Smart Investing/Trading for the week ending February 20 2009

US markets Update and Outlook

Stocks at the mercy of nationalization debate

MarketWatch: U.S. stocks are likely to face choppy waters next week, as the debate about whether or not to nationalize banks intensifies along with growing investor demand to rid the financial system of its toxic assets.

"Financial markets appear to be fixated on 'toxic' assets, and until they are removed from bank balance sheets, pressure will remain on the sector," said Benjamin Reitzes, an analyst at BMO Capital Markets. It's a week full of home sales and real-estate data, and Ben Bernanke heads to Capitol Hill for two days of testimony. Home Depot, Dell and others report earnings, and Microsoft has annual strategy meeting. Such concerns have helped drive the Dow Jones Industrial Average to fresh six-year lows. For the week, the blue-chip average fell more than 6%, marking its worst week since October of last year. The broad S&P 500 index fell nearly 7% for the week, while the Nasdaq Composite lost 6%.

A big chunk of the pain came from the financial sector, where Bank of America sank to new lows and Citigroup fell to an 18-year low on Friday amid concern the government may take over the banks, wiping out their shareholders. Senate Banking Committee Chairman Christopher Dodd on Friday said banks may have to be nationalized for a short time, according to Bloomberg News. But Robert Gibbs, the White House press secretary, said the Obama administration supports a privately held banking system. While the comments seemed to help financial shares come off their lows Fridays, stocks on Wall Street have again taken a turn for the worse since last week after Treasury Secretary's Tim Geithner unveiled a plan to help ailing banks.

Many analysts complained that the plan was short on details, specifically, on how the government would deal with the toxic assets that have plagued banks' balance sheets and the financial system for more than a year and a half.

"Unless investors are somehow convinced the assets are worth more or banks are willing to sell for less, the only option might be broad nationalization," BMO's Reitzes said in a note. Yet, he added, it was that very "prospect that helped drive U.S. banking shares to their lowest level since the early 1990s this week."

Not all asset classes lost over the past week, as investors seeking a safe haven led gold to top $1,000 an ounce for the first time since March of 2008. Still, the lack of follow-through from gold mining stocks isn't sending much of a bullish signal, according to some analysts. As commodity prices have plunged over the past year, the materials sector, which includes the shares of mining and chemical firms, has seen its profits collapse. In the fourth quarter, profits in the sector are down 82% from the year-earlier period, making materials the second worst performing sector of the S&P 500, after financials.

Overall earnings are now expected to have fallen 42.1% for the fourth quarter, according to Thomson Financial. This would mark the worst earnings growth rate since Thomson began tracking earnings 10 years ago. "The weakness is now spread out across multiple sectors and it looks to continue at least through the third quarter," said John Butters, earnings analyst at Thomson.

The first quarter is looking increasingly grim, with the ratio of negative to positive company forecasts jumping to 5.9 to 1, compared with a usual ratio of 2 to 1 historically.

Whereas health care, consumer staples and the utilities sectors had still posted slight earnings growth in the fourth quarter, all 10 sectors of the S&P are now expected to see their earnings fall in the first quarter, according to Thomson.

Next week, another 51 S&P 500 companies will report results, including Dow component Home Depot another update on the housing market, with the December S&P/Case-Shiller Home Price Index, followed by a survey of consumer confidence in February by the Conference Board. And Fed Chairman Ben Bernanke will deliver his semiannual report on monetary policy and the state of the economy, at the Senate Banking Committee. Wednesday will bring existing home sales figures for January, followed by new home sales date on Thursday. Also on that day will be data on durable goods orders for January and weekly jobless claims. On Friday will be a February manufacturing survey from the Chicago region, followed by another February reading of consumer confidence, this time by the University of Michigan. Also on Friday, will be a second estimate of gross domestic production in the fourth quarter. "Weaker business inventory and trade data suggest the second estimate for the fourth quarter GDP [...] will show a meaningful downward revision to something around negative 5% from the initial estimate of negative 3.8%," said William Knapp, investment strategist at MainStay Investments.

Weekly KLSE Update and Outlook

StarBizWeek(MarketWatch): The local bourse could not make much progress despite breaking out of the 21-week simple moving average for the first time in 12 months a week earlier, as investors were not enthusiastic to take up new positions due to frail offshore leads. Instead, they opted to book profit.

Despite that, Bursa Malaysia was holding quite well given the trauma the US market had been through the past week.

According to the daily chart, the recent breakthrough in the CI appears a half-hearted move for now and going forward; Bursa may just be range-bound due to limited participation from investors amid a dearth of market-stimulating news.

In short, there is still no solid confirmation of the recent bullish reversal but we will continue to look out for that.

While the weekly MACD is firming, the daily MACD is at a risk of flashing a sell. Given the tricky technical reading, the key index may channel sideways pending a new lead to emerge. Support 886, 860-863 and 835. Resistance at 925, 936.63, 946-950, 963.

* MarketWatch: Russian boom ends as resource wealth vanishes

* Japan leaves interest rate at 0.1%.

Smart Investing/Trading for the week ending February 13 2009

Weekly US Markets Update and Outlook

Stocks to cut their apron strings with Washington

Wal-Mart, economic data to dominate; bad-bank plan could still make waves

MarketWatch: U.S. stocks, at the beck and call of Capitol Hill in the past month, get a chance to cut those ties in the week ahead, as Congress heads home and a smattering of corporate and economic releases take over the calendar.

During a holiday-shortened week, earnings from Wal-Mart Stores Inc. and Deere & Co. round out a quarterly reporting season notable for the gallons of spilled red ink.

Investors on watch for early signs of an economic turnaround also will wade through two economic surveys on how business and the housing market are faring this month, plus January's industrial activity and inflation.

"Everyone knows that the economy is weak, but the consensus is that the economy will bottom in the summer," said Alec Young, equity strategist for Standard & Poor's equity research unit. "If you see the numbers miss, it makes it harder for investors to believe things will get better."

News out of the Beltway could still wreak havoc across traders' screens when they return from the President's Day holiday weekend Tuesday. U.S. Treasury Secretary Timothy Geithner could fill in the details of his recently announced plan to partner with private investors to wipe the bad assets off banks' books. Stocks sold off sharply in the past week, after analysts said the plan fell short of the needed fix for the beleaguered banking system.

