Those who made huge $$$$$$ in d year pig , u should do some charity n help those who need yr donation, if u made more donate more, make less donate less , lose money then how ? what do u think of blood donation ? it wont cost u a cts by doing that ^V^ DO IT ^V^
I will be away for holidays till 18 of FEB, TL & BEN, pls take over my blog if u r free, someone will do d blog moderation for u 2, fyi, I have swap my ECM to Liondiv @ 1.53+ last Friday ^V^ Total 78 lots liondiv @ avg cost of 1.58+- ^V^
I wish u guys :-祝你在鼠年事业上独鼠一帜，股市挣钞票鼠不胜鼠，有情人终成眷鼠 ^V^
^V^ HAPPY CHINESE NEW YEAR ^V^
73 comments:
Bro Sam & all, I wish everyone a year
of dream come true in the year of 2008. Happy Chinese New Year and "GONG XI FA CAI"
Sam, so envy you can go holiday so often. So good in doing own business … but makan gaji also not bad, haha I got 6months bonus this year, how about you all?
Beside, I do donate blood every quarter …
I am still holding on to my ECM.
Goodluck, apparently, you are adopting BHSH strategy. If you have no confidence on ECM, you may swap to other counter like what Sam did (fyi, UOB Asset management has bought in more Liondiv).
Believe ECM will buy back stake in near future. Properly right after the two fellows exercised their ESOS. My advise is not to swap yet unless you expect other counters may rise faster than this one.
The other reason I'm still hold on to this counter is because she is one of the GE themeplay stock.
2887 LIONDIV LION DIVERSIFIED HOLDINGS BHD
BLAST FURNACE IRON-MAKING FACILITY
BLAST FURNACE IRON-MAKING FACILITY
We refer to the newspaper reports dated 5 February 2008 on the signing ceremony
between a wholly-owned subsidiary of Lion Diversified Holdings Berhad ("LDHB"),
Apex Gem Sdn Bhd, and Wisdri Engineering & Research Incorporation Limited of
China on 4 February 2008 to undertake a blast furnace iron-making facility.
We wish to clarify that the proposed blast furnace iron-making facility will
have a production capacity of 2.5 million tonnes of hot metal a year which upon
reaching a full 12 months' production, is expected to generate a revenue of
approximately RM3.0 billion. Compared to LDHB Group's revenue of RM5.2 billion
in the financial year ended 30 June 2007, the additional revenue from the hot
metal production represents an increase of approximately 60%.
Sam/Ben,
I could see the potential of Liondiv and strongly believe on her.
Ben, congratulations to you with 6 months bonus, I damn envy.. haha...
GK
So benjamin,wat your TP for ECM?im still holding it cause i bought it at a quite high price :(
Hi.
To all samgang, just want to wish u all Happy Chinese New Year and "GONG XI FA CAI"
GONG XI FA CAI
Ben, ur company so nice. I just got 4 mths bonus only. That's the most I get so far after working 7 yrs....
Gong Xi Fa Cai to all the SamGangs here...
As I mentioned sometime ago, normally I will expect return of around 30% for each of my investment. My cost for ECM is at RM0.845. So you can calculate what is my target price. But of course there is always possibility to let go earlier if situation turn out adversely just like I cut loss on Liondiv and Onastel when risk of US recession excess my tolerable level.
Gong Xi Fa Cai! Seems like everybody still in CNY mood, not many postings lately.
Ben or TL, what is ur comment on KINSTEL compared 2 Liondiv?
Political stocks are cooking ... can see lots of political flag flying in the sky these few days.
Rumours were saying Pak La will dismiss cabinet tomorrow. Let's see how true it is.
Hellooooo.....
Everyone still on holiday ah ?
Last comment was on 6/2/08. So many days ago liao. Cheers...
Thanks Benjamin. Wish You have a prosperous year!
TL wishing all Sam & All Buddies....stay healthy and wise investing always.
Wednesday February 13, 2008
Graham’s investing philosophy
Personal Investing
By OOI KOK HWA
THE recent developments over the subprime issues and the big volatility in regional markets have caused a lot of uneasiness to retail investors.
According to Benjamin Graham (1894-1976), investors should make market fluctuations their friends, rather than get carried away by the market sentiment. Investors should not try to time the market, as the stock market movement is always unpredictable.
In this article, we will look into some key elements of Graham’s investing philosophy.
Graham, the father of value investing, was born in London and moved to the United States when he was eight years old. In 1914, he graduated from Columbia University and started work as a financial analyst on Wall Street.
He started a private investment organisation, the Benjamin Graham Joint Account, on Jan 1, 1926, which was later joined by Jerry Newman at end-1926.
One of the richest men in the world, Warren Buffett, worked for Graham from 1954 to 1956. He learned the quantitative screening process from Graham.
The common Graham’s stock selection criteria include buying stocks with price-to-book of 1.5 times, debt-to-equity ratio of 0.5 times and price-to-earnings ratio (PER) of less than 20 times.
However, Graham did not accumulate as much money compared with Buffett. When he died in 1976, his estate was only US$3mil.
According to Graham, the stock market is manic-depressive. Investors should focus on the fundamentals of the company and ignore the market optimism and pessimism.
If a stock tumbles to a very low level as a result of market crashes, it may provide a good buying opportunity.
He always believed in the safety-first approach. He would consider buying a stock if it was selling at about 33% discount to its intrinsic value. This 33% discount is referred to as the margin of safety (MOS), where it has the remotest chance of losing market value. Sometimes, we can consider it as margin of error.
As the intrinsic value for a stock is computed based on analysts’ estimation, analysts may make a mistake in their computation. If we can buy a stock at 67 sen, a 33% discount from the intrinsic value of RM1, this 33 sen provides us the MOS as analysts may make a mistake in deriving the intrinsic value of RM1.
In his book titled Security Analysis, Graham suggested a few defensive investing approaches. His unique conservative way of investing may be attributed to his bad experience in 1929. During the Great Depression in 1929-1932, Graham lost about 70% of his money. However, he recovered from his losses in 1935.
Buffett’s way of investing could also be derived from Graham’s safety-first principle as he always says he has two basic rules of investing.
Rule No. 1: Don’t lose money in the stock market. Rule No. 2: Never forget Rule No. 1.
To select the right stocks for investing, Graham proposed that investors treat a stock as pieces of a business.
Buying stocks is like buying businesses. Investors need to conduct a thorough analysis before investing in any company. Graham formulated systematic approaches in deriving the intrinsic value for a company. Intrinsic value can be derived from the assets, earnings, dividends and prospects of a company.
The primary determinant of an intrinsic value is the earning power of a company. It is the earning capacity of a company during a normal business conditions. It can be derived from historical data, together with the projection of future average earnings and growth potential.
For example, if we intend to invest in a plantation company, we should know the company’s total planted areas, the potential crude palm oil (CPO) that can be produced from this area as well as the average CPO price per tonne in normal business conditions.
Lastly, Graham advised that investors need adequate knowledge, tested judgement and courage.
Unintelligent speculators are investors who lack proper knowledge and skills, but yet are willing to risk their money in anticipation of profiting from market fluctuations.
Intelligent investors are those who focus on the underlying business and will only buy when they have MOS.
Graham believed that risk and return do not move proportionately to each other. Investors can get high returns with lower risk if they know how to exercise their optimal intelligence and skills.
hi all
GONG XI FA CAI to all.
Any idea what happen to Lioncorp?
TL to 118
The diff btw Kinsteel and Lion Div is one is already into the business and while the latter is just going to start the business. While the latter are more in favor then ? Don't is like counting the chicken before the egg hatch ?
Like what Sifu Sam explain so many times....for a stock to become ten bagger gem, it need to fulfill all the criteria. For TL, Lion Div balance sheet is far more superior and the man who run the business have excellent proven track record on turning garbish into diamond. ( like what he did by turning ACB into high flying Parkson ). He are excellent in corporate play and able to generate shareholder values by ' unlocking ' hidden unpolished gem.
Until then....TL will continue to count the chicken before the egg hatch !
Consumers, Credit, and Complications
February 8, 2008
By John Mauldin
The evidence continues to mount that the US is in a recession. In this week's letter, we will look at the blind spot in the unemployment statistics, the continuing meltdown in the credit markets, and the simply awful service sector implosion in the ISM data, and then add a few thoughts on the housing market. There is a lot of data to cover, so this week's letter should be particularly interesting. The letter will print longer than normal, since there are lots of graphs.
For the first time since August of 2003 we had a drop in the employment number. Employment fell 17,000 in January. The BLS also released its benchmark revision with the January report. The year ended with 376,000 fewer jobs than were reported a month ago, and 1.14 million net jobs were created December to December. Downward revisions were spread throughout the year. This translates into 95,000 new jobs per month, down from 175,000 in 2006. Remember, it takes 150,000 jobs per month (or so) simply to maintain the employment rate, due to growth in the population. The January loss is likely to be revised down over the next year. The median duration of unemployment also rose from 8.4 months to 8.8 months. The trend is most definitely not your friend. (graph from www.economy.com)
Last week jobless claims rose almost 20%, to 378,000. This week they came in at 356,000. These last two weeks represent a marked increase in initial unemployment claims but, as many bulls point out, that number is nowhere near the levels that would indicate a recession.
As I have explained in numerous letters, the jobs report put out by the Bureau of Labor Statistics can be misleading both when the economy is coming out of a recession and when it is going into one. It tends to underestimate the number of jobs as the economy is recovering and overestimate the number when the economy is slowing down. That's because the data is basically trend-following. A year later, better data comes in and the numbers are revised, as they were this month. But those revisions are basically stuck on page 16 in fine print in the Wall Street Journal. Who cares about year-old data, except economists?
The problem is, if we're in recession we should be seeing a higher initial unemployment claims number. The "we are not in a recession camp" is absolutely correct about that. And yes, we've seen a marked rise in continuing claims the last two weeks, but not as high as one would think to be the case if we were in a recession. Yet continuing claims are up by 10%, which based on the past would suggest we are in a recession. So why the seeming disconnect?
An answer comes from David Rosenberg, the North American economist for Merrill Lynch, who points out that jobless claims number may be suspect. Let's look at what he says in his recent analysis:
"First, the jobless claims are being distorted right now because the seasonal factors are looking for retail sector layoffs in January but these layoffs are not happening because there was no hiring in November and December. So the seasonal factors are depressing the claims data to the downside right now - look for them to hook up in coming weeks. But anyone putting their faith in claims in January given all the early-year distortions ... good luck. No mention made, by the way, that the backlog of continuing claims has spiked up 10% over the past year and the last time that happened, well, was in late December 2000 - the recession began the very next quarter.
"Second, the focus on payrolls at this stage of the cycle is fraught with risk. In 90% of the business cycle, the payroll survey is the one to focus on, given its lack of volatility and huge sample size. But the 10% of the time when the payroll survey does not work well is at turning points in the business cycle. Why? Because being a poll of companies, what the payroll number misses are the self-employed and there are more than 10 million of them.
"So the bottom line is that what the payroll data have missed is the fact that over the past six months, 520,000 self-employed individuals have fallen by the wayside (more than were lost in the entire 2001 recession). This may also be why it is that claims are suppressed - having never paid into the unemployment insurance program, these people are not necessarily entitled to any benefits. The population- and payroll-concept adjusted data show that employment fell 400,000 in November-December combined (because Thanksgiving landed so late in 2007, both months have to be looked at together, whether it be for jobs or retail sales). So we think the view that job growth is hanging in is, just in plain simple language, wrong."
Look for unemployment to rise to 6% (or more) in the coming quarters. This will of course put a damper on consumer spending.
The Credit Crisis is Simply Getting Worse
Goldman Sachs CFO David Viniar warned yesterday that some key mortgage bond insurers could collapse. Viniar, speaking at a CSFB conference, said credit markets are trading as if we are in a "worst recession"; and there is a "total disconnect between the equities market and the credit market." (The Bill King Report)
There was a convention this week in Las Vegas of the American Securitization Forum. I talked to good friend Michael Lewitt who attended the conference, and he said the mood was simply dismal. The credit markets have gone from bad to worse. There's almost no trading being done in the $2 trillion Collateralized Debt Obligation (CDO) markets. Perfectly good bank loans are trading at discounts of between 10-20% to par, in addition to much higher and wider spreads. There are a lot of opportunities for intrepid investors who can distinguish solid value, as funds, banks, and pensions are having to unload loans without regard to value. It is a buyer's market. Let's take a look at a few graphs from www.markit.com.
This first one is an index of asset-backed paper, mostly mortgage-backed. This is the BBB-rated paper issued last year. It is trading at an 86% discount. This pays a coupon of 3.89%, so it is yielding almost 30% if you are looking for yield. (For the four people who might be tempted to do that let me point out that was a joke.)
I should also point out that this index is composed of bonds and trusts put together by some of the biggest names in the investment banking world less than one year ago. One year ago these banks sold these bonds as investments worth 100 cents on the dollar. Cue lawyers. I was recently sent a link to a conference that will be held in New York next month. It is basically for people who are interested in litigation over the subprime and credit mess.
