Junior
Take rice & sugar:
In 2007 & 1996, rice was 320USD per metric tonne, now around 560USD per metric tonne.
In 2007 & 1996, sugar was 11 US cents per pound, now is 22
URA property index, 1996 was 180, 2008 was 180, now 16X ?!
If you have 1million cash in the bank in 2007 until now, your purchasing power for sugar/rice is now halved, my dear friends.
Global recession is coming....
If there is a property bubble, than the GOLD BUBBLE or OIL BUBBLE is a lot lot BIGGER!
Originally Posted by jitkiat
Junior
Sounds more like inflation.
Then how would one equate Inflation with Bubble?
BE CENTRED BY ALL AT THE FRINGE OF THE CITY @
Newbie
I dun see the relationship between gold and property.
No doubt they are both investment but they are different class of investment, one being more liquid than the other.
But as for DOW and gold, they are equally liquid and hence could be seen as substitute investment for each other, hence you can compare these 2 together...
Suagr and rice is inflation...not cycle. Property there are cycle, which is more or less in line with economic cycle...160 does not mean it didn't increase in value...you are just comparing 160 against the peak of 180...if you compared against the bottom, 160 is already 30% higher leow...
Newbie
Singapore external trade contracted 21% on year in Q3
By Irene Chan, 938LIVE | Posted: 19 November 2009 1352 hrs
Photos 1 of 1 ">
Motorists travel over the bridge against the view of Singapore skyline.
SINGAPORE: Singapore's external trade contracted 21 per cent in the third quarter compared to a year ago.
The level of total trade reached S$199 billion in the three months to September.
This is higher than the previous quarter's achievement of S$178 billion.
Exports declined by 20 per cent while imports fell 23 per cent in the quarter.
Compared to the second quarter, total trade rose 8.4 per cent after adjusting for seasonal factors.
IE Singapore said the on-year decline in trade was due to both lower oil and non-oil trade.
Oil trade contracted 36 per cent on-year in the third quarter while non-oil trade decreased 15 per cent.
Overall, total trade declined 25 per cent in the first three quarters of this year.
The government has revised its trade forecast for this year to a contraction of between 21 and 22 per cent, an improvement from a previous forecast for a 21 to 23 per cent fall.
For the fourth quarter, trade is expected to continue on its recovery path.
And going into next year, the government projects trade to grow between seven to nine per cent, mainly due to higher projected oil prices and an expected recovery in global demand. - 938LIVE/vm
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3-5% growth in 2010
Robin Chan
The Straits Times
Thursday, 19 November 2009, 9.24 am
The economy is slated to grow between 3 and 5% in 2010. -- Photo: Samuel Ee
The Singapore economy is slated to grow between 3 and 5% next year, the Government has said in its first official forecast for 2010.
GDP for the 3rd quarter also expanded 0.6%, from the same period last year after contracting 3.3% in the second quarter, the MTI said on Thursday morning, confirming that Singapore is out of the recession.
On a seasonally adjusted annualised quarterly basis, the economy grew by 14.2% in the 3rd quarter, following growth of 21.7% in the 2nd quarter, with all major sectors registering positive growth.
The 3rd quarter performance was slightly lower than advanced estimates for 0.8% growth released last month.
The expansion was led by the manufacturing sector, which grew by 26.6% on a quarter-on-quarter annualised basis. Increased production of higher-value pharmaceutical ingredients led to a continued surge in biomedical manufacturing output, while the electronics cluster grew modestly on the back of continued restocking activities and an uptick in consumer demand for electronic devices.
Inflation was revised upwards and is expected to rise 2.5 to 3.5% next year on the back of higher HDB property values.
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Indian billionaires double
Agence France-Presse
New Delhi, Delhi, India
Thursday, 19 November 2009
The head of India's biggest company Reliance Industries, Mukesh Ambani, is once again the wealthiest person in India, with his net worth estimated at US$32 billion, an increase of 54% from 2008.
The number of billionaires in India almost doubled in the past 12 months to 52, mainly thanks to a recovery in global stock markets, a richlist from US magazine Forbes showed on Thursday.
'Happy days are definitely back again for India's richest,' said Naazneen Karmali, India editor for Forbes Asia, in a statement accompanying the India Richlist survey. 'This year's list shows yet again that when conditions in the financial markets and the economy are right, India has the scale and resources to produce billionaires faster than most of the countries on Earth.'
A rebound in the Mumbai stock exchange, which is up 76% since the start of the year, and continuing economic growth helped enrich the mostly male list of company owners, whose accumulated net worth is equivalent to a quarter of India's gross domestic product.
Last year, the number of billionaires halved to just 27, from 54 in 2007.
'In terms of absolute fortune, we are not at the level we had,' Mr Karmali said: 'We're back to 52, but in terms of wealth we have not recovered yet.'
The magazine also underlined the higher concentration of wealth in India compared with China. The 100 richest Chinese are worth US$170 billion (S$236 billion), less than their Indian equivalents at $276 billion.
Junior
Be patient ... the next push against Gold $1,000/oz. ... Oops! I mean Property Index 180 will be very soon ...
When the Integrated Resorts open, we will know whether they are going to SUCCEED !!!... or FAIL !!!
2009 is the calm-before-the-storm ... similar to 1989 and 1999 ... a very quiet year ...
