Bite the bullet, fight another day?

Like many other Malaysians, I have been following the "katak jumping events" in Perak fervently over the online news portals, newspapers or any other piece of information that makes senses. I have lost count already how many times I have visited and refreshed those online sites eager to see how those events unfold and to get the final verdict from the Sultan. The public opinion polls are all calling for dissolution of state assembly.

While I was busy "googling", many random thoughts on katak jumping came into my mind. Amongst them include the feeling of being cheated, sad, anguish, anxiety, revengeful, corruption, power play, plots, disloyal, betrayal, treachery, inducements, lack of integrity and quality or moral standards, options and alternatives and the fast sinking economy.

Then at 300pm, the much awaited news were out. Sultan has asked Nizar to resign, BN set to form government. I have stopped "googling" for any more updates then but those thoughts mentioned above are still coming back and forth my mind as I write.

The winners will be rejoicing while the losers will be depressing. What can the losing Pakatan Rakyat, Perakians and rakyat do? Will they protest against it(can't help but relating it to Bangkok) or like Jeff Ooi says, Bite the bullet, fight another day?

* Fitch downgrades Russia's debt to BBB(2nd lowest investment grade). The ruble has fallen by 40% since July 2008 against the USD.

* Bloomberg: Sany Heavy, China's biggest supplier of concrete-making equipment, plans to cut its Chairman's annual salary to 15 cents from USD92,000 (in 2007) and cut pay of board members by 90% because of the financial crisis.

* Old folks don't just attend company's meetings for souvenirs and food. See here.

Sharing by Warren Buffett

Warren Buffett: We begin this New Year with dampened enthusiasm and dented optimism.

Our happiness is diluted and our peace is threatened by the financial illness that has infected our families, organizations and nations. Everyone is desperate to find a remedy that will cure their financial illness and help them recover their financial health.

Every new year, I adopt a couple of old maxims as my beacons to guide my future. This self-prescribed therapy has ensured that with each passing year, I grow wiser and not older.

This year, I invite you to tap into the financial wisdom of our elders along with me, and become financially wiser.

Hard work : All hard work brings profit; but mere talk leads only to poverty.
Laziness : Sleeping lobster is carried away by the water current.
Earnings : Never depend on a single source of income.
Spending : If you buy things you don't need, you'll soon sell things you need.
Savings : Don't save what is left after spending; spend what is left after saving.
Accounting : It's no use carrying an umbrella, if your shoes are leaking.
Auditing : Beware of little expenses; a small leak can sink a large ship.
Risk-taking : Never test the depth of the river with both feet.
Investment : Don't put all your eggs in one basket.

Opportunities are never lost. The other fellow takes what you miss.

Truly words of wisdom, aren't they? The above article is sourced from an email received recently.

* Malaysian katak and politics. Frogs are great jumpers, hardy, exceptional ability to hide and camouflage, poisonous and at times noisy. According to Wikipedia, frogs feature prominently in folklore, fairy tales and popular culture. They tend to be portrayed as benign, ugly, clumsy, but with hidden talents.

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* Australia announces its 2nd "move earth and heaven" stimulus package worth up to 4% of GDP or AUD42b while cutting interest rate by100 basis point to 3.25%. The news pushed AUD up by 2% yesterday.

* Bloomberg: Isuzu, Japan's largest maker of light duty trucks may post its first annual loss in 6 years.

Technical Analysis - January 30 2009

S&P500 (826, last week 832 or -0.72% w.o.w )

Except for the Daily Parabolic SAR which turned positive recently, all other indicators egs MACD, MACD Histogram, Guppy MMAs and DMIs (+ve and –ve) are negative. For the weekly readings, the MACD, MACD Histogram and Parabolic SAR are still positive but will eventually turned negative if the selling continues further. The weekly ADX trend and DMIs (+ve and –ve) are bearish while Guppy MMAs is weakening further. Expect index to be at best consolidating. Support is around 780 and resistance at 850.

KLSE CI (884, last week 873 or +1.3% w.ow)

The market still has a 1% gain for the year. The daily indicators MACD, Parabolic SAR, ADX trend and DMI (+ve and –ve) have turned bearish. The weekly charts MACD and Parabolic SAR are still positive but will eventually turned negative if the selling continues further. The index is expected to trade between 835 and 915.