Look at some of the topics:
"Look inside the mortgage industry, its underwriting, risk analysis procedures and loan approval technology...Get up-to-date on who is suing whom and the status of the recent wave of securities complaints ... Learn the key elements necessary for proving or disproving fraud and negligent misrepresentation ... Find out what to look for when it comes to disclosures, disclaimers and limitations on standing ... Learn the role played by rating agencies, insurers and the feds ... Acquire the skills necessary to successfully prosecute or defend mortgage-backed securities suits."
This is going to take years to sort through.
I wrote in late 2006 that the housing and subprime crisis was going to result in massive litigation. The lawyers will be looking at every deep pocket to see what they can get for their clients who lost money. I can guarantee you the rating agencies are in the crosshairs of hordes of attorneys from around the world. (If you are interested in the conference you can go to http://www.lexisnexis.com/conferences/.)
The Falling Knife of Credit Spreads
Let's talk about credit spreads for a moment. The "spread" is the difference you pay, typically over LIBOR (or the London InterBank Offered Rate). LIBOR is the most important interest rate in the world, as massive amounts of debt are set according to it. Let's say you are an AAA-rated borrower. Last summer you might have been paying as little as 3.84 basis points over LIBOR. If LIBOR was at 5%, you would be paying 5.0384%. There was very little premium for what was considered risk-free money.
Today you are paying as much as 1.89% more. Granted, 3-month LIBOR is now at 3.10, down 2.16% over the last six months, due to aggressive Fed, Bank of England, and ECB (European Central Bank) action. Thus your net cost of funding is the same, but only if you are AAA. There are actually very few AAA borrowers in the world. Let's look at how your costs may have risen if you are still barely investment-grade at BBB.
Now you have a problem. Your costs may have risen from a mere 1.45% over LIBOR to as much as 13%! The spread on some junk bonds is running as much as 18%! (All this data can be had at www.markit.com) This is a credit market that is in serious trouble. No one wants to lend unless they can be sure of getting repaid, so the price of risk is rising rapidly.
Interestingly, there are many who actually benefit. For example, I am involved with some hedge funds in Europe that use modest leverage. We borrow at a fixed rate over LIBOR. Our spread has actually done down, as well as actual LIBOR going down. So we are well ahead of where we were last summer in terms of borrowing costs. It is an ill wind that blows no good to at least someone. Those borrowers with solid balance sheets find their costs going down.
Capital Ratios Are Under More and More Pressure
There are hundreds of billions of dollars of Leveraged Buy Outs (LBOs) that were done last year that are still on the various lending banks books, which they thought they were going to be able to sell to investors. However, the price of risk has risen and no one is willing to take the loans at anywhere close to the original rates the banks committed to. I talked with one major investment banking executive this week, and they are having to cut back on the loans they are currently making, and tighten credit standards, as they now have to carry those old loans at very low rates on their books.
This means those loans count against the capital reserves they are required to maintain. If they move those loans off the books at today's higher interest rates, it would mean large, and I mean LARGE, losses. That is in addition to the losses they are already admitting to. If they keep the loans on their books, it simply means they are not getting as much interest as the market is paying today, but does not require them to book an immediate loss, unless the loan goes into default. But it does mean they have less money to lend, so banks are becoming quite picky about whom they lend to.
The news just keeps getting worse. We are now told that we are nowhere close to the end of the writedowns by banks all over the world. Goldman Sachs now estimates that the total loss in the mortgage security world will total $400 billion (this includes more than just subprime mortgages), up from an estimated $200 billion only a few quarters ago. And that is if home prices only fall about 20% on average.
And that probably assumes normal default patterns. The Wall Street Journal noted today that Fitch has warned of an additional $139 billion in mortgage-related losses from individuals who are simply walking away from mortgages where the homes have lost value. They are doing this in advance of foreclosure proceedings. Fitch expects that losses will be 26% of the value on subprime loans made in 2007.
But returning to the rise in spreads, this also means that subprime credit cards, subprime auto loans, and subprime student loans will start costing a lot more, or become less available. There are tens of millions of subprime credit cards. And their cost is going to go up. But here I refer not to the borrower but to the lender.
Defaults on credit cards are rising. 7.6% of all credit cards loans were 60 days past due in December. Credit card debt is sold to various investors as bundled securities, just as mortgages were. If delinquencies rise, then the rates that investors want must rise to cover the defaults. Interest rates are going to rise on all but the highest-rated credit card debt.
And speaking of consumer debt, something happened in December that is quite unusual. This week the Federal Reserve announced that total credit card debt rose by just 2.7% annually in December, after rising 13.7% in November and 11% in October. In fact, new credit card debt was on a tear right up until December, which as I have previously written is the month I think we will look back on and see that a recession began. Notice that credit card debt rose by less than inflation.
Wal-Mart sales rose just 1.4% in the year ended February 1, which is the lowest increase in the 30 years since the company has been making that data public. With inflation running at 4% (and more if you think about how much of Wal-Mart sales are food), that is quite weak indeed.
It now looks like the US consumer is finally beginning to slow down. No more Mortgage Equity Withdrawals, and better use that credit card less. Consumer confidence surveys continue to drop. Today the RBC Cash Index of consumer confidence dropped to its lowest level since 2002. Hardly an environment for robust consumer growth. We will come back to this point in a page or so, but let's finish up my thoughts on the credit crisis.
Over in Europe there is a disturbing set of circumstances. The European Central Bank is (properly) lending massive amounts of money to banks to maintain liquidity, making the Fed look miserly in comparison. They are allowing the banks to post asset-backed paper (including presumably some mortgage paper that is still rated subprime) as collateral. This amount has risen to a massive EUR430 billion, or about $623 billion. There are estimates that as much as $500 billion in asset-backed paper is on European bank balance sheets, and much of that is being used as collateral at the ECB. This means that European banks may still have several hundred billion in paper to write down.
No wonder European banks are not lending to each other. No one knows who is in serious trouble. As I reported a few weeks ago, there are serious rumors from credible (and off-the-record) sources that one of the largest European banks is technically in a condition of negative equity due to the massive amount of asset-backed (mostly mortgage) paper on its books, which it has not yet written down, since it has not yet been downgraded.
Finally, let's look at what is the spear point of the current credit crisis: the monoline insurance companies like Ambac and MBIA. I have been warning for months that they are either insolvent or on their way to insolvency. If they are downgraded, they are essentially forced into bankruptcy. Let's look at what Professor Nouriel Roubini wrote this week:
"Next, the downgrade of the monolines will lead to another $150 of write downs on ABS portfolios for financial institutions that have already massive losses. It will also lead to additional losses on their portfolio of muni bonds. The downgrade of the monolines will also lead to large losses - and potential runs - on the money market funds that invested in some of these toxic products. The money market funds that are backed by banks or that bought liquidity protection from banks against the risk of a fall in the NAV may avoid a run but such a rescue will exacerbate the capital and liquidity problems of their underwriters. The monolines' downgrade will then also lead to another sharp drop in US equity markets that are already shaken by the risk of a severe recession and large losses in the financial system."
In talking with friends in the credit markets, in order to return to more normal credit markets, the thing that has to happen first is that the monoline insurance problem MUST be resolved. I agree with Nouriel that $15 billion being written about in the papers will not be enough. I have no idea what the correct number is, but it needs to happen soon, before the rating agencies are forced to downgrade the monolines.
While Nouriel thinks the use of public funds is unlikely, I am not so sure. The failure of the monoline companies could trigger a very serious crisis, beyond what we have already seen. Of all the things on my worry list, this is at the top. It could trigger a counter-party credit risk in the credit default swap markets that might simply cascade to something hard to imagine. I don't want to sound too alarmist - but we should be alarmed. This needs to be settled, and soon, so we can go on to the next set of problems. I think if the monoline problem can be resolved, we would be a major step toward the solution of the crisis.
The ISM Services Survey Simply Falls out of Bed
The ISM services (technically, the non-manufacturing) survey came out this week, and it was simply horrible. I am going to use the entire graph and table from www.economy.com (a very useful source of data). The consensus expectation was for an index number of 53. It came in at 41.9. This was the first drop in almost five years. I cannot ever recall such a one-month drop. And the internal numbers were ugly as well.
For those of you not familiar with the index, a number above 50 suggests the factor being measured is increasing, and below 50 suggests a contraction. The higher or lower the number is from 50 simply measures the degree of increase or contraction.
Notice that the graph of the last year shows a fairly stable index. This index represents roughly 70% of the economy. It is retail stores, restaurants, and all manner of services. This suggests that business expectations are being drastically reduced. Employment expectations are sharply down, suggesting that it will be harder to get a job in the near future. New orders were down severely, as well as all the other forward-looking indicators. Take a moment to look at the data, and compare January's number with just six months ago. The trend is not your friend if your business is tied to consumer spending.
Finally, one last statistic. The growth rate of the ECRI Index of Leading Economic Indicators is down 7.9% from 7.1%. It continues to point to a recession.
I read and listen to the various bull arguments. I think there is a major disconnect between what we see in the economy and what they see as "value." Remember, if you're managing money in a long-only fashion, you cannot go on TV or in print and say, "The economy sucks, the market is going down, so redeem from my fund." Not going to happen. When Art Laffer throws in the towel, there is a bear market coming.
You need to use these bear market rallies to lighten up your long-only exposure, with the usual caveat that there are exceptions. I in fact do own one micro-cap stock I am holding on to for long-term reasons. But I would not want to be anywhere close to an index fund. And it is not too late to get out. There is still more downside in this bear.
ECM now at RM0.94 already. Are you guys still worrying?
I can smell ~~~ my the other 2 counters are cooking !! ^_^
Tailow, did you swap to the counter I mentioned?
Malaysian PM calls general elections dated 13/2/08
MALAYSIAN Prime Minister Datuk Seri Abdullah Ahmad Badawi called today for early general elections,
at a date to be fixed by electoral authorities.
The king has given his consent to dissolve parliament, effective today the 13th of February, to allow the elections to be held, he told a press conference that ended months of speculation.
Abdullah said he had advised the king to dissolve federal parliament about a year before its five-year term was due to end. He gave no reason, but analysts have said the ruling coalition wants a fresh mandate before the economy slows and inflation picks up steam.
He also advised all the state governments, except Sarawak, to dissolve their state assemblies to enable the state elections to be held simultaneously.
The ruling coalition hopes to retain a two-thirds majority of the 222 seats up for grabs at the polls, Abdullah added.
The Election Commission will meet soon to fix the election date, though political analysts expect it to be held during the first ten days of March.
Elections were not due to be held until May 16, 2009. - Agencies
Hi Benjamin & Sifu Sam,
I had sold all my ECM at loss of 5cent,keep bullet and clear off all my position on the annoucement of parliment dissolved. Although i suffer some loss on this counter, i would like to say thanks to all of your guidance on PE and profitable stocks selection.
All the best to samgangs and lets do it big together when chance come in the brand new year.
Thanks TL 4 d comment on Kinstel n Liondiv. Got some Liondiv in hand n will buy more on dip.
GE announced n now d real showtime of KLSE will begin...
Good luck n all d best 4 those v enough "bullets" in hand!
马来西亚宣布解散国会 为大选铺路
13 February 2008 1231hrs
马来西亚首相阿都拉巴达威中午宣布，解散国会，为大选铺路。
之前有马国媒体揣测，马国首相将在近日内宣布解散国会。由于阿都拉向来喜爱13这个数字，当地媒体普遍猜测阿都拉会在这个月或下个月13日宣布解散国会。果不其然，阿都拉就选择在情人节的前一天，宣布解散国会。
阿都拉说，他在今天早上已经获得最高元首的同意，解散国会。他也指示州议会必须各自解散。
根据马国宪法，在宣布解散国会的60天内必须举行大选。不过最近几次的大选都在宣布解散国会的三个星期内举行。
阿都拉曾经在上个星期天表示，已经指示他的部长们要做好大选的准备。政治分析家预测，在经济表现缓慢以及通货膨胀的压力之下，阿都拉将会宣布在下个月举行大选。
I gain from KEYASIC. Just within 3 days. I manage to gain 20K. :)
Sam....
I am a bit lost here... Kindly explain why when our pm announces the resolvement of the parliament, the market re-acts in a negative way.
Isn't it suppose to be the opposite ?
Wow! congras to herbert.
ECM was raised to RM0.925 instead of RM0.94 (typo error).
Dear Ben and TL,
Among the property counters YTLLand, Sunrise and Glomac, which one is better to hold on to?
Would appreciate your comment. Thank you.
Happy Trading and good luck to all.
Dear Sam,
Are youi still keeping keladi. Seem to be going down still. Now 18cts. Wonder if something wrong with its next quarter results
Myke8888, speculators are selling to take profit once rumours become news.
TL : These article is much more interesting compare to Edison Chen aka Dr. SL Chua ! Waste no time browsing the net looking for Edison Chen act....after all, all women and men is the same kind once they go down naked ! Get down to real business.
Where next for the US economy?
Published: January 24 2008 12:30 | Last updated: January 28 2008 13:58
“The downturn in housing has spilled over to the rest of the economy. Monetary and fiscal stimuli are not enough to avert a recession,” writes David Rosenberg, Merrill Lynch’s chief North American economist, after the dramatic 75-point cut in the Fed funds interest rate to 3.5 per cent.
Mr Rosenberg believes the Fed needs eventually to get the funds rate back to 1 per cent. ”This may sound aggressive but Fed easing cycles in recessions almost always see the prior tightening cycle completely unwind,” he told the FT.