Geithner has yet to detail how much the government will pay to take bad loans and securities off the balance sheet of banks. Too low a price for these illiquid assets would likely cause some banks to take a fresh round of charges, further pushing off a recovery in the financial system. "There will be a lot of speculation as to whether Geithner comes out with the details," said Greg Valliere, senior political strategist at Stanford Financial Group in Washington, D.C.

The Treasury or the FDIC could reveal how it plans to value toxic mortgage-related assets by rescuing a struggling financial institution, according to analysts.

For weeks, mixed sentiment about the progress of a second economic-stimulus package and the Treasury's bank plan has teased the benchmark indexes.
Optimism over both underwrote a rally in stocks during the first week of February. But the S&P 500 Index and Dow Jones Industrial Average gave back most of those gains in the past week, making spectacular intraday dives on Tuesday and Thursday, on disappointments that both programs would fall short.

The S&P 500 and the Dow both lost about 5% for the week ended Feb. 13.
Stock investors shut the door on one source of that volatility Friday, when Congress prepared to push through a sprawling, $787 billion stimulus package backed by President Barack Obama. He is expected to sign the bill into law on Monday. "It's going to be a quiet week because Congress is out," Valliere added.
Legislators heading home for the President's Day holiday typically take the week off to spend time with voters and donors.

Future news about the stimulus will involve details of its implementation, such as how "shovel-ready" infrastructure projects are and when certain tax changes will go into effect, Valliere pointed out. But for now, distraction from that legislation is likely to give ground to reports from the economy and corporations.

Wal-Mart, inflation

The world's largest retailer is expected Tuesday to report a lower profit for its fiscal fourth-quarter, hurt by higher expenses and a stronger dollar. Analysts expect Wal-Mart will earn 98 cents a share, excluding a charge from class-action lawsuits. Reports from retailers J.C. Penney Co. and Lowe's Co. follow later in the week.

Companies are closing the books on an earnings season that has made records for its dismal performance.

Reported earnings, which include one-time gains and charges, in the S&P 500 have lost $10.44 a share in the fourth quarter -- the first time companies in the index have ever posted a collective loss. Operating earnings are on track for the six straight quarterly decline. Companies have been struggling to project future quarters as the economy founders.

On Tuesday, surveys from New York area manufacturers and the National Association of Home Builders give traders a taste of how factories and the real-estate sector have been faring this month.

On Wednesday, the January industrial output report is likely to show widespread declines in U.S. manufacturing, particularly pressured by lower auto production. Housing starts, also out Wednesday, likely slid to a new all-time low. Also Wednesday, the Fed releases minutes from its last meeting and its economic projections.

The week ends with reports on January wholesale and consumer prices. Both indexes are expected to reflect slightly higher gasoline prices since December while continuing to underscore the risk of deflation. Most key economic data this week "will contribute further evidence to the decay in economic growth in this quarter," wrote Brian Fabbri, chief economist for North America at BNP Paribas, in emailed comments Friday.

Weekly KLCI Update and Outlook

StarBizWeek(MarketWatch): Despite overseas markets, especially the Dow experiencing great swing and volatility, trading on the local bourse was pretty stable, with the key index fluctuating sideways to marginally higher, catching many people by surprised.

According to the weekly chart, a positive development appears in the making. That is, the key index had penetrated the 21-week simple moving average for the first time in 12 months. Theoretically, the breakthrough would pave the way for more scaling but because the CI still is flirting around the breakout level, it is wise we seek further confirmation before everyone turns bullish again.

Technically, the uptick of the daily and weekly MACDs suggest Bursa Malaysia may firm gradually this week.

To the upside, the key index is expected to face resistance at 925 points, 936.63 points, 946-950 points, 963 points and the 970-973 point range.

Support is seen at 886-892 point range, followed by 860-863 points band and the next at 835 points.




* Xinhua: South Korea Exchange plans to sign an official agreement with the Cambodian government next week to launch the kingdom's proposed stock exchange market in December. More fresh blood to spill? .

Smart Investing/Trading for the week ending Februeary 6 2009

Weekly US markets update and outlook

Stocks pin hopes on rescue plans

Market rallies past dismal jobs numbers, with sights set on possible recovery
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MarketWatch: Investors are poised to start next week eager for plans from the government to boost the economy and rescue the financial system, which could help bulls cement a nascent February rally in stocks. Hopes that the market has already priced in much of a dismal outlook for the economy this year were also evident Friday, as stocks rallied past news that January saw the biggest loss of jobs since 1974.

"The market is possibly looking at what we see today and thinking that we can't get much worse than that," said Paul Nolte, director of investments at Hinsdale's Associates. "It's not yet expecting that things will get better, but at least not much worse." On Friday, the Dow Jones Industrial Average jumped 217 points, or 2.7%, to end at 8,280. The S&P gained 22 points, or 2.7%, to 868, while the Nasdaq Composite rallied 45 points, or 2.9%, to 1,591. After posting their worst January performance on record, stocks entered the month of February on a positive note. For the week, the Dow rose 3.5%, the S&P gained 5.2%, and the Nasdaq jumped 7.8%.

Part of the rally was supported by hopes that the Obama administration's economic stimulus plan was close to being passed by Congress. Late Friday, senators reached a tentative deal on a $780 billion plan, clearing the way for a vote over the weekend.

And on Monday, Treasury Secretary Timothy Geithner is expected to unveil the administration's plans to rescue ailing banks and hopefully tamp down the credit crisis that has crippled the financial system and the global economy the past year and a half.

While outlines of the plan remain sketchy, many holders of financial stocks fear that potential moves to nationalize banks could reduce their stake or wipe them out altogether. "There remains an outside chance the federal government could move to nationalize the banks or commit additional capital and thus require banks to halt interest payments on preferred shares or at the very least, dilute existing equity shareholders," said Robert Pavlik, market strategist at Oaktree Asset Management. Yet, absent of the exact details of the Treasury's prescription for change, financial shares still rallied over the past week on Wall Street, a bullish sign for the market, according to Pavlik. "The market's turnaround on a lack of concrete news is interesting," he said. "We believe it points to the hope that the Street has that investor optimism will once again return to the levels we saw back in November."

