Make Money Online: 2008-11-10

Sunday, November 09, 2008

It Ain’t Over Yet – China and Unemployment are Next

Once I read that we shouldn’t jump as we would not be affected by the U.S. sub-prime crisis because the engines from China and India were running at full steam. I almost fell off my chair because such article could mislead novice investors in snapping up stocks without knowing what they were doing. I’ve written about it and again I would like to emphasis that nowhere in the world can we find the replacement market huge enough to take over the vacuum from U.S. Not European Union, not Russia, not Brazil and definitely not India or China. No doubt China registered mind-boggling annual economic growth but that’s because U.S. allows it. The United States and China symbiosis relationship was a unique one really.

China trade with USA Make no mistake about it – United States is world’s largest economy while China is the world’s fastest growing economy and there’s a difference between them, mind you. China depends on U.S. export market to generate jobs for its huge pool of workers while U.S. investors in China depend on continued Chinese economic growth and cheap labor. China’s economic growth was at the rate of 10% per annum during the period 1990-2004 – the highest growth rate in the world. Annually China needs to generate about 15 million new jobs to its huge population. Even during 1997 Asia Economic Crisis the dragon was growing at 8.9%, 7% and 7.1% in 1997, 1998 and 1999 respectively. As a consequence of China artificial low currency, the trade surplus jumped from $57 billion in 1998 to $256 billion in 2007 in favor of China.

China top export destination China top trade partner United States is China’s top trading partner and literally when the former entered the recession gate, the mighty dragon was pulled down together. I guess the theory that China would face difficulties after the 2008 Olympic holds water. Those who were more optimistic brushed off such theory and opined that China was somehow insulated from any crisis included the financial problem that was staring at United States. They believed the Chinese government had the magic wand to keep the economy afloat, come shine or rain. Little did they know that Chinese consumer confidence was declining slowly but went un-noticed and when Brothers Holdings Inc. (NYSE: LEH, stock), an investment bank that is 158-year-old and survived the 1929’s Great Depression filed the largest bankruptcy (Chapter 11) in American history, the Chinese confidence speedometer jumped.

Already many China factories are closing putting tens of thousands of workers speechless and out of job. In fact every sector of the Chinese economy is slowing and credit is tightening. From annual economic growth of 11 percent in 2007 the Chinese economic muscle is expected to shrink to 5.8 percent – a level that worries Beijing because anything less than 8 percent means many more will lose their jobs. Speculators, punters and gamblers whose job were to bet on the stock market and nothing else to make a living were watching with horror their invincible Shanghai composite index fall more than 60 percent this year alone.

Last Friday United States unemployment rate climbed to 14-year-high of 6.5 percent from 6.1 percent a month earlier. With additional 240,000 jobs disappeared in October (the 10th month consecutive month of retrenchment) this means there’re about 10 million Americans who are jobless in October – the most since 1983. The U.S. Big Three automakers namely General Motors Corp., Ford Motor Company and Chrysler are trying to get $25 billion soft loan but should any of them falls, the unemployment rate could easily skyrocket to 10 percent. The current situation is getting so bad that the incoming 44th President Obama said it was an “urgent priority” to extend unemployment insurance benefits for workers who could not find jobs – referring to his new stimulus package worth $100 billion. So, do you still think China is insulated from United States’ sneeze? But then all good things come to an end hence it’s about time China’s economy reveals its true picture.

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Thursday, November 06, 2008

Stimulus Plans, to be spent Wisely or ended up Elsewhere?

Outgoing PM Abdullah Badawi said “Anyone can be PM” after reporters asked the sleeping beauty if it were possible for a person from a minority group to become Prime Minister in Malaysia, apparently referred to President-elect Barack Obama. That would be a bold and positive statement that would raise millions of eyebrows and earn applause if it was made four-years ago. Sadly Badawi still has another four months to go before hand-over his comfy bed to his deputy PM Najib. So it doesn’t matter what Badawi said as it does not carry any more weight. The focus is on Najib, advisor Mahathir, Deputy-PM-in-waiting Muhyddin and of course CIMB Group chief executive Nazir Razak (Najib’s brother).

Najib Nazir Razak Stimulus Plan In time of uncertainties investors need all the assurances they can get and the new Finance Minister Najib tried to do that. His brother, Nazir, also extended his assistance to assure the investor community that Malaysia banks are still strong (what else can he say anyway). While Badawi at best will provide empty slogan that the country will not enter the recession door if he was not forced to resign today, Najib provided both the slogan plus the RM7 billion stimulus plan to excite the economy. Najib earlier rubbished that the country will enter technical recession phase but has come to his senses now hence the downward revision of economic growth from 5.4 percent to 3.4 percent in 2009. The RM7 billion stimulus package announced was also welcomed.

However critics are questioning the source of the money, the huge RM7 billion after the earlier RM5 billion capital injection to boast stock market was tainted with claims that the money was actually needed to pay the debts-due from Valuecap. Furthermore it will be an uphill task to track the money spent on the so-called projects identified. Every Tom, Dick and his dog knows “leakages” are bound to happen within the current administration but little activities are still better than no activities in the attempt to boast domestic economy. Najib (and his advisor Mahathir) knew they can’t depend on foreign investor but to rely solely on the domestic supply and demand to create excitement. Execution is important and Najib’s boys need to ensure whatever projects trumpeted would be properly carried out.

EPF 3 percent cut Still, if the RM7 billion was not from the money saved from reduced petrol subsidy then where will it comes from? As unique as it is that any amount of money needed from the cash-rich EPF (employee provident fund) does not require any approval from either Lower (Dewan Rakyat) or Upper (Dewan Negara) house of representatives, people are questioning the transparency of such unique plans. Well, the 3% cut in EPF contribution for employees will definitely boost domestic consumption provided there’re sufficient contributors bought the idea to subscribe to such plan. However Malaysians are known to have high saving so it would be overstatement to project that RM4-5 billion could be released into the street. Furthermore people are more conscious and careful about spending future money now although the cut was only for two years. However a 3% cut in income-tax would definitely do the trick and send more applause to the desk of the Finance Minister *grin*.

If Nazir speaks on behalf of his brother Najib, expect more similar multi-billion stimulus packages to supplement the current RM7 billion based on the statements released by the National Economic Council to which Nazir is the member. And he actually recommended former premier and dictator Mahathir for Nobel economic prize? Absolutely amazing!

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Wednesday, November 05, 2008

It’s President Obama, learn from this Great Nation please

Barack Obama, 47, the son of a father from Kenya and a mother from Kansas was elected as the 44th President of the United States on Tuesday. America has again show why the country is the greatest nation ever. America is a place where all things are possible. Who would have thought that a black man, whose fate is destined to be a slave if today is 400 years ago, could become the president of the most powerful country in the world? Instead of congratulating President Obama, there are actually many things that we can learn from this latest historic moment. In fact there’re some similarities when you compared the latest U.S. election with Malaysian’s election in Mar.

Presidential Race Obama McCain Eight out of 10 voters were damn worried about the U.S. economic crisis, so much so that they couldn’t afford to see the crisis hurt their finances hence the swing of votes to Obama. It was the same about 8-month ago when majority of Malaysian cannot stand the sleepy PM Abdullah Badawi anymore because he was clueless about economy ever since he scored landslide victory 4-years ago. President Obama has the new (more than double of 11 percent of electorate) and young voters (two-thirds of voters under 30) to thank for delivering the important scores. It was the same about 8-month ago in Malaysia when the new and youngster crossed the racial boundary to cast their votes to opposition parties regardless of Chinese-based DAP or Malay-based PAS and multi-racial-based PKR.

Senate House Control Obama Most importantly a new chapter in U.S. has been written for many future generations to remember – you can become the President of the United States regardless of your race. Will Malaysia (I heard some of you said Singapore) see such historic moment in a not so distance future? Probably not during current generation simply because the racism is so entrenched as if it is part of the culture, thanks to the successful implementation of Mahathirism over 22-year rule under dictatorship. The latest appointment of Low Siew Moi as acting general manager of PKNS that attracted objections was perhaps the best litmus test to justify why Obama will not happen in Malaysia for at least another 50-year. Maybe it is true that Malaysians are not mature enough to deserve a capable and great leader, regardless of his or her race, who can drive this country to become a greater nation – much better than Singapore or Hong Kong.

Now that the election is over all eyes will re-focus back to the economic mess, not to mention the “buy on rumor, sell on news” profit taking activities that are set to starts after the recent gains. On the local front, the RM7 billion stimulus package announced by Finance Minister and de-facto Prime Minister next Mar should be applauded. Already there’re speculations whether the RM7 billion is really derived from the money saved from the reduced fuel subsidy. Let’s hope the government is not working behind the scene to borrow the money from EPF again after Najib’s earlier plan to inject RM5 billion borrowed money from EPF to stock market drew criticism as it was claimed the money (RM5 billion) was actually meant to pay Valuecap “debt-call”. Let’s give Najib the benefit of doubts for the moment, shall we?

RM7 billion Stimulus Package Between the two persons obviously Najib is a better person (than Abdullah Badawi) in laying investors confidence. He may be the most tainted Prime Minister in-waiting in the history of Malaysia but with Mahathir working behind the scene, he should be able to demonstrate and justify why he’s a better leader than Abdullah Badawi. In fact Najib is racing against time in order not to suffer the same fate as Republican in the next general election. Only time will tell if Najib’s RM5 billion plus RM7 billion plans are another hoax with lots of “leakages” specially designed to enrich his cronies. Let’s see if he has learnt anything from U.S. election during the coming UMNO assembly although I doubt he’ll threaten to bathe his keris (Malay dagger) with Chinese blood. He and his cousin Hishamuddin has done that so let’s see if it’s Mahathir’s son turn this time to play with the keris again.

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Tuesday, November 04, 2008

Obama or McCain, place your bets and Make Pocket Money

Ever wonder why those casinos, lottery and 3-D, 4-D & 5-D businesses were almost recession-proof? Besides opportunity to make money if you strike, people tends to feel great when their bets hit the bull-eye. The feeling was just unbelievable as if it was better than sex. And it’s not funny at all to read the husband-wife team was slapping each other to confirm they actually won the multi-million dollar jackpot recently. Today, Tuesday Nov 4, is the day the de-facto Malaysian PM Najib is due to announce his grand economic plan while the Americans will decide if the country will see the first black as their next President of the United States.