”The serious nature of the current housing deflation and credit crunch environment makes the case for an aggressive easing in policy all the more compelling.”
So will the $150bn fiscal stimulus plan - involving temporary tax relief for consumers and companies - keep the US economy out of recession? Mr Rosenberg answers your questions
Do you know of any US recession in the past that has been preceded by so many confident predictions of its imminence? Does that make you nervous?
William Simpson
David Rosenberg: The seeds of recession were probably sown 18 months ago when the Fed inverted the yield curve. The rapid widening in credit spreads and the decline in the equity market in the face of Fed rate cuts is an added tell tale sign.
So far, several economists and market commentators have rang the alarm bell, but look at the op-ed pieces in the Wall Street Journal and the guests on CNBC and you will see that recession is hardly the consensus call, even if a growing number of pundits are now making the call.
Last we saw, the consensus economics view was 42 per cent chance of recession, which is hardly a capitulation data point; and neither is the 10 per cent plus earnings growth the bottom-up analyst crowd believes we will see this year.
Until a few days ago there were a lot of people talking about the “de-coupling” of emerging markets from the US economy, but what happened this week seems to be suggesting it was quite a naive assumption. As the US now seems to be heading towards a recession, how will it impact the rest of the world economies?
Niccol Ragnoli, Milan
David Rosenberg: The economies may hang together okay, given the ability to fiscally reflate and the large-scale infrastructure spending in the region, but capital markets are a different story and are much more sensitive to shifts in global investor risk appetite.
It stands to reason that the highest-beta markets will suffer the most in this increasingly uncertain investment backdrop, as has already been the case over the past three months. A US recession may not lead to a global recession, but considering that the consumer is still over 19 per cent of world GDP, a recession in this critical segment will certainly trigger a discernible slowdown in the rest of the world.
Where do you see the housing market going in the short to medium term even if Fed cuts rates again? And if there is recession in the US, how long will a recovery take?
Ahmed, US
David Rosenberg: Aggressive Fed easing and the associated drop in Libor-based rates are a positive in terms of redressing debt-service charges but what the rate cuts will not do is trigger credit creation at a time when mountains of bad debt is coming to the surface in a capital-constrained banking sector.
When you look at how much debt relative to economic growth was added to the system this cycle that was over and beyond what was normal in past expansions amounting to $6,000bn of excess credit creation. How much of this is toxic is anyone’s guess, but even a 5 per cent default rate on this ”excess” tranche would be more than $300bn of aggregate losses.
The Fed is really running backward on the treadmill but it’s not as if we haven’t seen this before - the historical record shows clearly that the bursting of asset and credit bubbles takes huge doses of monetary easing to redress. As for the housing situation, there is still such a huge gap between underlying and supply - highlighted by unsold nationwide inventory that is still well north of a nine-month backlog - that the market is still in need of some massive surgery on the production front. Housing starts, at this point, likely will not bottom until later this year at around 700,000 units, which would be a historic trough in the post-WWII era and a further 30 per cent downside to homebuilding activity from already-depressed levels.
Overall, we expect a three-quarter recession lasting into the Autumn, but make no mistake - it will not be mild outside of government and exports for we see real private domestic demand contracting 1.3 per cent this year, which would be the weakest since 1980. Thereafter, we expect to see a rather slow-motion recovery of 1992 and 2002 proportions as the process of balance sheet repair in both the consumer and financial sectors is very likely going to take time and weigh on the pace of economic activity, even after the official downturn is behind us.
Do you feel the Fed is underestimating the danger of inflation, particularly in relation to the depreciation of the dollar?
Tony Makara, Manchester
I don’t believe for a second that the Fed is underestimating inflation - in fact, deflation is the real threat going forward. We are seeing deflation in housing, equities (both account for nearly 70 per cent of household net worth), and now commercial real estate and even the commodity complex.
Given the lags between the housing market and the and owners’ equivalent rent components of the CPI, coupled with the prospect of a cyclical slowing in resource prices, the prospect that we see the inflation rate recede back towards 1 per cent by 2009 is higher than many think. And as resource markets soften - this is a cyclical story, the secular bull market is still intact - and other central banks follow the Fed, there is little reason to remain bearish on the dollar so this ”inflation threat” may well have come and gone already.
All the focus is on financials now, plus some general comment on how things might be looking up for America’s ”manufacturers’” whoever they are. Can you offer some guidance on the 2008 risks and opportunities for US sectors that haven’t gotten much press lately - health, tech, small caps, food, etc?
Brendan Hillson, Seoul
David Rosenberg: There is indeed an enduring positive theme otherwise known as the ”US manufacturing renaissance”. What is truly under-appreciated is the extent to which the weak dollar has supercharged domestic export competitiveness, and because of the long lags, these benefits, especially for basic manufacturing, are going to linger for at least another three years.
All we ever hear about is how there’s a dollar crisis or how the dollar’s decline is going to limit what the Fed can do, or that the dollar is going to somehow lose its coveted reserve status. But there’s a positive spin to the story, which is that the 25 per cent decline in the trade-weighted dollar in the past five years has actually been a blessing because it has unwound the massive uncompetitive appreciation that took place from 1997 to 2002.
In fact, in 2002, the dollar hit a more overvalued extreme than it did even in 1985 when we needed the Plaza Accord to bring it down. But what has happened since the dollar began to roll over in 2002, is that America’s cost-competitiveness has improved dramatically - and you can see that in unit labour costs in manufacturing which are now 30 per cent lower in dollar terms than the average in the rest of the industrialised world. At no time in the past three decades has US industrial competitiveness relative to the rest of the world been as solidly positioned as it is today.
This relative improvement in our cost structure in turn is stimulating a big revival in foreign direct investment into the US manufacturing sector, double digit export growth and the spawning of import-substitution effects in many areas. Sectors that have already either carved out some very convincing bottoms, or are already in discernible uptrends in terms of shipments and production, include oil/gas extraction, steel, shipping containers, food products, farming equipment, turbine and power transmission equipment, aerospace, medical supplies, conveyer equipment, and chemical manufacturing.
All factors of the US economy demonstrate actually that the recession is here. Why don’t all the politicians and economists just say it clearly: we are in a recession?
Brigitta Moser-Harder, Florida
David Rosenberg: What are policymakers to gain from telling us that we are in recession?
First, the Fed would never acknowledge this publicly - its role is to help foster stability, not fear. And politicians right now are in the business of trying to get re-elected. But a 75 basis point inter-meeting cut in rates coupled with a larger-than-expected $150bn fiscal package tells us that we should be heeding their deeds at this juncture, not their words.
Do you put any weight in the theory that the US presidential race and the resulting incessant talk of change may have the psychological effect of keeping the US economy out of recession?
Niall Harte, Dublin
David Rosenberg: If there is one thing about ”talk”, even in an election year, it is that it is cheap. ”Talk” does not go into GDP, unfortunately, but what does is spending, which is why a large-scale fiscal package is crucial.
How will this recession affect other housing markets especially in EU? Do you think European banks are making the same mistakes American banks did?
Artur, Poland
David Rosenberg: Some parts of Europe (like Ireland and Spain) went through a housing bubble. But the core countries like Germany and France didn’t seem to take on nearly the same intensity in credit and housing markets as was the case in the United States.
In your opinion, to what extent is the slowdown/recession that you anticipate already priced in by equity markets (for example, 50 per cent priced in, fully priced in)?
David Lehane, US
David Rosenberg: The equity market at this point has roughly 50 per cent recession odds already priced in. But only financials and consumer discretionary stocks are fully discounting the likelihood - tech, industrials, materials and energy have much less priced in.
What’s the best way to deal with monoline insurers that provides the right balance between avoiding moral hazard and minimising impact on the global economy?
Dave Kil
David Rosenberg: If you want to avoid moral hazard, then let the rating agencies do their thing and see where the cards land - it could mean up to $200bn of aggregate losses in the financial system. But in order to minimise a catastrophe, the government may well have to play a role in re-capitalising the monolines.
In times like these, moral hazard issues are best left on the back burner.
Do you think the Fed is making a mistake following equity markets as indicators for future policy?
Micheal Jewrat
David Rosenberg: The Fed is following a broad array of indicators, not just the equity market but also credit spreads and how the data are shaping its macro-forecast.
What do you feel are the risks of stagflation in the current economic situation, especially in the US where the Fed seems keen to use interest rates to avoid a slow-down?
Gaurav Rege, London
David Rosenberg: Stagflation is yesterday’s story. Tomorrow’s story is very likely to be deflation. We are already seeing hints of this - housing, equities, now commercial real estate and it looks like oil and industrial commodity prices are rolling over in a rather material way.
The dollar now seems to be consolidating. I would not be surprised to see the inflation rate, total and core, flirting with 1 per cent levels by 2009. Of course, some would claim that the run-up in gold prices is a sign that inflation expectations are being revived but if that was the case then we would be seeing corroborating evidence in TIPS break-evens, which have receded impressively in recent months.
Gold always does well in an environment of negative real rates and it is also a hedge against recurring bouts of financial market instability.
In the face of lower US interest rates, will the dollar continue to depreciate against the euro, or has that cycle run its course? Will emerging markets be hurt by the US slowdown? And will emerging European countries with high current account deficits be hurt disproportionately?
John Prentoulis, Bucharest, Romania
David Rosenberg: The dollar is very likely going to be appreciating against the euro and sterling as the ECB and the Bank of England play catch-up on the rate-cutting front in the coming year.
Emerging markets have a strong secular story but given that they tend to do better during periods of accelerating global growth and flush liquidity conditions, the current and prospective risk-aversion environment clouds the outlook. And in a period where investors are focused on balance sheet quality, it does stand to reason that countries with strong balance sheet fundamentals will tend to outperform.
Many feel that the current financial crisis represents an opportunity for China and other cash-rich Asian countries, with many sovereign and other funds buying stakes in ailing western banks. However there has been little coverage about whether Chinese banks have exposed themselves to subprime lending and are facing writedowns, Many people here in Shanghai feel that this is indeed the case but information is, not surprisingly hard to come by. What is your view?
Conor Griffin, Shanghai, China
David Rosenberg: I have no view on what China’s banks were buying in terms of US subprime paper but it does stand to reason that the US current account deficit in recent years was funded disproportionately via risky spread products.
Are economic cyclical downturns inevitable? Making it always more of a question of “when” rather than “if” a recession will begin? To what degree do you believe monetary and fiscal policy can avoid or mitigate an impending recession? And finally, given consideration of the above two questions, what is the outlook for the US economy in 2008-2009?
James Roberts, Edinburgh
David Rosenberg: I’m not sure that cyclical downturns are ”inevitable” but it does stand to reason that recessions are as much a part of the business cycle as expansions are. In fact, there have been 32 expansions since the Civil War and funnily enough, there have been the same number of recessions. They are joined at the hip, and it’s a good thing that expansions are long and recessions are short, but what recessions do is they expunge the excesses that tend to build towards the tail end of the prior up-cycle.
Aggressive monetary and fiscal policy will certainly help limit the downturn but there is hardly any chance at this point that it can reverse the momentum any more than it did back in 2001, when another bubble-burst was weighing heavily on the economy and investor risk appetite. There are inherent lags between the policy response and the eventual impact on the real economy and the plain fact of the matter is that policymakers acted too late to prevent a recession, but it is not too late to establish a floor under the situation.
All the stimulus that is now coming to the fore doesn’t change our overall macro-view that we are in for at least three quarters of recession starting now, and then a classic elongated U-shaped transition to the next economic cycle, as the post-bubble de-leveraging phase is going to involve significant balance sheet repair in both the financial and consumer sectors.
Remember that the President cut taxes by $120bn in 2001 and the Fed cut rates 300 basis points by the time of the September 11 terrorist attacks, and nature still took its course as the implosion of the tech bubble worked its way through the economy and the financial markets. In the end, all the rate cuts and fiscal stimulus managed to do was limit the damage.
Copyright The Financial Times Limited 2008
Herbert, your keyasic dropped like hell, have you disposed off? Hope you had.
Master Wong from Fatshan once said : Bitter medicine cure the root of problem. Just bite your lips and swallow
Mr FED - So what ? I add more sugar to the medicine. Is look sweet and nice. Make it more easier to swallow. Now only 3% what ? I can lower it again and again. U blow me meh ?
TL : Wait till more economic data reveal in coming weeks to see how effective the sugar tainted pills offer by Mr FED.
Bernanke: Economic outlook has worsened
WASHINGTON - Federal Reserve Chairman Ben Bernanke told Congress Thursday the economy is deteriorating and signaled a readiness to keep on lowering a key interest rate to shore things up.
Bernanke also told the Senate Banking Committee that the one-two punch of housing and credit crises has greatly strained the economy. And he forecast sluggish growth in the near term. Bernanke also noted that hiring has slowed and that people are likely to tighten their belts further because of high energy prices and plummeting home values.
“The outlook for the economy has worsened in recent months, and the downside risks to growth have increased,” Bernanke said. “To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so.”
Bernanke also told senators that the “virtual shutdown” of the market for subprime mortgages given to people with blemished credit histories or low incomes — and a reluctance by skittish lenders to make “jumbo” home loans exceeding $417,000 — have aggravated problems in the housing market.
