BLACK HOLE 2009 “November 21st update”

BLACK HOLE 2009 “November 21st update”

As this point, the market has reached the new low since 2003 and broke a number of critical supports. Dow Jones index broke the psychological support intraday low level of 7737 set on October 10, 2008. S&P 500 and Nasdaq both finished to new low this year. The recent market movement is telling us something. We are NOT out of the danger zone yet. You would be misled by the mainstream media that things will get better in the 2nd half of 2009 and early 2010. AGAIN. Didn’t we hear this back in November 2007, we would have a summer recovery in 2008 as the Fed began to cut interest rate back then.

Financial guru and experts are calling out we will suffer another Depression II in 2010 to 2012. The chance of this happening is still ANYBODY'S GUESS! WHY? Because if we step backward a little bit, the cause of the doom and gloom outlook is the recent CONSUMERS behavior pattern has been in 360 degree complete reversal since the collapse of the stocks, bonds and commodities markets starting in mid-September. That’s it! Sure! A number of big corporations have been bailed out and some are out of business. The truth of the matter is… it’s only happening in wall street and financial markets. It’s still early in the game whether or not we would be in Depression mode. Recession YES. DEPRESSION. YOU DECIDE. We, the CONSUMERS, will decide the final outcome of this. It will be a tough ride, but I am sure majority of us would not want to see a repeat of 1929 and lost decade of 1930s.

What should do we next? Expect the Dow Jones index to be around 5000 to 6000 area in the next 3 to 6 months. The 4th quarter outlook for consumers’ confidence, GDP growth (contraction), retail sales and unemployment would be VERY UGLY. Moreover, malls and retailers in US have been giving out Christmas sales to try to boost up revenue before the final tally close up by Christmas season. One thing I know for sure, it would be one of the worst Christmas sales season we have since early 1980s.

For time being, even though the media has been hyping for a deflationary economic environment, I strongly suggest you to buy some physical gold and silver to hedge against future civil unrest and zero interest rates all over the G-20 nations. As more bailouts and intervention made by central banks and government, holding fiat currency paper is destined to be ultimate losers of this financial black hole.

Take care, stay liquid and be safe! Just prepare and we would be the last ones standing in this troubled time.

black hole 2009 update

as of this writing, S&P future is frozen due to downside limit. Looks like the credit crunch has been spreading to Asia, (most notably Korea and Japan -- off to 10 year and 5 year low) and possibly other South America countries beside Argentina could be in danger too. unfortunately, there is a good chance the next shoes to drop is the world currency. bluntly speaking, even the cash we are holding on could be worthless pretty soon. Dont forget the market has not priced in the upcoming stagflation and hyper-inflationary period.

Therefore, this is the good time to snap up some physical gold and silver to hedge against further meltdown. at the end of the day, you have something leftover instead of nothing.

At this point, you may throw out those technical support points for all market because we cannot prevent irrational folks doing panic selling at this moment. DO IT SOON. before it's too late.

This is not a financial tsunami. this is black hole where something must give to calm this crisis.

GOOD luck!!

BLACK HOLE 2009

BLACK HOLE 2009

Ladies and Gentlemen: when you get a chance, time to prepare for black hole 2009. No doubt, the recent financial crisis in Europe will continue and possibly will bring more fear to Asia soon and worse around the world. There are three things that people should be aware that mainstream media hasn’t fully covered thoroughly the truth out there.

First, the credit default swaps (CDS) in the banking system will be a bottomless hole that the governments and world banks cannot cover up and settle the outstanding derivative contracts. Based on the source from Bloomberg and Fortune magazine, there is $62 trillion dollars of CDS sitting in the system. Subprime MBS is NOT the cause of the current crisis. It was a tip of the iceberg. Who is going to pay/trade for CDS No body knows. Maybe, looking at Henry Paulson expression last week., he said it all. They must act now to buy more time!!

Second, the interbank rate (loan rate between institutions and banks lending to each other) has been UP UP UP for 1 month, 2 month, 3 month term-loan. NO significant adjustment occurs that we are out of the panic and danger area. The rate is telling us the banks DO NOT trust each other. Why bother lending to someone who might be in trouble later on?? Another important impact, small and medium businesses would be suffering from lack of liquidity to pay off payables and salaries. Just imagine taking out high rate credit line to pay off normal expenses. The owners would take major hit on this. Workers might not get their pay-check in the near future.

Third, misery index (unemployment and inflation) has been rising. Latest US employment report shows a 9 consecutive monthly job decline. Although the rate was unchanged, the government has been trying to paint a solid picture. The trend has been the same in Europe. Asian would not be alone. Japan is near recession and the exports sectors South East Asian countries would feel the pain eventually when US and Europe confirmed their economic recession. On the inflation front, the food and energy price have been stabilized but no adjustment due ot lack of demand. Therefore, normal citizens are continuing to pay high prices while the economic outlook is negative and workers might lose their jobs if new round of laid off occurs.

At this point, I don’t know what will happen, how will happen and when will happen. All I know for sure is that the banking system has been reverted back to 1907. YES. You read it correctly 1907. The turning point was when AIG needs 85 billions USDs temporarily loan from US Federal Reserve, the banking and insurance industries are virtually INSOLVENT with the exception of a few players such as Goldman Sachs, JP Morgan, Citibank, Warren Buffett standing w/ government backing and supports. If you look at a bigger picture, some Central Banks around the world holding US notes and dollars are taking major hits in their portfolio. The $770 billion law only allow more time for politicians and bankers to buy more time to do MORE coverup.