Next year ... 2010 ... the two Integrated Resorts will open ... but we won't know immediately whether they will succeed SUCCEED !!!
But rest assured that, no matter what they say in public, these four people are on our side ...
...I'm scared ...... me too ..... daddy .... shut up ...
2011 will be the year of assessment ... similar to 1991 and 2001 ... when the troops of CondoSingapore Forum Investors face off against the Straits Times Forum Complainers to prepare for the final battle between Good and Evil ...
Don't worry, we have General Jet Li on our side ...
The Business Times Wed, Jun 17, 2009
Jet Li buys $20m Binjai Rise bungalow
Then ...
Junior
Be patient ... the next push against Gold $1,000/oz. ... Oops! I mean Property Index 180 will be very soon ...
When the Integrated Resorts open, we will know whether they are going to SUCCEED !!!
2009 is the calm-before-the-storm ... similar to 1989 and 1999 ... a very quiet year ...
Next year ... 2010 ... the two Integrated Resorts will open ... but we won't know immediately whether they will succeed SUCCEED !!!
But rest assured that, no matter what they say in public, these four people are on our side ...
...I'm scared ...... me too ..... daddy .... shut up ...
2011 will be the year of assessment ... similar to 1991 and 2001 ... when the troops of CondoSingapore Forum Investors face off against the Straits Times Forum Complainers to prepare for the final battle between Good and Evil ...
Don't worry, we have General Jet Li on our side ...
The Business Times Wed, Jun 17, 2009
Jet Li buys $20m Binjai Rise bungalow
Then ...
My feeling tells me next year, seems not too long a wait
Newbie
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Chinese growth is likely to be hurt by an absence of consumer demand from trading partners such as the U.S. "The Chinese, I suspect, will have a bubble of their own to confront," Gross said in a Bloomberg Television interview yesterday from Pimco’s headquarters in Newport Beach, California. "It’s gearing up for export that doesn’t find an end consumer, that’s the real problem in China."
The "systemic risk" of new asset bubbles in global economies and markets is rising with the Federal Reserve keeping interest rates at record lows, Gross wrote in his December investment outlook posted on Pimco’s Web site yesterday. Under what Pimco has termed the "new normal," investors should be prepared for lower-than-average historical returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy.
"With unemployment in the double digits and likely to stay close to that for the next six months despite job creation ahead, the Fed has nowhere to go," Gross, co-founder and co- chief investment officer of Pimco, said on Bloomberg Television.
Fed Chairman Ben S. Bernanke said after a Nov. 16 speech in New York that it’s "not obvious" that asset prices in the U.S.
are out of line with underlying values after a 64 percent jump in the Standard & Poor’s 500 Index from its March low.
Negative Rates
Treasury three-month bill rates turned negative yesterday for the first time since financial markets froze last year on concern that the rally in higher-yielding assets has outpaced the prospects for economic growth. The two-year note yield touched 0.68 percent, the least since Dec. 19.
The Fed cut its target rate for overnight lending between banks to a range of zero to 0.25 percent in December. Policy makers reiterated on Nov. 4 that they intended to keep the rate at the record low for an extended period.
The "heavy lifting" will likely be done first by other central banks such as those in Australia and Norway that have already begun to increase interest rates, Gross wrote. "China may abandon its dollar peg within six months’ time and with it, its own easy monetary policy that has fostered more significant mini-bubbles of lending and asset appreciation on the Chinese mainland," he added.
China’s Currency
China has kept its currency at about 6.83 per dollar since July 2008 to help sustain exports amid a global economic slump. China’s trade surplus in October almost doubled from the previous month, to $24 billion. The nation, with the world’s largest foreign-exchange reserves of $2.3 trillion, is the biggest creditor to the U.S., holding $798.9 billion of Treasuries as of September. "With renewed upward appreciation of the yuan may come potentially volatile global asset price reactions to the downside -- higher Treasury yields, and lower stock prices -- which the Fed must surely be leery of before making any upward move, of its own," Gross wrote.
The U.S. economy grew in the third quarter for the first time in more than a year as gross domestic product increased 3.5 percent from July through September after shrinking the previous four quarters, a Commerce Department report showed on Oct. 29.
Gross advised following the lead of billionaire investor Warren Buffett on buying utilities because their earnings growth will mimic U.S. economic growth and provide steady dividend income. Buffett’s Berkshire Hathaway Inc. agreed this month to take over Burlington Northern Santa Fe Corp., the No. 1 U.S. railroad, for $26 billion.
Fund Returns
The Total Return Fund managed by Gross boosted its investment in Treasuries, so-called agency debt and other government-linked bonds to 48 percent of assets in September from 44 percent in August, according to Pimco’s Web site. The holdings were the most since August 2004.
The $192.56 billion Total Return Fund returned 18.29 percent in the past year, beating 54 percent of its peers, according to data compiled by Bloomberg. The one-month return is 1.11 percent, outpacing 59 percent of its competitors. Pimco is a unit of Munich-based insurer Allianz SE.
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“为了取得持续的增长，中国应该加快让经济增长转向国内私人消费的步伐，不再依赖美国消费者来取得增长。这也对其他亚太经济体有益，包括了亚细安经济体 (ASEAN)。”
—
... 摩根士丹利亚洲主席 史蒂芬·罗奇
... Stephen Roach, Morgan Stanley's Asia Chairman
Newbie
We can RA RA down here all we want but despite all these euphorism that we see on this forum, in reality, people are paying to place their money with govt than for the govt to pay them for lending them money.