HangSeng (13,278, last week 12,579 or +5.6% w.o.w )

Despite only traded for two days during the week, the index gained more than 5% . Despite this, all the daily indicators like Parabolic SAR, the daily MACD and MACD Histogram and Guppy MMAs are still negative. The weekly charts are still positive, especially the MACD, MACD Histogram and Parabolic SAR but will eventually turned negative if the selling continues further. Support is seen at 12,600 and resistance at 15,000.

Nikkei 225 (7,994, last week 7,745 or +3.2% w.ow)

Similar with S&P500, except for the Daily Parabolic SAR, all the daily indicators like MACD and MACD Histogram, DMIs (+ve and –ve) and Guppy MMAs are still negative. The weekly charts are still positive, especially the MACD, MACD Histogram. However, the Parabolic SAR has just turned negative. Support is seen at 7,400 and resistance at 8,400.

* JapanTimes: Japan's longest boom in the post war era died in October 2007. The boom lasted 69 months.

* CNN: Heaviest snow in 18 months partially criples UK.

* Will Australia cuts its interest rate by 150 basis point today similar with its NZ counterpart? Together with a slowing down economy and a negative trade deficit in December, watch AUD goes down further.

* Fitch: Outlook for KL currency rating negative.

* China considering new stimulus: Wen. A recent survey reveals that 20m migrants workers recently lost their jobs.

Smart Investing/Trading for the week ending January 30 2009

Weekly US Market Update and Outlook

'Bad bank' is best hope for beaten stock market

MarketWatch: Progress creating a government structure to absorb banks' rotten assets could provide some relief next week for the stock market, which otherwise faces a tough lineup of woeful corporate outlooks, plunging auto sales and big job losses.

Investors are hoping for more clarity from Congress and the White House on establishing a good bank/bad bank institution that would buy up the delinquent loans and illiquid securities corroding banks' books.

Traders will also be cued to policymakers' decision on how to spend the second half of last fall's $700 billion Troubled Asset Relief Program, or TARP.

"The market fully understands that the two largest problems we're faced with are the solvency of the banking system and bringing about the end to the real estate crisis," said Robert Siewert, a portfolio manager at Philadelphia-based Glenmede Trust Co., which manages about $17 billion in assets. "It could start to rally on any sort of indication of putting the banking system on a better footing," he said.

The market could use the good news. The S&P 500 and Dow Jones Industrial Average have lost about 9% this year, adding to last year's double-digit losses.

Any spark of hope from Washington faces a squall of negative reports from corporations around the country. Some 193 S&P 500 companies, 40% of the entire index, have already reported fourth-quarter results. Another 102, including Dow Jones Industrial Average components Merck Co., Kraft Foods, Inc. and Walt Disney Co. , are slated to report next week.

So far, earnings look bad and forecasts look worse. S&P 500 companies are on track for a 35% earnings decline. Companies are missing earnings' expectations at a rate not seen since the fourth quarter of 1995. These added to a gloomy jobs picture that next Friday's jobs report will likely illustrate.

Economists are expecting the economy lost 400,000 to 600,000 jobs in January. As in past months, the Wednesday release of payroll processor ADP's job forecast, followed by Thursday's jobless claims figures, could roil traders ahead of the Friday Labor Dept. release. January sales figures from the auto industry and retailers could also tip indexes, even though the theme of plunging auto sales and stingy shoppers is a familiar one. GM sales fell about 40%, Chrysler sales dropped 50% and Toyota Motor Co. sales lost more than 30%.

Devil's in the bad-bank details

The possibility that policymakers would take a page from the 1980s savings and loan crisis by creating an agency to buy institutions' bad assets sparked a rally in bank shares last week. After some jaw-jumping intraday rises, the Financial Select Sector SPDR Fund , which tracks the S&P 500 bank stocks, ended the week 2.8% higher vs. a 0.7% drop for the broader index. Many agree that the market won't rally until the financial system works through the toxic mortgage and related assets. These prompted the failures last year of Lehman Bros. and Washington Mutual, caused successive writedowns as big banks such as Bank of America Corp. and sent the industry running hat in hand to the U.S. government - repeatedly knocking down any chance of a stock market rally.

But even if policymakers pull together to form a new version of the 1980s' Resolution Trust Corp., investors say a sustained rally won't necessarily follow. A lot rides on the details of the structure. If a government "bad bank" buys up bank debts for a steep discount to par value, say at 23 cents on the dollar, those purchases could force struggling institutions to embark on another big round of writedowns and capital raisings. That process could send more down the path to bankruptcy. But if the government buys the assets at par value, in other words, for far more than they are worth now, the problem passes on to the government and ultimately, the taxpayer. "The idea that this will be such a sizeable pricetag to the taxpayer is certainly something investors are weary of," Siewert said.