Depressed earnings

The market also seemed not overly concerned about weaker-than-expected earnings and even some drastically weaker outlooks from companies posting their quarterly results. With 309 companies from the S&P 500 having now reported, fourth-quarter earnings are expected to have slumped more than 40% from the year-ago period. This would mark the weakest growth rate since at least 1998, according to Thomson Financial, which began tracking the data that year. Just a week ago, earnings were expected to have fallen 35% in the quarter.

The outlook for the rest of the year has also weakened, with a drop of more than 28% now expected for the first quarter, a roughly 25% decline in the second quarter, followed by a drop of 10% in the third quarter. Most forecasters still expect modest growth for the fourth quarter. But that view currently seems in jeopardy, warns John Butters, earnings analyst at Thomson.

Next week, another 60 companies from the S&P 500 are expected to report, including one Dow component, Coca-Cola Co. on Thursday.

Economic blues

Next week will be light on economic reports, except on Thursday, when the government will report its January tally of retail sales. Dismal sales and outlook from U.S. retailers failed to prevent those stocks from rallying last week, as investors had already priced in very bad numbers. On Tuesday, Federal Reserve Chairman Ben Bernanke is expected to testify on the central bank's lending programs to ailing financial institutions. That same day, wholesale inventories and sales data for December are due. On Wednesday, the government will report trade data for December.

Weekly KLSE Update and Outlook

MarketWatch(TheStarBizWeek): Bursa Malaysia's principal index retraced from the recent high of 936.63 on January 7 to a low of 867.35 on January 23 in an apparent profit-taking activity before turning range-bound on consolidation.

According to the chart, the CI has been trapped within a moderate band. It will continue to trade in this way until a clear breakout or a breakdown is detected, with many investors adopting a cautious stance while volume stays low due to prevailing uncertainty.

Initial resistance is pegged at the 900-point mark, followed by the 100-day SMA of 914. A successful push above the recent peak of 936.63 will see the market experiencing greater volatility to the upside.

Important support is set at the 860-863 point band. If it is violated, the next lower floor of 835 points and the recent bottom of 801.27 will be become much weaker. Overall, the technical landscape is unclear but a slight improvement in the short term indicators suggest share may have a mild upward bias initially before pulling back later.


* It is steaming hot today isn't it? In Australia, the hot weather has caused the worst fire disaster in a quarter century and the death toll has now reached 84.
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* Australia's latest GDP estimates: 2009 : 0.5%, 2010: 2.5%

* IMF: China has potential to maintain 8% growth this year.

* Bloomberg: Japan won't print new currency to help stimulate the economy.

* RTTNews: Japan's foreign exchange reserves for January is USD1.011T(Dec USD1.631T)

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).

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% .

Smart Investing/Trading for the week ending January 9 2009

Weekly US markets Update and Outlook

Stocks turn to earnings as recovery hopes slip

Marketwatch: Investors will get their first taste next week of what's expected to be a gruesome earnings season, with a double helping of sour 2009 outlooks and even more evidence of the depth of the recession.

"There's disappointment about the prospect of the recovery," said Ken Tower, market strategist at Quantitative Analysis Services. "Earnings are now more likely to disappoint, and across the board, [companies] are slashing estimates going forward." Stocks fell on Friday, and posted steep losses for the week, after the government said the U.S. economy lost another 524,000 jobs in December, and the unemployment rate rose to 7.2%, confirming 2007 as the worst for the labor market since World War II.

The current market consensus is for the U.S. recession to bottom out sometime in the middle of this year -- but the latest signs from the labor market suggested to many that these forecasts might be too optimistic.

"I think that people are too optimistic about the recovery," Tower said. "A lot of bad news is already priced in but every time you get worse than expected news, the stock market will have to adjust." On Friday, the Dow Jones Industrial Average finished at 8,599.18, down 143.28 points, or 1.6%, for the session. For the week, the blue-chip average posted a loss of 4.8%. The S&P 500 lost 19.38 points, or 2.1%, to finish at 890.35, with the broad index losing 4.5% for the week. The Nasdaq Composite shed 45.42 points, or 2.8%, to stand at 1,571.59 Friday, leaving it down 3.7% from last Friday's close.

President-elect Barack Obama told a news conference on Capitol Hill the jobs report underlined the need for quick action on his proposed economic stimulus proposal.

"The new Obama Administration has been very quick to market their roughly $750 billion two-year stimulus package in the hopes of speedy implementation after the January 20 inauguration," said Sherry Cooper, chief economist at BMO Capital Markets.

"Even so, it appears that the squabbling on Capitol Hill will stall early passage, at least for a while," she said.

Next week, investors will key in to more economic data, especially the December retail sales numbers due out on Wednesday, and the Federal Reserve's Beige Book of economic conditions, released on the same day.

According to Marc Pado, market strategist at Cantor Fitzgerald, the stocks in the retail sector bear watching as they have shown signs of life over the past week, even after most retailers posted scary same-store sales numbers.

Earnings

In the quarterly reporting season that gets its unofficial start Monday, analysts polled by FactSet anticipate earnings for S&P 500 companies fell 12%, dragged down by double-digit drops in auto, retail and materials companies. Alcoa Inc., which kicks off the unofficial start of reporting season after the close of trading Monday, earlier this week said it planned to cut 13,500 jobs, close plants and chop capital spending by 50%. Intel Corp., another blue-chip stock often used as a barometer for both the tech sector and the economy, will report earnings on Thursday.

Weekly KLSE CI Update and Outlook

ICapital: The KLSE CI is above its 30-day and 50-day but below its 50-week moving averages. Its daily MACD and DMI are bullish. On weekly KLSE CI. The stock market had one of its worst years ever in 2008, with the KLCI falling 39.3%. However, the KLCI has actually been quietly attempting to build a base in the past couple of months from which a bottom may form with the 800-mark acting as support. Would the volume that picked up substantially amidst the New Year rally be a precursor to a new sustained bull market?

* Beware of fake RMB ..esp...RMB100 notes.