Dow Jones closed the trading session with little change Monday ahead of the election. But at one corner punters (can you call them investors?) are monitoring to see if their bets will make cool monies for them – the Election Futures Market.You can virtually open an account for as little as $5 to as much as $500 bucks (real money, mind you) and use it to buy and sell contracts. However you’ve to take this trading system with a pinch of salt because a simple huge order could tilt the result in your favor. The risks are high but so do the gains.

Platforms such as Iowa Electronic Markets or Intrade are some of the election futures market providers. It was reported that people who bet on Barack Obama a year ago are making great money today. Back then Obama was given a pathetic 14% if he can win the Democratic presidential nomination but now traders are betting this guy has a staggering 90% chance of being elected to the White House. If you’re a high risk taker then place your bet on Arizona Senator John McCainbecause as of now a contract will cost you only $9.20 but if this guy can pull the stunt, you can pocket $100 from the bet.

Unlike Malaysia whereby only 191 voters will vote for the President of UMNO and indirectly the Prime Minister of Malaysia, there will be more than 100 million people who will vote for the President of the United States. No wonder money can easily buy the Prime Minister seat in Malaysia. Can you imagine doing the same in the United States? But then we shouldn’t do such comparison because Malaysia is such a darling country with the cleanest Prime Minister, heaven-like investment climate, fairest wealth distribution of all, recession-proof, highest concentration of great-brains from all over the world and basically there’s not a single poor citizen at all *grin*. We’ve even explored the space and self-sufficient with abundance of oil, palm oil, agriculture products, clean water, free electricity, cheapest fuel price, great foods and you name it we have it.

And no, we didn’t blow up that Mongolian beauty Altantuya, most probably she tripped and blown up herself while playing with that piece of hamburger-like C4. I still wonder how do Chief Inspector Azilah Hadri and Corporal Sirul Azhar Umar, both from Special Action Unit, look like since until today nobody can ascertain if the persons behind the masks are indeed them at all.

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Time is Tough but don’t be Silly and Commit Suicide

Technical recession may already hits the economy in about 15 European Union countries and the EU forecast unemployment to climb to 8.4 percent in 2009 which literally means another 2 million people will be out of job. Even Hong Kong’s oldest stockbroker David Tung said he has not seen a financial crisis as serious as the current one throughout his 65 years of stocks trading. One thing that never fails to happen when economy crisis exploded is the increasing number of suicide cases. It doesn’t matter if you’re a seasoned stock traders or a young chap who have not even graduate from high school. The stock trading game does not discriminate and most of the suicidal lost not only their savings but also their jobs, homes, marriage and probably their kids’ piggybanks *grin*.

It’s sad to note that despite past suicide cases reported people still tends to treat stock market as a casino gambling their money away. The rule of the game is pretty simple – if you can’t afford to lose then don’t ever step your foot on the trading floor (inclusive of internet trading nowadays, mind you). There’re big time gamblers and there’re small time traders. Either way if you can’t afford to lose the shirt you’re wearing or the few thousands of dollars of savings then don’t spell stocks. This is not the game for you. You may do well in the game of fixed-deposit saving, provided the bank you trusted do not go bust. However if you still stubbornly wish to play the stock market then allocate the amount of money that you can afford to lose without thinking even once of committing suicide. If you’ve heart problem by all means go and do some knitting will you?

Americans Satisfaction at All Time Low But not all suicide cases are directly related to losses in stocks betting. A person who suddenly lost his / her job may resort to such silly ending as well. The fact is only 9 percent of Americans are satisfied with the way things are going in the United States – lower than the 12 percent registered back in 1979. Based on the Gallup Poll result, almost 7 out of 10 interviewed pointed their finger at economic problems for their unhappiness. The latest reading revealed by Institute for Supply Management shows U.S. manufacturing activity tumbles to 38.9 in Oct – its lowest level in 26 years (more people to get axed?). Somehow people are questioning if Barack Obama should be their next President of the United States.

Americans Satisfaction List Based on the latest Presidential Estimate it appears that Barack Obama is leading with 55% advantage over John McCain’s 45% but some fear Obama’s victory could spell doom to the stock market. Obama’s plan to raise taxes on capital gains and on income above $250,000 was the reason why people thought so. But the other argument was that Obama intends to cut taxes that could benefit 90 percent of the Americans. Traditionally any new leader who wins the throne will spend some time “honey-moon” so let’s forget about that taxes trumpeted. It’s no brainer that President Bush is clueless about the economy hence how bad could it be to have Obama as the next President of the United States. What we need to do now is to sit down & relax and wait for the storm to settle.

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Monday, November 03, 2008

Will Malaysians wake up to face the Economic Challenge?

One of my favorite cakes is indeed the tiramisu cake from Secret Recipe. My only complaint is its price because I normally will buy the whole cake instead of a slice or two. I’m not sure if the cake has shrunk since the price increases but I suppose if you like it so much you’ll still pay for it. The tiramisu cake will be super nice if you “chill” it in the fridge. At least the tiramisu has not shrunk (assuming they did not add extra baking powder) compared to other foods whereby the portion was ridiculously small even after they raised the price in tandem with the fuel hike.

Lately the politicians are fighting nail and tooth to justify their candidacy as the most powerful person in their respective country. Sadly while the Americans may see Barack Obama as their first black President of the United States, Malaysians are still very much a racial country. No doubt the cake of wealth is shrinking as we speak because there’re too many people talking while too few people are building the wealth pie. In fact the country is reaching the tipping point whereby the cake is not enough to be distributed to the lazy and greedy cronies of politicians that the same pool of cronies might end up cannibalizing each other.

Barack Obama U.S. first black President The mandatory requirement of 30 percent equity for bumiputra ownership of companies under the NEP (New Economic Policy) started in 1970 was already obsolete and flawed in the first place. Frankly who would work his life away only to give away 30 percent of his company’s stake to bumiputra? Even if they’re willing to do that in order not to anger these people who always scream they may run amok if provoked, wouldn’t 50 years are too long a time to spoon-feed these parasites? The fact is if this wealth of 30 percent equities were to be distributed“equally” and “fairly” to the bumiputra, you should see the genuine improvement of bumiputra’s lifestyle since 50 years ago.

But NEP’s objective was the eradication of poverty irrespective of race so why the need to constantly find a bumiputra and beg him / her to take your 30 percent stake away? Strangely despite the equity given out, the bumiputra’s stake was claimed to be still at 19 percent since 1970. Of course professional thieves are always creative in their justification that the loots are never enough. And what better way then to use the companies’ shares par value, a stagnant and nonsense method, to ask for the 30 percent freebies forever? Best still, exclude the ownership of GLCs (government linked companies), EPF (employee provident fund) and other state-owned companies. In this way the non-bumiputra would work for generations like cows to generate the wealth so that these bumiputras can enjoy the fruits of hard labour. However even the most hardworking cow can work for so long before give up and “migrate” or “transfer” their wealth overseas. Hey, don’t under-estimate the cows because with the current internet technology, anything is possible.

bumiputra onwership In reality the genuine poor bumiputras were never there to receive the golden eggs laid by the NEP. It was the small elite and cronies who armed themselves with shoe polishers that enjoyed the bumiputra equity ownership which was believed to have reached as high as 45 percent. But the illiterate villagers value the slogan of “30% bumiputra equity” more than anything else, never mind that they still do not enjoy basic facilities such as electricity and clean waters. Stupid or purely ignorance, the politicians knew such explosive firearms can be ignited with ease and they never fail to amuse me with their propaganda. You can’t blame the villagers (and even graduates) because the “divide and rule” strategy deployed by former dictator Mahathir Mohamad was so successfully that such racism mentality is still strongly entrenched in the minds of the bumiputras, well the Malay-bumiputras to be precise. So you should not be surprise when these people ran wild with the idea of having Low Siew Moi as acting general manager of PKNS (Selangor State Development Corporation) despite her capabilities and qualifications – because she is a Chinese and not bumiputras.

We’re already living in a borderless world and with each recession every 10-year, you don’t need to be a heart surgeon to realize the impact on the economy if the country is not prepared. If the politicians and the UMNO-bumiputras still think they are invincible, can demand 30% free stakes and more whenever they like and the tiramisu cake will continue to grow itself, this country is a very risky place for foreign investors to pour their money in. Get real! While the local non-bumiputras have no choice, the foreign investors are pampered with many alternatives.

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Thursday, October 30, 2008

Forget about rate cut, AIG may Crash the Stock Markets again

Boy! I’m glad that I took the little profit I made scalping Apple before the Feds announcement. As expected the Federal Reserves lowered its interest rate by 50-basis points to 1 percent now, the same rate last seen five years ago in 2003 and 2004 after the Internet bubble burst. However unlike the bubble five years ago that only affected the technology stocks, this time the problem is more severe simply because the financial institutions were in the center of the problem. Going by current situation Bernanke’s boys may go even further and the interest rate could go down to “zero” percent – virtually means the bank loans are free of interest *Yippee!*.

Bernanke Another Cut The Dow did not follow through (as expected) and gave-up all the 298 points gained before erased another 74 points from the day before to close at below 9,000-level at 8,990.96. Perhaps the happiest traders of all in the current volatile situation are thefuture traders. It’s a normal trend nowadays for Dow to yo-yo in three-digit-figures, up or down. The Fed acknowledged that the economy had lost steam on almost every front - consumer spending, business investment, financial markets and even exports. As I’ve blogged before this latest interest rate cut, I doubted if the slash would help the stock market simply because the root of the problem was not on the rate anymore.

But I suppose the Feds has to do what it has to do. If the interest rate was the medicine to cure the current havoc, it would have worked much earlier. I’m sure the Feds and Bush administration know that the main problem is the consumers and businesses lost in confidence, so much so that they are holding back in spending. The fact that the banks and financial institutions are still fearful in lending money despite being disbursed of $600 billion by Feds is not helping the situation. It makes one wonder what could be the problem with these greedy banks hugging the monies that were supposed to be lent out. They should be grateful that taxpayers’ money was used to bail them out after they thrown the risk-management guidebook out of the windows just because these top executives need to please the boards with cool-figures in order to secure fat bonuses.