U.S. stocks extended a global drop as concern grew that the rally has outpaced the prospects for economic growth. The yen and the dollar strengthened, oil tumbled and yields on Treasury three-month bills turned negative for the first time since financial markets froze last year.
The MSCI World Index of equities 23 developed countries dropped 1.7 percent at 4:31 p.m. in New York, its steepest loss this month. The Standard & Poor’s 500 Index fell 1.3 percent to 1,094.90 as Bank of America Corp. downgraded chipmakers, sending Intel Corp. and Texas Instruments Inc. down at least 3.4 percent. The yen climbed against all 16 of its most-traded counterparts and the Dollar Index rose as much as 0.5 percent. Aluminum and copper led declines in industrial metals.
Stocks slid amid speculation the eight-month, 68 percent rally that drove the valuation of the MSCI World Index to the most expensive level in seven years already reflects forecasts for a 25 percent rebound in corporate earnings next year. The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year to 1.9 percent in a report today, while saying that mounting debt burdens will keep the expansion in check. "It makes perfect sense that the market’s going to take a little bit of a breather," said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. "Sentiment had gotten a little too bullish."
Fall From Peak
The S&P 500 retreated from a 13-month high for a second day even as the Labor Department said the number of Americans filing claims for unemployment benefits held at a 10-month low and the Federal Reserve Bank of Philadelphia’s general economic index rose more than estimated. The Dow Jones Industrial Average lost 93.87 points, or 0.9 percent, to 10,332.44. Rates turned negative on some bills maturing in January, according to Sarah Sobeck, a Treasury trader at primary dealer Jefferies & Co. The three-month bill rate was at 0.0051 percent, the least this year. Six-month bill rates dropped to the lowest since 1958. Treasury bills turned negative last December for the first time since the government began selling them in 1929 as investors scrambled to preserve principal and were willing to sacrifice returns in the months following the collapse of Lehman Brothers Holdings Inc.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the "systemic risk" of new asset bubbles is rising with the Fed keeping interest rates at record lows.
‘Painful Level’
"The Fed is trying to reflate the U.S. economy," Gross wrote in his December investment outlook posted on the Newport Beach, California-based company’s Web site today. "The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher-risk bonds or stocks."
The two-year note yield fell five basis points to 0.70 percent at 4:24 p.m. in New York, according to BGCantor Market Data. The 1 percent security due October 2011 rose 3/32, or 94 cents per $1,000 face amount, to 100 18/32. The yield touched 0.6759, the lowest since Dec. 19. It fell to an all-time low of 0.6044 percent on Dec. 17.
Today’s slide in the S&P 500 was the biggest since Oct. 30, when the benchmark for U.S. stocks dropped 2.8 percent. Intel, the world’s largest maker of semiconductors, fell 4.1 percent and Texas Instruments, the second-biggest, dropped 3.4 percent. Dan Heyler, head of Asian semiconductor research at Merrill, said the supply of chips is growing faster than demand, putting earnings at risk. Intel and Texas Instruments were lowered to "neutral" from "buy" and the global chip industry was cut to "negative" from "positive."
Chip Stocks, Alcoa
Semiconductor stocks in the S&P 500 lost 3.7 percent as a group, the largest tumble among 24 industry groups. Alcoa Inc. declined 3.9 percent for the second-steepest drop in the Dow as aluminum, copper, lead, nickel and tin all retreated. ConocoPhillips, the third-largest U.S. oil company, slipped 1.9 percent and Chevron Corp. lost 2 percent as crude fell for the first time in four days. Schlumberger Ltd., the world’s biggest oilfield-services provider, lost 3.3 percent. Crude for delivery next month tumbled 2.6 percent to $77.50 a barrel. Energy producers in the S&P 500 fell 2.1 percent as a group, the biggest drop among its 10 industries. Technology shares, the largest group in the index, lost 1.6 percent and contributed the most to the decline.
‘Grossly Overvalued’
Bank shares slid after Meredith Whitney, the analyst who correctly predicted in 2007 that Citigroup Inc. would cut its dividend, said lenders "are still grossly overvalued" and reliant on government purchases of mortgage-backed securities. JPMorgan Chase & Co., the second-largest U.S. bank, and Wells Fargo & Co., the fourth-biggest, each dropped 1.9 percent. The S&P 500 Financials Index slumped 2 percent. Writedowns of mortgage-backed debt contributed to a combined $1.7 trillion of losses by financial companies globally since the beginning of 2007. Mortgage delinquencies have continued to rise as job losses render consumers unable to stay current on their debt payments. One out of every six home loans insured by the Federal Housing Administration was late by at least one payment and 3.32 percent were in foreclosure in the third quarter, the highest for both since at least 1979, the Mortgage Bankers Association said today.
Europe’s Dow Jones Stoxx 600 Index fell 1.7 percent in the first three-day decline this month after Groupe Danone SA, the world’s largest yogurt maker, cut its forecast for annual sales growth. The company cited "profound" changes in consumer spending. Danone lost 4.4 percent in Paris.
