Monday, January 25, 2010

Uncertainty on Bernanke vote raises economic fears

A defeat of Federal Reserve Chairman Ben Bernanke's quest for another four-year term could raise the risk of a "double dip" recession if political jousting over a successor were to drag on for months, economists warn.
But Bernanke's prospects appeared to brighten Sunday, with three more senators, including Republican leader Mitch McConnell of Kentucky, predicting he'll be confirmed. A vote is expected later this week.
Still, the chance of Bernanke's defeat has unsettled Wall Street, contributing to last week's 4 percent loss by the Dow Jones industrial average, its worst performance in 10 months. If Bernanke were rejected, uncertainty over a successor would further roil global markets, at least in the short run.

Thursday, January 21, 2010

Buffett predicts slow, uncertain economic recovery

Billionaire investor Warren Buffett said Wednesday he's still not sure when the economy will recover, but he expects the rebound to be slow because American consumers remain uneasy.

"We need to get money in people's pockets. The first stimulus plan did not do that very well," Buffett said.

Buffett said the slow economic recovery the nation is experiencing now is related to the financial excesses of previous years, when many people and companies spent beyond their means.

"I thought it would be slow to come back and it has," Buffett said. "The hangover is sort of proportional to the binge."

Sunday, January 17, 2010

Investment Clock

E*Trade Surges on Speculation of Acquisition Talks

E*Trade Financial Corp., the online brokerage that’s been unprofitable for two years, climbed the most in a month after the Daily Telegraph said the company is in talks about a sale.

The stock rose 6.4 percent to $1.84 in Nasdaq Stock Market trading after the Telegraph said the talks were advanced and the company has shut down applications for new accounts. E*Trade spokeswoman Pam Erickson said that the company shut down applications for international locales in connection with a previously announced restructuring and that it doesn’t comment on market speculation or rumors.

Tuesday, January 12, 2010

Investment outlook 2010

Think cautiously: hot money, asset bubble, inflation, policy exit, strong US$ ….

Global healing, not global boom

Global GDP had contracted by about 1% in 2009, the worst since 1982. Undoubtedly the world has started to heal in about June, and continues to bounce as China, Brazil, India and Southeast Asia are pulling relentlessly. While we believe the world will eventually heal all its deep-cut wounds caused by the financial turmoil of 2008, a full recovery is unlikely to be seen until the end of 2012. For 2010, we will have a global recovery, not a global boom. While the stock markets of Hong Kong and China are still in their party moods, we caution investors to think about the possible setbacks that will cause some really volatile swings for the markets.

Hot monies will depart

There were no sign of their departure so far, but if they do depart, the bull market will end without hesitation. There are plentiful profits with the hot monies already, so the lure to depart is irresistible. Besides, their flows are hypersensitive to the policy changes and shifting relative attractiveness of the different markets. As such, by nature they won’t stay.

Asset bubbles will burst

Many young doctor and lawyer lovers can’t afford to buy a shelter to get married. We will not see public land sales resuming. As such, property prices will continue to rise. The asset bubble will burst when all young couples are marching on the streets on 1st July 2010, or when the hot monies suddenly leave and cause the market to collapse.

“Policy exit” here and there

Given the globe will reach the flexing point of its recovery path during 2010, the central banks must withdraw the excessive liquidity from the system. Their “policy exit” may take different forms, and start at different times. Yet the end result will be the same: interest rates will go up, so as the mortgages and borrowing costs. Only by doing so, the G7 (and to lesser extent, China) can curb inflation expectation before inflation runs. As the “policy exit” is equal to high interest rate, equity markets will head south when the politicians are heated up with the debates of when and how to exit, a signal telling the stock market to contract, in our view.

US$ strengthening

The US$ had declined by 10-20% against most Asian currencies in 2009, causing gold price to reach over US$1200. The US dollar index of the Reuters was 89 in Feb and is now 77. In 2010, the US$ will likely strength instead of continue to fall, the US economy will finally start to recover and the number of new jobs will rise. A stronger US$ will lift the appreciation pressure from the RMB, and will also induce a majority of the hot monies to flow back to the US, causing severe swings in the HSI.

Hot themes for the mid-caps

We believe coking coal, steel, cement, heath care, sportswear, green energy (car batteries and wind) are the hot themes from which we can identify many super outperformers in 2010. China’s infrastructure will boom in 2010, due mainly to the Rmb4 trillion rescue package of Q4 2008. Steel, coking coal and cement should be investors’ main focus in the next 6 to 9 months. As living standard improves, the sportswear and health care stocks will perform fantastically. We also believe the green energy companies will remain hot in 2010, including those involving in wind and solar energy, and those supplying the next generation batteries for cars.

Obama Plans to Raise $120 Billion From Banking Fees

President Barack Obama plans to raise as much as $120 billion through a fee on financial institutions to help recoup losses from the Troubled Asset Relief Program and reduce the deficit, according to an administration official.

The White House hasn’t settled on the final structure of the fee and how to target the big banks that have returned to profitability, said the official, who requested anonymity.

The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.

Malaysia Palm Oil Stockpiles Second Highest on Record

Palm oil stockpiles in Malaysia, the largest producer after Indonesia, surged 16 percent in December to the second highest on record. Inventory of the edible oil, used mostly in cooking, rose from November to 2.24 million metric tons, the Malaysian Palm Oil Board said in a statement today.

The record was 2.27 million tons in November 2008. “In all likelihood, the inventories and stock/usage ratio will go up,” said Ben Santoso, a plantation analyst at DBS Securities (Singapore) Pte ahead of the data release. “I expect some minor correction later.”

For the full year, output surged 16 percent to a record 20.5 million tons in 2009, from 17.7 million in 2008, taking into account the revised data. Exports rose to 15.84 million tons, from 15.4 million in 2008.

“Palm oil production should pick up from March 2010 onwards and continue its upward trend until October or November,” said a Goldman Sachs report by analysts Patrick Tiah and Nikhil Bhandari on Jan. 6. Still, production growth this year and next would be “below trend,” it said, because of replanting and lower yields.

Tuesday, January 5, 2010

Resorts World Sentosa

Singapore’s first integrated resorts -- Resorts World Sentosa - will start its phased opening from Jan 20, 2010, beginning with its four hotels opening on the same day.

The chairman of the Genting Group and Resorts World Sentosa Tan Sri Lim Kok Thay said in a statement on Tuesday, Jan 5 that when the Genting Group won the bid to build Resorts World Sentosa in December 2006, it promised Singapore that it would deliver a true integrated resorts that would make Singapore and Singaporeans proud.

Resorts World Sentosa’s four hotels - Festive Hotel, Hard Rock Hotel Singapore, Crockfords Tower and Hotel Michael – offer a combined inventory of 1,350 rooms and 10 restaurant outlets at their opening.

Another two hotels at the Resort, Equarius Hotel and Spa Villas, will add another 500 rooms when they launch after 2010.

"Resorts World Sentosa is working closely with the authorities to obtain approvals for Universal Studios Singapore, which will open next. The opening date for the casino will be announced when it gets notice of its casino licence," it said.