Bernanke Next Target Zero rate Japan was perhaps the only country that had experienced “zero” interest rate back in 1990s and it would be fun to see the same rate from the United States. This could be another once in a lifetime experience, mind you. Judging from how Japan struggled for years even with zero interest rate in place before the sun shines again, U.S. Feds would be silly to not have other backup plans besides the “zero” interest rate bullet. Then you would need to get ready as the investors would conclude that there could be bigger problems if Feds indeed went down to the zero. Already a scandal is about to explode, if you can call it one. American International Group Inc.’s (NYSE: AIG, stock) may crash the world stock markets once again after the recent $123 billion emergency lending provided by Feds.

US Crisis Irregularities Guess what! After a mere one month the staggering $123 billion is fast disappearing and rumors are spreading that AIG was having tens of billions of dollars of losses and was actually about to collapse before the $85 + $38 billion rescue came into the picture. To make matter worse AIG has declined to provide a detailed account of how it has used the Fed’s (or rather taxpayers) money and it appears the company will continue to hide any irregularities for as long as possible. Hmm, poor Warren Buffett, he was criticized for urging people to buy U.S. stocks recently. Well, I’ve wrote (read here) that you can’t simply follow blindly when the Oracle of Omaha said “don’t keep cash”. The billionaire has so much cash that he can afford to be wrong while we, the small players, can’t. Warren didn’t shout it was the bottom then so we can’t blame him now, can we?

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Wednesday, October 29, 2008

Experience the Real Panic in Persian Gulf Slowdown

Prince of Persia was one of my favorites and I was so addicted to the DOS-game that I used to sleep four to five hours daily in order to complete the adventure. It was many years ago and the game which was developed by a teenager was superb. The fact that the game did not allow you to save meant I’ve to literally switch on the personal computer for God know how many days. The first personal computer that I owned was a 386 (although 286 was still available) that comes with 240MB of hard-disk, if my old memory still serves me right, and if I press the turbo button the clock will speed up to 66 Megahertz. It was the top range back then and most of my friends envy my machine *grin*. Of course there’s also this simple stock market game that randomly flashed on the screen if you’ve made great fortune or went bankrupt the next trading morning.

Needless to say nowadays I seldom have the time to play computer games and I still have many PS2 games bought but never have the time to enjoy it. Surprisingly I don’t find many stock market games today. I suppose with the internet technology it would be silly to play such games when you can trade with real money on actual stock markets. Dow Jones is rather boring today as everyone is waiting for the afternoon announcement from Ben Bernanke on the interest rate cut. Feds do not really have much choice but to cut it further lest it wants to see another huge plunge. Furthermore the almost 900 points jump Tuesday was mainly due to anticipation that Feds will cut the rate by either 50 or 100 basis points. China had just cut its interest rate to 6.66% from 6.93% while Norway’s cut was 50 basis points to 4.75%. The European Central Bank (ECB), Bank of England and Bank of Japan may follow soon.

Persian Stock Markets Tumble I can’t remember the last time the customers got panicked and invaded banks for their money deposited with the banks. It must be a wonderful sight to see the Kuwait’s second-biggest lender struggling to meet the customers’ demand of withdrawals at Gulf Bank KSC (KUW: GBK). The fear factor is moving its way into the Middle East. Stock traders in the Persian Gulf were having good time when the bull was charging on the dessert for a while and it appeared the stocks were invincible and could only go up. Their backyard was filled with black gold which was fetching $148 a barrel. High oil prices have allowed state and private investors (or rather speculators) across the Gulf to funnel billions of dollars into property markets, infrastructure projects and, foreign-exchange speculation. Nobody expect the oil would plunge by 50% from their July highs. Gulf states have different break-even oil price – Saudi Arabia is $49 a barrel, Bahrain is $75 a barrel and Kuwait requires $33 a barrel but as long as global oil prices are above $55 a barrel, the governments are happy. But it was currency trades and not bad loans that plunged Kuwait into a banking bailout after Gulf Bank incurred losses of about 200 dinars ($746 million).

AAPL Profit Middle East is a self-sufficient territory although you (if you’re a foreigner) would cry for home if you were to stay in Dubai for more than a month. Even if you can cook finding the raw materials such as veggies and eggs known to you would be a big problem. Egypt receives $3 billion in annual remittance from its 2-million citizens working in the Persian Gulf while Jordan receives $2 billion annually. It would be interesting to see if Dubai’s overheated real estate market will have a soft landing instead of a crash. Anyway, I’m not going to wait for the Feds announcement on the interest rate cut because it would be very volatile thereafter. Instead I decided to take small profit scalping Apple Inc.’s AAPL Nov 100 Call Option during the morning trading session today.

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Tuesday, October 28, 2008

The Junk US Dollar Skyrockets but whose fault is it?

Another slaughter day (Monday) in the global stock markets *yawn* and the yoyo is expected on Tuesday as well. I wonder if all the governments worldwide instructed their print and electronic media to announce fictitious news such as Dow Jones jumped 1,000 points or 1 million tons of gold suddenly found hidden in some caves or every citizen will be given free cash of 1 million to buy stocks, will the confidence suddenly reverse for the better. After all it was all about peoples’ sentiment when come to stocks. As much as I would like to day-dream *smack me* we’ve to accept the fact that the global economy is in total chaos. Unlike 1997 Crisis this time it would be more serious because the U.S. is in the center of the problem. And guess what, the Bush administration is not super-worry about it because they know someone will definitely offer the seat for the super-power in this musical chair game.

US Dollars IOUs We’ve not talk about credit-card debts yet; hopefully it will not burst, mind you. Some (of you) may argue or even clueless why the U.S. dollar is exceptionally strong as if it had taken excessive dose of Viagra. It does not make sense that a country with national debts of over USD$10 trillion is enjoying such a strong currency. Remember my previous article when I mentioned that if you wish to be in debt make sure you owe hell lots of money, not millions or billions but trillions. As individual you should owe the banks millions; as a corporate you should owe foreign debts in billions and as a nation you would be accorded the “VVVIP” privileges if you owe in trillions. That’s the rule of the game and U.S. is the master in this area. Yeah, U.S. owes everyone monies so what? In fact Americans are spending excessively on your money to ensure their debts continue ballooning. In the process rich nations such as Japan, China, United Kingdom, Germany, Hong Kong and Gulf countries are at U.S. mercy due to huge “IOUs” accumulated inside their vaults.

Nobody dares to quit the musical chair game simply because the stake is too high. Imagine the Japanese and Chinese suddenly decided to quit the game and demanded US$600 and $500 billion in gold respectively from U.S. in exchange for the worthless papers to which the U.S. do not have. It will create panic selling on the U.S. dollar and the domino effects are beyond imagination although it would be fun to see an exchange rate of US$100 to RM1 (Malaysian Ringgit) or US$300 to 1 Chinese Yuans for that matter. It would be super-cheap to buy Boeing jumbo planes or their AH-64 Apache helicopters, so much so the Malaysian de-facto PM Najib Razak can get his personal Apache parked on his helipad. But then the U.S. will not be able to buy from the rest of the countries because the manufacturing goods from these countries will costs a leg and an arm.

CAD to USD currency rate Euro to USD currency rate In order not to interrupt the cycle, the rich nations continue to subsidize and feed the Americans – and continue to accumulate “IOUs”. As much as you like to replace U.S. economy with BRIC (Brazil, Russia, India and China) the time is still too distance for it to materialize. Heck, the Chinese might even collapse despite its huge reserve if the U.S. enters depression, lost its dollar’s shine and never recovers for a couple of years similar to 1929’s dark moment. That hopefully will not and should not happen, going by the U.S. artificial intelligence (AI) model’s logic. U.S. is just like the dark hole in which the gravitational field sucks up all the goods manufactured elsewhere. The biggest debtor has the market huge enough to take this role and you do not want to poke her nose with a stick lest you have an alternative market to import all your goods. So naturally other nations will push up the U.S. dollar so that it would “appear cheap” to the U.S. consumers.

Hence, don’t expect Malaysian Ringgit to strengthen anytime soon because it won’t. The central bank (Bank Negara) has been intervening for many weeks to stabilize the Ringgit else it should have nose-dived to RM3.80 to a dollar long time ago. Even if it drops to RM4.00 to a dollar I’m not complaining because inflation will continue to rise regardless of RM3.50 or RM4.00 to a dollar as long as the incompetency, cronyism, corruption and nepotism are still very much alive. Short the ringgit as much as you like because it’s going down the toilet anyway.The next move from the Feds is to cut the interest rate again but I doubt it will help much. And the reasons why Malaysian Central Bank stubbornly maintained the interest rate were to attract foreign hot monies (hopefully) and the so-called inflation (what inflation?) but again I doubt they can hold on to it for long.

SGD to USD currency rate RM to USD currency rate Frankly I don’t think the local stocks have reached the “cheap level” yet, at least to me. IOICorp at RM2.19, Resorts at RM2.23, Genting Berhad at RM3.94, Maybank at RM5.00, Tenaga at RM6.15, Public Bank at RM7.85 and others are still “very expensive” relative to the 1997 Crisis. But if your objective is to boast that you managed to buy at the bottom and catch the knife, nobody is stopping you from buying one share everyday *grin*. I want to see real panic selling.

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Monday, October 27, 2008

The New Great Depression is a Different Animal, Stupid

Just because some so-called smart analysts who may not know how it felt during the 1998-1998 Asia Economic Recession screamed that “our shares are oversold”, “they no longer reflect their values” and “plenty of cheap quality undervalued stocks”, you should refrain yourself from being influenced by them as the fruits are not ripe yet for the picking. And please stop believing those buy “calls” from irresponsible analysts or fund managers whose main intention was to unload their sour stocks, unless you wish to become the suckers.

Kuala Lumpur Composite Index finally closed below 900 points (Yippee!) after it shed 32 points to 859.11 on Friday. I bet many beginners were mouth watering and may have entered as the stocks were relatively cheap (than yesterday). But if you’re a season player the past memory of the KLCI’s plunged from 1,300 to 262 points 10-year ago should serve as guidance for this round of the game. If you think 800 points is attractive then 700-level is very cheap, 600-level is absurd and 500-level is unbelievable. That’s right! don’t blink with your jaw dropped to the floor when that happen. Prepare yourself mentally and you would reap a bountiful harvest soon. Forget about the parasites’ plan to rob peoples saving (EPF) to boast their cronies’ stocks because the RM5 billion is practically useless against the onslaught of the stocks-tsunami.