Share Sales
Asian stocks declined, dragging the MSCI Asia Pacific Index down for a third day, as share-sale plans at Japanese companies raised concern the value of existing holdings will be reduced. Mitsubishi UFJ Financial Group Inc. sank 3.7 percent and Nomura Real Estate Residential Fund Inc. slumped 8.6 percent after filing to sell stock. Sixty-five percent of companies in the MSCI World Index that reported earnings since Oct. 7 have beaten analysts’ estimates, Bloomberg data show, and 80 percent of S&P 500 companies have topped estimates. The two indexes have rallied since March 9 on signs government stimulus policies and record- low interest rates are helping to pull the global economy out of the recession.
Fewer ‘Buy’ Ratings
The MSCI Emerging Markets Index dropped the most in a week, losing 1.4 percent. Emerging-market analysts cut "buy" ratings on Brazil to 44.6 percent this month, the lowest since Bloomberg began tracking them in 1997, after a 139 percent surge in the benchmark Bovespa Index pushed equities to their priciest levels in six years. Brazil’s Bovespa Index lost 0.3 percent today.
The yen appreciated 0.6 percent against the euro and 0.3 percent against the dollar. The dollar advanced 0.3 percent to $1.4916 versus the euro as it strengthened against all 16 major counterparts except the yen. "The yen and U.S. dollar have been supported by the continued upturn in risk-averse conditions," Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a report. "Current conditions remain unfavorable for risk assets, leaving them vulnerable to a correction lower."
The combined economy of the OECD’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the Paris- based organization said. Output will contract 3.5 percent this year. The 2010 forecast compares with the 0.7 percent growth predicted by the OECD in June, when the major economies were just beginning to emerge from their worst recession in more than half a century.
Losing Confidence
President Barack Obama said in an interview with Fox News recorded in Beijing that the U.S. must get the federal deficit under control. If the government continues to pile up debt, "people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession," he said. Sales of coupon-bearing Treasuries will increase to $2.38 trillion in the fiscal year that began Oct. 1, from $1.81 trillion in the prior 12 months, primary dealer Goldman Sachs Group Inc. said in a report on Oct. 20.
The U.S. will auction $44 billion of two-year notes on Nov.23, $42 billion of five-year debt on Nov. 24 and $32 billion of seven-year securities on Nov. 25. The $44 billion in two-year notes matches a record and the five- and seven-year amounts are both records.
Last edited by kali-yuga; 20-11-09 at 08:54.
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World economy rebounds
Agence France-Presse
Paris, France
Thursday, 19 November 2009, 6.18pm
The OECD report on the global outlook concealed a big surprise in a table of data showing that at the current rate of recovery, worldwide activity will be back to normal within 25 months' time. - Photo: AFP
China, Asia and the United States are pulling the world out of an economic vortex with surprising 'modest' speed, the OECD declared on Thursday.
Asian economies underpin the recovery, and the United States is in the midst of a sudden rebound, switching to expected 2.5% growth next year from 2.5% recession this year.
But leading economies are now in an exit dilemma over huge debt and rescue spending. The recovery is uneven, unsteady and unpredictable, the OECD said.
This assessment was mirrored earlier by US President Barack Obama in comments during his Asian trip on the need to support recovery but contain debt.
He said it was important to recognise 'that if we keep on adding to the debt, even in the midst of this recovery, that at some point people could lose confidence in the US economy in a way that could actually lead to a double-dip recession.'
The OECD report on the global outlook concealed a big surprise in a table of data showing that at the current rate of recovery, worldwide activity will be back to normal within 25 months' time.
Newbie
For thos e whom believe in decoupling and China being our saviour.....
Commentary by William Pesek
July 3 (Bloomberg) -- So you think China’s 6 percent growth will power a global recovery. Think again.
Economists, for example, can’t put a gloss on how ugly Japan’s data are getting. Exports and output are plunging, unemployment is at a 25-year high and those all-important summer bonuses are evaporating. The best we can say is that sentiment among large manufacturers was less gloomy in June than expected.
Where is that smidgen of hope coming from? China, which rarely misses a chance to declare victory over the global recession. Officials in Beijing say stimulus spending and record lending are sparking a recovery in the third-biggest economy.
Export-led Japan would seem perfectly placed to benefit.
That is, until you check the evidence. Shipments to Japan’s biggest trading partner fell 29.7 percent in May, more than April’s 25.9 percent. It suggests China’s growth isn’t helping the rest of Asia very much.
China acted quickly to shield its economy from the global crisis. Manufacturing in May expanded for a fourth month.
Central bank Governor Zhou Xiaochuan says things may keep improving in the third and fourth quarters. It’s also worth noting that Japanese exports to China are falling less severely than elsewhere. Shipments to the U.S. fell 45.4 percent in May. Exports to Europe slid by the same amount.
No Engine
China isn’t turning out to be an engine of growth for Asia. One possible explanation is protectionism, as China works to encourage exports while curbing imports. The country objects to the "Buy American" provisions in U.S. stimulus efforts, yet it is using similar tactics. Another reason may be that China’s revival is more spin than reality. Either way, talk that China would feed the "green shoots" dynamic that Federal Reserve Chairman Ben Bernanke introduced into Wall Street’s lexicon four months ago isn’t working out.