Unsold homes have piled up and foreclosures have climbed to record highs.
“Further cuts in homebuilding and in related activities are likely,” Bernanke cautioned.
Given all the dangers facing the economy, he said, the Fed “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.” Bernanke indicated that additional rate cuts were likely. Still, he voiced hope that economic growth will improve later this year.
Bernanke’s Hill appearance with Treasury Secretary Henry Paulson and Christopher Cox, chairman of the Security and Exchange Commission, came amid escalating worry that the economy may be drifting into recession. The troubles in the housing and credit markets alone threaten to push the economy into its first recession since 2001 — if it hasn’t fallen into one already.
Bernanke and Paulson don’t believe the country will fall into a recession. Their forecasts still call for growth, albeit slow growth, they said. However, the pair did say Thursday that the administration and the Fed are expected to downgrade their economic forecasts for this year.
“It would be less, but I do believe we’ll keep growing,” Paulson said. Bernanke said a new Fed forecast due next week will “show lower projections of growth ....growth looks to be weak, but still positive.”
On Wall Street, Bernanke’s bearish assessment pulled stocks lower. The Dow Jones industrials was down more than 100 points in afternoon trading.
The Federal Reserve, which started lowering a key interest rate in September, has recently turned much more aggressive. Over the span of just eight days in January, it slashed rates by 1.25 percentage points — the biggest one-month rate reduction in a quarter-century. Economists and Wall Street investors believe the Fed will cut rates even more at its next meeting in March and probably again in April.
“Our economy is clearly in trouble,” said the committee’s chairman, Sen. Christopher Dodd, D-Conn. Restoring investor and consumer confidence, he said, is critical “if we are going to get back on our feet again.”
Bernanke said his forecast is for the economy to continue to endure a “period of sluggish growth.” That would be “followed by a somewhat stronger pace of growth starting later this year” as the effects of the Fed’s rate cuts and a newly enacted stimulus package begin to be felt. The $168 billion package, which includes rebates for people and tax breaks for businesses, was speedily passed by Congress last week and signed into law on Wednesday by President Bush.
Sen. Richard Shelby, R-Ala., was skeptical, saying he thought the energizing impact of rebates would be “negligible” and likened the action to “pouring a glass of water into the ocean.”
Even though Bernanke’s forecast envisions an improving economic picture later this year, the Fed chief said it was nonetheless “important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated” or that credit will become even harder to secure.
That’s why, for now, Bernanke indicated the Fed is still inclined to lower interest rates.
Yet, that could change, depending on how the economy and inflation unfold.
“A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives” of promoting healthy employment and economic growth while keeping inflation under control.
Sen. Robert Menendez, D-N.J., criticized policymakers for what he believed was a too slow response to the housing crisis. “We count on those at the top ... to sound an alarm,” during a crisis, he said. Instead, “what we got was a snooze button ... we’ve been behind the curve.”
Noting spreading credit problems, Sen. Charles Schumer, D-N.Y., asked whether policymakers underestimated the severity of the situation.
Replied Paulson: “It’s one thing to identify a problem. It’s another thing to know exactly what to do about it.”
Meanwhile, Paulson said the administration’s efforts to help people at risk of losing their homes is paying off.
Paulson said that in the final three months of last year, more than 470,000 homeowners got help from companies servicing their mortgages and almost 30 percent of those received a loan modification. He insisted the administration was working hard to help, and called the problems facing some struggling homeowners “heartrending.”
In terms of clues for an economic turnaround, Bernanke said the Fed would need to see signs of stabilization in the housing and labor markets and improvements in credit markets. For now, he said, the Fed doesn’t expect a “rip roaring” jobs market. Employers in January cut jobs for the first time in more than four years.
TL : DID SOMEONE EVER TAKE THE EFFORT TO READ THE OVERLEAF INSTRUCTION ON PANADOL STRIPS WHEN CONSUMING ?
TL : UNTUK ORANG DEWASA - 2 BIJI SEKALI. TIDAK BOLEH MAKAN LEBIH DARI 4 KALI SEHARI.
TL : MR FED HAVE BEEN POPPING 4 PILLS PER ONE DOSAGE, FOR 4 TIMES A DAY AND THE PAIN JUST COULD NOT GET AWAY.
4:51 p.m. ET Feb. 14, 2008
NEW YORK - Wall Street retreated Thursday after Federal Reserve Chairman Ben Bernanke predicted a “sluggish” economy until later in the year and more mortgage-related losses at banks. The Dow Jones industrial average fell 175 points.
Though the Fed chairman’s comments suggested the central bank is still open to further interest rate reductions, the tone was, as expected, somber. Bernanke said the housing and credit crises have weighed on the economy and curbed hiring. If the job market deteriorates, consumer spending, which is crucial for economic growth, will keep dwindling.
The Labor Department said Thursday the number of workers filing unemployment claims fell 9,000 to 348,000 last week. But after the January jobs report that showed the first net jobs loss in more than four years, Wall Street remains worried that businesses are becoming cautious about hiring and that unemployment will compound the debt problems that have been slamming the markets and the greater economy.
After three strong days on Wall Street, investors found scant encouragement in Bernanke’s testimony and cashed in their gains.
“HE WAS MORE BEARISH ON THE ECONOMY THAN HE WAS BEFORE,” said Arthur Hogan, chief market analyst at Jefferies & Co. After this week’s better-than-expected report on January retail sales, investors found Bernanke’s assessment of the economy particularly disheartening.
“To have the Fed come in and talk about how things could be getting worse, not better, kind of takes the wind out of their sails,” Hogan said.
According to preliminary calculations, the Dow Jones industrial average fell 175.26, or 1.40 percent, to 12,376.98.
Broader stock indicators also declined. The Standard & Poor’s 500 index fell 18.35, or 1.34 percent, to 1,348.86, and the Nasdaq composite index fell 41.39, or 1.74 percent, to 2,332.54.
Government bond prices dropped, pushing up the yield on the benchmark 10-year Treasury note, which moves opposite its price, to 3.83 from 3.73 percent late Wednesday.
Bond investors were focusing on Thursday’s upbeat jobless claims data, as well as Bernanke’s indication that the Fed may be nearing the end of its rate-cutting campaign if it expects the economy to regain momentum later in the year, said Joe Balestrino, a portfolio manager at Federated Investors Inc.
The central bank has been lowering key interest rates since September, and it USUALLY TAKES SIX TO NINE MONTHS BEFORE RATE MOVES AFFECT THE ECONOMY.
Banks fell on Bernanke’s testimony, and on a huge loss at the Switzerland-based bank UBS AG. UBS reported a fourth-quarter net loss of $11.28 billion due to investments in U.S. subprime mortgages. THE BANK, WHICH POSTED ITS FIRST FULL-YEAR LOSS IN A DECADE, SAID IT EXPECTED MORE DEBT PROBLEMS IN 2008. Its U.S.-traded shares fell $3.05, or 8.3 percent, to $33.94.
Wall Street’s decline also reflected its underlying concerns about bond insurers, which are in danger of losing their superior ratings because of bad mortgage debt.
Late Wednesday, MBIA Inc. raised $1.1 billion from the sale of a nearly 40 percent stake in the company. Shares of the bond insurer rose 98 cents, or 8.4 percent, to $12.62.
MBIA told Congress Thursday it has enough cash to survive the distress in the industry, and that it needs neither a bailout nor tighter federal regulation. But lawmakers say action is necessary. New York regulators are working with banks and bond insurers on a plan to raise insurers’ cash levels.
Moody’s Investors Service downgraded another bond insurer, Financial Guaranty Insurance Co., to a financial strength rating of “A3” instead of “AAA.” The ratings agency said it believes the larger bond insurers MBIA and Ambac are “better positioned from a capitalization and business franchise perspective,” but that it is still reviewing its ratings on the two companies.
The dollar was mixed against other major currencies.
The weak dollar is, somewhat counterintuitively, helping to prop up the economy right now because U.S. goods are cheap for foreign buyers. The government reported Thursday that the nation’s trade deficit, which had ballooned to record levels for five straight years, finally narrowed in 2007. In December, the deficit dropped 6.9 percent to $58.8 billion, thanks largely to strong increases in U.S. exports.
SHARP RISE IN GLOBAL DEFAULT RATE EXPECTED THIS YEAR
PRESS RELEASE
New York, Jan 7, 2008 -- Moody's global speculative-grade default rate reached 1.1% at the end of January, up from a revised closing level of 0.9% for 2007, Moody's Investors Service reported today. The recent increase comes off of a two-decade record low level reached in November 2007, when the speculative-grade default rate came in just below 0.9%.
“January is the second consecutive month in which the speculative-grade default rate has now increased,” says Moody's Director of Corporate Default Research Kenneth Emery. In January 2007, the global spec-grade default rate was at 1.8%.
Moody's default rate forecasting model now predicts that the global speculative-grade default rate will rise sharply to 4.6 % by the end of this year and increase further to 4.8% by January 2009. The year-end forecast is close to the long-term average of 4.5% since 1983.
“Importantly, the model’s baseline forecast does not assume a U.S. recession. If a significant recession were to occur, default rates could reach over 10% as they have in previous recessions,” adds Emery.
Across industries, Moody’s default rate forecasting model indicates that the Construction & Building sector will be the most troubled industry among U.S. issuers over the next 12 months.
Moody's speculative-grade corporate distress index- which measures the percentage of rated issuers that have debt trading at distressed levels- reached 18.8% in January, the highest level since November 2002. The index has been increasing sharply since last summer when it had been fluctuating in the 2.0% range during the first half of 2007.
A total of seven Moody’s-rated corporate issuers defaulted in January, the highest default count in a month since 2004. In 2007, the average default count was only 1.5 issuers per month for a total of 18 defaulters. Of the seven defaulters in January, six were by U.S. issuers and the other was domiciled in Canada.
Measured on a dollar volume basis, the global speculative-grade bond default rate closed at 0.7% in 2007, up from 0.6% in December. A year ago, the global dollar-weighted bond default rate was 1.2%.
Among U.S. speculative-grade Moody’s default rate forecasting model forecasts that default rates will rise to 5.2% by the end of this year. Additionally, the dollar-weighted bond default rate rose from 0.6% in December 2007, to 0.8% in January 2008. At this time last year, the U.S. dollar-weighted bond default rate stood at 1.2%.
In the leveraged loan market, four Moody’s-rated loan issuers defaulted in January. The trailing 12 month U.S. leveraged loan default rate rose to 0.8% in January, which doubled the revised level of 0.4% for December.
All the Sifu's
I do think that US/World market has been very volatile. Seemed very likely to crash. Huge up .. Huge dwn.. Swinging lower and lower. Can share all your strategy during year of rat?
benjamin, i had dispose off at 0.77... instead 0.80. i will try to buy back on 0.30 cents
TL reply 2 Goodluck : For Mr FED to wait for another ONE month or so before next FED meeting in March for the rate cut, is like trying to tahan from ' shitting ' from today upto next 30 days or so.
So the question is : Can he do like what he did in January 2008 by cutting rate 75 points even before the FED meeting which about week away ?
So what investor will be looking at from today upto to March FED meeting ?
Every single down rating of financial market send the DJ kowtow to Mr Bear.
GE already announce and Dato Anwar Brahim is all fire up to dance ' dang-dut ' at every corner of kampung.
TL would not dare to recommend sell and stay sideline....should the market turn green, TL will be F left and right.
Bottomline is - equities market in Asia cannot DECOUPLE from US market. Asia market now is much more stronger and mature with internal demand which may support the growth. We may still ride the same BEAR.....but the good sign is that we are riding at the BEAR tail....which mean anytime will drop off from the BEAR leaving small wound and cut.
Until then.......UNDI LAH PAK LAH !
Gemilang, Terbilang & TEMBERANG !
Greenspan Says U.S. Economy Is `On the Edge' of a Recession
By Vivien Lou Chen
Feb. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending.
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century.
Fed Chairman Ben S. Bernanke, Greenspan's successor, acknowledged ``downside'' risks to the expansion yesterday, while telling lawmakers he expects growth to pick up later this year. He reiterated the central bank is prepared to take ``timely'' action to aid the economy as needed.
``While we are at stall speed in the U.S. at the moment, we haven't yet seen the discontinuity that characterizes recession,'' Greenspan said during a question-and-answer session yesterday. ``American business was in such extra-good shape before this problem hit. Otherwise we would be talking about how long and how deep. We are not there yet.''
Credit Availability
The lack of available credit ``hasn't been a major problem yet for American business,'' he added. Among consumers, though, spending has been slowed by falling home values, which leaves homeowners with less capital to borrow against, Greenspan said.
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
Separately, the former chairman, a Republican, gave a nod toward Republican presidential candidate John McCain, comparing him with ex-President Ronald Reagan. He made the remarks after his predecessor at the Fed's helm, Paul Volcker, last month endorsed Democratic candidate Barack Obama, the Illinois senator.
``John McCain has the same roots as Reagan, being a Goldwater Republican,'' Greenspan said. McCain, like the late Barry Goldwater, is a senator from Arizona. McCain ``is a conservative and has many of the same characteristics that Reagan did.''