Mahathir create artificial demands In fact if you wish to know the truth of what’s going on locally just read the reverse of what those politicians said and about to say in future. They’ll still sing the same old song that the stocks are fundamentally strong even when the KLCI were to drop to 500 points. Boy! Those shorting the futures would have made tons of money by now. The only thing that could stop the bleeding is probably when the former premier Mahathir played behind the scene and used many more billions of peoples money (who cares about what the people think?) to support the local (or rather cronies) stocks - artificially. He may succeed this time compared to 10 years ago simply because most of the foreign funds have exit or rather havenever return in the first place since the 1997-1998 Crisis. But Badawi has been so successfully in doing “nothing” that it would take more than a rescue on the stock market alone. And if you’re still holding Bursa Malaysia Berhad (KLSE:BURSA, stock-code 1818) stocks today, chances are high that you didn’t read StockTube’s article written on Dec 2007 (read here).

More than 110,000 have lost their jobs so far this year and some industry experts forecast Americans could see close to 200,000 will face the same fate before the year is over. Already branded companies such as Yahoo Inc. (Nasdaq: YHOO,stock), Goldman Sachs Group Inc. (NYSE: GS, stock), Coca Cola Co. (NYSE:KO, stock) and Electric Company (NYSE: GE, stock) has announced the job-cut plan. In September alone, 2,269 employers each laid off 50 people or more and most likely the current job losses are only the tip of an ugly iceberg. It is pity that there’re still people who are in the denial state and think recession is centuries away. Interestingly there’re people who chose to argue that the current recession will not reach the level of 1929’s Great Depression. So, we should applause and pretend things are all right?

1929 Great Depression 2008 2009 Great Depression Of course we would not see thousands of skeletal jobless people queuing begging for food just like 80 years ago stupid. In 1928, the Fed drove up interest rates so high that construction slowed and subsequently the stock market crash. Consumers’ spending nose-dived and then you saw more than 9,000 banks went bust from 1930 to 1933 – the losses estimated at $2.5 billion or $340 billion of today’s money. People got panic and almost everyone withdrew their money from their bank’s account. Money supply collapsed and brought down many small businesses. Unemployment of 3% in 1929 jumped to 25% in 1933. It was a crisis of confidence and shortage of liquidity while what we faced today is shortage of solvency. Unless you can clone the problem back, chances are you won’t be able to experience the 25% unemployment anymore (hopefully). At today’s rate even half of that is bad enough and would bring you back to the 1982’s Great Recession.

Great Depression of today’s standard is a different animal altogether. Unlike 80 years ago, U.S. has become smarter with the ability to print almost unlimited monies if required. Furthermore U.S. problem is not confined to U.S. alone but rather shared amongst the entire richest nations. You have watched how European and Japanese were more anxious than Bush’s administration in preparing trillions of dollars whenever the superpower needs it. It is no-brainer that everyone cannot afford to have U.S. stop playing this musical chair game. American’s purchasing engine cannot stop else it’s Armageddon.

USA 2008 Great Depression It appears that the U.S. economic epidemic which has spread to Europe is now slowly setting its foot onto the Gulf countries. Kuwait’s Gulf Bank’s (KUW: GBK) stock was stopped from the trading board due to rumors that it incurred losses of over $750 million in derivatives deals. Other Gulf countries stock exchanges were not spared from the current global economic crisis. Oman, Qatar and Saudi Arabia’s stock exchanges were all down despite their black gold. And to think that the de-facto PM Najib has the nerve to declare Malaysia will never enter recession and the country’s willingness to pay more than double the price for Eurocopter’s EC 725 Cougar helicopters than Brazil were enough to send a very scary message to the public. Amazingly we’re still paying the salary to the good-for-nothing Kuala Lumpur Mayor who thought it would bring in more tourism by changing the 35-year-old famous Jalan Alor to Jalan Kejora. What a waste of public fund!

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Thursday, October 23, 2008

In time of Cheap Lobster, Peoples Money are Robbed

From the initial result of the “Poll” conducted by StockTube it appears majority of the readers are ready with tons of money to pounce on cheap stocks. I’m both surprise and happy that the readers are so financial-savvy – Bravo! This is once in a 10-year chance and might be once in your lifetime opportunity to make your money grows exponentially. Of course many of you were screaming like a hungry wolves that have not seen a moving creature for months –when is the best time to move in for the kill? Well, if I know the exact date Warren Buffett, Charlie Munger, Peter Lynch, Jim Cramer, George Soros, Carl Icahn, Jesse Livermore, John Templeton, Prince Alwaleed or even President Bush will need to bid with the highest bidder get to have an hour lunch appointment with me *grin*.

The fact is nobody knows when the perfect time to buy low (or rather lowest) but fortunately neither the technical analysts nor the fundamentalists can tell. It won’t be fun if you know that Michael Schumacher will emerge again as the F1 champion for the X-time, would it? So that’s the excitement of the current stock market. Everyone was looking at each other and wondering if it’s the right time to scoop the stocks. In fact the big boys with deep pocket are currently buying in stages. Only time will tell if they’re actually averaging down or averaging up – either way they’ll have the portfolios if the bull comes. Small investors would not have such luxury and most of them will have to wait for the right wave and ride on it. Unless of course your strategy is as simple as buy the stocks and keep it until the bull comes regardless of the “when”. I’m not suggesting that the bottom is here and you should buy now because I still think the worst is yet to come – I might be wrong, mind you *grin*. At the stock trading hall when the KLCI was at 1,300 back in 1997, who would have thought that the index would plunge to 262 in another 18-months?

Cheap Lobster during recession At this stage the bear is taking a rest with the bull is standing still while shaking its butt as if it has taken ecstasy. Heck, even the delicious Maine lobster industry is being slammed by the current economic tsunami with some seafood shops selling lobsters for as cheap as $3.89 a pound. Obviously the lousy sentiment on the stock market means lousy demand for the lobsters or any other luxurious seafood. Not even great earnings result from both Google Inc. (Nasdaq: GOOG,stock) and Apple Inc. (Nasdaq: AAPL, stock) could save the Nasdaq. The poor earnings and guidance from Boeing, AT&T and Amazon knocked off more than 500 points from Dow. For now the 9,000 will be the immediate resistance for Dow Jones. The global economy is getting so sick and chaos that the Argentine’s President Cristina Kirchner has to seize the country’s private pension funds in an apparent attempt to access its $29.3 billion before the $20 billion debt obligations deadline in 2009.

Now, this story about Argentina somehow reflects exactly what the Malaysian government was trying to do – access to EPF’s (Employee Provident Fund) RM5 billion in the name of boasting and helping undervalued stocks. Blind patriotism aside, I still couldn’t figure out why the ruling government has such an easy access to the vault. What you need to do is announce it (access to RM5 billion) without providing a detail plan and you get it? One of the comments I received from the reader suggested that there could be insider trading and the repeat of the 1997-1998 bailout of politicians’ stock at sky-high price actually hold water, mind you. The cronyism, corruption and nepotism are still very much alive and you can bet your last dollar that many politicians’ wealth had evaporated over the weeks. Strangely if Valuecap could make great profit by investing undervalued stocks then why should EPF loan the $5 billion? Won’t it better for EPF to invest the money itself and reap all the profits (and hopefully redistribute the profit in terms of dividends to us)? Declare how much profit can EPF enjoys from such silly arrangement and StockTube increases it by 1 percent. Just give me the RM5 billion and let me invest the so-called undervalued stocks *grin*.

Easy Money from EPF to Valuecap The ruling government never fails to amuse me with their half-past-six reasons in their policies implementation. Not long ago they cried loudly that the government cannot afford any more fuel subsidy thus the RM0.78 (41%) a liter petrol price hike when the global oil prices was at $127 a barrel. And now the black gold is under $70 a barrel yet they only reduce the price by RM0.40 a liter. They even have the cheek to divert the attention to petrol station dealers who complained about potential losses if the fuel is reduced further. And the pathetic Tenaga Nasional Berhad (KLSE: TENAGA, stock-code 5347) which despite its monopoly status cried like a baby for electricity tariff’s hike, blaming the high global oil prices. The baby was pacified with the hike but now TENAGA said it could lower the tariff only if the excessive 42% reserve margin for power is reduced (Huh?). In other words there won’t be any electricity tariff reduction so make yourself useful and go play balls.

Using such silly excuses only go to prove that it was true that the country actually has huge excess of electricity after all. Therefore why the plan to proceed with thisstupid and wasteful mega project called Bakun Dam, not to mention the newly proposed RM3 billion dam in Murun, Sarawak? Maybe the brilliant boys from Khazanah Nasional Berhad could shed some lights with its forecast that the nation will face energy shortage in 2012. Or maybe the newly appointed deputy Chairman was smarter than Abdullah Badawi in such tariff usage forecast calculation. Still, I want to know why give away RM5 billion to Valuecap knowing that we couldn’t trace its whereabouts. The chances are high that a huge portion of it will ended up in unknown’s pocket so might as well divide it equally to the 27 million population –each will get roughly RM185, enough for a month groceries to some of the poors.

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Wednesday, October 22, 2008

The RM5 billion, shouldn’t the Government seek approval?

Warren Buffett has blew the trumpet to buy stocks now and don’t keep cash. So if you’re a die-hard fan of this Oracle of Omaha, then you should just follow him. After all nobody knows when the bottom is to fish for stocks so you might as well take his advice. Furthermore how could the greatest investor be wrong when his fortune was built based on the simple concept of “be fearful when others are greedy and be greedy when others are fearful”. It’s true that fear is now widespread but the multi-billion-dollar question is will we ever see the desperation, panic or capitulation along the way from now onwards? Bad news is indeed our best friend and I wish there would be more of such friends coming to town *cruel me*.

