Smart Investing/Trading for the week ending August 22 2008

Weekly US Markets Update and Outlook

U.S. stocks to focus on financials, housing data
Possible Lehman takeover, Fannie Mae-Freddie Mac bailout also on radar

MarketWatch: Stocks next week will take their cues from fresh data on housing and consumption, while the fate of mortgage giants Freddie Mac and Fannie Mae, as well as the future of investment firm Lehman Brothers, will likely keep investors on their toes. Among other factors likely to move markets will be Democratic presidential candidate Barack Obama's pick for vice president. Oil prices, which fluctuated wildly over the past week, also will stay on investors' radar screens. But analysts say the ailing financial sector, where the fallout from the credit crisis continues to take its toll, will be on top of the agenda next week. Among economic data on the docket for next week are the Case-Shiller home price index and home sales figures for July. The consumer confidence index along with personal income and consumption figures for August will provide a snapshot on U.S. consumers. After posting gains since mid-July, the stock market still seems still unable to get past the continued fallout of bad home loans that have led to a global credit crisis and mountains of losses for financial firms. But stocks rallied Friday amid mounting speculation that Lehman Brothers might be the subject of an outright acquisition and that the U.S. government might bail out Fannie Mae and Freddie Mac jumped 197 points, or 1.7%, to end at 11,628, with 28 of its 30 components gaining ground, led by financials stocks J.P. Morgan Chase. Major stock indexes still ended the week lower, after falling three out of the past five sessions. Despite Friday's rally, the Dow finished the week down 0.3%, the S&P lost 0.5% and the Nasdaq Composite dropped 1.5%. Front-month crude-oil futures gained 0.7% this week. Crude surged 5% on Thursday as tensions between the U.S. and Russia flared up. But on Friday oil slumped more than 5% to close at $114.59 a barrel, pummeled by a rising dollar.

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Stocks' strong gains Friday were also supported by comments from Federal Reserve Chairman Ben Bernanke, who said he expected U.S. inflation to moderate this year. The comments fueled speculation that the Fed will keep interest rates low for the near future. The Federal Open Market Committee, the Fed's rate-setting arm, will release minutes from its last meeting on Tuesday. Shares of Lehman Brothers jumped 5% after Korea Development Bank, which is in talks with the troubled Wall Street firm, was quoted as saying that one of the options on the table is an outright acquisition.

Monthly KLSE Composite Index

I Capital: The KLCI seems to have followed the trend of the other equity markets in falling. The technical readings have been painting a picture of doom. However, as any bear would have to eventually end, the KLCI has now hit its long-term uptrend support line. Whether it will fall below this or rally from here will depend, to an extent, on Malaysia's political developments, and more crucially, the global economy. Both are stories waiting for a final chapter.

* Today marks the last day of the Beijing Olympic games. Farewell Beijing, Hello Manchester! What will be in store for the Chinese markets post Olympics?....well the story will start unfolding tomorrow.....