Nor will the Asia-decoupling theory that’s being resurrected. Yes, Asia is less reliant on the U.S. than it was a decade ago. Its fortunes are still intricately tied to what happens in the $14 trillion U.S. economy. The longer the U.S. is on its back, the harder it will be for Asia to maintain modest growth.
One reason for a resurgence of the decoupling argument so convincingly debunked last year is actual growth. Even with the U.S., Europe and Japan mired in recession, economies in China, India, Indonesia, the Philippines and Australia are still expanding. That’s impressive given the state of credit markets.
Fast Forward
Fast-forward one year, though. If the U.S. economy is still weak in July 2010, Asia will have a hard time supporting growth from within. At the moment, stimulus efforts are starting from a low base. Over time, government spending and low interest rates may get less traction.
The Asian market won’t close the gap. Much of the region’s internal trade involves intermediate goods used in the production of other products -- many of which go to the U.S. and Europe. A world without growth will force Asia to retool economies toward greater domestic consumption without the cushion of robust demand.
What’s more likely is an inward-looking period as opposed to regional cooperation. Groups such as the Association of Southeast Asian Nations talk a lot about linking their combined fortunes and outlooks. Meetings, photo opportunities and communiques don’t hide the stark reality that Asian economies compete more with each other than join hands.
‘Buy China’
China has been expanding efforts to help exporters with bigger tax benefits, loans from state-owned banks and other steps. Many "Buy China" directives are coming from Beijing. And don’t expect China to allow the yuan to appreciate much in the second half of 2009, regardless of market pressures. Such policies suggest China is losing confidence in its 4 trillion-yuan ($585 billion) stimulus plan. They are also a reminder of the limits to governments’ ability to boost growth with public largess alone. Growth may slip as stimulus spending wanes amid political opposition to a widening fiscal deficit, says Ma Jun, Deutsche Bank AG’s Hong Kong-based China economist. That casts doubts on predictions that Chinese gross domestic product will expand 8 percent in 2010.
The omnipotent reputation many assign to leaders in Beijing is being challenged. Take this week’s Internet fiasco. China postponed the deadline for personal-computer makers to include state-backed anti-pornography software on new PCs after U.S. officials and business groups urged it to scrap the rule.
China is normally a model of implementation. The speed with which it builds state-of-the-art airports, high-speed rail lines and Olympic stadiums is impressive by any scale. Its censorship efforts were exactly the opposite: sloppy and ill-considered.
Economic-stimulus efforts appear to be benefiting from greater competence. That may be a boon for 1.3 billion Chinese trying to get a share of the nation’s growth. The benefits for those outside China are much more limited.
And if the fate is so tightly link, read this........
By: Jeff Cox
CNBC.com
As experts debate the potential speed of the US recovery, one figure looms large but is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.
According to the government's broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994. The number dwarfs the statistic most people pay attention to—the U-3 rate—which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983.
The difference is that what is traditionally referred to as the unemployment rate" only measures those out of work who are still looking for jobs. Discouraged workers who have quit trying to find a job, as well as those working part-time but looking for full-time work or who are otherwise underemployed, count in the U-6 rate.
With such a large portion of Americans experiencing employment struggles, economists worry that an extended period of slow or flat growth lies ahead.
"To me there's no easy solution here," says Michael Pento, chief economist at Delta Global Advisors. "Unless you create another bubble in which the economy can create jobs, then you're not going to have growth. That's the sad truth."
Pento warns that forecasts of a double-dip ("W") or a straight up ("V") recovery both could be too optimistic given the jobs situation.
Instead, he believes the economy could flatline (or "L") for an extended period as small businesses struggle to grow and consequently rehire the workers that have been furloughed as the U-3 unemployment rate has doubled since March 2008.
As that trend has happened, the U-6 rate has expanded at an even more dramatic pace. Economists cite several reasons for the phenomenon.
For one, more workers are becoming discouraged as real estate—the focal point for the expansion in the earlier part of the decade—has collapsed and taken millions of directly related and ancillary jobs with it.
Many workers believe those jobs aren't coming back, and have thus quit looking and added themselves to the broader unemployment count.
"In the earlier part of this decade, 40 percent of all new jobs created were in real estate. Attorneys, mortgage brokers, agents, construction—they were all circled around housing," Pento says. "We've had a jobless recovery in the last two recessions. This is going to be the third jobless recovery in a row."
Another factor that may be leading people onto the rolls of those no longer looking for jobs is the government's accommodative extensions of jobless benefits. "Workers are unemployed for a much longer span than we've seen historically," says David Resler, chief economist at Nomura Securities International in New York. "Part of that may be affected by the longer availability of benefits. It reduces the incentives for an urgent job search."
The U-6 rate debuted in January of 1994 at 11.8 percent, while the U-3 was at 6.6 percent. The measure hit a low of 6.9 percent in April 2000 while U-3 sat at 3.8 percent.
While the current methodology only dates back 15 years, a former U-6 gauge was in existence previously and peaked at 14.3 percent in 1982. Economists predict the current measure would fall just below that number using the same methodology.
"We're in the process of discovering how severe this recession and the long-run impact on certain industries will be and what that will do to overall employment," Resler says. The U-6 rate "portends a very slow, sluggish recovery."
If that holds and the US economy stays weak, that presents challenges for investors. "People focus too much on that 10 percent number and not on the larger number," says Kevin Mahn, chief investment officer at Hennion & Walsh in Parsippany, N.J. "There's a humongous inventory of people out there looking for work and have been looking for work for a long time. Where are those jobs going to come from?"