Bernanke, 54, told the Senate Banking Committee yesterday that Fed officials lowered their forecasts for growth after the U.S. lost jobs in January, and declining home and stock values threatened consumer spending.
Growth Forecast
Economists predict economic growth will slow to a 0.5 percent pace in the first quarter from the annualized rate of 0.6 percent recorded in the previous three months, according to a Bloomberg News survey this month.
Traders anticipate the Fed will cut the benchmark interest rate by half a point, to 2.5 percent, by March 18, after 2.25 percentage points of reductions since September. Last month, policy makers reduced rates by 1.25 percentage point, the fastest easing of monetary policy in two decades.
Some Fed officials, such as Dallas Fed President Richard Fisher and Philadelphia Fed chief Charles Plosser, warned that the central bank must also monitor inflation as it lowers rates. Fisher said this month that rate cuts can have the potential to ``juice up inflation.''
Faster inflation, combined with slower growth, is a condition known as stagflation, which throttled the U.S. economy in the 1970s.
No `Stagflation'
``Stagflation is too strong a term for what we are on the edge of,'' Greenspan said yesterday. ``I trust we have enough sense to come up with policies to avoid that.''
He also told the group of energy-industry executives that a mandatory cap on carbon emissions ``will lead to lower levels of economic activity and significantly higher unemployment.''
Greenspan left the Fed in January 2006 after almost two decades at the helm. He has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.
During a Jan. 24 speech in Vancouver, the former chairman said he's worried that an ``inevitable'' global recession will create a backlash that forces countries to retreat from world markets. He then put the probability of a U.S. recession at ``50 percent or more, but we're not there yet.''
In November, he told a Sao Paulo, Brazil, audience that the odds of a recession were less than 50 percent.
To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net
Last Updated: February 15, 2008 00:15 EST
Thanks TL.
Perhaps i should do like you to stay sideline during the sideline market. I could hardly see any good news after General Elections and also decide to follow Sifu Sam not to drink untill the last cup and buy on MOS
wow..wow.. mkt down again...
stay aside like sam, too risky to buy in any stock now...
GE hav no gd effect to klse, so stay aside & enjoy d cny holiday.
ben, i didn't buy d stock u mentioned, will keep an eye on it when it fall near 1.00. i hav too many stock yet to cut loss, so ....
anyone can comment on keladi, seem keeps going down ????
TL : SPONGEBOB ( BERNANKE )& PATRICK THE STAR ( PAULSON ): THE MOST HILARIOUS STOOGES IN USA
Recession Watch 2008
Five questions for Ben and Paulson
Amid growing recession fears, Fed chair Bernanke and Treasury Secretary Paulson head to Capitol Hill. Here is what they should be asked.
By Chris Isidore, CNNMoney.com senior writer
February 13 2008: 12:11 PM EST
The Senate Banking Committee needs to ask Treasury Secretary Paulson and Federal Reserve chairman Bernanke tough questions about the economy on Thursday.
NEW YORK (CNNMoney.com) -- The economy is on everyone's mind right now. And traders, homeowners and politicians all have the same question: How bad it will get?
We'll get some answers Thursday when Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry "Hank" Paulson testify about the economy before the Senate Banking Committee.
But how much we learn from them will depend partly on how tough the questions are and how truthful they can be in their answers. With that in mind, here are some key questions top economists think should be asked of these two key government officials.
Both of you have said you're looking for slow growth this year, not a recession. Is that still your view?
It's clear that the Fed chairman and Treasury Secretary are going to be reluctant to ever call a recession until well after the fact. Perhaps that's the way it should be. Financial markets would shudder if either were willing to acknowledge the economy has shifted into reverse.
Such a pronouncement could even become a self-fulfilling assessment, scaring both consumers and businesses to further pull back on their spending at a time when both men are trying to spur economic growth. But their actions speak louder than their words.
For example, why do we need a $170 billion stimulus package if growth is simply slowing and not declining?
"Their comments and the actions are not aligned," said Keith Hembre, chief economist for First American Funds.
Hembre said if Bernanke doesn't expect a recession, then the Fed shouldn't be cutting interest rates as much as it has since the cuts could spur inflation down the road.
Bernanke's testimony Thursday will be his first public comments since a series of reports about jobs, service sector activity and retail sales showed more economic weakness. But even economists who believe a recession has begun don't expect Bernanke to admit this Thursday.
Bernard Baumohl, executive director of the Economic Outlook Group, who believes that the recession began at some point in the last three months, said he only thought Bernanke would use the R word to describe the current economy is if he was giving his testimony "strapped to a lie detector."
What can be done to address the credit crunch?
David Wyss, chief economist for Standard & Poor's, said there are not a lot of good answers for this question, given the depth of the problems with banks' balance sheets.
In fact, there are concerns that some of the steps taken so far, including the Fed's rate cuts may eventually make the problems worse, not better.
The rate cuts were supposed to reduce the cost of money for banks, spurring them to lend money to qualified borrowers. But it has also sent investors fleeing from investments that do poorly when interest rates fall.
The market for loans to big U.S. companies with low credit ratings, as measured by a Standard & Poor's index that charts those loans, hit a record low on Feb. 7 and is currently down more than 11% since October.
"Leveraged loans have fallen out of bed," said Jim Grant of Grant's Interest Rate Observer. "I'd like to know Bernanke's answer about other unintended consequences of these dramatic rate reductions."
Is the worst almost over for housing?
Even trade groups like the National Association of Realtors (NAR) are forecasting more declines in home prices and sales this year, but the expectations for how deep prices will fall vary wildly, from the NAR's prediction a 1.2% drop to about a 15% plunge being forecast by Merrill Lynch.
The official line from the Fed and the Bush administration is that housing is at or near a bottom. Unfortunately, the Fed has been wrong about this before: Bernanke was talking about signs of stabilization in the housing market during testimony to Congress in November 2006.
What's clear is that the worse housing gets, the further the impact of this decline could spread to the broader economy. Consumers no longer able to tap into equity in their homes are likely to see their spending constrained. That could mean losses will continue to mount at big banks, creating additional problems in credit markets.
"I think the housing market is a disaster right now and I think [Bernanke and Paulson] know that," said Hembre. "But they've stuck with the story that there's limited spillover or no spillover. I think clearly that's not the case."
Will other countries continue to lend us money?
The U.S. economy is dependent like never before on capital from overseas investors and governments. Sovereign funds are taking stakes in big Wall Street firms and are also buying bonds used to fund the record U.S. debt and help support the dollar in the face of the Fed's rate cuts.
But while the dollar's slide versus the euro and yen has helped lift U.S. exports to record levels by making U.S. goods more competitive, it has its own risks. The price of imports, particularly oil and other commodities, have become more expensive with a weaker dollar, adding to inflation risks.
Wyss said the risk that overseas investors could pull back on buying U.S. assets is one of the greatest concerns facing the economy.
"How do you continue to run trade deficits like this if people aren't going to send you cash?" asked Wyss.
How bad will it get in the jobs market?
The government reported a decline of 17,000 jobs in January, the first drop in more than four years. Job losses clearly aren't limited to housing and manufacturing any longer either, as services firms also posted a decline.
The recent survey from the Institute of Supply Management about the services sector showed that more employers in service businesses are trimming staffs and fewer are looking to hire.
This is bad news since the sector -- which includes retailer, airlines and banks, have been the engine of job growth in recent years as manufacturers laid off workers.
Paulson has argued the economic stimulus package should create 500,000 jobs. But other economists question how many workers businesses will add to meet what could be only a short-term pick-up in spending.
In addition, other measures of the labor market, including long-term unemployment, are signaling weakness beyond the 4.9% unemployment rate. So it will be key for Bernanke and Paulson to address more than just the unemployment rate when discussing the health of the labor market.
After all, even after the most recent recession ended in 2001, there was a "jobless recovery" that lasted for two years.
TL : TIP OF ICEBERG ?
Banks at Risk of $203 Billion in Writedowns, Says UBS (Update4)
By Poppy Trowbridge and Zachary R. Mider
Feb. 15 (Bloomberg) -- The world's biggest banks may have to book as much as $203 billion of writedowns, in addition to the $152 billion reported so far, if bond insurers the lenders rely on become insolvent, UBS AG said.
``Risks are still rising on many fronts; the problem is broadening from just subprime,'' London-based UBS analyst Philip Finch said in a note to investors today. ``We expect more writedowns.''
MBIA Inc. and Ambac Financial Group Inc., the No. 1 and No. 2 bond insurers, are struggling to maintain their AAA credit ratings following losses on residential mortgages. Banks may be forced to write down the value of securities protected by contracts with the so-called monoline insurers if their financial condition deteriorates, Finch said. The New York-based companies guarantee the repayment of bond principal and interest in the event of defaults.
Ambac became the first monoline insurer to receive a downgrade, when Fitch Ratings cut it to AA from AAA in January, citing ``significant uncertainty'' over the insurer's business model.
The cost of protecting banks from default soared on concern a proposal to break up MBIA and Ambac may trigger further credit market losses.
Writedowns at the world's largest banks on so-called collateralized debt obligations and subprime-related losses may increase by $120 billion, UBS's Finch wrote. The lenders may have to book charges of $50 billion for structured investment vehicles, $18 billion for commercial mortgage-backed securities and $15 billion for leveraged buyout loans, UBS said.
Breakup Concern
``Liquidity conditions are still far from normal,'' the note said.
Credit-default swaps on the Markit iTraxx Financial index of 125 banks and financial institutions rose 10 basis points to 104 as of the close of trading in London, according to JPMorgan Chase & Co. The Markit iTraxx Japan index rose 4 basis points to 86, Morgan Stanley prices show.
New York Insurance Department Superintendent Eric Dinallo said regulators are trying to help the two biggest bond insurers raise $15 billion to avert rating downgrades that may endanger the $1.2 trillion of debt they guarantee worldwide. One option is to split the insurers' municipal bond business from their money-losing subprime-mortgage units, Dinallo said in a Bloomberg Television interview yesterday.
A regulatory backlash against the banks also threatens to cut profits in the global banking industry by 5.3 percent this year, which could result in additional capital requirements for banks, according to Finch.
Blow to Earnings
Increased credit costs of 10 basis points would lower 2008 industry earnings to 5.9 percent from 10 percent, the report said. A basis point is 0.01 percentage point.
Goldman Sachs Group Inc., the biggest securities firm by market value, had its first-quarter profit estimate cut 51 percent today by Fox-Pitt Kelton Cochran Caronia Waller. The New York-based firm faces ``continued challenges in credit markets'' and may report a $1.7 billion writedown from leveraged loans, analyst David Trone wrote in a research note today.
UBS fell in Swiss trading today after Citigroup Inc. said Europe's biggest bank by assets may have to write down as much as 20 billion Swiss francs ($18.3 billion) this year on securities infected by the subprime debacle. UBS dropped 1.44 francs, or 3.8 percent, to 36.02 francs.
`Defensive Portfolio'
HSBC Holdings Plc, Europe's largest lender, Bank of America Corp., the biggest U.S. bank by market value, and UniCredit SpA, Italy's largest bank by assets, would be included among a ``defensive portfolio,'' the UBS analyst recommended.
HSBC fell 2.3 percent to 730 pence in London trading. Bank of America rose 1.1 percent to $42.70 at 4 p.m. in New York and UniCredit declined 3.4 percent to 4.84 euros.
Rising defaults on subprime mortgages in the U.S. last year sparked a collapse of global credit markets. The ensuing cash shortage led to writedowns by banks in the second half of 2007.
U.S. Economy: Confidence Drops, Factories Stagnate (Update2)
By Bob Willis and Courtney Schlisserman
Feb. 15 (Bloomberg) -- Confidence among American consumers slumped to the lowest level since 1992 and factory output failed to increase, indicating the damage from the housing contraction is pushing the economy toward a recession.
The Reuters/University of Michigan index of consumer sentiment fell to 69.6 in February from 78.4 the previous month. The Federal Reserve said manufacturing production was unchanged in January after two months of gains, while a gauge of activity at New York factories contracted this month.
``We're seeing a clear pattern of sudden weakening in both consumer and business confidence, which frankly is the sign of a recession,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who had the closest forecast for consumer sentiment in a Bloomberg News survey.
U.S. government bonds rallied after the figures, sending two-year note yields to the lowest level since 2004, while the dollar dropped. The reports reinforced traders' anticipation that the Fed will need to cut interest rates by at least a half- point by the end of the March 18 meeting.
Best Buy Co., the largest U.S. consumer electronics chain, today cut its full-year earnings forecast. ``Soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets,'' Chief Executive Officer Brad Anderson said in a statement.
Waterford Warning
Waterford Wedgwood Plc, the Dublin-based maker of Royal Doulton crystal and china, today forecast its sales will fall 4 percent this year, due to weaker consumer spending in the U.K. and the U.S.
The reading on consumer sentiment was the weakest since February 1992. Economists had forecast the measure would fall to 76, according to the median of 66 projections in a Bloomberg News survey.
The decline in confidence indicates that pledges of tax rebates and lower interest rates failed to ease Americans' concerns about falling home and stock prices and rising unemployment. President George W. Bush this week signed a $168 billion stimulus package, including tax rebates to more than 130 million households, after a deal with Democratic lawmakers.
