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Peter Switzer
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+ About Peter Switzer

About Peter Switzer

Peter Switzer is one of Australia’s leading business and financial commentators, launching his own business 20 years ago. The Switzer Group has since grown into three successful companies spanning media and publishing, financial services and business coaching.

Peter is an award-winning broadcaster, twice runner-up for the Best Current Affairs Commentator award for radio, behind broadcaster Alan Jones. A former lecturer in economics at the University of NSW, Peter is currently:

• weekly columnist for Yahoo!7 Finance
• a regular contributor to The Australian newspaper and ABC radio
• host of his own TV show, Switzer and Grow Your Business, on SKY News Business
• regular host of the Super Show on 2GB radio.

Testimonials

Dear Peter, What fun! You are really very good at what you do. I appreciated our time together and wish you continued success in all you do. Have fun (I know you will).

Jack Welch, former CEO, GE, and ‘Manager of the Century’ (Fortune magazine)


Peter, It was great to have worked with you – you really made the event come alive. I hope you enjoyed yourself. I know Steve Ballmer [CEO, Microsoft Corporation] did.

John Galligan, Director of Corporate Affairs & Citizenship, Microsoft Australia


Here’s a home truth, my only real education – or teacher who I actually ever listen to – is your interviews on Qantas. So thank you with sincere respect.

Sean Ashby, Co-Founder, AussieBum


Peter did a wonderful job on the night; keeping the program moving, working around changes to the run sheet, and ensuring each award recipient, and our sponsors, were made to feel welcome and important.
The feedback received from those attending has all been extremely positive.

Peter Mace, General Manager NSW, Australian Institute of Export


Peter, We would like to congratulate you for performing your master of ceremonies role in such a professional, entertaining and informative manner. We were impressed by your ability to tease out each winner’s story so that the audience gained maximum benefit from their collective business experiences.

Greg Evans and Nicolle Flint, Directors, Australian Chamber of Commerce and Industry


Hi Peter, I listened to you speak this morning and thought you were amazing. I am an accountant and in risk management and have never thought about doing a SWOT on myself – thanks for the tip!

Serife Ibrahim, Stockland Corporation Ltd


Dear Peter, Thank you for your valuable contribution to this year’s forum. Ninety-two per cent of delegates rated your presentation highly, commenting on its useful and topical content.

Catherine Batch, Head of Marketing and Communications, Indue


Peter has facilitated our CEO and CFO symposiums over the last three years. A true professional, he takes away the stresses of hosting and organising an event.

Justine Goss, Strategy Group

Trump, tax, Thanksgiving and our wealth – they’re related!

Monday, November 20, 2017

By Peter Switzer

By the weekend, we should know if Thanksgiving in the USA on Thursday gives us anything to be thankful for. Generally, I don’t think of America’s huge ‘mass murder’ of turkeys as a significant reason to write about, apart from the fact that it ushers in Black Friday. However, this year there could be some huge issues for stocks, super and overall market confidence coming out of Thanksgiving.

The day after the fourth Thursday in November, which is when the US public holiday Thanksgiving happens, is called Black Friday and is economically significant because it brings the start of the holiday season sales. And it’s when retailers get out of the red and go into the black with their bottom lines. Some retailers lose money all year until the December-January period, so this is a case where the word “black” has very positive connotations.

Last Friday, the US Treasury Secretary Steven Mnuchin said  he expects a Republican tax reform bill to be sent to President Trump to sign by Christmas.

"We're very excited about the timeline," Mnuchin says. "We're going to have the Senate, as soon as they get back from Thanksgiving, vote on the bill."

Back on October 30, President Trump said he wanted the House to pass a tax reform bill by Thanksgiving, which he says he hoped to sign by Christmas. And the House has given the tax bill the thumbs up but the Senate, which is dominated by Republicans, has some rogue members who are holding out their vote for electoral payoffs!

So it looks like there will be some anxiety for the Trump family on Thanksgiving day, given the President didn’t get his bill passed before the country’s most loved day for family get-togethers.

So now the wait is on for what the Senate might do post-Thanksgiving but if the talk is negative and the Republicans create another failure for President Trump (as they did with the hoped for end of Obamacare), then Donald’s popularity could slip below the latest Lucid poll, which had him at 35%.