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* I am feeling worried....TheStar: Government departments ordered to drop austerity measures.

* Bloomberg: Bank of Korea cuts key interest rate to record low 2.5% as recession looms.

* Bloomberg: Morgan Stanley: Buy Won, Mexican Peso, Yuan as dollar shortage ease.

Smart Investing/Trading for the week ending January 2 2009

US Markets Update and Outlook

Year-end rally to get put to the test
As volume returns, will recent euphoria depart?

MarketWatch: Like so many New Year's revelers, the U.S. stock market may try to stick to its resolutions -- and fail miserably.

After a dismal 2008, U.S. stocks started out the new year with a splash. The Dow Jones Industrial Average on Friday rose above 9,000 for the first time since early November and finished 6% higher for the week, ending a four-week losing streak. But with many professional money managers home for the Christmas and New Year's holidays, the stock market made its recent moves in very light volume. The return of institutional money next week will determine whether these gains stick. "The real question is, is this going to last when traders come back from vacation?" said Doug Roberts, chief investment strategist at investment research firm ChannelCapitalResearch.com.

Every day next week, traders will get a dose of new corporate and economic news that may give them more insight into the depth of the U.S. recession and credit crunch. Items most likely to move stocks include minutes from the Federal Reserve's last interest-rate setting meeting, two big tech conferences, returning lawmakers' efforts on another stimulus package and Friday's job report.

Autos, Madoff

The trading week starts out with a bout of Detroit dolor, Capitol Hill head-cracking and the end of an era at Apple, Inc. On Monday, U.S. automakers disclose auto sales for December. Industry sales risk dropping below a rate of 10 million on a seasonally-adjusted annual basis, or the lowest for 2008. The Treasury Dept.'s move last week to grant $5 billion in bailout money to GM's financing arm GMAC LLC, which immediately prompted GM and GMAC to ease lending conditions for new auto loans, probably came too late to sway December sales, say analysts. Still, with General Motors Corp., Ford Motor Co. and Chrysler LLC executives making no secret of their problems in hearings last month, the market may shrug off auto sales data unless the expected drop turns into a freefall.

"People are obviously expecting pretty bad numbers," said Bill Stone, chief investment strategist at PNC Wealth Management. "The fear is that you get something far worse."

Also Monday, the House Financial Services Committee will hold a hearing on the $50 billion Ponzi scheme investment manager Bernard Madoff allegedly orchestrated. The panel, led by Barney Frank, D-Mass., says it will interview witnesses with an eye on making "the most substantial rewrite" of financial markets laws since the Great Depression.

TARP, Macworld

Any word from Washington on its efforts to stem the current financial crisis -- and prevent the next one -- is likely to pique investors' interest. President-elect Barack Obama and Democratic lawmakers say they want to pass a second fiscal stimulus package to create jobs and deliver tax cuts to low-wage and middle-income workers. Recent estimates of its size have ranged from $850 million to as much as $1 trillion. Plus, lawmakers are expected to enter a new round of wrangling over the uses of the $700 billion Troubled Asset Relief Program. The Bush Administration's decision to extend the financial system bailout money to automakers pushed total TARP payouts past $350 billion. The Treasury Department must now convince Congress, which is at odds over the best uses of TARP, to release the second half of the $700 billion.

The House Financial Services Committee will hold a hearing Wednesday on uses of the TARP. Separately, Treasury Secretary Henry Paulson is scheduled to speak on the government-sponsored mortgage agencies. For tech investors, the annual Macworld trade show kicks off Tuesday with a keynote speech by a top Apple official -- but not Apple CEO Steve Jobs. The announcement last month that Jobs would forego his traditional opening remarks sent Apple's stock tumbling as worries resurfaced about Jobs' health. This is also the last Macworld Apple plans to attend. The sector gets a doubly whammy of product news next week as Microsoft Corp., Cisco Systems, Inc. and other tech heavyweights head to Las Vegas for the annual International Consumer Electronics Show.

More job losses

Economic data starts to pile up Tuesday with releases on the services sector, pending home sales and minutes from the Federal Open Market Committee's Dec. 16 meeting. That's the meeting when policymakers threw everything they had at getting credit moving in the economy.

To a certain extent, those efforts seem to be working. Mortgage rates dropped, and yields on Treasurys steepened as investors clung less desperately to safe-haven assets. Spreads on corporate debt have narrowed slightly, suggesting investors are feeling a bit more comfortable lending companies money.

"I'm cheered by the fact that spreads have come in and mortgage rates have come down," said Stone. "But we'll see if it follows through when we actually have people trading." Economic indicators early in the week -- plus Wednesday's ADP employment report and jobless claims on Thursday -- are the opening acts for Friday's main show, the December unemployment report.

Economists are looking for more of the same sorry news on the economy. They expect about half a million jobs to have disappeared in December, contributing to a 5% to 6% drop in the fourth quarter's gross domestic product.

"As we turn into the new year, the message from the data flow is as straightforward as it is glum," said J.P. Morgan Chase economist Bruce Kasman in a report Friday. "We are in the midst of a deep global economic contraction, one that is likely to produce the sharpest four-quarter decline in global GDP in the post-World War II era." In corporate news, Constellation Brands Inc., Monsanto Co, Bed Bath & Beyond Inc. and KB Home are scheduled to report earnings. Chevron Corp.will release an interim production update.

KLCI Update and Outlook

BT: The composite index's daily trend continued to stay below its intermediate-term downtrend. It continued to stay below its intermediate-term downside support.

The KLCI ended the year on a rather weak note when it closed at 873.43 on December 31, posting a year-on-year loss of 571.60 points, or 39.56 per cent. The FBM Second Board Index tumbled 2,778.34 points, or 41.27 per cent, to 3,954.01 while the FBM Mesdaq Index plunged 2,863.91 points, or 46.88 per cent, to 3,245.25.

Its daily and weekly fast MACDs (moving average convergence divergence) continued to stay above the support of their respective slow MACDs at the market close yesterday. Its monthly fast MACD continued to stay below its slow MACD.

The index's 14-day RSI stayed at 60.87 per cent level yesterday. Its 14-week and 14-month RSI stayed at 35.39 and 32.02 per cent levels respectively.