Newbie
The dark side of the BRICs
Commentary: What goes up, comes down harder
By Howard Gold
NEW YORK (MarketWatch) -- Emerging market stocks have been the stars of the global market rally, and the BRICs (Brazil, Russia, India, and China) have set the pace.
Since their lows in late October 2008 -- they bottomed a few months before the U.S. market did -- the MSCI Emerging Markets index has soared 116%, while the MSCI BRIC index has skyrocketed 150% (all measured in dollars).
That makes the Standard & Poor's 500's 65% gains from its March lows look like chump change.
In the past year, Brazil has been on fire, surging 139.5%. Russia and India are close behind, with advances of around 115%, and China is the "laggard," with a mere 94.5% gain.
But how long can this go on? Isn't a correction long overdue? I think so, and investors who have been piling into these markets are going to get badly burned.
The rationale for the big move -- and every rally has a plausible one -- is that with big surpluses and strong economic growth, the BRICs and other emerging markets are coming into their own, while developed countries are still picking up the pieces from the recession and financial crisis.
That's true, of course, but what's even truer is that emerging markets have moved from being diversifiers to "intensifiers"-- amplifying moves made by their stodgier cousins.
That also makes them more vulnerable to rare "black swan" events, which are triggered by things usually not on investors' radar screens.
"Emerging market equities are developed market equities on steroids," says Peter Stanyer, economist and strategist at Delmore Asset Management in London and author of Guide to Investment Strategy, whose new edition will be published in January.
Indeed, according to ING Investment Management, emerging markets have had a "beta" of 1.4 times that of developed markets this decade, which means they've moved 40% more than, say, the S&P 500. So, you can gain a lot more, but you can lose your shirt, too.
Those of us with long memories -- going back, say, a couple of years -- may remember how much these markets fell in the recent crash. While the S&P lost 57% of its value from top to bottom, China and Brazil shed around three-quarters of theirs.
"The correlation gets even higher and the benefits of international diversification become even less [in a downturn]," says Jay Ritter, professor of finance at the University of Florida.
So, emerging markets are more vulnerable to "black swan" events. That term, used by Nassim Nicholas Taleb in his 2007 book, refers to events so rare they don't lay within the normal probability scale. Taleb argued that black swans are more common than investment professionals think, and investors need to protect themselves against them.
One professor, Javier Estrada of IESE Business School, says black swan events have a bigger impact on emerging markets. "The evidence, based on more than 110,000 daily returns from 16 emerging equity markets, is unequivocal: Outliers have a massive impact on long-term performance," he writes.
In developed markets, he found, missing the best ten days caused investors' portfolios to lose 51% of their value, while missing the worst ten days resulted in a 150% gain. But if you missed the best ten days in emerging markets, you were worth 69% less, whereas missing the worst ten days resulted in portfolios that were 337.1% more valuable.
So, how can you be out of the market on the worst days and in on the best? You can't. "The odds against consistently successful market timing in emerging markets are staggering," Professor Estrada concludes.
So, investors need to be especially aware of events that could knock markets for a loop.
Case in point: last year's invasion of Georgia by Russia. Russia's market already had lost ground by August, when Russian tanks moved across the border with Georgia in response to disputes in South Ossetia. But after the invasion, the market collapsed, losing half its value in six weeks. Foreign investors panicked, triggering a massive run on the ruble.
I've written about some of the big issues facing China. But what about Brazil and India?
Brazil has been rightfully praised for its financial management -- it long ago moved from debt to surplus -- and its status as a world-class exporter of resources to markets like China. It also will become a major oil exporter in the next few years, and has a remarkably transparent stock exchange.
But beneath the glitter of coastal megalopolises like Rio de Janeiro and Sao Paulo, social dynamite is waiting to explode. Weeks after Rio was named the site of the 2016 Summer Olympics, drug gangs shot down a police helicopter in the middle of town. That parallels equally brazen moves a couple of years ago in Sao Paulo, the financial capital.
And in the New Yorker, writer Jon Lee Anderson traced the pervasive reach of these gangs in Rio's slums ("favelas").
"At least a hundred thousand people work for the drug gangs of Rio in a hierarchical structure that mimics the corporate world," he writes. "The state is almost completely absent in the favelas. The drug gangs impose their own system of justice, law and order, and taxation -- all by force of arms."
Could Brazil go the way of Mexico, where violent gangs vie with the government for control? Who knows, but consider this from a former revolutionary who's now part of Brazil's government: "If [the gangs] ever acquired an ideology, they could threaten the state," he said.
Like, for example, in India, where there's a serious insurgency led by Maoist guerillas, called Naxalites. They control huge swaths of territory in southeastern India, as the armed forces prepare a major offensive against them.
Meanwhile, tensions are heating with China over its claims to a Northern Indian province and China's support of arch-enemy Pakistan. And labor and civil unrest may be growing.
Will any of these flashpoints turn into wildfires? Who knows? And technically some of these markets aren't terribly expensive. (Brazil trades at around 12x earnings, way below the S&P's 18x multiple.)
But after such an amazing run, risk is growing. That's why this would be a good time to take some money off the table here, too.
Junior
Usually the market will move over a period of several years ...