When the chief executive of Berkshire Hathaway's (NYSE: BRK.A, stock) screamed “Cash is Trash” you better think twice before you unload all those money stacked under the mattress ready to buy any stocks tomorrow. What he really meant was if your only intention was to keep your money inside piggy bank or stash it under the pillow, then you’re fighting a losing game against the inflation. But if you believe “Cash is King” and the reason why you keep so much of it was to wait for the right time to pounce on dirt-cheap stocks, then you don’t really have to come visit StockTube *grin*.

However you’ve to take note that Warren Buffett’s strategy is always a long-term investment simply because he’s a novice when come to short-term prediction. Also he’s not always right so you got to do your homework as well. Make no mistake about the current U.S. stock market. Don’t ever dream that it will make a V-recovery because you would be lucky to have a U-recovery and the last thing we want is a L-recovery. One of my buddies was right when he said we shouldn’t rush into stocks now because you’ll have at least six-months to do your window shopping. Even at this moment investors are buying stocks to average their holding.

So, the Malaysian Government tries to copy Warren Buffett’s philosophy to buy local cheap stocks with the RM10 billion hot money allocation huh? Apparently the plan was to inject RM5 billion to Valuecap Sdn Bhd to invest in undervalued companies and the rest of the money on other assets. But the lack of transparency is haunting the EPF shareholders (that’s you and me) because it seems the de-facto PM Najib has instructed EPF (Employee Provident Fund) to loan the government RM5 billion for his plan. If the EPF can provide periodical report on how the RM5 billion of EPF account holders’ monies are to be used and the returns of such investment, I’m sure people won’t mind such noble plan to help the local stocks. But if everything is done in secrecy with no trace of where the RM5 billion goes to, then EPF account holders have the right to bark.

It is believed Valuecap has about RM4.9 billion worth of investment in 70 listed companies and the company which has assets of well over RM7.5 billion had paid out a total of RM135 million in dividends since Sept 2007. Nevertheless the returns of such borrowing to EPF from Valuecap is still unknown, not to mention the EPF account holders were being paid pathetic dividends every year. Just like Bush administration’s request for $700 billion rescue plan that requires Congress approval, the Malaysian Government cannot simply give a call to EPF and the RM5 billion is ready to be transported. The Malaysian Government should seek the approval from the “Congress” since the money belongs to the shareholders – the peoples’ monies.

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Monday, October 20, 2008

The Return of Sex Actor and Mahathirism

Who would have thought that the former health minister, Chua Soi Lek, would make a comeback after his sex scandal exposed early this year? He was written off from the political scene simply because none of the politicians who involved in sex scandal could come back in a big way. But now it appears this guy has not only come back after a mere 10-month since his cuckoo was revealed to public, he also came back as the deputy President of MCA, the second biggest party in the BN coalition government. As strange as it may look, the return of the sex actor spells more uncertainty to the party.

The newly elected President of MCA, Ong Tee Kiat, has been on cyber-war with the newly elected deputy President, Chua Soi Lek, via their personal blogs ever since the race for the power (and money?) begins. And now both have been put on the bed as newly wed husband-and-wife, it would be interesting to watch how they could sleep and live happily together. The result of the election also shows that the “just awaken” MCA delegates do not mind having a sex actor as their deputy President as long as he dares to speak up, lest they wish the party to become totally irrelevant. It’s always better to have such candidate than to have someone whose task is to submit to the bully UMNO, not to mention the continuity of “Ong-Dynasty”. You don’t need a heart-surgeon to conclude that the Ong-Brothers expired right after the Mar 2008 general election.

Ong Ka Chuan lost to Chua Soi Lek The fact is not only has the political landscape changed overnight after the Mar 2008 general election but indirectly the economic landscape has changed as well. Everyone, both foreign and local investors, are awaiting for reforms to happen. With U.S. economic in chaos, the foreign fund managers are not rushing their money into Malaysia. Hey! You can’t fool these investors as the “track record” since 2004 under Badawi’s administration was not that super-duper that they’ve to fight tooth and nail to pour their money in. But with the PM Badawi set to retire for good in another five-months, the shadow of “Mahathirism” comes back to haunt the investors. They still remember how former premier Mahathir “locked” or “trapped” their money from being repatriated overseas. But I guess nobody can blame the dictator as he himself was caught in panic over the 1997-1998 Economic Crisis which within 18-months had erased the KLCI of 1,300 in Feb 1997 to 262 in early Sep 1998.

Until now, it’s hard to say whether his capital control was successful as compared to the IMF-pills swallowed by countries such as South Korea and Indonesia. However one thing is for sure – over the period of 10-year since 1998 crisis, Malaysia could not match the prosperity enjoyed pre-1998. Sure, it appears that the country is not “affected” by the current global economic crisis as per various statements by the government ministers. The joke was that the local stock market did not fall as badly as 1997-1998 Crisis because almost all the foreign investors have exited and is enjoying pop-corn and Coke while watching how the country would perform. Furthermore compared to pre-1997 Crisis, the presence of foreign hot-money post-1997 was laughable. Theoretically the stock market should jump as a sign of approval of the three musketeers – Mahathir-Najib-Muhyddin, right after Badawi thrown in his towel. But it didn’t happen, so go figure.

Badawi lost to Mahathir Whether the de-facto PM Najib (with Mahathir's influence and tips?) could prove that he’s a better leader (economically) and not another slogan master does not only depends on what he has to announce today (if there’s one) but rather if those actions are practical and achievable. Investors have tasted the Malaysian style flip-fried-with-flop and it would be stupid to order the same dish again. After being tricked by Badawi somehow I’ve a feeling that Mahathir believes it’s better to copy Singapore’s Lee Kuan Yew Minister Mentor model since Najib is relatively smarter than Badawi. Won’t it be fun to see if the return of the Sex Actor and the Mahathirism could bring major changes to the country – good or bad?

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Friday, October 17, 2008

Cycle and the desire for Power, Money, Sex and Glamour

Did you realize that the climate has change dramatically this year? It might have transformed earlier but the slow and sleepy me only realized it days ago. Besides the consistent rainy evening (or afternoon on certain days) that pours “money” almost daily onto us, it appears the sunset and sunrise have shifted about an hour earlier. Not that I’m complaining but a few weeks of snow would be great, not that I’m tired of past skiing experience from the mountain of South Korea. I’ve not try (can’t afford it anyway *sigh*) pamper myself at Ski Resort in Switzerland though. Therefore I cursed my sister who has just return from her ski trip in Switzerland simply because she kept singing the songs of praise on her adventure which was mouth-watering. Heck, if only I can afford it *grin*.

Economic Stock Cycle I was having dim-sum-lunch with my buddies the other day and naturally the current global economic issues that have been plaguing almost every country now became the hot topic. One of my buddies kept on asking why we should have thiseconomic crisis every 10-year. Well, if you’re into financial sector you would know the answer. In fact everything revolves around us has its own cycle – from politics to marriage. For example the de-facto bully UMNO is destined to face crisis every 20-year and marriage would take the first test at the seventh-year and it’s called the 7-year-itch. If you survive then you would have an ever-lasting marriage else you would (happily) find yourself a new partner and the cycle repeats although some would experience permanent distress from a broken relationship thereafter.

Cycle of Market Emotion It’s the same in the employment world. If you survive the first five-year of employment and still feeling anxious to get out from that comfy bed to work, rain or shine, then your next hurdle will be the eighth or tenth year, whichever comes first. So it’s the cycle that we’re seeing the current economic chaos and we can’t a damn thing about it? Not quite because the constant value in all these cycles is the “human” or rather homo-sapiens. For many decades the technology and the way we conduct businesses have changed but human’s greed and fear remain unchanged. Human’s greed for power, money, sex, fame, knowledge, glamour have never change and will remains unchanged for many centuries to come. And this is exactly what you need to capitalize if your desire is to make some decent money so that you can retire earlier. It’s not too much to ask and it’s perfectly alright to have such goal after considering the amount certain politician(s) has profited from the sale of submarines and helicopters, no?

Anyway, the Dow’s 733-point tumble should not surprise you by now. Didn’t you read that such problem requires time to recover? Hence the 733-point plunge only goes to prove that the recent 932-point single-day-gain was heavily subsidized by over-due technical-rebound after a week of onslaught. By now you should be able to read the market’s pulse and you surely do not need the government to tell you that a recession is bound to happen, if not already happened. Go back to the basic fundamental of demand and supply. Get to know the employment report and move your lazy bum to survey the retails sales. Yeah, the greedy bankers should be punished and let to rot and not be given the taxpayer money to bail them out else the same problem will happen again. But the problem is this bunch of greedy top executives also happened to be smart-arses as well. They created fear that if their financial institution goes down, they will pull the rest down the lake unless of course the government rushes as much money as possible to their coffer.

Retail Sales turn bad OMX Iceland stock exchange fell by 77 percent or 2,326.2 to 678.4 after trading resumes post three-day suspension and some poor charities are about to lose their £120 million invested in Icelandic banks. Heck, even the proud Switzerland largest banks, UBS AG & Credit Suisse Group AG received 6 billion and 10 billion francs respectively. So Malaysia is actually a very fortunate country with very brave and most capable politicians to declare the country will never enter the recession-gate. Bravo! For once you’ve managed the country better than Singapore. Seriously, the stock markets sentiment now is only at the “Fear” level and has not even reach the “Desperation”, “Panic”, “Capitulation” or “Despondency” stage yet so stay cool and let’s pop the Champaign, shall we?

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Thursday, October 16, 2008

Hooray! Another Fuel Reduction but it’s a Little Too Late

Sometimes it’s fun to see how the half-past-six government struggling to find ways to twist the facts again after they shot their own foot. Everyone knows that Malaysia is perhaps the only oil-producing country that charges the highest fuel price on her citizen. Sure, the country’s oil reserve will dry soon and in another 10-year or so, we’ll be begging other oil producer countries to sell their oil to us, so goes the propaganda. Hence, we got to become “prudent” and one way to preserve the wealth is to pay more. Was it our fault that the stupid government spent like there’s no tomorrow in the first place and when the nation’s coffer is running dry, they instilled this fear in order to justify the fuel hike? It was amusing that suddenly the government awakens from their nightmare and realized thesubsidy mentality that they had deployed decades ago has grown so strong that it robbed them of five-states and two-third majority in the Parliament.