The composite index staged an overhead breakout of its 50-day moving averages on December 30 and continued to stay above that at the market close yesterday. This signalled a shift in market momentum.

With the shift in market momentum to the upside, the KLCI is now staging a re-test of its previous resistance high of 926.65 set on November 5 2008. A decisive breach of this resistance is likely to see a major trend reversal.

Next week, the index's envisaged resistance zone hovers at the 897 to 930 levels while its immediate downside support is at the 856 to 890 levels.

* Back to school tomorrow! Happy learning and making new friends!

* RGE: DJIA's stocks performance in 2008 is the worse since 1931.

* AP: Singapore's economy shrinks 12.5% in Q4. Citigroup: " If we are correct, 2009 will mark the most severe recession in Singapore's history.

* RTTNews: Japan PM says the country will be the first to recover from the financial crisis.

* Too much to handle? Bursa experienced its 3rd technical(after the lunch break) glitch since Bursa Trade implemented more than 1 month ago.

Smart Investing/Trading for the week ending December 26 2008

US Markets Update and Outlook

U.S. stocks turn to final week of 2008
Investors likely to ditch worst stocks after market's 40% drop year to date

MarketWatch: The final week of the 2008 is unlikely to be as tumultuous for stocks as the year has been to this point.

But some economic data points might provide insight on the depth of the recession, and some selling is expected in the most battered stocks by investors seeking a break on their tax liabilities. "Next week, people will be finishing their tax strategies," said Hugh Johnson, chairman of Johnson Illington Advisors. "There will also be some rearranging of portfolios to prepare for the next year." As year-end nears, investors typically sell underperforming assets to offset tax liabilities.

This trend was partly at work over the past week, which saw the Dow Jones Industrial Average lose 0.7%, the S&P 500 index drop 1.6% and the Nasdaq Composite fall 2.2%.

And most investors probably won't have any trouble locating losing assets in their portfolios. Since the beginning of 2008, the Dow industrials have lost 35.8%; the S&P 500, encumbered by financials, is down 40.6%; and the Nasdaq Composite has fallen 42.3%.

In post-holiday trade Friday, the market managed to post gains in spite of grim results from the retail sector. Crude prices gained 6.7% to $37.71 a barrel, lifting the energy sector, after a four-session drop and a 33% drop thus far in December. The Dow industrials rose 47 points to finish Friday at 8,515, with shares of General Motors Corp. pacing the gainers. The Federal Reserve approved the request by GM's finance arm, GMAC, to become a bank holding company, clearing the way for it to receive aid from the government. Online retailer Amazon.com provided some cheer after saying its 2008 holiday season had been its best ever, in spite of grim results across most of the retail sector.

Economic woes

National retail estimates were more grim. Total retail sales dropped 5.5% to 8% for November and December, according to MasterCard's SpendingPulse. A 40% drop in the price of gasoline compared to December 2007 accounts for almost half of the decline. Excluding gasoline, total sales were down 2% to 4% this holiday season versus the same period in 2007.

"Everybody is going to watch the economic numbers looking for any signs that the consensus forecast is going to be right," said Johnson. "So far the consensus is that the economy will start to recover in the second half of 2009."

Meanwhile, more economic woes will likely be on display next week, with the release of the S&P/Case-Shiller Home Price Index, a manufacturing survey for the Chicago region, and a reading of consumer confidence, all due Tuesday. Wednesday will bring weekly jobless-claims data, an update on mortgage applications and crude-oil inventories. Markets will be closed, and no economic data will be released Thursday, New Year's Day. On Friday, a survey of the national manufacturing sector is likely to be closely watched. "Manufacturing has been plunging and we expect the ISM index to fall to 34 in December, pushing it below its 1982 recession low," economists at BNP Paribas said in a note.

According to Johnson, investors will try to read the tea leaves not only in forward-looking economic indicators but also in the economic policies of the incoming administration, as well as from the behavior of markets, including the battered credit markets.

KLSE CI Technical Update and Outlook

BT: The KLCI's brief technical rebound hit its intra-week high of 888.03 on Monday, moving into the confines of this column's envisaged support zone (879 to 913 levels).

Subsequent technical pullbacks sent the index to its intra-week low of 862.29 on Wednesday, staging a re-test of this column's envisaged support zone (839 to 873 levels).

Chartwise, the composite index continued to stay below the support of its immediate downside support for the sixth consecutive week. It continued to stay below its intermediate-term downtrend yesterday.

The index's daily trend continued to stay below its intermediate-term downtrend. It continued to stay below its intermediate-term downside support .

The KLCI's daily and weekly fast MACDs (moving average convergence divergence) continued to stay above the support of their respective slow MACDs at the market close yesterday. Its monthly fast MACD continued to stay below its slow MACD.

The composite index's 14-day RSI stayed at 49.29 per cent level yesterday. Its 14-week and 14-month RSI stayed at 29.36 and 29.10 per cent levels respectively.

The KLCI staged a failed attempt in trying to take out the resistance of its 50-day moving averages. A decisive break of the 50-day moving averages is likely to signal a major trend reversal. Until then, it will continue to consolidate within range-bound trading activities.

As it turned out, the traditional year-end window-dressing rally seemed to have run out of steam. With that, the KLCI will continue to consolidate within range-bound activities.

Next week, the KLCI's envisaged resistance zone hovers at the 870 to 904 levels while its immediate downside support is at the 830 to 864 levels.

* Worse one day death toll in Gaza in 6o years. Israel "air-tack" Hamas-ruled Gaza killing atleast 205 people, destroying 40 security compounds and wounding 700 Palestinians.

* South Korea sees unprecedented economic crisis looming!

* Bloomberg: Japan's recession deepens as industrial production falls most in 55 years.

* Thailand (SEA's second largest economy) plans to spend USD8.6b (or 3% of GDP) in stimulus package to boost growth. Malaysia? What slow down? We are still doing well and confident in achieving growth next year!!!!