``We're starting '08 with modest, if any, economic momentum,'' Alan Gayle, senior investment strategist at Trusco Capital Management in Richmond, Virginia, said in an interview with Bloomberg Television.
Two-year note yields dropped as low as 1.82 percent, and were at 1.91 percent at 4:02 p.m. in New York. Interest-rate futures show the chance of a three-quarter point Fed rate cut, to 2.25 percent, by March rose to 32 percent from 30 percent yesterday.
Dependent on Utilities
Total industrial output rose 0.1 percent for a second straight month, matching economists' forecasts, the Fed said today. Production was held up by unusually cold weather that spurred utility use. Manufacturing, which accounts for four fifths of industrial production, was unchanged from December after a 0.2 percent gain.
The Federal Reserve Bank of New York's general economic index fell to minus 11.7, the first negative reading since May 2005, from 9.0 in January, the bank said today. Readings below zero for the so-called Empire State index signal contraction.
Fed Chairman Ben S. Bernanke yesterday told lawmakers that the central bank is ready to act ``as needed'' to address risks to growth. His predecessor, Alan Greenspan, told an audience in Houston late yesterday that ``we are clearly on the edge.''
`Clearly Struggling'
``Manufacturers are clearly struggling under the pressure of slower consumer demand and a much more cautious corporate sector,'' said Russell Price, senior economist at H&R Block Financial Advisors in Detroit. ``Exports are still a positive for the sector but clearly they are not enough to offset these other factors. The Fed still has more work to do.''
Production of construction supplies dropped 1.1 percent in January, today's Fed report showed. Residential building subtracted 1 percentage point from economic growth last year, the most since 1980.
Reports this year indicate the housing slump is continuing. Builders broke ground on 1.006 million homes at an annual rate in December, the fewest since 1991. The National Association of Realtors said last month sales of existing homes fell more than forecast in December, while prices of single-family homes posted the biggest annual drop probably since the Great Depression.
Capacity Use
Capacity utilization, which measures the proportion of plants in use, was unchanged in January at 81.5 percent, today's report showed. Capacity utilization was forecast to fall to 81.3 percent. The rate has averaged about 81 percent over the last 30 years. Higher rates raise the risk of bottlenecks in production that can push up prices.
Utility production rose 2.2 percent after falling 0.2 percent, the report showed. The average temperature in January was 30.5 degrees Fahrenheit, 0.3 degree below the mean for that month in the 20th century, according to the National Climatic Data Center in Asheville, North Carolina. The Northeast was hit by blizzard conditions at the end of the month.
Economic growth slowed to a 0.6 percent pace in the fourth quarter, and the economy lost jobs in January for the first time in more than four years. Economists surveyed by Bloomberg News this month indicated even odds that the economy will enter a recession this year.
Citing a worsening outlook, the Fed lowered its benchmark interest rate by 1.25 percentage point during two meetings over nine days in January, the fastest rate reduction since the federal funds rate became the main policy tool around 1990.
Car Sales
Cars and light trucks sold at a 15.2 million annual pace in January, the worst showing since October 2005, industry figures showed. Economists for General Motors Corp., Ford Motor Co. and Chrysler LLC said Jan. 15 that U.S. sales of cars and light trucks may fall for a third straight year in 2008.
``This is going to be a challenging year for the auto industry,'' said Paul Traub, a Chrysler economist, at a conference in Detroit last month.
Delinquency rates on U.S. auto loans in asset-backed securities rose in January to the highest levels in 10 years, Fitch Ratings said. Delinquencies for subprime auto loans reached 4.03 percent, a 43 percent increase from a year earlier, the Chicago-based ratings company said in a report yesterday.
Exporters Benefit
Exporters are helping to keep manufacturing from a deeper slump. General Electric Co. said fourth-quarter profit rose 15 percent on higher international sales of jet engines and power- plant turbines, drawing more than half its annual revenue from overseas for the first time.
GE Chief Executive Officer Jeffrey Immelt's push into global markets was led by a 30 percent jump in the GE Infrastructure group's sales, as developing countries built cities, hospitals and airports, and the dollar weakened.
``Every place we went there's a need for power, there's a need for planes, there's lots of capital being invested, and there's just no sign this global infrastructure boom is slowing at all,'' Immelt told a conference call Jan. 18.
UBS writedowns could double
Published: 2008/02/15
ZURICH: Swiss bank UBS could face billions of dollars more in subprime-related writedowns in 2008, which could tip it into a second year of losses, analysts warned investors, sending its shares tumbling again.
Some said UBS might be only halfway through clearing the debris from the subprime loan disaster that has already saddled it with US$18 billion in charges in 2007.
The prognosis knocked UBS shares down 5.93 per cent to 35.24 francs by 1130 GMT yesterday, a day after falling 8 per cent on the news that the company had at least US$80 billion in exposure to subprime loans and other risky debt, nearly three times more than it had previously disclosed.
"The disaster is much worse than we had thought," said Dirk Becker, analyst at Landsbanki Kepler in Frankfurt. "It looks like they face another very bad year, and a loss for 2008 is not inconceivable."
Equity analysts at Citigroup said UBS might have to spend 12 billion to 20 billion Swiss francs on additional writedowns.
Others, including Lehman Brothers, which tallied UBS's exposures at US$97.3 billion, said a write-down of 10 billion francs was on the cards.
"A further 10 billion Sfr writedown would eliminate all profit for 2008, which would likely be a negative for the stock price," said Lehman in a note.
A UBS spokesman said yesterday "our exposures are disclosed," but declined to comment on speculation of more writedowns.
"If your starting point for exposures is an US$80 billion number, then it is not off the wall to think that a quarter of that could be in trouble," said one analyst with an investment bank who asked not to be identified.
The Swiss bank, the world's largest manager of affluent people's money, is already Europe's biggest casualty of the credit crunch by far.
It has replaced nearly all its top management and watched its share price more than halve since June, when the force of the subprime crisis began to register. - Reuters
TL : TO BUY OR NOT TO BUY ?
BUY : THE MOST ' IN ' TERM NOW THAT BUBBLING OUT FROM EVERY SINGLE ANALYST OR SMART INVESTOR IN MARKET...IS ' DECOUPLING '.
WE HAVE THE DRAGON SLAYER ( CHINA ) AND BOLLYWOOD ( INDIA ) TO CUSHION THE USA SLOWDOWN.
WHY WORRY ? USA DOWN DOESN'T MEAN OUR MARKET DOWN ?
WARREN BUFFET IS STILL DOING SHOPPING LATELY BY BUYING UP STOCK. SO WHY WE ARE WORRYING TOO MUCH.
SELL : TO CUT LOSS & SPEND RM10 LOOKING FOR MEDIUM ( BOMOH ) ASKING FOR ADVISE
TL : STAY TUNE !
Housing Market Index
2008 Release Schedule
Released On: 19 Feb 2008
Definition
The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes. (National Association of Home Builders/Wells Fargo)
Why Do Investors Care?
This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a POWERFUL MULTIPLIER effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.
Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.
Since the economic backdrop is the most pervasive influence on financial markets, home sales have a DIRECT bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.
Market is really quite on 500mil shares traded.
Fyi, I have bought some Bjcorp @RM1.03.
ben 1.03 price will be last year NOV story wor :P
haha, sorry typo again. Should be 1.13.
I am back ^V^..gd morning guys ^V^
Latest update, instruction given to my remisier to dispose my shares off upon GE announcement b4 I went 4 my holiday , seems like what I predicted was correct, correct correct , sell on news n stay aside, sold all my rcecap @ 0.795+- n 50% of keladi @0.20+, told u guys already, when time to retreat , retreat ! stock in my holding , Liondiv , skpres n some Keladi ^V^ which consists about 20% of my total fund ^V^
Lots of water liu liu stocks out there but will not buy in at this moment due to absent of 天時 n 人和 ! n also.. as u know, this year is not my year ... ha ha.. anyone willing to share his luck with me ? Ben ? or tailow ? anyone ?
According to d attached Ijing ,mkt will do well in month of March n April , for me..i dont think so , Oil price n others will be raised after GE that's 4 sure , these r no good to d mkt, Dow yet to reach its bottom with more n more bad news qeueing to be announced by US companies in d coming months, hence retreat is d best stratergy ^V^
I know chopping 4 some of u is something hard to execute , guys.. look beyond that , mkt is always there , save yr bullets 4 next bull !
TL : WALL STREET IS ALREADY GREETED BY ENOUGH BAD NEWS. IT DOESN'T NEED ANOTHER ONE TO MELT HIM.
Wall Street’s role in housing meltdown probed
State, cities go to court and may pave way for private suits
The Associated Press
updated 5:07 p.m. ET Feb. 18, 2008
BOSTON - Regulators are trying to punish Wall Street for mortgage finance practices that expanded home ownership and spread risk among a host of new players — but also may have duped borrowers and investors who supplied cash to fuel a housing boom that's turned bust.
A handful of state securities regulators and a couple foreclosure-blighted cities have fired the opening shots with lawsuits trying to prove that investment banks and big lenders are guilty of more than just bad business decisions and failing to foresee looming mortgage troubles. Some regulators say greed and fraud underlie much of the subprime mortgage mess that has spread across the broader housing market, triggering a spike in foreclosures.
Aside from the civil cases, the FBI is looking at possible criminal action, focusing on what Wall Street firms knew about the risks of mortgage securities backed by subprime loans, and whether they hid risks from investors.
Observers don't expect the financial penalties that regulators extract in the civil cases to be massive. But the cases could turn up evidence that forces Wall Street to defend itself amid growing talk of government help to ease subprime-related financial strains on bond insurers. Revelations of bad behavior turned up by the government also could spur private investors to file even more lawsuits than the hundreds they've already brought to recover losses.
"This could get a lot nastier, for many reasons," said John Akula, a business law lecturer at the Massachusetts Institute of Technology's Sloan School of Management. "Prolonged close scrutiny often turns up all kinds of dubious practices that in normal times are under the radar.
"If the government sponsors any kind of bailout with public funds, this may be coupled with an aggressive prosecutorial agenda in support of efforts to get private parties to kick in."
Although the foreclosure-blighted cities of Cleveland and Baltimore have sued seeking to recover damages from mortgage lenders, most of the cases filed so far are from regulators alleging violations of state securities laws.
Attorneys general in New York and Ohio are targeting alleged systematic inflation of home appraisals by major lenders and appraisal firms. Litigation in Massachusetts and other states seeks to demonstrate that investment banks failed to disclose risks to investors who bought mortgage-related securities and weren't up front about conflicts of interest across their far-flung financial operations, including trading of subprime investments.
"Over the years, the relationship between lender and borrower and a particular piece of property has been severed," said Massachusetts Secretary of State William Galvin. "It's clear that it's become a runaway train."
Gone are the days when most borrowers simply got loans from the neighborhood bank, which used to hold the bulk of mortgage risk. Now that risk is spread further — mortgages are bundled together and sold to investors. Behind the scenes, credit-rating agencies offer advice on whether the investments are secure.
Until recently, cash from Wall Street banks and investors extended growing amounts of credit to low- and middle-income Americans enticed to enter a market when home prices appeared headed nowhere but up.
Lenders wrote $625 billion in subprime mortgages in 2005, nearly four times the total in 2001. The boom brought in big fees to mortgage brokers, lenders, banks and ratings agencies.
But now that prices are dropping, those players are hurting. Global banks have ousted executives and have written off nearly $150 billion since mortgage securities began collapsing last summer.
Given the losses, "It's doubtful some of these entities will repeat their performance," Galvin said. "But I think there needs to be an understanding of how we got where we are, whether that is through regulatory action, or through Congress."
States have responded by tightening rules governing how lenders and brokers arrange mortgages and are compensated. But lawsuits and administrative complaints are the main tools regulators use to seek fines against companies accused of wrongdoing, or to set examples to deter bad behavior.
"What they can't enforce through regulation, they will try to accomplish through suing," said David Bizar, a Hartford, Conn.-based attorney with the firm McCarter & English who defends against subprime mortgage lawsuits brought by consumers and regulators.
Already, the number of subprime-related cases filed in federal courts is outpacing the rate of litigation that emerged from the savings and loan meltdown in the late 1980s and early '90s, according to a study released Thursday.
The 278 subprime cases filed in federal courts in 2007 already equals half of the total 559 S&L cases handled over multiple years, according to the findings from Navigant Consulting Inc.
Criminal action also could be looming. The FBI said last month it was investigating 14 companies for possible accounting fraud, insider trading or other violations that could result in criminal charges. The FBI didn't identify companies but said the probe involves firms across the financial services industry.
The FBI is working with the Securities and Exchange Commission, which has civil enforcement powers. The SEC said in January that it had about three dozen active investigations under way.
In the rush to sue big business, there's plenty of blame to go around in the subprime meltdown, said Bizar, the lawyer who has represented lenders in subprime cases. Those include everyone from investors buying mortgage-related investments without understanding the risks, to credit-rating agencies that failed to alert investors to lenders' precarious positions as mortgage delinquencies spiked.
But the mess can be blamed more on unrealistic expectations than fraud, he said.
"You had a lot of people reaching to get into homes they couldn't afford, on the theory that it would go up in value," Bizar said.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Sifu Sam,
Welcome back. I also chop all my stocks and save bullet like wat u told. Wanna to hunt the tame bear together with sifu.