Time.com says the latest Harvard CAPS/Harris Poll found the President’s rating was 41%, which is down four points from September, and 59% disapprove of Donald.

But he smells like roses compared to the Republicans generally, with the party only liked by 29% of Americans!

This week better be one where the noise around this tax bill being passed and then signed by the President before Christmas is positive or the stock market could send a message to Republicans that they’re not happy.

An expectation of lower taxes is already baked in by Wall Street and if the a party that owns the House, the Senate and the White House can’t deliver on an election promise of this significance, there could be a big stock market sell off.

Remember the US stock market has gone for over 60 weeks without a 2% pullback and there are lots of experts who say a correction — a 10% drop — is way overdue.

The Republicans better not give the stock market reason to get negative in this Thanksgiving week or else December might not deliver its famous Santa Claus rally for stocks.

I really hope the Republicans don’t act like turkeys and trump the tax bill, as it will be bad for stocks, our super and even global economic confidence, which is one of the great assets that we take into a 2018 that looks economically promising.

 

Longest run of job gains in 23 years! Try to be optimistic

Friday, November 17, 2017

By Peter Switzer

In the absence of anyone in the media willing to cheer our latest jobs report, let me give you the truth about employment in this country.

The headline all newspapers and business websites should be running with is: “The longest run of job gains in 23 years!”

Let me give you the hard facts that should be getting your high hopes about our economic future into optimism mode.

Here they are in a nutshell:

  • Jobs rose for the 13th straight month, up by 3,700 in October after rising by 26,600 in September (previously reported as a rise of 19,800 jobs).
  • Full-time jobs rose by 24,300, while part-time jobs fell by 20,700. Economists had tipped an increase in jobs of around 20,000.
  • Hours worked rose by 0.3% in October and were up by 3.2% over the year. Trend hours worked rose 3.1% over the year, the fastest growth in seven years.
  • Unemployment fell from 5.5% to 5.4% – the lowest jobless rate since February 2013.
  • Unemployment remains under 5% in three of the nation’s states and territories. In fact, the NSW job market could be considered at full employment with a jobless rate of 4.6% — a 9-year low.
  • The number of unemployed males fell to a 5-year low of 5.2% in October. The female unemployment rate was 5.6%.
  • Aussies actively employed or looking for work rose to 5 ½-year highs.

Seriously, I could go on, but I’ll let you off the hook but as you can see, this is a wonderful employment report. More importantly, this job market of ours has been getting better for 13 months and augurs well for the economy next year.

This week we saw business conditions rise from 13.9 points in September to a record high of 21.1 points in October, while business confidence as measured by the NAB came in at 5.9 which is above the long-term average.

Anyone who doesn’t want to see this as an unambiguous good story for the economy for 2018 simply doesn’t want to believe it!

Adding to my optimism was the RBA telling us that non-mining business investment is on the rise and more economists are tipping wage rises to pick up next year.

As I said, anyone who doesn’t see this as a good news story, simply doesn’t want to believe it. And I say — screw them!

 

Same sex and soccer wins good for the economy!

Thursday, November 16, 2017

By Peter Switzer

Same sex legislation and the Socceroos’ Russia reigniting win against Honduras made November 15 a good day for the economy in 2018 and all we’re waiting on now is Donald Trump to talk his own Senate into passing his tax cuts to ensure next year is a ripper for stocks and the economy.

Regular readers know I’m on a unity ticket with the Reserve Bank in believing that our economy will move into the 3% growth zone. I believe the likes of Chris Richardson and the business leaders from a recent AICD survey, who see wage rises kicking in at better levels next year.

I believe that our dollar is bound to fall as the Yanks raise interest rates, starting in December, which could bring three to four rises next year, and this should send the greenback up and our currency down.

Also strengthening the US dollar should be the Trump tax cuts getting through Congress, which would also help the US dollar go higher while taking ours down.

Macquarie’s experts think commodity prices will stay in the current elevated prices range, so that should help exports and related stock prices, while even the RBA’s Deputy Governor, Guy Debelle, told a conference this week that at long last non-mining investment was on the rise.

Investment today feeds growth in 2018 and it comes when we saw the latest health check of the business sector from the NAB on Tuesday.