Smart Investing/Trading for the week ending December 19 2008

US Markets Update and Outlook

Light on data, earnings - and maybe, cheer

MarketWatch: Stock investors looking for a little year-end cheer may instead find themselves finishing the holidays with another dose of bah, humbug. Events that helped stocks post mild gains in the past week - namely, government interventions to prevent an even worse recession - may be in short supply, as Congress stays on recess and President-elect Barack Obama vacations for the holidays in Hawaii. Instead, a smattering of economic news and earnings from Walgreen Co. and Micron Technology will shape trading in the holiday-shortened week. These days, however, it's what Washington says that matters most.

"Other than the government largesse, there's really no good news," said Alec Young, equity strategist at Standard & Poor's. "It's not surprising rallies are fading." Stocks posted modest advances last week, thanks largely to the Federal Reserve's decision to cut interest rates to near zero percent, a record low, and its promise to buy up more debt to rejuvenate the housing market. The White House's decision to lend U.S. auto makers up to $17 billion also gave a lift to the indexes.

But the next big item on Wall Street's wish list - progress on another fiscal stimulus package - is likely to wait until next year, analysts said.

Fewer trading days

If holiday fizz is in low supply, investors won't suffer for long. The New York Stock Exchange closes at 1 p.m. Eastern on Wednesday and is closed Christmas Day. Other markets also have curbed hours. When they do trade, uncertainty about the length and depth of the global recession is likely to dominate. Optimism that the recession may avoid the worst projections has driven stocks higher in recent sessions.

But these gains have often evaporated by the close of trading, as fears took hold. The Friday gave up a nearly 200-point lead to end 26 points lower "People are placing bets based on how long the recession will be," Young said. A lot of bad news has been factored in already, which has helped the S&P 500 and Dow avoid undercutting their November lows. "But we're not going to get much upside," he said, "until people get the sense that things are stabilizing." Stocks have lost about 35% to 40% this year.

Economy: durables, spending

On the economic front, durable goods orders are expected to have another significant decline as business caution has postponed any capital spending. New home sales should drop to the lowest level since the 1981-82 recession, and consumer spending should drop for the fifth month in a row. "Recent economic indicators suggest that the U.S. economy fell off a cliff in the fourth quarter," said Michael Moran, economist at Daiwa Securities.

The Treasury Dept. will also test investors' appetite to buy yet more government debt at low yields. It will auction $38 billion in two-year notes and $28 billion in five-year notes. Both will set records for size. The Fed's aggressive moves supported a rush into Treasurys this week, driving yields to record lows and shaving a nearly half percentage point from yields on the benchmark U.S. Treasury note.

KLSE Technical Update and Outlook

I Capital: The KLSE CI is below its 30-day, 50-day and 50-week moving averages. Its daily MACD is bullish but its DMI is bearish.

On weekly Plantation Index. In the past few weeks, we have seen the Plantation Index starting to rebound. Many might think this is a sign of bottoming out as it has retraced towards the 50-week moving average resistance. Also, the Plantation Index has been moving sideways over the past 2 months after the sharp fall, which is common in a strong trend. Afer sinking in the negative territory for months, the daily indicators have finally turned bullish and the weekly MACD has also made a bullish crossover. However, the oil price is still dropping, despite a record oil production cut by OPEC. Would the current period of consolidation continue or are we seeing a cyclical bottom?

* Happy Dongzhi - Tang Yuen (Winter Solstice) Festival!

* Sterling near parity with Euro! 1 euro = 95.5 pence

* BT: Malaysia November inflation slows to 5.7% (October 7.6%)

* MS: Malaysia's growth for 2009 will be 0.5%.

* The Straits Times(S'pore): Japan's growth for the year to March 2010 will be zero. It recently cuts key interest rate to 0.1% and said it would buy corporate debt as a deepening recession chokes off funding for business.

Smart Investing/Trading for the week ending December 12 2008

US Markets Update and Outlook

Auto bailout likely to steal limelight from Fed

Fed seen cutting rates; OPEC to cut production; Goldman, Morgan report

MarketWatch: Efforts to prop up the ailing U.S. auto industry, along with economic data that may provide fresh clues about the depth and duration of the recession, could outweigh investor interest next week in the Federal Reserve's interest-rate decision.

The possibility that a collapse of the Big Three automakers, General Motors Corp., Ford Motor Co. and Chrysler could plunge the economy deeper into recession rattled markets last week. "We're probably going to limp through next week as Washington tries to solve the auto bailout question," said Hugh Johnson, Chairman of Johnson Illington Advisors. "There will be a lot of attention on what the Fed does and what it says, but it won't be as important as what happens with the bailout." Senate talks on the package collapsed late Thursday, paralyzing a $14 billion federal loan package for the Big Three, which had been approved by the House of Representatives. Yet by Friday, the Treasury said it stood ready to provide funds for automakers until lawmakers consider a longer-term package next year.

Separately, Canada said it will provide CA$3.5 billion, according to reports. The assurance by the White House helped the market recover on Friday, with the Dow Jones Industrial Average finishing 64 points higher at 8,629, even as it lost 0.1% for the week.

The picture was brighter for the rest of the market. The S&P 500 climbed 6 points to end at 879 on Friday, giving it a 0.4% rise on the week. The Nasdaq Composite rose 32 points to 1,540, up 2.1% from a week ago.

Besides the auto bailout, investors have been hopeful that big infrastructure spending by the incoming administration of President-elect Barack Obama and by other governments around the world will help shore up economies and markets. "With fiscal stimulus all the rage around the world, it's no surprise that equity investors have bid up related industries," said Robert Kavcic, an analyst at BMO Capital Markets, in a note. "Among the top performers in the S&P 500 over the past month have been engineering, building products and construction materials, all up more than 20%."

Fed and OPEC cuts

The Federal Reserve is again widely expected to cut interest rates by another 50 basis points on Tuesday, bringing its key Fed funds rate down to 0.5%. The Organization of Petroleum Exporting Countries will also meet in Algeria on Wednesday, and is expected to deliver a big cut in production. Such expectations helped crude oil prices surge over the past week, providing support for the broad market as it lifted the shares of oil producers such as Exxon Mobil Corp and Chevron Corp. Crude-oil futures finished the week at $46.28 a barrel, posting a weekly gain of $5.47, or 13.4%, from last Friday's close of $40.81 barrel.