And regardless of the details of a proposed bank fix, the market still faces a rocky road. Siewert said his firm continues to underweight equities in favor of more investments in bonds, such as high-yield and municipal securities.

Weekly KLSE Update and Outlook

Trading is seen to be supportive after the week-long holiday.

StarBizWeek/MarketWatch: OUTLOOK: With the return of market players after a week-long holiday season, trading on the Bursa this week is expected to be "supportive". Having said that, most dealers expect trading to be range bound throughout most of the week.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi sees a strong support level of 867- 868 points for the KL Composite Index (KLCI) "which it is unlikely to violate" and resistance level of 887-900 points for the week ahead.

"I think this trading week is going to be okay and not as bleak as would be assumed based on overseas markets," he says, pointing out that the KLCI had managed to punch through into positive territory on Friday.

While the local bourse failed to sustain the window dressing activity that lent it a boost towards the end of the year, some say the Umno general assembly meeting in March may inject some vigour into the market, as historically the market sees support from local players in the run-up to the meeting. However, with February having two-shortened trading weeks, there may not be much time to structure a supportive equities market, he says.

Rotational play is already evident in the market with the run-up in water-utilities linked counters on Thursday and plantation counters on Friday.
Despite weakness in crude palm oil (CPO) futures that are trading at around RM1,760 per tonne, plantation stocks have drawn speculative interest and this may continue.

"It's not pretty because CPO futures have broken past the RM1,790 per tonne support level, but there is still a run-up in plantations counters which are index linked," he says.

Lee expects this week to be trapped between the support and resistance levels with trading opportunities in some speculative stocks, naming infrastructure firm MMC Corp Bhd.

* Wow!How time flies when you are having fun! Its the 7th day of the Chinese New Year already! Time to wish everyone a very Happy and Bullish Birthday and enjoy tossing“Yu Sang” (a special dish in Malaysia Chinese community).

Happy Chinese New Year!

May you and your families be richly blessed with Wealth, Health and Happiness Always in this year of the Ox. Happy Chinese New Year!

JR: "UK has nothing to sell"

Jim Rogers(JR)'s advise with reference to the pound and the UK economy pushed the country deeper into its financial gloom. With a very troubled housing and financial service sector, JR's statements push the already nervous investors over the edge. In fact, the advise spark a Sterling sell-off resulting it sitting at a 23 year low against the USD and an all-time low against the Yen. Questions have emerged whether the UK will be able to ride out this financial storm and how soon or earned the reputation as being the second European Union country after Iceland to fail in this crisis. Are the fundamentals of the UK that weak? Will the RBS, Lloyds and Barclays be nationalised soon? Will the country be able to retain its AAA ratings? Will pound near parity with the USD? Will the London Olympics 2012's projects get stuck? One thing I am sure, despite all this, the country will still have their famous football clubs and pubs, just to name a few.

FT.com: The pound is a currency with no underpinning and should fall against the dollar and the euro, says Jim Rogers, chairman of Rogers Holdings and co-founder of the Quantum Fund with George Soros.

He says his view reflects the UK’s dire economic situation: “It’s simple, the UK has nothing to sell.”

Mr Rogers says the two main pillars of support for sterling have been North Sea oil and the strength of the UK financial services sector, in particular, the City of London’s role.

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But Mr Rogers says just as North Sea oil is running out, so London’s standing as a major financial centre is set to suffer.

“I don’t think there is a sound UK bank now, at least, if there is one I don’t know about it,” he says.

“The City of London is finished, the financial centre of the world is moving east.”

“All the money is in Asia. Why would it go back to the West? You don’t need London,” says Mr Rogers.

Mr Rogers thinks the pound is more vulnerable than the dollar or the euro.

He says the UK housing market is arguably in a worse state than that of the US, given pockets of strength in the US and prices that are sliding across the board in the UK.

Meanwhile, he says, the UK is in worse shape economically than the eurozone, where most countries are not big debtors and do not run huge trade deficits.

“If the UK discovers more North Sea oil, I might change this view,” he says. “But I don’t see that happening.”

* China's economy grew 6.8% in the 4Q; slowest in 7 years. For the year, the economy grew 9% in 2008.

