Austerity Is Dead........

ST Jimmy | Monday, May 21, 2012 | | 0 comments


Austerity is dead…. New printing of flat money/lower rate? (contributed by Chan Cheh Sing)

On 12th May 2012, the People’s Bank of China lowered the reserve requirement ratio by 50 basis points. It is the third cut in the reserve ratio so far in the current cycle of monetary-policy loosening, with the previous two cuts in November and February.
The ratio, or the level of deposits that banks in China must hold in reserve rather than lend out, will drop to 20% after the latest cut takes effect.
What is worrying the PBoC?

In April 2012, renminbi deposits fell by 465.6 billion yuan.  A year ago, they increased by 342.4 billion. This could only mean deposits were fleeing the Chinese banks, thereby reducing the amounts banks could lend. Also In April 2012, new renminbi-denominated lending fell 8.2% from the same month last year and 32.6%—329.6 billion yuan—from this March.

What will China government do?
·         Cut further. They may even ask the bank to cut lending rate.
·         Re-order huge infrastructure building.

In Europe, previous ruling parties are falling like snow. Those who support austerity are voted out. But, does that mean EU is ready to print money?

The bias is to print, to flood and to spend. But will it work to revive the economy globally??
The answer is to NO. (The problem is in the money transmission system, especially the institution)

Then which asset class will be a buy, which will be a sell?
·         If the fundamental is not going to be good (and go worse if the problem is prolonged), then bond is a buy. The emerging market local bond is a buy (do pay attention to currency swing, if your base currency is USD). Developed market will act as buffer to lessen volatility.
·         Gold will be sold off either EUR survives or EUR cracks. Both cases are a confident vote to flat currency.
o   If EUR survives, then the fear that EU will break up will dissipate, and confidence on paper currency will return.
o   If EUR cracks, then the EU17 members will go back and print their own currency. Then each country will defend their currency. This means they will not let gold be the medium of exchange… gold plunges.

·         Equity will rally… but not take recent high as seen from the QE I & II; there is a margin of diminishing return. 


The end.


















































LATEST IN GLOBAL ECONOMY

ST Jimmy | Sunday, May 20, 2012 | | 0 comments



GLOOM IN GLOBAL ECONOMY CONTINUES UNABATED FOR NOW

All is not well in the global economy; in fact all may likely loom into further tumult for the rest of the year, probably spilling into 2013 without sanguine signs of reprieve in the near term, if the latest commentaries and news reports are deemed as references to be relied upon.

Rather than presenting in an intense saturated narrative format, which is the usual style deployed by most media columnists, instead I prefer to list out some key developments in point outlines so that it is easier for readers to grasp my overview of the overall economic atmosphere. I now go straight to the points.

Ø  Asian currencies at large has witnessed the sharpest drop since last November as continuing concerns regarding the Europe debt crisis rallied a demand for USD, which is still considered the safe haven in event of unfavourable global trends. Strong market forces in favour of the dollar have added more frigid sentiments.

Ø  Investors are shying away – in fact drawing their money out – from riskier assets because of lingering concerns on economic recovery prospects and on Europe’s issues.

Ø  Due to discord among political leaders in Greece about austerity measures after the recent polls, Greece has been unable to form a government, thus paving for another election to be held.

Ø  Asian shares ended lower last Friday (May 18, 2012) due to concerns about the global economy, coupled with escalating banking crisis in Spain and political uncertainty in Greece that has fueled expectations of Eurozone breakup.

Ø  European parliament chief Martin Schulz has warned that the Greek economy could be devastated if Greece really goes for exit from Eurozone, and to him that would be “the beginning of an even more negative cycle.”

Ø  The jobless rate in Greece hit a new high in February. More than one in five Greeks and more than one in two youths are out of job. At more than 21% unemployment rate, nearly 1.1 million people are without job.

Ø  Germany, the big brother of Europe and Eurozone, experienced stagnant growth as at April.

Ø  Asia Pacific nations are experiencing slower growth emanated from troubled export markets and rising commodity prices, according to a United Nations report. The greatest threat to the region is the issue of debt default in the Eurozone.