This told us that:

  • The business conditions index rose from +13.9 points in September to a record high of +21.1 points in October.
  • The business confidence index was unchanged at +7.6 points in October, remaining above its long-run average of 5.9 points; and
  • The measure of business profitability surged from +16.6 points in September to an all-time high of +26.2 points in October.

On the consumer front, it was a mixed picture, with the Westpac monthly reading only just negative, with pessimists slightly outnumbering optimists after a previous month when the opposite happened. However, the weekly ANZ/Roy Morgan consumer confidence rating rose by 2% to 114.8 – its highest level in seven weeks - after falling by 0.7% in the prior week. Sentiment towards current and future economic conditions rose by 3.5% and 7% respectively.

Meanwhile, expert stock market analysts have local earnings from our top companies on the rise and many are tipping our S&P/ASX 200 index to reclaim the 6000 mark before Christmas, before marching to the 6500 level or higher by year’s end.

Throw into this largely positive mix the hospitality spend that will come from same sex couples, who aren’t renowned for their money miser ways, and we can see the demand for reception centres, catering, photographers, alcohol providers and marriage celebrants going through the roof.

Meanwhile, imagine what hotels and all the related businesses to Australian soccer would have missed out on if the Socceroos had lost on Wednesday night!

In the whole economic scheme of things, these are small spends compared to what will be spent on infrastructure next year, which is another strong argument for the economy in 2018, but both of these events will help consumer confidence and could prove to be good omens for an economic optimist like yours truly.

 

Is it time to panic about China and our own economy?

Wednesday, November 15, 2017

By Peter Switzer
 
Will China bring down a “house of cards” called the world economy and really hurt one of its most dependent economies called Australia? That’s the residual question following a huge think piece by one of Australia’s smartest guys in the room — CEO of Freelancer.com, Matt Barrie.

Matt sent me his seemingly endless document via email on why China will fall over and we will follow like a domino and end up in a recession, with stock prices tumbling like they usually do. His tome on why we looked economically screwed was picked up by a journalist in The Australian and gave birth to a headline that read: “Australian economy news 2017: Recession, depression predicted.”

Always on the lookout for a scary story to ensure you never get complacent, the AFR came up with: “Matt Barrie says doomed Australia needs ‘an Apollo program’.”

One other forgettable publication served this up: “Freelancer CEO Matt Barrie goes nuclear on Australian meltdown.”

When I replied to Matt, this is what I said: “Impressive Matt but you made an Armageddon call years ago at the CEO sleep out! One day you will be right but when?

“The pivotal point rests on a Chinese expert on Chinese banking — if he’s wrong or the Chinese Government buries the problem, as Communist Governments can do for a long time, you have worried us all too early.

“As I say, a crash and recession will happen eventually but I’d rather you work harder on getting the freelancer share price up and hopefully you are spending less time in Kings Cross night clubs!”

Matt is the founder of Freelancer.com and is a smart tech-entrepreneur, who also doubles as an adjunct associate professor at the University of Sydney where he teaches classes in computer and network security since 2001 and technology venture creation since 2010.

As I pointed out above, some three or four years ago, Matt was on the Armageddon gravy train with other doomsday merchants and I told him what I said in the email: “Crashes and recession always happen but now is not the time.”

By the way, I don’t do this lightly but this is my job in the media, for my financial planning clients and those invested in the Switzer Dividend Growth Fund or SWTZ. I’m always working out what’s likely to happen to key world economies, major companies’ profits, the course of share prices, what bond markets are warning us of and whether the hard-to-see ‘black swans’ are coming for us.

The most recent black swan event was the fact that debt ratings agencies didn’t tell the truth about large parcels of debts that were being sold with inaccurate ratings on them. What looked like a AAA parcel of loans had a lot of dodgy, sub-prime loans in them and when this was recognised by some smart guys in the room (like Matt but who were financial market experts and players) it gave birth to the story that inspired the movie The Big Short.

Now some people try and scare us about an upcoming debt disaster because they’re shorting the stock market or certain stocks in the market. A famous shorter called Jim Chanos in the USA has been trying to make money out of shorting China but has failed for nearly a decade.

One day after Matt’s prediction of a China Syndrome-like economic and market meltdown, one of the most respected economists, Jim O’Neill, who famously coined the term BRIC economies (which stood for the emerging economies of Brazil, Russia, India and China), allayed Matt’s fears.