When it starts moving, usually we don't even know ... because the market has an "intelligence" of its own, which is more than that of our individual intelligence.
I think all factors are very nicely lined up for the Perfect Storm ...
Basically, what the US is saying is that it hack care about our asset inflation, and they are going to keep printing money non-stop.Business Times - 20 Nov 2009
Not easy to identify asset price bubbles
Fed official adds it's not practical to adjust US policy to surging Asian mkts
(ATLANTA) Federal Reserve Bank of St Louis President James Bullard said it is difficult to identify asset- price bubbles, and it's not 'practical' to adjust US monetary policy to account for surging Asian markets.
'It is very hard to identify a bubble,' Mr Bullard said today in answer to a question after a speech in St Louis.
'If there are problems in real estate markets in Asia, it is not very practical to say you should raise interest rates in the US.' Mr Bullard was asked to respond to comments by officials in Japan, Hong Kong and China, who have said the Fed's policy of keeping interest rates near zero may inflate asset prices and derail the global economic recovery.
It should be "What came down hard, must go up harder" ...
Chris Patten: Many people forget that in 1850 China and India accounted for 50 percent of global GDP. For 18 out of the past 20 centuries China had been the world's largest economy, and it will be so again.
So very simply, US is going back down; China and India are going back up to where they rightfully belong. In the process, Obama will keep printing more and more money; and Asian assets will keep rising and rising ...
But as Fed's Mr Bullard said, 'It is very hard to identify a bubble,'.
Because in the first place, it's not a bubble. It's China and India going back to their rightful place in history.
Junior
Market movement damn hard to predict. Can maybe only sense.
Newbie
Key word is SENSE
But given the good/stable life that we have all these while, wonder how many people still have that animal instinct in them to SENSE and REACT????
Junior
British Historian ARNOLD TOYNBEE thinks that China has the highest chance to unite the whole world in the future.
将来统一世界的大概不是西欧国家，也不是西欧化的国家，而是中国。且正因 为中国有担任这样的未来政治任务的征兆，所以今天中国在世界上才有令人惊叹的威望。中国的统一政府在以前的两千二百年间，除了极短的空白时期外，一直是在 政治上把几亿民众统一为一个整体。而且统一的中国，在政治上的宗主全被保护国所承认。文化的影响甚至渗透到遥远的地区，真是所谓“中华王国”。实际上，中国从公元前二二一年以来，几乎在所有时代，都成为影响半个世界的中心。最近五百年，全世界在政治以外各个领域都按西方的意图统一起来了。恐怕可以说正是中国肩负着不止给半个世界而且给整个世界带来政治统一与和平的命运。”
“中华民族的美德，就是在那屈辱的世纪里，也仍然继续发挥作用。特别在现代移居世界各地的华侨个人活动中也都体现着这种美德。
Newbie
Unlike past property market bull runs, nowadays, property prices are closely watched especially in Singapore because of their implications on the overall economic competitiveness on Singapore's economy and the accompanying political effects. So I would not expect too much of a bull even if the property market does turn bullish. MBT and co will impose fresh measures to ensure we do not have a runaway property market.
Global recession is coming....
If Govts are so capable, we would not have recessions!
If Govts are so capable, we would not Asia financial crisis!
If Govts are so capable, we would not have global financial crisis!
If Govts are so capable as to prevent property bull run, they will create the next great depression! How can they prevent property bull run when they are printing so much paper money? The only way for them to prevent property bull run is to take back the money and raise interest rate to >15%. Hooray! They solve the 'problem' for some people but they create the next great depression! Who in Singapore or anywhere in the world want to take this honour (or rather dis-honour)? At least, Ben Bernarke openly stated that he is going to continue to print USD until the US economy shows solid signs of economic recovery (& he is not going to be the man named & blamed for the causing the next great depression).
Unlike past property market bull runs, nowadays, property prices are closely watched especially in Singapore because of their implications on the overall economic competitiveness on Singapore's economy and the accompanying political effects. So I would not expect too much of a bull even if the property market does turn bullish. MBT and co will impose fresh measures to ensure we do not have a runaway property market.
F01 N54 Sheer Driving Pleasure
Not easy to identify asset price bubbles
Fed official adds it’s not practical to adjust US policy to surging Asian markets
The Business Times
Atlanta,
Friday, 20 November 2009
Fed Bank of St Louis Preseident Bullard said it’s not ‘practical’ to adjust US monetary policy to account for surging Asian markets.
Federal Reserve Bank of St Louis President James Bullard said it is difficult to identify asset-price bubbles, and it’s not ‘practical’ to adjust US monetary policy to account for surging Asian markets.
‘It is very hard to identify a bubble,’ Mr Bullard said today in answer to a question after a speech in St Louis.
‘If there are problems in real estate markets in Asia, it is not very practical to say you should raise interest rates in the US.’ Mr Bullard was asked to respond to comments by officials in Japan, Hong Kong and China, who have said the Fed’s policy of keeping interest rates near 0% may inflate asset prices and derail the global economic recovery.
Emerging economies ‘might overheat and experience financial turmoil,’ Bank of Japan Governor Masaaki Shirakawa said in Tokyo on Nov 16. Low rates and the dollar’s depreciation present ‘new, real and insurmountable risks to the recovery of the global economy,’ Liu Mingkang, China’s top banking regulator, said a day earlier.