The country has too many artificial parts. The NEP thing has only enriches a small group of cronies while the rest of the people were left to rot although strangely these same people continue to vote the same corrupt officers to power. The subsidy scheme was drafted in order to jump-start the poor so that they could stand tall on their own feet one fine day. But it didn’t take off as planned and this“category” of people still demands subsidies from gasoline to education. Essentially it has created an artificial demand and supply value chain of which if interrupted could explode like volcano. Ask anyone old enough and they will tell you an engineer 20 years ago has more disposable money than now – with salary package hardly change within the time-span.

Fuel Price of Producing Countries As much as the outgoing PM Abdullah Badawi loves to sleep, the people are actually willing to close one-eye if his administration can at least control the inflation. Heck, they’re even willing to close one-eye on the rampant corruptions practiced since the 22-year-rule under Mahathirism. It doesn’t take a rocket scientist to know that any fuel hike would be followed by inflation, what more in a country where enforcement of essential goods are almost non-existent. Not sure whether it was plain stupid or arrogance but the decision to raise fuel price by 30 sen (from RM1.62 to RM1.92 a liter) on 28th Feb 2006 was the turning point to all the havoc. It’s hard to believe that the Badawi’s administration did not know the impact from such an action since he got all the helps and consultations from the 4th-floor-geniuses, fully imported from Oxford mind you.

Climax was reached when the sleepy, clueless and confused PM thought the people would understand him when he decided on the 78 sen (41%) a liter hike on 5th June 2008. All hell breaks loose when the inflation skyrockets. The crude oil prices were at $128 a barrel then. The fact that Petronas, a wholly government owned entity, was reaping easy money during the black oil’s appreciation was swept under the carpet and instead the government launched the No-Holds-Bar campaign focusing on how much the government was subsidizing the fuel. So, instead of performing the simple arithmetic of minus the “extra gains” from Petronas sudden windfall and “add” to the government’s so-called fuel subsidy in order to “neutralize” the situation during such trying time, Badawi’s administration believed it was better to take money away from the struggling citizen than to offend the Petronas major shareholders (which in turns is the government themselves).

Malaysia Petrol vs Crude Prices But now the fuel price drops like a rock to even lower than the closing price on that faithful day of 5 June 2008 ($127.79 a barrel), naturally people are demanding that the fuel price be lowered to the previous RM1.92 a liter, if not lower. Caught in the middle, the government has no choice but to reduce the fuel price in stages. With such strategy the government can still enjoy the extra pounds of fats (being the difference between the latest RM2.30 and RM1.92 a liter) while can shout that the government has so far reduce the fuel prices “three freaking times” *applause please*. However nobody knows for sure on how the formula on the price reduction was being calculated.

Fuel Price Formula Statistically, if you compare the crude oil prices and the petrol price reduction, you might need to resurrect Einstein to solve the mystery. For example when the crude oil dropped from $127.79 to $114.59 the difference was $13.20 which translated to fuel reduction of RM0.15 a liter. Subsequently the difference of $8.86 ($114.59 minus $105.73) produced RM0.10 a liter reduction. Strangely crude oil differences of $26.78 (from $105.73 to $78.95) only transformed to RM0.15 a liter difference. There might be noises and other factors that the geniuses need to take into consideration but looking at the poor-man model above, it appears that in order for the petrol price to fall back to RM1.90 a liter, you’ve to pray that the crude oil plunges by $48 bucks to $30 a barrel. But, but, but, but that means the global economy would most likely be in Great Depression and chances are high that you won’t have much money to visit the nearest fuel pump.

Shahril petrol price formula Nevertheless, the main problem is the food prices remain high despite cheaper petrol and the cycle of blame goes again. The consumers point their finger at operator; the operators blame the supplier; the suppliers blame on transporters; the transporters blame on government and the government points their finger at consumers and consumer groups *gulp*. I guess the government still refuse to acknowledge that once the fire has been started (by themselves in the first place), it’s hard to be extinguished when everyone was happily pointing finger at each other while the victims were crying for help.

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Tuesday, October 14, 2008

Easy money everywhere, we are safe – for now

It was nice to hear the Malaysia’s Central Bank (Bank Negara) is ready to provide liquidity to financial institutions should they need the money although the Central Bank did not commit on the dollars and cents that it could cough up to “rescue” them. I’m sure the central bank should have tens of billions ready in the vault for such purpose. It was also nice to read that British PM Gordon Brown’s administration injected ₤37 billion ($63 billion) into Royal Bank of Scotland Group PLC (RBS), Lloyds TSB Group PLC and HBOS PLC (Lloyds & HBOS are to be merged) in exchange for 60 and 43.5 percent stake respectively.

Spain also help by buying the rest of the three-quarters stake it doesn’t already in Philadelphia-based thrift Sovereign Bancorp Inc. for $1.9 billion. The much awaited and greatest news came from Japan and EU nevertheless. The cash-rich Japan says it is ready to offer money to any crumbling financial institutions around the world (Hello! Anybody interested?) This is what I called “Cash is King” and what could be the better time to scoop stakes in such banks if not now? Europe (Britain, France, Germany, Netherlands, Portugal, Spain & Austria) has committed a whopping $2.3 trillion to protect their banks.

Dow biggest gains record Naturally the Dow Jones jumped a mind-boggling 932.42 points *Wow!* (11.08%) to 9,387.61 - the biggest point gain ever. The S&P 500 index climbed 104.13 points (11.58%) to 1,003.35 while the Nasdaq composite index rose 194.74 points (11.81%) to 1,844.25. Percentage-wise, this is the biggest one-day rally since 1933’s Great Depression. It was green screen all over traders’ monitor and the U.S. stock market made a $1.2 trillion paper gains alone on Monday with 3,030 stocks advanced versus 160 declined. It was cheers when the Fed was reported to begin providing “unlimited” dollar funding with the assistance from the European Central Bank, the Bank of England and the Swiss National Bank. In short it means no matter how much of U.S. dollar is required, the European central banks will provide it. Cool huh?

Meanwhile Treasury Secretary Henry Paulson has summoned nine banking chief executives to Washington, basically to tell them how much the Treasury is buying into their companies. Some of the big banks were not happy to be told to swallow the money despite the fact that many didn’t want the money. But like it or not the Treasury will buy $25 billion in preferred stock in Bank of America, Merrill Lynch, J.P. Morgan and Citigroup; between $20 billion and $25 billion in Wells Fargo (fight it Warren Buffett!); $10 billion in Goldman and Morgan Stanley; $3 billion in Bank of New York Mellon; and about $2 billion in State Street. Preferred shares mean such paper carries a coupon of 5% annual dividend that rises to 9% after five years although the holders do not enjoy voting rights.

US stock performance 900 points gain It was definitely a nice view to have people flashing their billions and trillion to you and it would be disastrous for the stock markets to be in the red with such huge initiatives. The question remains if the 900+ point jump was a one-off time thingy with the long over-due technical rebound bundled in or if the stock markets have finally recover from the nightmare. While it was a happy day, nobody can tell for sure that the worst is over and we should pop the Champaign. Has the tsunami stocks gone for good? What say you? Oh yeah, by the way, please vote on what you think of the current economy crisis – it’s on the right-side of this website.

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Monday, October 13, 2008

Let’s Close the Global Stock Markets, shall we?

On Black Monday in 1929 the stocks dropped 24 percent and at the lowest point the U.S. stocks had lost more than 80 percent compared to their highest point (recorded in Sept 1929). But it wasn’t until 1932 when it hit the bottom and it took 29 years (1958) for the stock market to climb back to pre-Depression level. It was better during 1974’s Great Bear Market when the U.S. stocks erased more than 50 percent off their peak but compared to 1932 Great Depression, the stocks this time fell gradually. Still with Black Monday, the 1987 crash sent the U.S. stock market down 20 percent but it recovered fairly quickly.

As for the 2008 bear, the stock market has fallen more steeply during the first year than it did during the 1932 Great Depression and so far the stocks are more than 40 percent lower. The U.S. has done her part when the law was passed for the $700-plus billion rescue plan although the Congress felt somewhat foolish when the Bush administration suddenly wanted to buy part ownership in American banks and now it’s Group of Seven (G7) and Group of 20 nations’ (G20) turn. Whether such talks will remain talks and more meeting to be attended without concrete actions shall remains to be seen.

close global stock exchanges I’ve talked about the silliness in banning the short-selling by the U.S. regulator, SEC. Not only would such action not help to stop the bleeding it actually tantamount to add fuel into the fire. Former dictator via his “Mahathirism” had banned such short-selling during the beginning of 1997-1998 Asia Economic Crisis but the local stock exchange tumbled from more than 1,000-level to 200-plus-level. U.S. SEC tried to do that 10-years later but the Dow Jones is now trying to nose-dive to 7,000-level from 11,000-level. When nine out of ten people are running mad and fear, no short-selling ban can help stop the onslaught. There’s only one thing left to do to stop the global stock markets drop – close the global stock markets, period *grin*.

That was exactly what the G7 finance ministers were mooting when the Italian Prime Minister leaked the story. Strangely these smart ministers thought it was a freaking good idea to suspend the world’s exchanges in order to buy some time to rewrite some rules and enable U.S. Treasury and Federal Reserves to implement the $700 billion bailout plan. Furthermore stock markets around the world such as Iceland, Russia, Indonesia, Romania, Austria, Thailand and Brazil were either forced to halt trading or frozen indefinitely. It would be laughing stock to implement such stock market closure across the boards, no? These geniuses must have thought that once the global stock markets closed and reopen, people will forget about the sub-prime and the financial crisis as if they were being brain-washed. What a joke!

U.S. companies are set to announce their corporate earnings for the season starting this week. All the eyes are set to grill financial institutions such as Citigroup and JPMorgan Chase & Co. Investors are watching and will find tiny excuses to punish any stocks that do not exceed earnings estimate. The emotion is running high and people can be very unreasonable. Next week should be another interesting and great week with lots of surprises.