And what’s interesting is that on the same day Matt was doing a Paul Revere, warning us that the day of reckoning was nigh, Jim was warning about underestimating China.

In an interview with CNBC, this highly respected economist said investors should overlook the growing debt pile in China, highlighting various positive factors for the world's second-largest economy.

"I can't get excited about the debt issue," Jim O'Neill, former chairman of Goldman Sachs Asset Management, said. “Not least because in the past few months there's evidence that the rise of debt growth has slowed pretty dramatically and indeed with nominal GDP growth accelerating I think even some of the doom and gloom people about China would concede that the scale of the debt problem has come down a little.”

Now to be fair to Matt, the IMF is not relaxed about China. In August it noted: “International experience suggests that China's credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown."

China’s total debt is expected to hit 300% of GDP by 2022 and that’s big, so it’s silly to be too relaxed about it but O’Neill thinks doomsday merchants ignore a pretty important point. You see, as he explains, “it's a country with an enormous amount of savings."

If there is a global financial fallout, we’re more exposed because we borrow a lot from overseas — we use other people’s savings from overseas to bankroll our lives and investments — but China borrows from themselves and lends a lot to countries such as the USA!

Matt’s work has merit and one day the economic miracle which has been China over the past 10-15 years will become a nightmare, just like we saw with Japan in the 1990s, but I’m betting that time is not nigh and I hope that Jim and I are right and Matt is too early with his Armageddon call.

By the way, my reference to Matt and Kings Cross nightclubs harks back to another opinion piece he penned some years ago, which went viral worldwide, where he complained about Sydney’s lock-out laws for pubs and clubs in the Cross that he said made us look like an embarrassing tourist backwater.

Matt is an opinion-maker and is very smart but history has shown me that it doesn’t make you right on the economy. I reckon he started off with the view that he was worried about debt and went looking for stuff to vindicate his fears.

However, a good economist will also objectively test out their own objectivity, which is really hard to do.

I hope Jim O’Neill and I are doing that because I suspect Matt isn’t.

 

Two surprising threats to the Oz economy’s positive outlook

Tuesday, November 14, 2017

By Peter Switzer

There are two surprising threats to our increasingly positive outlook for the Oz economy and it’s not that tiny, tubby guy from North Korea that President Trump has ‘not’ insulted!

(In case you missed it Donald yesterday tweeted: “Why would Kim Jong-un insult me by calling me ‘old,’ when I would NEVER call him ‘short and fat?’ Oh well, I try so hard to be his friend - and maybe someday that will happen!”)

And over the next two days we will see data that could tell us if we should be worried about these two curve balls that are being thrown at what I have argued is a pretty good economic outlook for 2018.

The first is this citizenship madness that has gripped Canberra that could even see an indigenous Australian in Jacqui Lambie have to leave the Senate if the laws of the UK tell her she is a Scot because of her dad!

Recently, one of our great Davis Cup tennis players, John Alexander, was told he was a Pom because of his dad and it’s said the Coalition will refer suspicious Labor MPs to the High Court, who could be ‘secret’ foreigners.

This could be a funny Monty Python sketch if we weren’t talking about our national government and I’m wondering when/if business will get spooked by all this turmoil and uncertainty emanating out of the nation’s Parliament?

Today we get the latest NAB business survey and the news from this respected indicator of the economy’s health has been a big reason why I’m positive about the economy in 2018.

The last reading found that the NAB business conditions index rose from 14.1 points to 14.3 points in September. The business confidence index rose from 5.4 points to 7.4 points. The rolling annual average business conditions index was at a 9-year high of 13 points. And the measure of business profitability rose from 14.8 points to a 9½-year high of 16.9 points.

This was a really good report card for the attitude of business and made me think that business investment is very likely to go higher next year, which would drive economic growth, jobs and higher wages. All this should help consumer confidence.

But if the instability in Canberra leads to concerns about a new election or Labor assuming power, given some of its more anti-business and anti-property investor policies, this could easily spook business, derail investment and create a slower growing economy in 2018.

None of this scenario looks great for stocks either, so that adds another worry that could come out of this Canberra citizenship crisis!

Tomorrow we get the latest Westpac reading on consumer confidence and it’s relevant to note that in October, consumers got their mojo back, with optimists outnumbering pessimists for the first time after 10 months of negativity.