Ø  China’s residential property prices fell in 46 out of the 70 cities tracked by the government in April from a year earlier.

Ø  The Chinese monetary authority cut banks’ reserve requirement for the third time in six months to support the Chinese economy which recorded in the 1st quarter the slowest growth pace since mid-2009. Goldman Sachs lowered the country’s 2nd quarter estimate to 7.9% from the earlier projection of 8.5%. Likewise, the growth rate for 2012 has been reduced from 8.6% to 8.1%.

Ø  Although Japan’s economy expanded faster than expected in 1st quarter due to boost from reconstruction spending, it is yet facing imminent slowdown in view of Europe’s crisis that would curtail export demand. Estimated growth rate of 2.2% in 2nd and 3rd quarters could trim down to 1.7% in 4th quarter.

Ø  Hiring in the US seemed to have picked up in April but at modest level, with new 163,000 jobs added into the market compared to 120,000 in March. However, this was not sufficient to further lower the unemployment rate now still standing at around 8.2%. An average of 246,000 jobs were created a month from December 2011 to February 2012 but significantly slowed down in March, which thus sparked worries that job growth was weakening. In fact, some people have given up looking for work. The current unemployment rate portrays a superficial picture of the unemployed situation. Those out of work but not looking for jobs are not included in the unemployed computation.

A friend who is in unit trust sales just told me that the forthcoming 2012 London Olympics commencing in early July should in some ways pep up economic activities not just for the UK, but also Europe to some extent? He expects the Asian markets to rally again and prices should pick up around September. He said this was the tip he received from his company’s fund manager. Well, I can only say, “Let’s wait and see.” The UK may definitely go into a hype of economic activities, especially tourism and retails related, for a while as the spin-off from the Olympics. But will there really be a positive impact to other regions?.......I do not really perceive how. Again, let's wait and see.

The end.

Quotable Quotes In Jovial Vein & Philosophical Vein

ST Jimmy | Sunday, May 20, 2012 | | 0 comments





It has been quite a while since I last shared some “quotable quotes”. For a change from the serious stuff, I thought it would be refreshing to start off triggering the jovial vein in us first. Let me now recite to you some humorous puns which I picked up from posters displayed on the walls of a pub n’ grill outlet. Here goes………
 
 
^ My dear wife ran away with my best drinking partner……….God, do I miss him!

^ The best way to avoid hangovers………stay drunk.

^ Who says I got a drinking problem? I drink, I get drunk, I fall asleep – no problems.

^ Confucius said: Seventy-year-old man marrying a 25-year-old pretty woman….. is like buying a new great  book for another man to read.

^ Ideal husband is one who doesn’t smoke, doesn’t drink, doesn’t’ party around, doesn’t flirt……..and doesn’t exist.

^ There are more old  “practicing” drunkards than old practicing doctors. Change your ambition to be a drunkard.

^ Written note in fainted drinker’s shirt pocket: I am an alcoholic. In case of emergency, get me a beer!

^ Drinker puts advertisement in a newspaper:  Bottoms up beer drinker seeks a perfect partner. To apply, please send photo of bottom.

Now, let’s look at some meaningful quotes………..

# If you want to start doing something new, you have to stop doing something old.

# If you don’t like something, change it. If you can’t change it, change the way you think about it.

# Money may not, status may not; but it’s by leaving a legacy behind for the benefit of others that will bring you lasting satisfaction.

# In “silent” office politics, you should……….
Observe more, listen more, gather more (materials for your reference file), speak less, involve less (matters not within your job scope). But when there’s a right opportunity to do so, fan hard to stir an unprecedented breeze that wakes up other people in the office.

# Only when knowledge is fully contemplated and reflected upon can it become your wisdom.

# A kind word is like a perfume; if we spray it on others, a couple of drops will stay in us.

# The more you want to be independent, the more you will desperately need to depend on somebody, someday in your life. Question is, who will be there out for you to depend on at that  time of need?

# How to build self-confidence? Take the challenge to expose yourself to trials, adversities and tribulations, and learn from them.

# Reciprocity is the pivot for effective work.

The end.





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