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Sunday, October 12, 2008

Black Friday almost Rock&Roll, it’s not the bottom yet

Black Friday – well, almost, when the Dow opened with breathtaking plunge of nearly 700 points during the first 5-minutes into trading hour. The much monitored index was whacked to as low as 7,884 before recovered to above 8,000. Somehow I believe the authorities had their hands in this sudden recovery, not that it’s anything puzzling considering Friday’s closing was the seventh day of straight triple-digit loss. The Dow was bashed again at from 1:50 pm to 2:50 pm when the index tried to dive below 8,000-level after Moody’s warning that Morgan Stanley’s (NYSE: MS, stock) and Goldman Sachs Group Inc.’s (NYSE: GS, stock) long-term debt ratings might be cut. At the closing the Dow was down 128-point only with a huge swung of about 1,000 points from its low to its high *applause*.

Black Friday 700 point drop Some stock market players immediately raised the buzz that the bottom is forming simply because it appears there was a strong support at 8,000-level. On the other hand there’re analysts who believe it’s not easy to call the bottom as it takes time for the U.S. stock market to recover. I think it makes perfect sense to believe the market has yet to find its’ bottom. It’s like how the Malaysian were being bullied by the Barisan Nasional ruling government for the last 50-year and yet the voters still voted in the bully to become their master and guardian. Year after year mismanagement and corruptions were getting rampant but the stupid Malaysian chose to close one-eye and voted the same corrupted parties as the government. Only after the nation’s coffer is out of money and the arrogant government raised fuel hikes until the people couldn’t take the heat did they retaliate.

It’s the same with the current U.S. stock market crisis. Banks took the risks to become sub-prime lenders lending to unqualified borrowers in the name of profit and business growth. As long as the financial institutions reported good quarterly growth their stock skyrocketed. The top management was treated as God and huge bonuses were paid for job well done. When it burst this is what we’re getting. And the more the government tries to rescue or bail out such lenders (banks), the more people wouldn’t listen – just like how Malaysian has the perception that the current ruling government is too corrupt to be trust. It takes time for the sell-off (stock market) to cool down, the same way the Malaysian government needs time to reform (if they ever do). Another analyst even predicted that the U.S. stock markets might test S&P-500 low of 800-point and the Dow at 7,300-point before we can see clearly if the bottom has been hit *whoa*. There’re even calls that it’s not too late to sell now.

Another reason why I believe the bottom is still quite far below is the fact that such crisis will not infect financial sector alone. We’ll soon see the chain-reaction and it seems the next immediate sector is auto industry with 100-year-old General Motors Corp and 83-year-old Chrysler LLC talking about merger possibility. All this while we were being fed with the mortgages problem but nobody talks about the hidden time-bomb – credit-card debt, which amounted to a whopping US$950 billion outstanding. Prepare for another round of financial crisis when this credit-card melts and should this happens, banks such as Citigroup Inc, Bank of America and JPMorgan Chase will not be spared.

Down chart The other day I had a conversation with the boss of an electrical shop as I was thinking of getting a plasma TV after my sister got hers. It would be fun to play my PlayStation on that big flat screen. I asked the boss how was the business during the recent Hari Raya festival and since his business was mainly targeted at the Malay-Muslim, his feedback would be a good yardstick. He cried that this year his business dropped by 30% compared to previous year. But he grinned when he related the story of his good friend whose business is in car accessories that dropped by 50 percent. Assuming what the Second Finance Minister told us about Malaysia will not go into recession is true, the above story about domestic business should suffice for politicians to stop lying about the true picture of the country economy. Domestic economy is insufficient to move the nation’s engine, stupid!

Dow one week stock beating With Jakarta Stock Exchange frozen in the fridge, Japan’s insurer Yamato Life Co Insurance and Co in bankruptcy and Iceland financial system collapsed to the extent that the country may go bankrupt herself prompting the Iceland’s premier to tells the nation to go fishing instead, there could be more fireworks from countries such as:

Indonesia - stock fell by 21 percent in three days,
Vietnam - inflation of 21% and currency depreciation),
South Korea - currency (Korea won) lost 30% value against dollar since early of the year)
Pakistan - central bank’s foreign currency reserves fell to US$5 billion only),
Argentina - inflation of 28%),
Turkey - huge foreign debt),
New Zealand – currency (Kiwi dollar) lost 28% value against dollar and is in recession
Hungary - huge foreign debt exceeding 80% of GDP)

And to think that the dreadful "Mahathirism" will be back haunting us again with his shadow dictating Najib in the daily administration and policies, the old dictator might just play with his favorite toy again – repeg the ringgit against dollar again, not to mention more bloggers would be dump into the toxic site. So far we’ve witness the stock market tsunami. Will we be able to see the political tsunami this year? Life during weekend is definitely boring without Anwar’s stories, never mind he flip-flop imitating Badawi’s dance.

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Friday, October 10, 2008

Panic Selling Continues, first Stock Exchange to be Frozen

The “Taikor” Dow Jones has erased a whopping 2,300 points since six days ago and all were in triple-digit loss. I hope none of StockTube readers bought any Call Options when all the gamblers and traders were shorting the market using Put Options since the ban on short-selling. After the 777-point plunge now we saw 678-point plunge to 8,579.19 Thursday. The scary part is not about the triple-point tumble although the 7 percent drop would normally saw many jaws dropped onto the floor before the $700 billion rescue plan; but rather the fact that the 9,000 level was breached with such an ease. This is bad news, mind you, and it’s no brainer that you can increase your bet on Put Options. Wait! Hang on there!

If you’ve existing profitable Put Options then transform yourself to be either a bull or a bear but not a pig. Take some money off the table simply because you won’t know when the technical rebound is. But if you haven’t enter into the market yet, please do your homework and gauge the stock market sentiment daily before the market starts. I’ve said in such a panic situation, you can relieve yourself of the abundance of technical analysis because it’s useless for the time being. Technical chart can’t tell you the force of panic selling (can they?) and the bad news / statistic to be released by government agencies. Simple yet disastrous news such as “possibility” of a credit rating downgrade on General Motors Corp. was enough to create havoc on the stock market as can be witnessed on Thursday’s trading. (Watch out Proton! You’re next)

And if you believe the curse of Friday, you just have added another reason to be extremely bearish when the market open later. People do not think logically and any attempt(s) or initiative(s) announced by the federal government to save or calm the situation will be seen from the negative perspective / angle. So when the federal government said they wish to stabilize U.S. banks in exchange for equity stakes, investors generally thought that more banks are crumbling down and this started another round of panic-selling. Since six days ago, the selling volume is still high and there’s no sign to show otherwise. I pity the next President of the United States, whoever he is because this is not a toy for small boy.

Dow 6 days plunge At the same time I also pity Second Finance Minister Nor Yakcop (for being trapped in denial syndrome) on his statement that Malaysia will not go into recession although he was smart enough to say the economic growth for next year, 2009, might have to be examined. He might not want to create panic but it would be better to get the people ready instead; just like when the lame duck outgoing PM assured the people there would be not fuel hike only to raise it by 41 percent to the surprises and horrors of the whole population. Just because the U.S. is thousands of miles away doesn’t mean Malaysia is shielded from the impact. I think the situation is critical enough for Indonesian stock exchange to be“suspended indefinitely” to prevent deeper panic after the JSX was down by 21 percent this week alone. I can’t remember JSC was frozen even during the 1997-1998 Asia Economic Crisis, can you?

JSX Frozen indefinitely I doubt the local banks would face the same fate as some of the troubled U.S. banks because the 1997-1998 Recession has thought the local banks to be prudent. Nevertheless local banks are starting to be selective in their lending which means more small and medium businesses would be affected. Although the local banks will not go bust (hopefully) the business will be slowing down and thus the earnings for the subsequent quarters will not be rosy. You can only expect more and more corporate earnings growth cut from analysts (Citi already did that) on local financial institutions (follows by other sectors) and this is enough to put many economic wheels to a standstill. It would be nice to make money from U.S. and put it to good use by whacking the local stocks. Isn’t it beautiful to watch the Ringgit flushing down the toilet against the Dollar? Is Najib any better than Badawi in managing the economy and to find a formula to minimize the impact?

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Thursday, October 09, 2008

Flip-flop Badawi to the Exit Corridor – from Hero to Zero

Like it or not the outgoing Malaysian Prime Minister Abdullah Badawi would be remember as the weakest, laziest, useless and the most indecisivePM this country ever had. From the start he doesn’t have the minimum quality, both academic and leadership, to become the PM. He was put on throne because the former dictator, Mahathir, who had ruled Malaysia with iron-fist for 22-years “thought” Badawi was the tamest breed of hamster pet he could ever afford to warm the seat temporarily before hand-over the premiership to the current deputy PM Najib Razak.

Little did Mahathir realize that his hand-picked hamster would bit his hand and ate his “cheese” while refused to stay temporarily as promised. What frustrated Mahathir more was when Badawi decided to play marbles with the Father of Singapore, Lee Kuan Yew, a person Mahathir hates the most even to this day. Things got extremely ugly when Mahathir found out that Badawi was actually sleeping on the job and left the daily management of the country to a bunch ofhippies led by his own son-in-law, Khairi Jamaluddin. Without grassroots support but yet was ambitious to become youngest Prime Minister before he reaches the age of 40, Khairi and his “4th Floor” boys were said to control almost every decision made by Badawi.

Abdullah Badawi - Rise of a Hero

Of course Abdullah Badawi had his glory moment when in 2004 he led the Barisan Nasional (National Front) to a landslide and historic victory with 90 percent of seats in the bag. It was the greatest victory ever. Four years later on Mar 2008 general election Abdullah again led the BN coalition party of 14 political parties. Only this time it was a spectacular disaster because not only the National Front lost five states inclusive of the most developed state of Penang and Selangor, the arrogant coalition also lost its treasured two-third majority in the Parliament. It was the greatest defeat ever. I guess not many world leader could claim such trophy. To be fair the 2004 victory was a direct result of people’s 22-year of unhappiness under Mahathir’s racists divide-and-rule scheme and the threat of fear using the draconian ISA on whoever that could threaten Mahathir’s iron-fist grip on power.

Badawi 2004's Reform Promises

What Abdullah did was to add the slogan as the catalyst and the people were flocking to him as if he was God. Badawi’s promises for reforms were too good to believe yet that was what the people had been waiting for. The newly crowned king was so popular that a pathetic DJ (enough to say his name consists of two character) from 988 radio station was so obsessed that he immediately compared Badawi to China’s legendary Justice Bao (包青天). People were relieved that the country was finally free from the dictatorship and the feel good factor was on the air. Even the then opposition leader Lim Kit Siang was singing songs of praise for Badawi. Little did the 20-plus million populations realize that their nightmare had just begun. He was known as “Mr. Clean” so how bad could he be?

