"... the catalyst needed for the market to start its meaningful uptrend is not here yet but will only come about when Warren Buffett and the likes start buying in the market or when states and pension funds, national funds or even tax payers monies are being used to prop up badly beaten stocks (HK uses it successfully in 1998) and the buying of defaulted housing loans and schemes from banks and companies. These type of intervention is not talked about as it touches on bail-out, especially this year is an election year. However, if things get real tough, these desperate measures will probably save the day".
This was what I wrote on March 19 this year(here) after the Fed Reserve lowered its Fed Fund rate by 75 basis points to 2.25%. At that time the US markets have gone down by more than 10% in less than 3 months and many were asking whether we have reached the bottom then and are we seeing light at the end of the tunnel? So another half year latter now and with the US financial markets tumbling almost 15% to date, the billion dollar question arises again. As you probably notice, the main difference now compared to then is that tax payers monies are now being used to rescue companies(Bear Stearns- Fed backed/Fannie/Freddie/AIG)and financial experts like Warren Buffett (investing about USD5b in Goldman Sachs) are slowly coming into the picture and these are probably some of the important points to note indicating markets are getting desperate while going from bad to worse and shrewed investors are taking opportunity to buy certain good value stocks with a bargain. Based on these facts and technical charts, I believe the US markets could have found its temporary bottom last week. The technical indicators for S&P500 are still not showing any positive signs yet and will provide a big confirmation if it does with fresh buying momentum in the coming weeks. The road ahead is still very rocky with high probabilities that many more big corporate names going under and more house buyers defaulting loans etc. In the meantime, Americans must take this crisis to seriously improvised, take some financial beating(including the egos) and shedding excesses along the way...otherwise the recovery ahead would be slow and painful...
* Bloomberg: Warren Buffett stands to gain USD437m on the Goldman Sachs's deal deal!
* FBI investigationg companies(Fannie/Freddie/AIG/Lehman Brothers) at the heart of financial meltdown. This is a good move. Find out what went wrong and how to improve from here.
* Bloomberg: Pakistan may default on its debt soon? Moody's Investors Service cuts its outlook on the country's credit rating on Tuesday. Citing heightened prospects of "missed repayments" on the nation's debt. Pakistan's government debt is the riskiest in the world. I shivered thinking Maybank's investment in Pakistan.
* Malaysia's August inflation at a 27 years high at 8.5% . Other countries' inflation seems to peak in July and starts to tapper off in August
No comments:
Post a Comment