MSCI’s emerging-markets stock index has risen 73% this year, and Asian countries from Singapore to South Korea are trying to rein in surging real-estate prices.
Fed officials are debating how and whether to respond to rising asset prices in the US, where the Standard & Poor’s 500 Index has jumped 63% from its 2009 low on March 9.
‘I think the issue is, where there are bubbles in the US – there was a tech bubble in the US and a housing bubble – should we react to that? That is what we are rethinking,’ Mr Bullard said. ‘But to extend that and say you are going to look at house prices somewhere else, that would be a step beyond.’
Fed chairman Ben S. Bernanke has said it’s hard to identify asset-price bubbles, and he suggested that the best safeguard may be for the central bank to use its supervisory authority to strengthen the financial system.
‘It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value,’ Mr Bernanke said after a speech in New York on Nov. 16. ‘It’s not obvious to me in any case that there’s any large misalignments currently in the US financial system.’
‘As long as we can’t detect bubbles with great confidence, it seems unwise to adopt fighting them as a policy objective,’ Chicago Fed Bank President Charles Evans said in a speech in Paris on Nov. 13.
Junior
It will be unthinkable for such an article to appear in Times Magazine 10 years ago.
http://www.time.com/time/world/artic...938671,00.html
Newbie
I kinda agree on this statement. However, in 2014, the property you have now should be able to sell at least 12% higher.Unlike past property market bull runs, nowadays, property prices are closely watched especially in Singapore because of their implications on the overall economic competitiveness on Singapore's economy and the accompanying political effects. So I would not expect too much of a bull even if the property market does turn bullish. MBT and co will impose fresh measures to ensure we do not have a runaway property market.
Junior
so the answer is here?
Newbie
True. But don't forget SENTIMENTS is a major single factor affecting markets, be it property, equities, commoditities, etc. that besides increasing interest rates which governments around the world is unlikely to touch now without the US moving first, unless absolutely neccessary, there are other measures which the governments can resort to control property prices. Examples, increasing the initial downpayment for purchase of properties, increasing property taxes, increasing the stamp duties, discouraging banks from matching the asking valuation of properties in granting mortgage loans, increasing supply of land, talking down the property market - affecting the psychology of buyers, tenancy market, etc.. I dare say, all these measures if implemented can effectively stop a property market bull in its path!
F01 N54 Sheer Driving Pleasure
I agree with you that government can implement policy to alter the property market movement. In fact, the best policy would be capital gain tax, which they have implemented before.True. But don't forget SENTIMENTS is a major single factor affecting markets, be it property, equities, commoditities, etc. that besides increasing interest rates which governments around the world is unlikely to touch now without the US moving first, unless absolutely neccessary, there are other measures which the governments can resort to control property prices. Examples, increasing the initial downpayment for purchase of properties, increasing property taxes, increasing the stamp duties, discouraging banks from matching the asking valuation of properties in granting mortgage loans, increasing supply of land, talking down the property market - affecting the psychology of buyers, tenancy market, etc.. I dare say, all these measures if implemented can effectively stop a property market bull in its path!
The question is why would they want to do that to indirectly destroy our reputation in the wealth management industry, which they have been trying so hard to establish and compete against Hong Kong? We no longer need foreigners to park their wealth here or invest here? Maybe?
Newbie
Which is more important - the competitiveness of the Singapore economy which can attract FDI continuously and thus generates the jobs required or just one sector - the wealth management industry?????? I doubt its the government to crash the property market rather their aim is more to have a sustainable rise in property price in line with Singapore economic growth. Can this be achievable remains to be seen. So bottomline - forget about short term gains from property investment.
F01 N54 Sheer Driving Pleasure
It's your opinion, which we should respect.Which is more important - the competitiveness of the Singapore economy which can attract FDI continuously and thus generates the jobs required or just one sector - the wealth management industry?????? I doubt its the government to crash the property market rather their aim is more to have a sustainable rise in property price in line with Singapore economic growth. Can this be achievable remains to be seen. So bottomline - forget about short term gains from property investment.
Who knows? You may be right!
They could be raising annual value and property tax to crash it.
Junior
Deflation is even more dreadful. Yen carry trade going to resume soon.
TOKYO - JAPAN'S finance minister voiced strong concern Friday about deflation in the world's number two economy, saying it was a major challenge for policymakers.
'The recent price falls are not right and worrisome. This is one of the major policy issues right now,' Hirohisa Fujii told a news conference.
The government was expected to declare in a monthly report on Friday - for the first time in more than three years - that Japan is in a state of deflation. Mr Fujii dismissed the idea that government spending could solve the problem, saying public works projects would not lead to higher prices.
Japan was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, hitting corporate earnings and prompting consumers to put off purchases in the hope of further price drops.
The current global economic downturn and a slump in commodity costs pushed Asia's biggest economy back into the deflationary doldrums. Core consumer prices have now fallen year-on-year for seven months in a row. The Japanese central bank announced on Friday that it was leaving its key interest rate unchanged at 0.1 per cent, in the face of the concerns about deflation.
Japan's deputy prime minister said on Friday that the government would convey its worries about falling prices to the central bank. 'The country is in a deflationary state. We are going to tell our economic views to the Bank of Japan,' Naoto Kan told reporters. -- AFP
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