* South Korea's economy shrank 5.6% in the 4Q.

* BNM has lowered its key interest rate by 75 basis point to 2.5% yesterday. Pretty sharp and desperate?

* Japan keeps its key interest rate at 0.1%.

* Come July 6, KLCI will be replaced and be known as FTSE Bursa Malaysia KLCI (30 largest main board companies based on investable market capitalisation. We will have a tough time getting used to it!

Time to invest in China?

The report below from Morning Money was written by Louis Basenese an Associate Investment Director of The Oxford Club and a regular contributor to Investment U. This article first appeared in Investment U a week back. Like Jim Rogers, this investment manager seems to be very bullish with China and even provided 11 reasons why he is keen in buying China shares. Well, is he too early to call China a BUY? I just understand China's urban unemployment rate jumped for the 1st time in 5 years to 4.2% as of December 2008. Also, there were over 550,000 Chinese laid off in the last 3 months of last year. What will it be for the up and coming GDP figures and other economic data? Ugly also. Me? I will keep watching...till it turns really ugly.

1) The truly “smart money” is buying, not selling.

To be fair, the reason Bank of America “took a little money off the table,” according to spokesman Bob Stickler, is because of its own financial condition and need to raise cash. Same goes for the Royal Bank of Scotland. Yet, looking past these institutions, the truly smart money is loading up on China. Mark Mobius, the king of emerging markets, sums it up best, “We’re having a wonderful time buying tremendous bargains.” Statistics from research firm EPFR Global indicate the rest of the smart money is following suit. Funds investing in emerging-market stocks raised their Chinese holdings to the highest level since 1995. We should, too.

2) Chinese stocks are cheap.

Ridiculously so. If legendary investors like Warren Buffett salivated over U.S. stocks trading at 12 times earnings, they should be rabid over Chinese stocks. Based on the MSCI China Index, the average Chinese stock trades for less than eight times earnings. Share prices are contracting, but earnings keep growing. Based on the severity of the sell off, you’d think every Chinese company was unprofitable and headed for bankruptcy. Yet the fundamentals remain rock solid. The average Chinese company is still growing earnings by 30%, according to a recent report in China Securities Journal. Compare that to the estimated 12% earnings decline in the fourth quarter for the companies in the Standard & Poor’s 500 Index, and the bargain valuations make even less sense.

3) Chinese investors learned a tough, but necessary, lesson.

During the height of the China mania, retail investors viewed the stock market as an ATM. They lined up by the millions to open brokerage accounts. But much like our infamous dot-com bubble, Chinese day traders and novice investors got a very painful reminder of what happens when the “Greater Fool Theory” reaches the last idiot. The important thing, however, is that the correction served a higher purpose. It began the process of flushing the extreme irrationality from the market. So we can be certain the next leg up will be governed by fundamentals, not hype.

4) Oil is much cheaper.

One of China’s biggest challenges was to keep a lid on inflation, while still maintaining its breakneck pace of economic growth. That was no easy task with oil at close to $150 a barrel, as the cost of shipping, food and fuel were rapidly increased. Keep in mind, China imports a net 3.3 million barrels of oil a day. Now that oil prices are down considerably, we can cross one big inflation risk off the list.

5) The economy is NOT in a recession.

Sure, it’s slowing down, but China is still on track for a solid 6% expansion based on analysts’ estimates. And 8% if you believe the government statistics. Regardless of who ends up being right, compared to the contraction in the United States, such a high rate of growth is downright explosive.

6) Massive foreign reserves.

The last time Chinese stocks were this cheap was during the Asian financial crisis. Back then, most Asian countries were running huge deficits. But this time the roles are reversed. As of December, China boasted of having $1.95 trillion in foreign reserves. And counting. If necessary, the government can deploy these surpluses to keep economic growth humming along.

7) Personal savings.

Unlike Americans that spend more than they earn, the Chinese save an amazing 35 cents of every dollar they bring in. This provides yet another cushion against any slowdowns. But also an enormous opportunity for future growth. As China’s economy develops, and affordable insurance and health care become ubiquitous, expect the Chinese to get comfortable spending more of their hard earned cash.

8) The consumer is just getting started.

The country’s burgeoning middle class, now the size of the entire United States, is just getting started. The McKinsey Quarterly estimates that it will take two decades before these nouveau riche reach their full spending potential. As we know from our own experience and prosperity - 70% of GDP in the United States is attributed to consumer spending - the consumer is an engine of economic growth. In other words, the global recessionary headwinds are no match for the Chinese consumer.