TL : UK Big Boys ( Bank ) reporting season. Sorry, no surprise.
Baclays Bank : report due out 19/02/2008 - massive writedown £1.30b.
Royal Bank of Scotland : report due out 28/02/2008 - massive writedown £1.50b.
HSBC : report due out 03/03/2008 - massive writedown XXXXX ( guess ! )
DOUBLE TROUBLE
TROUBLE NO. 1 : Credit Suisse cuts asset valuations by 2.85 bln dollars
By Simon Kennedy
Last update: 2:28 a.m. EST Feb. 19, 2008
LONDON (MarketWatch) -- Credit Suisse (CScredit suisse group
CS said Tuesday that it cut its valuation of certain asset-backed positions in its structured credit trading business by 2.85 billion dollars following an internal review. The group said the fair value reductions reflect significant adverse market conditions in the first quarter of the year and will result in a 1 billion dollar hit for its net income. The bank estimated it remains profitable in the first quarter to date, but added it will also assess whether any portion of the reductions could affect 2007 results. Credit Suisse added its internal review, which has identified mismarkings and pricing errors by "a small number" of traders in certain positions in its structured credit trading business, is continuing.
DOUBLE NO. 2 : Barclays profit dips 3%, write-downs reach 1.6 bln pounds
By Simon Kennedy
Last update: 2:42 a.m. EST Feb. 19, 2008
LONDON (MarketWatch) -- U.K. banking group Barclays
8:31am 02/19/2008
BCS said Tuesday that its net profit for 2007 dipped 3% to 4.42 billion pounds ($8.69 billion) as it also revealed net losses from credit market turbulence for the year had reached 1.64 billion pounds. The bank had already said in November that it would write-down 1.3 billion pounds. Pretax profit for the year fell 1% to 7.08 billion pounds, broadly in line with analyst expectations. Barclays also said it would raise its final dividend by 10% to 22.5 pence a share
HAVE WE ENOUGH OF TROUBLE ?
Sorry Sam I have no insider news on Bjcorp. But only knowing good result to be announced next month with backing up confidence on GS and Vincent Tan bulk buying on Bjtoto and Bjland shares. I know it is risky, that why I just bought in not more than 10lots.
Beside, need you advise on does share market rally before GE? Told by my father that share market "normally" rally b4 GE in the past. But seems like market still remain quiet, probably will start moving after nomination date.
ECM start moving, hopefully uptrend able to sustain.
bro sam,
just wondering what average price is your skpres?
also, if i want to enter on keladi, what's the 'ok' price?
thankx
TL to Ben ( sorry Sifu Sam for taking this question to answer . Is purely my 5 cents thought )
TO PREDICT GE RALLY ( PRE - POST ) IN TODAY MARKET SITUATION IS LIKE BETTING BIG - SMALL WITH UNCLE LIM.
TODAY MARKET DOES NOT WARRANT ONE TO BET IN KLCI FOR ANY PRE-POST GE RALLY.
NOT LIKE PAST GE ANTICIPATED RALLY WHICH NORMALLY FOLLOW HISTORICAL RECORD, CURRENT MARKET SITUATION IS TOTALLY & ENTIRELY DIFFERENCE.
WHY ? EVERYBODY IS TELLING THAT KLCI CAN DECOUPLE ( COOL WORD ? ) FROM USA RECESSION. ON CONTRARY, THOSE WHO TOLD U THAT IS THE ONE WHO CLOSELY WATCHING DOW JONES PERFORMANCE DAY AND NIGHT GLUE TO THE STOCK SCREEN. THEY BULL SHIT U MAN !
WITH THE OIL PRICE HITTING ABOVE USD100 OVERNIGHT, WE CAN'T EXPECT MUCH FROM KLCI.
MALAYSIA BUKAN TIAP - TIAP HARI BOLEH. SOMETIME BOLEH, AND SOMETIME TAK BOLEH.
POST GE RALLY ?.....WAIT TILL PAK LAH EVENTUALLY GARNERED LESSER SEAT COMPARE TO LAST ELECTION, IT MAY EVENTUALLY TURN OUT TO BE POST GE REELING !
THE MAN ALREADY SAID REPEATEDLY HIMSELF...THIS ROUND THE WIN MAY BE LESSER ' GLAMOUR '....SO YOU DARE TO BET FOR GE POST RALLY ?
SAVE YOUR BULLETS DURING RAINING SEASON. DON'T HOPE TO MAKE RM1.00 BY GETTING A BIGGER CHANCE TO LOSE OUT RM10.00.
TAKE CARE BEN & SIFU SAM....AND THE REST BUDDIES TOO.
ic .ic .ic ..Bro Ben ^V^ rally b4 GE ? hard to tell .. most of d time "YES" but this time ..i guess "no" due to unsolved sub prime crisis n also lots of ppl kena burnt in d recent slump..u can see d overall mkt volume is so low , Mkt confidence is no longer there , CI rosed >10 got nothing to do with us, only selected big blue chips moving !
Masteel, mahsing n lindiv 's qe will be out soon.. although i know it should be a good one..but still I think their rise will be minimum based on current mkt sentiment.
Those days, i were like those newbies , always thought that mine is solid FA, it wont come down one !..guys.. remember this >>
Be it king of FA such as PBB, YTL, IOI or.. when mr bear comes..he will sweep all across d board ! just like when Mr Bull come , be it shit stocks or laggard stocks..all UP !
We are at KLCI >1,400.. I dare not say it has reached its peak but at this level it is definitely not "Low" anymore !
2 tinlung, my average price of skpres ? u can get it from my attached portfolio .. all there ^V^ time to go in ? sorry "NO" !
Averaging yr cost in bear mkt is like catching d falling knife ! dont ever do that ! in bear mkt..d more u buy d more u die !
For those who aim for good dividend payer stocks, yes I agreed with u but y dont u stay out 4 little while n do bottom fishing later ?
Take from another angle, if u hv sold all yr shares b4 d slump, d more she plunge d more u GAIN ! u gain from " opportunity cost "!
Still FA play ? definitely "YES", Tidur FA, Makan FA minum pun FA ..ha ha.. but ??? but what ??
Still d same old saying >>Sun Tze Art of war said
天時
地利
人和
When there r no 天時 n 人和 , stay aside !
When yr enemy is stronger than u , retreat n wait until yr enemy getting weaker then only u strike back ^V^
Ancient chinese teaching is a source of wealth 4 us, understand it n apply it in yr daily life, it really WORK !
TL to Sifu Sam : I BANGSAI ALSO WITH FA !!!! FOR A JOKER LIKE ME WHO HAVE BEEN BURN FOR 99 DEGREE DURING THE 1997 FOR FOLLOWING THE UNCLE WHO SELL PUTU MAYAM AT PETALING STREET FOR STOCK TIPS, I HAVE TURN OVERLEAF NOW.
NOT ONLY MAKAN, TIDUR AND MINUM, BANGSAI TOO !
ONE AFTER ANOTHER CASUALTY.
MORE TO COME FROM EUROPEAN BANKS.
BNP PARIBAS Earnings Conference Call (Q4 2007)
Scheduled to start Wed, Feb 20, 2008, 10:00 am Eastern
TL : BNP PARIBAS IS FRANCE LARGEST PUBLIC LISTED BANK.
TL : ESTIMATED NET PROFIT SLUMP BY 41.80% ( 400 MILLIONS EURO DOWN )
TL : USA JUST NEED TO MAKE 12 STEPS TO MEET UP WITH COW HEAD HORSE FACE .
America's economy risks the mother of all meltdowns By Martin Wolf
Tue Feb 19, 1:25 PM ET
"I would tell audiences that we were facing not a bubble but a froth - lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy." Alan Greenspan, The Age of Turbulence.
That used to be Mr Greenspan's view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University's Stern School of Business, founder of RGE monitor.
Recently, Professor Roubini's scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is "a rising probability of a 'catastrophic' financial and economic outcome"**. The characteristics of this scenario are, he argues: "A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe."
Prof Roubini is even fonder of lists than I am. Here are his 12 - yes, 12 - steps to financial disaster.
Step one is the worst housing recession in US history. House prices will, he says, fall by 20 to 30 per cent from their peak, which would wipe out between $4,000bn and $6,000bn in household wealth. Ten million households will end up with negative equity and so with a huge incentive to put the house keys in the post and depart for greener fields. Many more home-builders will be bankrupted.
Step two would be further losses, beyond the $250bn-$300bn now estimated, for subprime mortgages. About 60 per cent of all mortgage origination between 2005 and 2007 had "reckless or toxic features", argues Prof Roubini. Goldman Sachs estimates mortgage losses at $400bn. But if home prices fell by more than 20 per cent, losses would be bigger. That would further impair the banks' ability to offer credit.
Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth. The "credit crunch" would then spread from mortgages to a wide range of consumer credit.
Step four would be the downgrading of the monoline insurers, which do not deserve the AAA rating on which their business depends. A further $150bn writedown of asset-backed securities would then ensue.
Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.
Step seven would be big losses on reckless leveraged buy-outs. Hundreds of billions of dollars of such loans are now stuck on the balance sheets of financial institutions.
Step eight would be a wave of corporate defaults. On average, US companies are in decent shape, but a "fat tail" of companies has low profitability and heavy debt. Such defaults would spread losses in "credit default swaps", which insure such debt. The losses could be $250bn. Some insurers might go bankrupt.
Step nine would be a meltdown in the "shadow financial system". Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they have no direct access to lending from central banks.
Step 10 would be a further collapse in stock prices. Failures of hedge funds, margin calls and shorting could lead to cascading falls in prices.
Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets. Behind this would be a jump in concerns about solvency.
Step 12 would be "a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices".
These, then, are 12 steps to meltdown. In all, argues Prof Roubini: "Total losses in the financial system will add up to more than $1,000bn and the economic recession will become deeper more protracted and severe." This, he suggests, is the "nightmare scenario" keeping Ben Bernanke and colleagues at the US Federal Reserve awake. It explains why, having failed to appreciate the dangers for so long, the Fed has lowered rates by 200 basis points this year. This is insurance against a financial meltdown.
Is this kind of scenario at least plausible? It is. Furthermore, we can be confident that it would, if it came to pass, end all stories about "decoupling". If it lasts six quarters, as Prof Roubini warns, offsetting policy action in the rest of the world would be too little, too late.
Can the Fed head this danger off? In a subsequent piece, Prof Roubini gives eight reasons why it cannot***. (He really loves lists!) These are, in brief: US monetary easing is constrained by risks to the dollar and inflation; aggressive easing deals only with illiquidity, not insolvency; the monoline insurers will lose their credit ratings, with dire consequences; overall losses will be too large for sovereign wealth funds to deal with; public intervention is too small to stabilise housing losses; the Fed cannot address the problems of the shadow financial system; regulators cannot find a good middle way between transparency over losses and regulatory forbearance, both of which are needed; and, finally, the transactions-oriented financial system is itself in deep crisis.
The risks are indeed high and the ability of the authorities to deal with them more limited than most people hope. This is not to suggest that there are no ways out. Unfortunately, they are poisonous ones. In the last resort, governments resolve financial crises. This is an iron law. Rescues can occur via overt government assumption of bad debt, inflation, or both. Japan chose the first, much to the distaste of its ministry of finance. But Japan is a creditor country whose savers have complete confidence in the solvency of their government. The US, however, is a debtor. It must keep the trust of foreigners. Should it fail to do so, the inflationary solution becomes probable. This is quite enough to explain why gold costs $920 an ounce.
The connection between the bursting of the housing bubble and the fragility of the financial system has created huge dangers, for the US and the rest of the world. The US public sector is now coming to the rescue, led by the Fed. In the end, they will succeed. But the journey is likely to be wretchedly uncomfortable.
*A Coming Recession in the US Economy? July 17 2006, www.rgemonitor.com; **The Rising Risk of a Systemic Financial Meltdown, February 5 2008; ***Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not, February 8 2008
Hi $ifus Sam n TL, ur analysis on d current share market really save me fr losing $$$ eventhough i'm still holding few Liondiv.
Like u guys said saving bullets during raining season but just wondering r we now already in d "Bear Market" n how long will it last. Still remember $ifu $am saying tat BULL will normally last around 18 mths, what abt BEAR?
2 b frank seeing d price of some stocks 2day, i really feel like buying but bcoz of ur advice, I just "Yan Yan Yan..."
So, $ifus, when do u think we should jump in? Especially Liondiv now @ 1.46.
Also any comment on KNM fr $ifus ?
sam. do u still hav keladi with u, i bought 200lots 2day to average down my cost, liondiv also 40@1.47. will d GE rally coming??
Higher inflation makes Fed's job tougher
Easy-money policy to revive the economy also fuels price increases
By John W. Schoen
Senior Producer
updated 3:54 p.m. ET Feb. 20, 2008
With the economy slowing and the housing market stuck in reverse, Wednesday’s surprise pop in the government's monthly inflation data was not good news for the Federal Reserve.
The problem: Central bankers now find themselves between a rock and a hard place in trying to meet their dual goal of setting interest rates low enough to get the economy moving again while keeping rates high enough to keep prices in check.
The Fed can’t do both. But given the ongoing turmoil in the capital markets — and the risk of a credit crunch that could do even more damage to the fragile economy — Fed watchers say inflation-fighting is taking a back seat.