Economic data, earnings

Data on manufacturing in the New York region will be released on Monday, and for the Philadelphia region on Thursday. Monday will also bring the December housing market index from the National Association of Home Builders. Late Friday, Fitch Ratings downgraded the credit ratings of a number of homebuilders, citing the difficult housing environment and expectations that housing activity will be even more challenging than previously anticipated in 2009. Among those affected by the downgrades were KB Home. Besides the Fed decision, Tuesday will bring housing starts data for November. Wednesday will bring industrial production figures and the consumer price index for November. Weekly jobless claims data on Thursday will also be closely monitored. Last week, the labor market weakened further, with the number of first-time filings for state unemployment benefits jumping by 58,000 to a 26-year high of 573,000. The data showed that businesses are laying off workers at a rapid pace, and that finding employment is ever harder for those who've lost their jobs. also announced big job cuts on Thursday and the stock ended higher Friday, even as it fell for the week.

Next week, the two remaining U.S. investment firms Goldman Sachs and Morgan Stanley are expected to post big writedowns -- Goldman on Tuesday and Morgan Stanley on Thursday.

KLSE CI Technical Update and Outlook

ICapital on daily KLSE CI. It was moving in tandem with the other major indices admidst the disapointing outlook of the global economy. However, this past week, the KLSE CI has started to consolidate while consistently trending below the 30- and 50-day moving averages. Although the longer term indicators are still showing a grim picture, the daily indicators have somehow shown little improvement. Meanwhile, sentiment is now at a crucial stage as the series of measures launched by the US government to soften the credit squeeze is being watched for its ability to restore the normal functioning of the US economy.

* A beautiful view of Colmar Tropicale Hotel, Bukit Tinggi, Pahang amongst the hills. Politicians are jumping into the ban "hillside development" wagon! No more hillside projects here and there. Yeah....we will see.....

* Economic Intelligence Unit: Malaysia politically unstable, 2009 growth at 1.5%.

* Ms Russia Kseniya Sukhinova wins Miss World contest. Click here for photos.

Smart Investing/Trading for the week ending December 5 2008

Weekly US markets update and outlook

Washington may steal Wall Street's limelight
With no relief seen in economic data, eyes turn to more federal bailouts

Marketwatch:Stock investors can expect little relief from economic data or corporate reports in the week ahead, making Washington's efforts to fix the broken credit system the one possible bright spot.

The Dow Jones Industrial Average and S&P 500 come to grips with the magnitude of the problem, tumbled last week as a drumbeat of bad economic and corporate news increased the likelihood the U.S. economy was in the midst of a severe recession.

"It looks like the market is starting to are already starting to get baked into prices," said Russ Koesterich, head of investment strategy for Barclays Global Investors. Economists don't see much moderation on the recession front for the week ahead. Retail sales and consumer sentiment reports are expected to show large drops and multi-decade lows. Wholesale prices are forecast to have retreated -- generally a good sign -- but one that's due to plunging oil prices. Prices have dropped as depressed consumers and manufacturers have used less.

Similarly, the handful of companies scheduled to report earnings - including consumer-oriented firms H&R Block, Inc. Costco Corp. and CKE Restaurants -- will be hard-pressed to find something good to say about the U.S. spending environment. Their reports will follow the worst monthly job loss and the grimmest month for same-store sales in more than three decades.

The dismal economic and corporate outlook leaves the heavy lifting to Washington, D.C. Lawmakers are debating bailout requests from struggling carmakers General Motors Corp., Ford Motor Co. and Chrysler LLC

Also, investors will be keyed into any announcements from President-elect Barack Obama or House Speaker Nancy Pelosi, D-Calif., on the direction of another fiscal stimulus package.

And the Treasury and Congress are expected to make further proposals on direct aid to mortgage markets, say economists at IHS Global Insight. Announcements about an alphabet soup of programs to lower borrowing costs and make loans more available have rocked credit markets in recent weeks. Some of these programs have started to achieve their ultimate purpose -- driving rates down. Spreads to Treasurys on mortgage-backed securities and debt issued by Fannie Mae and Freddie Mac have fallen sharply since the Fed said it would buy this debt Nov. 25. Mortgage rates dropped to 5.53%, a January low.

Treasury yields have also sunk, to historic lows, with declines hastened by Fed Chairman Ben Bernanke's comments Monday that the Fed might buy up Treasurys to push rates down. But borrowing costs for companies whose debt isn't backed by the U.S. government have risen in many cases. That's one more sign that risk fears are still running high, say strategists. "You'll know when risk appetite comes back into the market when yields on Treasurys start to back up," said Koesterich. The 10-year Treasury yield last week hit 2.655%, the lowest since at least 1955. Thirty-year bonds touched 3.165%, the lowest since at least 1977.

Still, a rally in stocks on Friday, the same day the Labor Department said the U.S. destroyed 553,000 jobs last month, have given some strategists reason hope for a turnaround. "In view of the 'mild' reaction to the U.S. employment report today, a modest increase in risk appetite between now and the end of the year is still not completely out of the question," wrote Stephen Gallo, head of market analysis at Schneider Foreign Exchange Ltd. More willingness to take on risk usually bodes poorly for the U.S. dollar. Like U.S. Treasurys, it's benefited from a flow into safety assets.

The U.S. dollar index gained 0.6% last week. Despite a nearly 260-point, or 3.1%, gain on Friday, the Dow-30 ended the week 2.2% lower. The S&P 500 lost 2.3%.

Oil futures plunged 25%, their worse weekly loss since Jan. 1991.

Weekly KLCI Update and Outlook

ICapital: The KLSE CI is below its 30-day, 50-day and 50-week moving averages. Its daily MACD is struggling to stay bullish and its DMI is bearish.

This week, we continue to see endless developments such as the continued bailout of the US economy, interest rate cuts by China, BOE, ECB etc leading to a short-lived rally. Locally, Bank Negara also lowered its OPR to 3.25%, the first reduction in more than 5 years. However, the KLSE CI still ended lower in lacklustre trade. Technically, the weekly MACD is still bearish but it has stalled its fall. Has it reached a bottom or has it not?