9) Forget what Westerners think, locals are optimistic.

We know consumer confidence plays a big role in the success of our own economy. It flat out stinks right now in the United States, and the economic conditions reflect that. But in China, it’s an entirely different situation. A recent survey from the Pew Research Center shows that most Chinese people (86%) feel positive about where their country is headed. And that’s up from 25% just six years ago. If they overwhelmingly see good things on the horizon, we should believe them.

10) The “mother of all stimulus plans.”

While the massive government stimulus package has yet to take hold in the United States, rest assured it will. The same goes for the $586 billion the Chinese government is pumping into its economy. As a fund manager for BlackRock Inc. (BLK) notes, China’s “got the mother of all stimulus plans” when you factor in the government spending, savings rates and the rapid decline in commodities prices.

11) The Best China Bets.

Make no mistake, the shooting-fish-in-the-barrel-stage of China investing is long over. Simply buying the iShares FTSE/Xinhua China 25 Index ETF (FXI) won’t cut it anymore. It’s too obvious.

So how do we play the next bull charge in China?

Well, last week, I offered up one compelling small-cap Chinese play, E-House Holdings Ltd. (EJ). I’d stick to that theme - small caps, with the strongest growth profiles. And that puts China Security & Surveillance (CSR), a leading provider of digital surveillance technology, and A-Power Energy Generation Systems (APWR), a power equipment company, at the top of my list. For those with a more conservative bent, I’d stick to large-cap, blue chip, best-of-breed China stocks - ones like China Mobile Ltd. (ADR: CHL), the world’s largest phone company. It sports a solid balance sheet, increasing profitability and a temporarily cheap valuation.

Whatever you do, don’t wait too long. The Chinese New Year holiday gets underway Jan. 25. When it’s over, don’t be surprised if the Chinese markets start fresh and get back to their winning ways.

I say that because the strong economic underpinnings, which lined investors’ pockets with gold from 2004 to 2007, remain well intact. Whether the next leg up will produce the same 450%-plus returns remains to be seen. But rest assured, the catalysts are in place to make it possible.

* Bird flu on the rise in China?

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* Bloomberg: Singapore economy may shrink to record 5% adding to pressure for stimulus.

* Toyota is poised to end General Motors' 77 year reign as the world's largest automaker when the US company reports on its 2008 global sales today.

HSBC replies

Of late, HSBC has been rumoured to require cash injection in order to keep its ship chugging along the stormy financial waters. Morgan Stanley for example, predicted the bank needs between USD20-30b of equity and halve its dividend in order to bolster its Balance Sheet. No recovery is anticipated in its results until 2011.

The news of the second financial bailout for the British banks and the staggering 70% fall of RBS yesterday compounded the already bruised European banks share prices, including HSBC. It is true as a 12 month analysis saw HSBC's share price peaking at HKD140 in May last year but has now gone down to HKD58. (refer here for share price movements). A drop of almost 60%.

HSBC has been "quick" to respond to the negative comments and says that it has ample of capital and do not need any help from anybody. It also added that, these "negative" analysts need to apologize once their predictions do not come true! Wow, we need more of such optimism(but truthful ones) in the market! Get ready your ang pow money to scoop the high dividend yield HSBC?

The Standard:Banking giant HSBC (0005) has refuted rumors that it is seeking capital support from the British government, saying it cannot "envisage circumstances" when such action would be necessary.

"HSBC has long been one of the world's most strongly capitalized banks and is committed to maintaining this position," the lender said in a statement in response to speculation that it would receive a cash injection when London announced yesterday a second bailout package for banks.
HSBC was on a list of lenders that could receive Bank of England funds in the first rescue plan unveiled in October. But HSBC rejected that offer, saying it had ample capital and needed no help from the central bank.

David Eldon, former chairman of Hongkong and Shanghai Banking Corporation, the local arm of HSBC, concurred saying the lender has no funding needs. He also said HSBC is only a victim of recent fund-raising activities by foreign banks.

Eldon cast doubt on statements by investment bank analysts that HSBC needs to raise funds, saying the London-based lender has always had a prudent policy regarding its capital base. Eldon said the analysts need to apologize once their predictions are proved wrong. Big investment banks including Morgan Stanley and Goldman Sachs have issued reports in recent weeks revising downward their forecasts on HSBC, and slashing their target prices for the lender's shares to as low as HK$52. They also predicted that the bank will cut dividends. Amid the bearish sentiment, shares of HSBC continued to nosedive in Hong Kong yesterday, losing 3 percent to close at HK$62.30, the lowest in more than 10 years. The bank's share price has shed around 15 percent since the beginning of this year.