So by Wednesday afternoon we should know what’s happening to both business and consumer confidence and I really hope we look past this inherited stupidity that is undermining our Government.

The second threat to our economic outlook is Donald Trump’s tax changes that could easily be delayed for a year. To be precise, the Senate Republicans are talking about a delay on introducing the company tax cut and this is already hurting confidence on Wall Street.

If the Senate has its way over the President and the House, Wall Street could sell off and our market would play follow the leader but, worse still, the US dollar would fall and our dollar could rise and this too could slow down economic growth for us next year.

The dollar falling has always been a good reason for me being positive about the economy in 2018.

For economies and stock markets confidence is everything and at the moment Canberra’s foreigner ‘f-up’ and Donald’s tax trap created by the Senate, could be the curve balls from left field that I never contemplated.

By the way, I don't see either of these issues creating a big stock market drama but they could create reasons for a solid sell off.

 

Don't be scared of a housing collapse. Fear stories about it!

Monday, November 13, 2017

By Peter Switzer

How scary is this Fairfax Media headline: Hasty interest rate hikes could trigger a property crash, UBS warns!? That’s what innocent readers were hit with but it’s like saying people will die if a meteor hits planet earth.

It’s a ‘well der’ observation but its timing is especially worrying because there are lots of Aussies out there who have been warned about a housing collapse for years and there are those who think it comes with a recession and stock market crash.

Let me be clear: if unemployment spiked up, I think we’d see a housing collapse and that would help create a recession and stock market crash but one important thing is missing­ —  the job market is doing really well.

This is what CommSec’s chief economist said about the latest job ad numbers: “Job advertisements rebounded in October, increasing by 1.4% to 169,577 ads after falling by a revised 0.7% in September. Job ads are up 12.5% on a year ago.”

And he threw this in as well: “The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable

in coming months. It takes around 5-6 months for the new staff to be added to the payrolls.”

So that’s the future for jobs and how are they going now?

Employment is up nine months in a row and the NSW jobless rate is at a nine-year low!

James thinks 2018 will bring 3.1% economic growth and the Reserve Bank is even more positive. If the growth rate beats 3%, the jobless rate falls so the outlook for 2018 is pretty damn good.

Meanwhile, for the stock market ahead, Credit Suisse equity strategist Hasan Tevfik, told the SMH that "while Aussie equities are due for a pause in the short-term, we think there is more bull to come and we're targeting an index level of 6500 by end 2018."

The S&P/ASX 200 index at Friday’s close was 6029, so if Hasan is right then he thinks stocks go up by 7.8% before dividends, so he’s looking at a 12% pay-off from the market next year, which doesn’t sound like a bad year, does it?

So, what was the Fairfax beat up story?

Well, UBS economist, George Tharenou is saying a housing crash could happen if the RBA raises interest rates in a hasty kind of way.

He argues if the RBA hikes too fast or too early then we might be surprised about the negative effects but his argument has two BIG problems.

First, no one with any economic credibility thinks rates will rise too soon. A rise around mid-to late 2018 is the majority view of pointy-headed economists while some say it will be 2019!

Second, no one with economic credibility expects there will be too many hasty rate rises.

George is making a lot about the end of the golden era of house price rises but his own UBS says overall house prices will rise by 7% this year and 3% in 2018, which hardly sounds like a house price horror story.

By the way, UBS (where George comes from) doesn’t expect that the RBA will raise rates quickly but this revelation was at the end of the story, which pretty well means the whole article was close to being crap!

The summary could be: House prices could crash but the RBA won’t let it happen. Move on, no story here.

And you wonder why newspapers are becoming less relevant.

 

Trump and the Republicans - dumb and even dumber!

Friday, November 10, 2017

By Peter Switzer

This was a thought I never wanted to contemplate but it’s now locked in the old head and it is, could the US Republicans, as a group, be dumber than Donald Trump?

Don’t get me wrong, I don’t think the 45th US President is dumb as a person or as an entrepreneur but as a president he’s no Teddy Roosevelt, Franklin D. Roosevelt or Abraham Lincoln.

His ability to build his brand and his intelligent sales process to become President shows how smart he is, but being the leader of the free world, as well as leader of a nation, is a task that finds out lots of high achievers.

