone is replaceable because the team comes first.”
Well said Will Genia, Wallaby halfback, who’s regarded as the best in the world, and who was replaced for a couple of games this year by new Wallaby coach, Ewen McKenzie. Ewen has been Genia’s Super Rugby coach for the past three years and is an enormous fan — now that’s leadership!
The Wallabies play the Poms tonight — let’s hope we can beat them at something.