"Right now they feel the greater risk to the economy spills over from the housing slump,” said Joshua Feinman, chief economist at Deutsche Bank Asset Management. “They are still going to err on the side of providing more insurance against downside risk to the economy.”
The Fed's latest inflation forecast, issued Tuesday, projects "core" inflation of up to 2.2 percent this year, dropping down into the Fed's preferred range of below 2 percent next year.
A slowing economy is supposed to help keep inflation in check, as weaker demand takes some pressure off prices. Some economists note that, with the economic downturn still in its early innings, it may simply take awhile longer for the slowdown to begin easing inflation pressures.
But there are forces at work driving prices higher that may persist even once the impact of the slowdown is fully felt. Oil prices are being driven higher, in part, because oil producers are having trouble finding new reserves fast enough to keep up with the growth in global demand and the depletion of older oilfields.
Food prices have also been moving higher, in part, because of those higher energy costs and the need to find alternatives to oil, according to Stephen Stanley, chief economist at RBS Greenwich Capital.
“The whole ethanol craze is behind a lot of the food inflation in the sense that it's driven up corn prices and increased the demand for crop space because people want to grow crops to make ethanol,” he said.
Food and energy prices have been tracking higher for some time, but the data for January showed a more worrisome trend: Those higher costs seem to be working their way through the economy faster than expected. The prices increases were broad-based, a sign that companies can no longer absorb the higher costs of producing goods and services, economists say.
There are also signs that the Fed’s shift to an easy-money policy last year — designed to revive the economy and calm the credit markets — may be adding fuel to the inflation fire. By pumping more dollars into the economy to spur growth, the Fed has been weakening the dollar, according to Conrad DeQuadros, a senior economist at Bear Stearns.
“As result of that (easing) the value of the dollar has fallen,” he said. “And that’s making the cost of goods that we get from abroad more expensive.”
Consumers are already feeling pinched and tell pollsters they’re hunkering down as the economy slows. A majority told a recent Reuters/Zogby poll that they expect a recession in the next 12 months. That was the first time since the poll began asking the question last September that a majority said they expect recession.
Those recession fears may take some of the wind out of the sails of the government’s fiscal stimulus plan — which will begin mailing tax rebates in a few months to try to get the economy moving again.
Nearly half of those surveyed in the Reuters/Zogby poll said they plan to use the money to pay down debt or build up their savings — neither of which will provide the spending boost that Congress and the White House are hoping for. Just 16 percent said they would spend their entire rebate; about as many said they plan to save it all. Nearly one in three said they would pay down debt, while 27 percent said they would spend some and save some.
The uptick in inflation also complicates the Fed’s job for another reason. Though it has a powerful influence on short-term lending rates, it has much less control over the pricing of long-term loans. If investors and savers who park their money in long-term bonds begin to fear that rising inflation will erode the buying power of those investments, they'll begin demanding higher rates in the bond market.
“For the first time in a long time people are starting to question the Fed’s will to fight inflation,” said Stanley. "And that kind of leaves the Fed in a tough spot."
Traders bid up interest rates on long-term Treasury bonds after Wednesday’s inflation data was released. If inflation worries become more widespread, rates could move higher still.
“The market is pricing in a fairly benign inflation environment,” said DeQuadros. “And I think it's underestimating the likelihood of high inflation over the next several years as the Fed has moved to this inflationary momentary policy."
If inflation remains strong, and long-term rates move higher, that could undercut the Fed’s efforts to head off an economic slowdown.
“That’s very important in the real economy because most fixed-rate mortgages are set off of longer-term interest rates,” said Stanley. "And a lot of the borrowing rates for real people in the economy — be they consumers or businesses — are based as much or more on long-term rates as on short-term rates."
Still, until the housing market recovers and the financial markets calm down, higher inflation probably won’t prompt the central bankers to change course. For the time being, the Fed is in “full risk management mode,” according to Diane Swonk. chief economist at Mesirow Financial.
“They are willing to discount these (inflation) numbers — put them on the side and deal with them later — and say the moderation in growth should help moderate inflation,” she said. “Whether it does or not, history will tell.”
© 2008 MSNBC Interactive
TL to Yat Yat Fat (118)
Answer to your 2 queries
1. Buy now or not to buy ? Mr Bear already wake up from hibernation. On when he will back into the cave for further hibernation, TL don't know. Instead of answering directly your question, please do some thinking yourself after my comment as follow : The housing and credit crunch is USA just started in late or 4Q 2007...and now just started to ' blossoming '. By giving a few steroid injection ( rate cut ), the economy won't get back in right path so fast. Is not like Wei-Ge, even 1/2 a pill can translate U into incredible HUNK ! ( not HULK ). The DOUBLE / TWIN BUBBLE in USA ( housing slump + credit crunch ) may last for 3Q or even 4Q before all the SHIT surface. By then someone need to wipe and clean up the mess ! So when you can dive into the market, I really don't know. Even PAK LAH manage to SAPU Kelantan in this coming GE also will not make KLCI shield from the USA effect. Again, I like to use this hi-tech savvy word.....DECOUPLE ? How ? Unless all of us go to tanam padi and bela kambing to survive, other than that, Malaysia still need to find a country for them to export. Beside than USA, mana mau pegi ? We export to USA make up about 18.80% of total yearly export worldwide.
2. KNM - the rights and bonus 2 for 1 is very mouth watering if the price of KNM drop below RM4.00 before ex-date ( yet to be determine )
Take care
Wowwww..gamuda plunged >0.86cts today ! take a look at its latest EPS, 1st qtr 4.4cts , q2q down by 8%, 4.4 x 4 =17cts 4 year 08, @4.86transacted into PE of 29+- !! even stocks like Masteel n Liondiv which traded at PE6+- also coming down from d sky, what do u think of Gamuda with PE > 20 ? well done Dato Lin 4 selling off his shares quietly !
Think ..b4 u jump in 4 bottom fishing ^V^
Single digit PE stocks also cant run away from Mr Bear, ha ha, what do u think of stocks with higher PE ? check d PE of yr stocks NOW b4 it is too late !
Thanks $ifu TL 4 ur reply n advice. Sounds like very pessimistic over KLCI n 2day seems like Blue Chips also start "shaking".
$ifu $am is correct - Retreat, Stay aside n do bottom fishing later.
KLCI dropped >1% 2day, not a good sign 4 2mollo, furthermore is Friday...(mo ngan thai if DOW slump 2nite)
Hi Sam....
Myself also lembit already lah. Still holding on to Liondiv, Evergreen, Keladi and Skpres. Not to mention DPS !
I think lately there have been too much negative news which frightens off ivestors.
Whole world is up but ours seems to be going the opposite direction.
Is it advisable to average down as Tailow has done for Keladi?
Cheap sales very soon! Cant wait to buy buy buy when people stop buying. Recession? I welcome you with both arms!
Tailow,
You are so daring man! It is really risky to average down you cost at current market sentiment. GE rally may come, but even it come I doubt it will help to bring up Keladi and Liondiv because these are not GE themeplay stocks.
U.S. recession may be as deep as in 1990s: Merrill
Thu Feb 21, 2008 4:48pm EST
NEW YORK (Reuters) - The United States is in a recession that could be much worse than it faced in 2001, and closer to the sharper economic slump of the 1990s, Merrill Lynch said on Thursday.
The bank also said the U.S. Federal Reserve will likely remain in "aggressive rate-cutting mode" as a result, cutting rates by 50 basis points on March 18.
Merrill argued the manufacturing slowdown in the U.S. mid-Atlantic region showed a "collapse in business confidence", to levels not seen since the 1990s recession.
"A pullback in the outlook of this magnitude could be extremely corrosive to the economy because it means shuttering production, slashing inventories, deeper job cuts and even canceling capital expenditure plans," Merrill said in a report.
The Philadelphia Federal Reserve's business activity index, a reading on the factories in the mid-Atlantic region that is viewed as a precursor of national factory performance, fell to minus 24 this month, below expectations for a minus 11. Readings below zero show contraction in the industrial sector.
The six-month outlook in the region has collapsed from a cycle high of 39.6 in October to minus 16.9 in February, the steepest decline ever recorded by the Fed report, the bank noted.
"The debate is no longer about whether the economy is in recession, in our view, it is about how hard the landing will be," Merrill Lynch said.
(Reporting by Walter Brandimarte; Editing by Neil Stempleman)
TL : ARE WE THERE YET ?
Time Is Growing Short
In Big Banks' Bailout
Of Bond Insurer Ambac
By LIAM PLEVEN, AARON LUCCHETTI and CARRICK MOLLENKAMP
February 2, 2008
A group of major banks is racing against a deadline as they work on a possible bailout of the No. 2 bond insurer.
The banks are seeking to preserve the top-notch credit rating of Ambac Financial Group Inc., which has been put at risk by the snowballing impact of downgrades on mortgage bonds. This in turn makes the bond insurers' positions more precarious.
If the bond insurers are downgraded, Wall Street could face an additional $40 billion to $70 billion in losses on top of the $100 billion it has already suffered.
The crisis illustrates the symbiotic relationship between the bond-rating firms and the bond insurers, which include Ambac and the No. 1, MBIA Inc. This relationship proved very lucrative during the boom time for the housing market, but now their interests are diverging, and the resulting spiral could lead to billions more in losses.
The relationship changed last year when major ratings firms began to raise their estimates of losses for securities backed by subprime mortgages. The firms, Moody's Investors Service, a unit of Moody's Corp.; McGraw Hill Cos.' Standard & Poor's, and Fimalac SA's Fitch Ratings, had given many of these securities their top, triple-A, rating. Bond insurers had guaranteed the principal and interest payments on many of these securities. Because the chance for default was slim, the insurers didn't have to set aside much capital to protect against losses.
But when securities they've insured are deemed more risky, that can force the bond insurers to set aside more capital. And if they don't have it and can't get it, the insurers are at risk of losing their own triple-A ratings, which are essential for their business.
This threat has loomed larger as the ratings firms' view of the housing market worsened, and they lowered their ratings on even more securities tied to mortgages, including those insured by the bond insurers. And when that happens, bond insurers effectively had to put up more capital for the bonds they were holding. Moody's prepared investors for bond-insurer downgrades in a research note Thursday and subsequent investor call Friday.
Some firms "may be unable to restore financial strength to levels consistent with a Aaa rating," the firm wrote. Moody's is likely to make decisions on downgrades this month, it said, possibly sooner in the month for insurers having trouble raising capital.
With this deadline looming, there are efforts to break that cycle by bailing out the bond insurers. One effort involves a consortium of banks working on a possible bailout of Ambac in a move that would provide the company with a pool of capital necessary to avoid a potential downgrade, according to people familiar with the situation.
Ambac recently lost the top rating from Fitch Ratings and has been placed on watch for a possible downgrade by Moody's. The company recently said it was in talks with "very credible" potential partners to supply needed capital. Ambac didn't return a call seeking comment. Greenhill & Co., a boutique investment bank, is working with the banks. A spokesman for the company declined to comment. No formal contract has been signed and the plan could still change or include a different mix of banks
TL : FOR THE PAST MONTH OR SO, TL HAVE REPEATEDLY BEING A CONTRARIAN BY POSTING UP NEGATIVE MESSAGES ABOUT USA AND GLOBAL CREDIT SITUATION.
I GUESS IS TIME FOR TL TO PAUSE AND LET THE MARKET DIGEST THE ECONOMIC DATA. NEGATIVES NUMBER KEEPS REELING OUT FROM USA & EUROPE. ( AND WE YET TO SEE ANYTHING ' REAL ' YET !!! )
BERNANKE SITUATION NOW IS LIKE YOUR BIRDY ACCIDENTLY ZIP UP.
I WAS ONCE EXPERIENCED IT BEFORE DURING CHILDHOOD DAY. DAMN IT....IS REALLY PAIN !!!
TO STIMULUS THE CREDIT CRUNCH AND HOUSING SLUMP, BERNANKE NEED TO CUT RATE ( TO PULL THE ZIP DOWN ).
BUT RECENT CPI AND INFLATION DATA FORCE HIM TO RETHINK ON WHETHER TO PULL ZIP SLIGHTLY UP ( TO SLOW DOWN OR REVISED UPWARD THE RATE TO CALM INFLATION )
WELL, PULL UP OR DOWN....YOUR BIRDY IS GONNA HURT BADLY.
.....FINALLY TL MANAGE TO PULL DOWN THE ZIP AS TO RELEASE THE BIRD FROM BEING ENTANGLE FOR SO LONG.....THINKING BACK OF THIS CASE.....I DO FEEL THE CHILL DOWN MY SPINE NOW...IS DAMN FxxxxxxG PAINFUL.
SO MR FED.....PULL DOWN OR UP ?
TAKE CARE.
TL : A TRIBUTE TO MS LYDIA SUM ( FEI-FEI ). YOUR EXCELLENT WORKS IN THE PAST HAVE TRULY ENLIGHTENED MY FAMILY NOT ONLY DURING THE ERA OF 80s', 90s' & 20s'....BUT YOUR SWEET , CUTE AND YET WARMTH SMILE WILL STAY FOREVER AND EVER IN OUR MEMORY..
MAY YOUR SOUL GET THE FULLEST BLESSING.....
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