Want proof? Just look at Kevin Rudd, Julia Gillard, Tony Abbott and, of course, our current day struggler Malcolm Turnbull.

Malcolm, along with Edward de Bono, are two guys I’d hate to publicly debate  — they’re really smart and have great, fast-thinking brains — but politics is a very different beast from debating and business.

So why this insulting slagging of Donald and his Republican buddies as real life versions of the dopes who starred in the film Dumb and Dumber?

Well, in their wisdom, the Senate Republicans, according to a Washington Post report, are considering a plan that would delay the President’s tax cuts until next year.

This contrasts with the House Republicans’ bill going through the House, which some say might get passed before Thanksgiving, which is November 30.

So how has Wall Street reacted to the news? Not well, with the Dow slumping over 160 points when the report was made public.

Some experts have tried to argue that the tax cuts weren’t all that important but I’ve always argued that it built in positivity about future profits for US companies and it has to have material value.

Well it does and it showed up most with tech stocks, which were down 0.9% compared to the Dow, which was off 0.6% before the close of trade.

But this isn’t just a company bottom line problem and therefore a stock price problem. It’s also a political problem.

You see, if President Trump doesn’t get some big wins sooner rather than later then the Republicans could be killed in the mid-term elections in October next year. This shooting would wing Donald, leaving him as a lame duck President.

Is this possible? Well, remember he has been rated as the world’s worst President ever on opinion polls but I guess, as he would say, it’s fake news!

I do believe Trump plays to his audience very cleverly but delaying tax cuts will hurt his credibility and influence over his own party.

So, why am I so nasty on all of this? It’s simple. Our stock market has beaten the 6000 level on the S&P/ASX 200 Index this week for the first time since February 2008 and this news could take away the positive momentum our market has picked up this week.

There’s also a bit of self-interest here, as the Switzer Dividend Growth Fund has gone from $2.46 some weeks ago to $2.60 at the close yesterday, which is a nice 5.6% gain. We listed at $2.50 nearly 10 months ago and that’s a 4% gain. And given my fund manager thinks we’re on track for about a 6% plus dividend with franking, then by February, which would be a year of trading, we could deliver a 10% plus gain for unit-holders.

I was sweating on US tax cuts being passed before December, which would give us a very merry Santa Claus rally on the stock market and that could even give us a greater return for SWTZ.

I just hope my positive expectations for our stock market, our super funds and my SWTZ aren’t spoiled by dumb and even dumber Republicans in the USA.

 

The Amazon threat to our retailers is bigger than I expected!

Thursday, November 09, 2017

By Peter Switzer
 
I’ve always argued that I think the Amazon threat to local retailers and their shareholders, as seen through the stock market’s treatment of companies such as JB Hi-Fi and Harvey Norman, was excessively negative. But after today’s revelation about what Amazon is up to, I’m starting to re-evaluate what this company is capable of.

When I asked Gerry Harvey early this year to tell me how he was going to cope with the Amazon threat, he said he saw five potential threats to his business and, as a consequence, he had five fight back strategies to make sure he remains strongly in the retail game.

When I asked him what were they, he laughed and said: “I’m not going to tell you that!” It made sense not to show his hand but it was typical Gerry Harvey.

However, fast-forward six months and I interviewed him again after a pretty good company profit report, which wasn’t well received by the market, and he did explain what he thought Amazon would have difficulties with.

He asked: “How will they get a fridge to Cairns cheaper than me? I’m already there and so are my fridges!”

He conceded that they could work their CBD more effectively and will pose problems but in the regions he believed he had the wood over them. I agreed and I also argued that it would take time for them to be strong in our major cities but over time they would hurt our local retailers. That said, I still argue that the stock market has overreacted and hit retailers’ share prices too early in the piece.

But what I saw on the CNBC website, which looked like a shocking news story but was really a gifted piece of advertorial masquerading as a news story.

The headline said: “Watch an Amazon delivery driver walk into a customer's home and leave a package.

I thought this was an outrageous case of an Amazon delivery guy overstepping the mark, giving us a new reason to fear the ever-encroaching tentacles of this mega-retailer. They could be accessories to home invasion!

But I was wrong.

In fact, the owner unlocked the door remotely as the delivery guy came up the footpath. In her home office, but she could have been anywhere, she watched on her camera as the delivery guy gently opened the door and slide the package in and then closed the door!