Eldon also said he supports the Hong Kong Monetary Authority's proposal to take up all banking regulatory functions.


* Obama, the 1st Black President and the 44th President of the USA will be inaugurated today. Above. Dennis Haysbert played the accomplished President David Palmer in "24".

* YahooFinance: RBS expects full year loss up to 28B pounds due to a goodwill impairment charge related to the acquisition of ABN Ambro. The loss is probably the biggest loss ever by a British corporation.

* Forbes: South Korea's finance minister and top regulator replaced. President says reshuffle aimed at boosting economy.

* China Premier Wen says toughest year ahead since 2000.

* Jim Rogers said investors should be worried about USD, sell government bonds and buy raw materials, China stocks and the Japanese yen.

* FinancialDaily: Khazanah's December 31 portfolio down by 36.5% compared to 7 months ago. The investment now stands at RM33.7B. Also to note is Khazanah do not support LCCT in Labu plan.....??

Technical Analysis - January 19 2009

S&P500 (850, last week 890 or -4.5% w.o.w )

The daily index has succumbed to selling pressure during last week. The Daily MACD, MACD Histogram, Guppy MMAs, Parabolic SAR and DMIs (+ve and –ve) are all showing negative already. However, we cannot discount a short term rebound during this week. For the weekly readings, the MACD, MACD Histogram and Parabolic SAR are still positive but will eventually turned negative if the selling continues further. The weekly ADX trend and DMIs (+ve and –ve) are not bullish yet while Guppy MMAs is weakening. The market is at best range bound. Like others, the market is still stuck in a major downtrend channel created since November 2007. Support is around 800 and resistance at 890.

KLSE CI (896, last week 919 or -2.5% w.ow)

One of the remaining few markets that still have a positive gain for the year but this may not likely to last soon. The index is finding it hard to sit above the daily 50-day ema. The daily indicators are at a crossroad again with the MACD, Parabolic SAR, ADX trend and DMI (+ve and –ve) going into an early bearish tone. The weekly charts MACD and Parabolic SAR are still positive but will eventually turned negative if the selling continues further. The market will need to work hard to avoid indicators turning negative again. To be positive, the index needs to clear the 935 level (a 20-day ema) and as such will breakaway from the major downtrend channel created since January 2008. The index is expected to trade between 850 and 970.

HangSeng (13,256, last week 14,377 or -7.8% w.o.w )

The index is determined to go south again. All the daily indicators like Parabolic SAR, the daily MACD and MACD Histogram and Guppy MMAs are turning negative and will remained so unless the index goes up strongly this week. We could see a short term rebound this week. The weekly charts are still positive, especially the MACD, MACD Histogram and Parabolic SAR but will eventually turned negative if the selling continues further. Support is seen at 12,600 and resistance at 15,000.

Nikkei 225 (8,230, last week 8,837 or -6.9% w.ow)

Similar with S&P500 and HangSeng, the index seems determined to go south again. However, we cannot discount a short term rebound during this week. All the daily indicators like Parabolic SAR, the daily MACD and MACD Histogram and Guppy MMAs are turning negative and will remained so unless the index goes up strongly this week. The weekly charts are still positive, especially the MACD, MACD Histogram and Parabolic SAR but will eventually turned negative if the selling continues further. Support is seen at 7,500 and resistance at 9,500.

* YahooFinance: Buffett says US in "economic Pearl Harbour".

* Bloomberg: China economy probably grew at slowest pace in 7 years as export slump.

* After ending 22 days of conflict leaving more than 1,200 Palestinians and 13 Israelis dead, Israel and Hamas has both declared victory?

Smart Investing/Trading for the week ending January 16 2009

Weekly US Markets Update and Outlook

Market braces for inauguration and earnings

MarketWatch:The inauguration of President-elect Barack Obama might be the only boost for Wall Street next week, as a deluge of what are expected to be mostly bad corporate results and fresh reports on the state of the housing market starts pouring in.

