S&P Japan move

Standard & Poor's surprised markets by downgrading Japan's long-term sovereign debt one notch from AA to AA minus, citing the country's ballooning deficit, which it said will further reduce Tokyo's already restricted fiscal flexibility.

The move will have a limited impact on Japan's ability to raise money on financial markets but it raised a red flag with investors about other leading countries' fiscal imbalances.

"It is not a good sign.... A major economy like Japan being cut is not going to go down very well," said Mark Priest, senior equities trader at ETX Capital

What is Now ? and Next ?

KLSE - still above the uptrend moving average. healthy correction now.

STI - double Top, and waiting to break resistant, if can..

S&P 500 - Strong uptrend, but correction will coming soon.

HSI - Still above the uptrend line, but waiting to break resistant, if can.

Shanghai - the trend was not so beautiful, waiting to break resistant.

Jakarta - Disappoint it going to south now ??

US Fed official: US$600bil bond programme could backfire

WASHINGTON: A member of the Federal Reserve's policymaking committee suggested Tuesday that the Fed may need to scale back its $600 billion Treasury bond-buying programme if the economy grows more quickly than expected.

The Fed meets next on Jan. 25-26 and will review the program at that time.

CPO windfall profit tax could be subject to review

The palm oil windfall profit tax (WPT) which has been the major cause of contention among many plantation companies could be subjected for a review soon, a source close to the industry said.

The source said plantation companies especially those undertaking new planting and replanting that incurred losses in the initial six years of operations have expressed their discomfort over the WPT when “most of them have not even started paying for corporate tax or break even but were forced to pay for the WPT.”

HUBLINE BERHAD - 7013

Hubline Berhad is trying to break above its resistance level RM0.30.
(TP RM0.37)

Happy New Year 2011

IJM Land, MRCB merger called off

MALAYSIAN RESOURCES CORP [] Bhd (MRCB), IJM Land Bhd’s proposed merger has been called off after both parties failed to agree on the terms of the MoU which expired on Wednesday, Dec 29.

MRCB said that after a series of discussions, MRCB and IJM Land have not been able to reach an agreement on the definitive terms and conditions of the proposed merger.

The Employees Provident Fund (EPF) is a common shareholder in all the companies involved in the merger. The EPF owns a 19.4% equity stake in IJM Corp, while it is the single largest shareholder of MRCB with a 41.63% stake. IJM Land is in turn a 62.48%-owned unit of IJM Corp Bhd.

The Eye of the Recession's Storm

by Robert Kiyosaki

Recently, as I was finishing my dinner at a local Italian restaurant, my waiter asked me, “May I talk to you about my mortgage?”

“Sure,” I replied.

“I haven’t paid my mortgage in over 18 months,” he said. “What do you think I should do?”

“Has the bank been calling you?” I asked.

“At first, but lately I’ve heard nothing,” he said hesitantly. “And I’m not the only one. Three of the cooks in the kitchen have also stopped paying their mortgage.”

“And what are you doing with the money?”

“We’re saving it.”

“And what do you plan on doing?” I asked.

“Wait till they take our houses,” he said. “Do you think this is a good idea?”

“I wouldn’t do it,” I said with a smile. “Why are you doing it?”

“Because the mortgage is more than the value of the house. We’re better off not paying the mortgage and saving the money. Let them take our houses.”

I didn’t agree or disagree with this man…yet, silently, I couldn’t fault his logic. Since he was 18 months behind on his mortgage, he was so far behind that he was actually ahead.

As you probably know, the mortgage mess is only getting worse, not better. Many people aren’t paying their mortgages because they don’t have a job. Yet there are a growing number of people who have jobs but who are also refusing to pay their mortgage.

A medical doctor friend of mine confirmed this growing trend. He said the doctors he works with, doctors who make a lot of money, are buying a lower-priced second home and then defaulting on their primary residence.

If this trend turns into an avalanche, the real estate market will crash again. The only people holding onto their homes are people like me, people who purchased before the bubble and don’t owe much, if anything, on their homes.

If there is another real estate crash, it’s people like me -- people who pay their mortgages -- who might be the biggest losers.

Looking at the chart, it’s easy to see the eye of the storm. The second half of the storm is about to hit.

The leading edge of the storm was the subprime mortgage defaults, the storm that hit in 2007. The trailing edge of the storm will be the defaults of people who are solid citizens, people who have good jobs and good credit.

How severe the second front of the storm will be is yet to be seen. If there are more people like the waiter and cooks in the Italian restaurant and the highly paid doctors who don’t want to pay for a house that is going down in value, the second half of the storm will be very severe.

China Increases Rates to Counter Highest Inflation in Two Years

Dec. 26 -- China raised interest rates for the second time since mid-October to counter the fastest inflation in more than two years and more moves may follow.

The benchmark one-year lending rate will rise by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, effective today, the People’s Bank of China said in a one-sentence statement on its website late yesterday.

Economists surveyed by Bloomberg News earlier this month forecast one percentage point of increases by the end of 2011. Premier Wen Jiabao is seeking to slow gains in property values and consumer prices that are making it harder for families to buy homes and pay for food. Bank lending and a wider-than- forecast November trade surplus have pumped more cash into an economy already awash with money.

Third-quarter growth revised up to 2.6 percent, But.....

Washington - Economic growth was a touch higher than previously estimated in the third quarter, but below expectations as a rise in the pace of inventory accumulation was offset by downward revisions to consumer spending, a government report showed on Wednesday.

Gross domestic product growth was revised up to an annualized rate of 2.6 percent from 2.5 percent, the Commerce Department said.

Economists had expected GDP growth, which measures total goods and services output within U.S. borders, to be revised up to a 2.8 percent pace. The economy expanded at a 1.7 percent rate in the second quarter.

But data so far suggests growth accelerated in the fourth quarter and will remain supported in 2011 by an $858 billion tax deal, which will help plug the gap from the fading boost from the rebuilding of inventories by businesses and winding down of the government's $814 billion stimulus package.