The process is called Amazon Key, which comes with Amazon Cloud Cam and a Amazon smart lock and it looks like Amazon has come up with a $US247 solution to a lot of peoples’ objections about not wanting their packages left on their doorstep or at some drive-to-location.

Sure, it’s going to take time for the Amazon threat to be felt and there could be some money to be made in the short-term investing in our great retailers but, given what this US ‘business  killer’ is capable of, retailers don’t look like a buy, set and forget investment option.

I’m not a great fan of Amazon’s low or no profit strategies to get a stranglehold on markets but you have to recognise that this company is very good at understanding what consumers want and then delivering it.

And for those who might be worried about strange delivery men having access to their house, Amazon will probably sell them a safety room from which they can watch the delivery guy come and go! They’re not offering it now but it wouldn’t surprise me if they’re thinking about it.

 

If our dollar falls we’ll be off to the races ‘rekindling’ a great Aussie economy

Wednesday, November 08, 2017

By Peter Switzer

If our dollar can fall to say 70 US cents, then the Reserve Bank would definitely be right about how strong our economy will be in 2018 and this ‘little’ currency slip would trigger a lot of good stuff!

If you like, you could see it like this: a dollar depreciation will mean a rekindling of a stronger economy and we’ll be off to the races.

And, unlike the Melbourne Cup, a whole lot of us will pick up a nice dividend. To be more precise, businesses will see more profits, the jobless will find work, wage earners will get better pay rises and even the government’s Budget deficit will fall.

If only the races could be so rewarding!

Last night I had a panel of two relatively negative economists compared to the Reserve Bank. One was Capital Economics’ Paul Dales and the other was BIS Oxford Economics’ Sarah Hunter.

Both of them have economic growth forecasts under 3%, while the RBA, Treasury and increasingly more economists are becoming 3% plus predictors. I like this trend of relative pessimists becoming relative optimists as I want the Aussie economy to go to the ‘races’, despite the fact it would mean interest rates could rise on Cup Day next year and that might not even be the first rise for 2018.

In case you missed it, CommSec’s Craig James looked at what has happened to the economy since the last RBA meeting a month ago. It makes good reading and here it is:

  • Consumer prices rose by 0.6% in the September quarter and annual inflation fell from 1.9% to 1.8%
  • Underlying inflation is holding around 1.85%.
  • Employment rose by 19,800 in September; the jobless rate fell to a 4½-year low of 5.5%.
  • Home price growth slowed; national home prices were flat in October.
  • The Aussie dollar eased from US78 cents to US76.5 cents.
  • Business conditions remained near 9½-year highs.
  • New vehicle sales in October were the highest for any October month.
  • The trade surplus was at a record high of $19 billion for the year to September.
  • US unemployment fell to a 16-year low of 4.1% but average earnings were flat in October.
  • The Chinese economy grew at a 6.8% in the year to September.
  • Consumer confidence is holding near long-term averages.
  • Retail trade was flat in September; retail prices fell 0.4% in the September quarter.
  • Commercial building approvals were at record highs in the year to September.
  • Global oil prices rose to 2-year highs.

I could add other pluses, such as building approvals in trend terms, up for the eighth straight month and business profitability at a 9½-year high! I could go on but I think I’ve laid it on thick enough.

The general tenor of these developments would make the RBA happy with its call and it looks like the stock market is starting to become a true believer, with the S&P/ASX 200 Index cracking the 6000 level for the first time since the GFC way back in early 2008!

Over the next three months we’ll get a whole pile of economic revelations from data such as the September quarter economic growth reading to developments such as Donald Trump’s possible tax changes. And a stock market historically tries to guess the future six months ahead, so the past few weeks, which have seen stocks go from 5651 to 6011 — a 6.3% rise in since October 4 — is pretty good omen.

I’m a great believer in the old saying that where there’s smoke there’s fire and the Oz economy is getting hot, hot, hot. But like a frog in a gradually heated pot, some economists are feeling it getting warmer!

 

On Cup Day let’s do the form on a real winner called stocks!

Tuesday, November 07, 2017

By Peter Switzer
 
I love Melbourne Cup day and I could enjoy it more, like most Aussies, if I didn’t do a radio show at 4pm and a TV show at 7pm. But I love the way the nation gets over-excited about what the great author Frank Hardy called the “four-legged lottery!”