"The stock market is a forward-looking animal that tends to move about five months ahead of the real economy, but right now its actions don't bode well for a recovery until late in the year at best," said Robert Kavcic, market strategist at BMO Capital Markets. With U.S. markets closed Monday for the Martin Luther King holiday, the trading week will kick off Tuesday. No economic reports are due that day, but there will be a slew of financial results, including those from IBM and Johnson & Johnson, two blue-chip stocks, and from regional banks, Regions Financial , State Street and U.S. Bancorp. Financial firms were already front and center in the market over the past week, as the likes of JP Morgan Chase, Bank of America, and Citigroup, all posted worse-than-expected results, with the economic recession further darkening the outlook for the already-embattled sector.

"Earnings are terrible and outlooks are cloudy," said Jack Ablin, chief investment officer at Harris Trust. "For financials, there are more worries ahead in my view."

For the week, the Dow Jones Industrial Average slumped 3.7%, the broad S&P 500 fell 4.7%, and the tech-heavy Nasdaq Composite lost 2.7%.

But stocks still rose Friday, for the second consecutive session of gains, with the Dow ending the session up 68 points at 8,281, the S&P 500 rising 6 points to 850 and the Nasdaq gaining 17 points to 1,529.

The government late Thursday approved a deal to provide an additional $20 billion in capitalization for Bank of America and to guarantee up to $400 billion in losses on real estate loans at both the Charlotte, N.C. lender and at Citigroup. Separately, Citigroup said it would split its operations in two. Although the stock market seemed poised to continue its late-year bounce into January, many market strategists are now trimming their expectations in the face of much worse-than-expected economic data, including dismal job losses in December, and the few earnings reports that have come out so far.

Earnings at S&P 500 companies are now expected to have tumbled 20.2% in the fourth quarter of last year from the year-ago period, according to Thomson Financial. Just a week ago, expectations were for earnings to fall 15.1%. The ratio of negative to positive pre-announcements has jumped to 3.6 to 1, its highest level since 2001, during the last recession. "And one of the themes for the fourth quarter is that earnings weakness is spreading," said John Butters, earnings analyst at Thomson. "During the early stages, most of the weakness came from financials but now, seven out of the 10 sectors of the S&P 500 are expected to post negative growth." Firms in traditionally defensive sectors, such as health care, consumer staples, and utilities are the only ones expected to have posted any profit gains during the fourth quarter.

Next week, 55 companies from the S&P 500 will report, with a lot of financial firms' results due out, along with a number of big names from the tech sector. Besides IBM on Tuesday, Apple Inc. and eBay Inc. will report on Wednesday, followed by Google Inc. and Microsoft Corp. on Thursday. Other blue-chip stocks due to report are United Technologies on Tuesday, and General Electric Co. on Friday.

Housing

The housing market, whose demise revealed the bad home loans that led to the credit crisis and pushed the economy into recession, will dominate the news on the economic data front next week. Wednesday will bring data on mortgage applications from the Mortgage Bankers Association, and the January housing market index from the National Association of Home Builders. On Thursday, December housing starts and building permits, which are forward-looking indicators, will be released. Also on that day, investors will continue to monitor a dismal labor market with the release of weekly jobless claims numbers.

The Obama factor

The inauguration of President-elect Obama on Tuesday could still provide a needed boost for the market, according to Owen Fitzpatrick, market strategist at Deutsche Bank. "The luster around Obama is quite big," he said. "It's like a light switch: out with the old, in with the new." Political momentum for the president elect's economic stimulus plan, now estimated at around $850 billion, might also accelerate. "It's now on the horizon," Fitzpatrick said. "The size of the package is large and it should lessen the impact of the recession."

Weekly KLCI Technical Update and Outlook

ICapital: The KLCI has rebounded nicely from its bear market low to kick start the year 2009 and it is now trading within a rising wedge formation. However, the nearby trendline that would act as a resistance level has somehow prevented the bull from continuing the recent rally. A break below the lower trendline will also likely trigger another wave of selling pressure and signal a resumption of the downtrend. With the catalyst to improve the global economic outlook still missing, the bottoming process for the KLCI will probably be drawn out over a multi-month time period. If it can follow through above the recent high, it could then ignite a sharp rally.

* ...PAS wins KT! ...second by-election win by Pakatan Rakyat after the March 2008's general election. Are we seeing a trend here for things to come?

* FT.com: Shift to dollar sees rouble reaching new low. Russia has since November last year devalued its currency 16 times to adjust for the collapse in the oil price.

* People are raising questions about the price gap between WTI and Brent.

* ECB cuts interest rate by 50 basis point to 2% .