So, time to start use ATMs and get some cash. Collect silver and gold coins to protect your assets. Good luck!!

HSI current outlook - Sept 16, 2008

Time to watch and buy some HK stocks as the emotional sell off brought the index to 22 months low at 18300 level.  

In my opinion, HSI is currently at pretty fair value.  If you are seeking a technical rebound, try to get in around 17500 to 18300 level.  

the easiest choice is 2800.HK (Tracker Fund HK).  

it's stupid to predict the bottom.  But at this point, when fearful selling occurs, this is the time to snap up for a quick rebound.  if you are long term investors, pick up the china A index 2823.hk, 0820.hk and 2827.hk which track the A shares. 

US Financial System R.I.P. Sept 15, 2008

US Financial System R.I.P. 2008

I feel extremely sad and disappointed as I am writing this title because the inevitable has finally arrived. In July – Fannie and Freddie were bailed out by US taxpayers. That was the indication that the mortgage business and real estate market were gone for good and the bailout would only reduce the shocks from the market. In the spent of last 48 hours, the 4th and 5th largest investment banks in the WORLD collapsed. It depends on how you defined it. Lehman and Merrill have been technically insolvent since Bear Stearn blew up in March 2008. One is in bankruptcy filing now. The other disappeared as an unit of Bank of America.

As of this writing, AIG, one of the largest insurance companies in the world could be facing capital shortage and it has been down 70% since last Friday. What’s next? To say AIG in trouble – this phrase is certainly unthinkable. Now, it becomes thinkable.

Well, nobody knows what would happen next. The current investing environment is similar to the one where our grandparents were facing back in the Great Depression Era. Simply put, the folks back then were suffering from the aftermath of excessive credits built during the industrial revolution and roaring 1920s. And the rest is history. Are we going to face similar path? We could be on the way. if the Federal Reserve continue to lower interest rate, maybe to zero, we would be facing a long term deflation. the one has been experienced by the Japanese since 1989. (they havent recovered since when Nikei was trading at 40,000 level)

Forward looking. The only investment class with conviction to buy is GOLD. If you can buy physical GOLD, that would be better. As a result of the current housing and credit bubble burst, central banks and government would continue to print more money to restore investors’ confidence. By doing so, we are devaluing the currencies worldwide. Forget about the 20% return year to year on your portfolio. This is the most difficult time we would be facing since the stagflation period in late 1970s to early 1980s. Again, we just don’t know the outcome and when and where something might happen. It’s better to be safe than sorry. Capital Preservation is the key to survive this current volatile investing environment.

Lets see how the policy makers around the world react to this. When the system is finally broken, this is the time to draw a new resolution.

GOOD LUCK. Be SAFE.

notably quote - by Thomas Jefferson

Notable quote

By Thomas Jefferson, one of the founding fathers of USA, in 1802.  

"If the American people ever allow private banks

to control the issue of their money,

first by inflation and then by deflation,

the banks and corporations that will

grow up around them (around the banks),

will deprive the people of their property

until their children will wake up homeless

    on the continent their fathers conquered."

Thomas Jefferson! The guy with GREAT VISION!  You saw this 200 years ago and it has been happening since the 2007 subprime mess broke out.  To all US voters, would your presidential candidate make any significant change in this current corrupted and manipulative bi-partisan parties format?  Tax, healthcare, social security, education, military, banking and real estate reforms.   I don’t think so. 

It’s all bout the lobbyists money folks!  The middle class and poverty class in US would soon to be wiped out pretty soon assuming the current system is in place.  The politicians are repeating the same mistakes by hiding the truth and teaming up w/ special interests group.  

Someone in the administration needs to wake up.  Hank! Ben! You saved the public panic and restore financial stability. Your same buddies would betray you guys when their profits margins could not meet their greedy pockets.   FDIC, the last backstop of banks would be insolvent as well.   

Your World Your Dream

When people would be looking back at history several years from now, August 08 2008 could be a turning point that we should remember.  As people around the world celebrating the opening ceremony of the Beijing Olympic, a mini-war broke out in Georgia between the Russians and Georgians.  At this point, it doesn’t really matter who started and instigated. The root of this mini-battle could be dated back in the 1980s if you are a true observer of modern day history. 

 

If you reading the media sources from G-7 and the West, you would see the blaming on the Russians aggression. From the Pro-Russians view, they need to protect its borders against the NATO and the United States.  Folks at this moment, people should realize how precious of independent and non-biased journalisms are.  With the world of internet, we get news at the speed of lights.  On the other hand, we have no time to digest the truth.  Just look up the owners of the newspapers, media, and newswire, you would know what I am talking about.  No doubt there is so many propaganda behind it.

 

It so ironic that preserving the Olympic sprit is about peace, harmony and athletes team works.   On that day, with all the focus on the ceremony, majority of the people probably blinded fold. 

 

As for the financial markets, the scuffle in Georgia have not priced in yet.  Gold and commodities prices have been taking a mysterious plunge.  No doubt the big investment bankers are probably loading up huge position while creating a panic selling to the ordinary investors.  With geopolitical risks have not subsided; this might be a good time to long gold for the long term investors.

Short term wise, wait for the dead cat rebound finish before shorting again.  Another clue, check out the Bear exchange traded funds. 

 

 

Hang Seng rally

blood has been out there.  time to snap up equities @ 21000 to 21500 level.  some of the major blue chips RSI has been in 30s level. 

if you dont want to think too much... 2800.hk is the easiest choice to buy on the dip and sell on the high.... HK ETF trackerfund.  

expect HSI to rebound 1500 - 2000 pts. 

good luck investing!!