Last year, my very money-conscious media colleague and business partner, Paul Rickard, who was the founding boss of CommSec, said he “did the form” and came up with the winner Almandin.

Paul is a rank amateur when it comes to conveyances of a four-legged kind but is a very well trained and shrewd picker of stocks. He can do the form on Aussie companies/stocks and knows that while the Cup might be more exciting for one day a year, stocks are a much better bet.

So as my fellow Aussies spend their time trying to select a winner out of the quality nags in our big race, that Mark Twain called “the race that stops a nation”.

He said more in 1895 when he went to the Cup and what he said is a great insight into our history: “Cup Day, and Cup Day only, commands an attention, an interest, and an enthusiasm which are universal,” he said. “Cup Day is supreme. It has no rival. Nowhere in the world have I encountered a festival of people that has such a magnificent appeal to the whole nation. The Cup astonishes me.”

But stocks are better — not all stocks — however, combined in say the top 200 stocks or even better, a great portfolio of stocks that outperforms our best 200 companies, the returns are far more exciting than most of us can ever expect from the Cup.

Imagine a 21-year old called Bob who, in 1970, had saved up his pocket money and went to his first Cup with $5,000 and lost it all on wine women and slow horses.

Now imagine he ignored the Cup and Cup Day celebrations, saved his $5000 and invested it into an exchange traded fund or ETF, which bought the top 200 companies. (ETFs did not exist then but he could have bought the top 200 companies individually.)

Taking a line through my next graph — my favourite when it comes to praising stocks over alternative ‘investments’ such as horses at Flemington — his $5,000 would’ve grown into over $225,000!

The following chart looks at what happens to $10,000 invested in 1970 in the top 200 stocks and includes the stock price rises or capital gain and the income or dividends paid and re-invested in the same 200 companies. It ends after 2009, which I have selected as it is only one year after the

GFC market crash that cut the value of anyone’s portfolio of stocks in half! So, if before 1 November you had a portfolio worth $1 million, it went down to $500,000! However, the graph shows if someone invested $10,000 in 1970, the sum grew into $453,166!

So Bob’s Cup Day-saved $5000 would have past the winning post in 2009 valued at $226,583, to be precise.

Yes I know saving each year is not as exciting as going to the Cup or Cup Day celebrations but imagine how much excitement you could have if you made an even bigger commitment to investing, not punting, in stocks.

Sure, people have lost money on stocks but they’ve tried to pick a winner and have punted too much and have ended up like Cup Day punters, who finish the day with their ‘arse out of their trousers!’

I also love stocks because, unlike gee gees, you could fail to win on price rises for some years but you still get a dividend every two months with many quality stocks. If your horse doesn’t run a place, you’ve done your dough.

Our stock market has not done as well as Wall Street since the GFC but we did better than the Yanks after the dotcom bust in 2001 and my chart shows how Bob’s money grew, despite those big market dips on the blue line, which indicate market crashes.

If someone called Roberta, say Bob’s daughter, invested $20,000 in 2009 after the GFC crash, she would have made about 80% capital gain and about 40% in dividends for a nice gain of around 120% over say nine years, or let’s call it $44,000, which is better than term deposits and race horses!

By the way buying property in 2009 in Sydney or Melbourne would have been greatly rewarding but I know someone who bought a house outside of Sydney in 2009 for $600,000 and with a $100,000 worth of extensions it is now worth over $1 million!

If you do the form, property is better than horses but stocks come without tenants, repairs and local councils!

Yep, do the form and select really good stocks and you’ll never have the arse out of your trousers, unless a Great Depression happens along and that’s when most investments go to custard.

Let’s not even think about that one.

For those who choose to ignore my words of wisdom, Tom Waterhouse came on my TV show last night and his mother likes her horse, Cismontane. He put a $1000 on it at 71/1 because he is a loyal son, who never underestimates his mother. His Dad, who is the student of form, likes Wall of Fire and Tom says a lot of money has come from the Irish raider called Rekindling.

The race looks so hard with so many chances I think I’ll stick to stocks such as my own SWTZ, which promises to pay dividends and a bit of capital gain most years.

Go the stock market!

 

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