* Tmn Bkt Mewah, Ampang landslides kills 4 people and evacuated thousands of residents. (site is just a few kms away from the Highland Towers disaster in 1993 where 48 people were killed. PM: Stop all hillside projects! I am quite sure we will very soon forget about it and happily approving it all over again!

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* Despite Paulson(US)'s calls for stronger RMB, some analysts were of the opinion it will not happen so soon as the currency is set to depreciate further. This is in view of the declining China exports and easier to tame inflation.

* TheStar Biz: South Korea's forex reserves fell to new lows with a drop of USD11.7b in November to USD200b (lowest since January 2005 when it was at USD199.7b). Japan's forex reserves meanwhile touches USD1T in November (October USD977.72b) on US Treasury gains as it came with lower yields.

Bloomberg: Interest rate cuts everywhere! Egs: NZ cuts its key interest rate to 5% from 6.5%. Thailand cuts its benchmark interest rate to 2.75% from 3.75%. UK cuts interest rate to its lowest since 1951 to 2% (from 3%) while ECB cuts to 2.5% from 3.25%.

* Bloomberg: Jim Rogers says commodities fundamentals are unimpaired and prices will rebound when a lack of new supply leads to shortages. Still so bullish?Merrill Lynch is predicting a USD25 per barrel for oil next year if China economy slumps. Oil is nearing USD40 per barrel now.

* US lawmakers will vote as soon as Tuesday on a proposal being worked out this weekend to help save the failing US carmakers.

Smart Investing/Trading for the week ending November 28 2008

US markets update and outlook





Stocks seek more gains on hopes worst is past
U.S. jobs report on tap along with interest rate decisions in Europe

MarketWatch: Stocks will enter the month of December with a sense of optimism that much of the dismal environment for corporate profits has already been discounted by the market, even as upcoming reports, including the key jobs report on Friday, are expected to show the economic picture is still worsening.

Next week, "we'll have a slew of economic numbers, including what I expect to be a rise to 6.7% in unemployment in November," said Peter Cardillo, market economist at Avalon Partners. However, "the market has already priced in another quarter or two of real bad economic news, and that things could start to stabilize in the second quarter" of next year, he said.

Dow's best 5-day gain ever

The market gained on so-called Black Friday, marking its fifth-straight session of gains, with grim prospects for retailers failing to dent optimism at the traditional start of the U.S. holiday-shopping season. The Dow Jones Industrial Average finished up 102 points, or 1.2%, at 8,829. While the blue-chip average fell 5.3% for the month of November, it jumped 9.2% over the past week. Even more impressive, the Dow gained 1,277 points, or 17%, in just five sessions, marking its best five-day percentage gain since 1932, and its best five-day point gain on record. The S&P 500 Index rose 8 points, or 1%, to 896 Friday. The broad index fell 7.4% in November, but it surged 12% for the week. The Nasdaq Composite Index gained 3 points, or 0.2%, to 1,535. The technology-heavy index jumped 11% for the week and had a monthly loss of 10.8%.

A turning point for the market seemed to start a week ago, with the market gaining more confidence as President-elect Barack Obama began unveiling his economic team. On Wednesday, Obama appointed former Federal Reserve Chairman Paul Volcker to head a newly created White House advisory post. "The pool of people the president-elect has chosen has been greeted well," said Ken Tower, market strategist at Quantitative Analysis Service. "Restoring confidence is an important step for the markets and the economy." Adding to the positive tone, the government stepped in to bailout Citigroup Inc., which allowed shares of the ailing bank to rebound 120% over the past week after plunging below $4 amid fear about its future. And continued hopes for a bailout of the U.S. auto industry also helped shares of General Motors Corp. to rebound over 70%.

On Tuesday, GM, Ford Motor Co. , Chrysler and other automakers will post what are again expected to be dismal U.S. sales for the month November. Over the past week, the Federal Reserve also announced it would spend $800 billion to buy debt in order to lower borrowing costs for consumers and home buyers. The move helped to send the yields on 10-year government bonds, which are used to benchmark mortgages, below 3% to their lowest level on record. "The market is getting the message that we're looking at a stabilization process," said Avalon's Cardillo. "The credit markets are likely to be behaving in a more normal way towards the end of the year." On Thursday, Fed Chairman Ben Bernanke is also expected to speak on housing at a Fed conference in Washington.

Data, central banks

On Monday, the Institute for Supply Management will release its manufacturing survey for November. Construction spending figures for October will also be released. Tuesday will feature U.S. auto sales while Wednesday will bring the November ADP employment survey of the private sector, productivity figures for the third quarter and the ISM's November survey of the service sector of the economy. Also on Wednesday, the Fed is expected to release its Beige Book of economic conditions, which is "likely to paint an even bleaker picture than the October report," as it captured a near seizure in credit markets "and the resulting knock-out punch to consumers and businesses," said Sal Guatieri, senior economist at BMO Capital Markets. On Thursday will be weekly jobless claims. Federal Reserve Chairman Ben Bernanke is also expected to speak on housing at a Fed conference in Washington. Also on tap, the European Central Bank and the Bank of England are expected on Thursday to make decisions on interest rates. Friday will bring the jobs report. BMO Capital expects the economy to have shed 350,000 jobs in November, and the unemployment rate to have risen to 6.8%, from 6.5% in October.

Weekly KLSE Plantation Index Update and Outlook

ICap: From a technical standpoint, the Plantation Index is now trying to engineer a rebound as it has been consolidating for about a month. Its weekly stochastic oscillator has finally strengthened to the neutral position after being flattish for three months. Its weekly MACD is also showing an initial uplift from the deep bearish territory. It looks like there is potential for further recovery. The Plantation Index has been moving in tandem with oil price, and thus, it is crucial for oil price to regain its glory to boost up the index. Are we still far away from this or is the selldown in commodity prices overdone?


* GM ends an endorsement deal with Tiger Woods worth USD7m per year to cut cost in order to survive in the prevailing market condition. Tiger has been with GM for the last 8 years.

* Malaysia's economy posted a growth of 4.7% in Q3(Q2 6.7%)

* Zeti: Malaysia will not slip into recession.

* BT: Genting getting more downgrades from research houses. Citi TP for Genting RM3.79 (from RM3.88) and JP Morgan TP RM3.70 (from RM6.40)