By Peter Switzer 

“A 40% fall in stocks!” That’s the call from Dr. Marc Faber, who has been wrong for a long time. Before the GFC, he was a big call merchant with a good reputation. However, I wonder how good, given that the media’s love of big, scary, negative headlines makes them all-forgiving of those with a shabby record.

When it comes to the founder of the 'Gloom Boom and Doom Report', I always say that one day Marc will be right about the overall market — he has got specifics such as gold right, at times. However, I just don’t think the big picture concerns will justify a huge sell off for stocks.

I can see a Donald disappointment sell off, because his tax plans could be delayed. And that would be a buying opportunity. If Donald failed totally and was impeached, a big sell off would be believable but, overall, the economic story and the earnings story stops me jumping on Marc’s train to ‘negative town’.

Making Marc more relevant was a pretty big drop in the Dow Jones Index but most of the fall was Apple-driven because, overnight, tech stocks were clobbered, which actually offset a positive push on the banks in the US. And when they get loved, our big banks back here are too.

We could have a good day for stocks here if banks get a lift from the US moves. In the business we call it a sector rotation. That’s why you have to be careful about short-term stock sell offs. Also helping us could be energy, which had a good night and will probably be helped by an energy speech by President Trump that would make nuclear and coal businesses pretty damn happy!

‘Tech out and banks and energy in’ is a classic sector rotation. But remember, tech stocks have been the stellar performers in the US this year, up 17% or so and its recent pullback is only around 2%. And let’s not leave it there, as the Yanks only have one trading day before the end of the quarter and that often leads to some big moves, as fund managers square up their positions and tricky trades, such as options, derivatives, etc., get repositioned.

Bob Pisani of CNBC at the NYSE looked at the performance of sectors this year and this is what he showed:

  • Tech up 17%
  • Healthcare up 15%
  • Industrials up 8%
  • Banks flat
  • Energy down 13.8%

Bob thinks it’s a healthy sign for stocks for the rest of 2017 but the VIX (or fear index) is now up to a reading of 17. While this isn’t a big, scary reading, it is a lot higher than recent levels of 11 or so.

Against that, a lower US dollar does help commodity stocks and overnight in London shares in Rio Tinto rose 2.4% and shares in BHP rose 0.9%.

So that means banks, energy and iron ore stocks should be in the good books today and this trifecta should be good for our stock market today as well.

If it’s not and Wall Street again is very negative, then I’ll have to have a harder look at what Dr. Marc Faber is warning about.

Summary? I’m taking an Alfred. E. Neuman approach right now: “What, me worry? However for those who are worry warts, you have been warned.