Abdullah Badawi’s journey to Zero

Hidden by the shadow of arrogance Abdullah Badawi thought he was invincible with the grand victory and he started to sleep on the job thinking he could fool the people all the time. Instead of surrounding himself with good advisors, Badawi chose to get close to shoe polishers. He thought his slogan should work forever and people won’t mind if he "sleeps a little". In fact he was an empty vessel who happened to be there at the right time at the right place. Furthermore if he managed to fool the old-fox Mahathir, chances are he can fool almost everybody. Who cares if all he got was only Islamic Studies under his belt and can’t even articulate any idea, let alone vision, to the audience. Obviously he has zero knowledge in Economic 101. He was the King of Sloganeering after all and that’s enough to stay in power - at least that was what he thought.

Dummies for Badawi He might survives the premiership even to today if he was smart enough to at least engage smart advisors, regardless of race and background, to do his job while he continue his sleep. Hey, the saying goes that if you’re not so smart then employs smart people to do your chores. That was why I hope my kids will never be so smart because if they are, chances are high they’ll ended up working for someone else. But I guess a PM who does not have properly functioning brains deserves what he’s getting today. The final stroke of bad decision was obviously the foreverfuel hike that caused the inflation to skyrocket. He went back to sleep thereafter leaving his deputy to urge people to change their style (again?) of living. When average-Joes on the street were having difficulties putting foods on the table that was when the earthquake started and tsunami hit his coalition party. The captain lost 5 states in the Mar general election. And when he thought the tsunami has ended, the next 78 sen (41%) fuel hike was announced and naturally opposition Anwar won Permatang Pauh by-election handsomely.

Badawi Weakest PM ever The second item on the top list that contributed to his fall was perhaps hiscontinuous “racist” policies inherited from his master, Mahathir Mohamad. His party, UMNO, was allowed free hand in flashing racial cards ranging from brandishing the “keris”, telling the non-Malay that UMNO do not need a single of their votes to stay in power, threatening the non-Malay with “13th May” (again?) incident to even intimidating his own component parties such as Gerakan into submission. It was the highest degree of arrogance, abuse of power, mismanagement and corruption that led to the people’s “Makkal Sakti”. Myth-wise, his downfall could also be contributed to his decision to marry divorcee Jeanne Abdullah nee Danker, former wife of Abdullah’s late wife’s brother. Not sure if Badawi had consulted feng-shui master (can’t afford Lilian Too, Joey Yap or Master Soo’s consultation fees?) but it appeared his new wife somehow “accelerate” the end of his political career, talk about bad luck or “four pillars of destiny”. For this you got to give credit to Mahathir because he is a big fan of feng-shui. His “Islam Hadhari” could be blamed as well partly because naughtily it means “had hari” (limited days?) so I guess his expiry day has arrive.

Badawi, the Father of Empty Corridors

Badawi should stop beating around the bush that he’ll not defend his UMNO presidency in March 2009 because he loves the party and wish to put the nation’s interest above all. Accept the fact that he’s no longer welcome not only by the people at large but also by his own comrades within UMNO. Sure, somebody who is “next-in-line” could have plotted the Supreme Council Warlords to kick him out but if he can at least produce a non-blank report-card since he took over the premiership, the attempt would not have been so easy. He tried to imitate his successor in promoting mega project and started the silly “Corridors” initiatives. Of course it didn’t take off handsomely because the scale was simply unbelievable – between RM800 billion to RM1.3 trillion (I was flabbergasted). He’s now shown the “Exit Corridor” instead.

Badawi Father of Corridors Now that he’s leaving for good (hopefully he won’t flip-flop again) suddenly people realized that they have to deal with a potential new Prime Minister who might be equally weak, not to mention tainted with the murder of Mongolian translator Altantuya Shaaribuu. Looking at the quality of the zombies who threw in their nomination for the UMNO deputy President post, the future of this country looks to be gloomy. Economic aside, the possibility of Mahathir playing the role of a decision-maker behind the curtain in Najib’s administration will bring back the dark-age of the past. Despite Badawi’s last pledge to carry-out the five missions before he pack, nobody believes it could be done within four-months since he didn’t manage to do it in four-years. Have a nice sleep Mr. Flip Flop Sleepy Head!

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Wednesday, October 08, 2008

Cash is King but do you have the bullets?

When the Dow was flushed to below 10,000 and as low as 9,560 at one point but recovered nearing the 10,000 before the closing bell on Monday, I was relieved. Firstly I was glad because I closed my position on AAPL Put Option before the last hour jump and secondly I was relieved that the Dow looked to bounce back, technically, and was fighting for the important 10,000-level. It’s no fun to see the Dow bleeds to death because it means the macro and micro economy will be affected. The last thing we want to see is high unemployment and increase in crimes, not that it’s any better now.

The Dow rebound on Tuesday but unfortunately managed to stay for a very short period of time before the freefall and erase more than 500 points from its index. In fact the writing was already in the wall when the VIX spiked on Monday. Although this extreme fear-factor indicator was not accurate due to the ban on short-selling forcing hedge-funds to re-strategize their betting on “put options”, it nevertheless showed the general sentiment. When time is bad people gets blamed as human feels good to have someone takes the bullet. Congress was blamed for the 777-point drop and Europe blamed the bankrupt U.S. for letting the shits flowed into their garden. And it’s Ben Bernanke’s turn to get the blame for Tuesday’s 500-point plunge for saying “The outlook for economic growth has worsened and that the downside risks to growth have increased”.

Feds cut 50 basis point Bernanke’s statement is no-brainer all right but mad people running on the trading floor do not like such bad news. Ben has just cut interest rate by 50 basis points, as did the European Central Bank, Bank of England and Swiss, Canadian and Swedish central banks. Let’s see how the stock exchange will react to the latest goodies, shall we? Seriously what should the “Man Street” do when the “Wall Street” is bleeding profusely? If the fireworks of 875 points tumble on Monday and Tuesday is not enough to scare the sh*t out of you yet, then either you’re living in the cave or your financial planning is rock-solid. It’s easy to see if you’re that tough – can you survive comfortably but not luxuriously for the next 5-years, if not 10-years, in case you’re jobless anytime from now onwards?

It’s not mission impossible or some fantasy Vision-2020 dreamed by some politicians. Assuming you’ve no debts (credit card, house-loan or mortgage, car loan etc) and you need $48,000 per annum to stay alive you will need $240,000 in savings to fit into this category. It’s better if you have the extra pounds to buy cheap stocks when the time comes. Annually, a Google Software Engineer earns about $96,000, an Accenture Analyst earns $58,000 and a Deloitte Tax Consultant earns roughly $60,000. Unless you graduated yesterday, chances are high that you would have some sort of savings and if you do not have, it’s wake-up time for you. You can’t skin the fat cat no matter how cheap the stocks are if you do not have the money.

Got Money to buy cheap sales? Again, stop thinking about that new car model or the new property project just published or launched. It would be cheaper to get them later. Now is the time for you to recalculate your “bullets” and it’s up to you to scoop either the stocks or the condos when the fire-sale comes eventually. Talk is cheap so let’s be the last person to laugh all the way to the bank. Only a few percentages of people are actually waiting for the real panic (selling) to happen again. This could be your first experience or your last attempt to boast to others that you actually realize and act upon the power of contrarian just like the Oracle of Omaha, Warren Buffett – be extremely greedy when others are fearful and vice-versa.

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AirAsia Privatization, a Pathetic Offer of RM1.35 a share?

Rumors about AirAsia Berhad’s (KLSE: AIRASIA, stock-code 5099) privatization have been circulating many months ago and today the Southeast Asia’s largest discount carrier confirmed that its major shareholder Tune Air Berhad is considering the initiative to buy back the shares from the public in an attempt to take the company private. The magic word here is“considering” and based on the airline’s feedback to Bursa Malaysia it appears this option will only be viable if the public agreed to surrender their shares in exchange for RM1.35 per share *stingy rat*.

As much as Tony Fernandes and his partner, Kamarudin Meranun, would like investors to appreciate the listed company more than the current stock value, the fact remains that its aggressive expansion has somehow sent shivers into investors’ bones. It (the expansion) also came at a bad time when the global oil prices jumped from as low as $85 early Jan 2008 to as high as $147 a barrel mid July 2008. So you can’t blame investors for having cold feet over the stock as the black gold has direct impact on the cost of running the airline business. Tony has earlier hinted that his baby (AirAsia) will not be de-listed despite the poor stock performance but instead might float his long-haul budget airline, AirAsia X, via a reverse takeover or backdoor listing *could this happen now?*.

AirAsia Privatization But now with the current global economy crisis, it would not be easy to gain investor’s interest in the stock although the initial plan was to get secondary listing either in U.S. or Europe. With the expected delivery of 17 units of A320s in 2008 and 23 units more in 2010 it seems the fastest way to secure financing is via privatization – assuming Tony has already got the ready-investors lined-up. As financial institutions are reluctant to lend in view of the current crisis in the banking system the speculators are betting that Employees Provident Fund (EPF) who has a 7.7 percent stake in AirAsia could be the major financier should the plan to privatize proceed. Furthermore EPF is a long-term investor unlike some foreign investors who dumped the shares for short-term gains inline with global stock market volatility.

Based on the strengthening of U.S. dollar against major currencies and the London inter-bank offered rate (LIBOR) of 4.5 percent for US dollar-denominated borrowings, it would be suicidal to seek borrowing in U.S. currency.Assuming Tune Air Sdn Bhd and EPF which own 30.7% and 7.7% respectively in AirAsia work hand-in-hand to get the plan works, it will need to dig about RM1.974 billion to buy back the remaining public shares. EPF is cash-rich so funding shouldn’t be a problem. A better plan is to allocate certain percentage to interested parties such as Middle-East financier and of course Tony buddy’s Virgin Group.

Global oil prices which have fallen to $90 a barrel should take away the pressure on AirAsia’s bottom-line and the current stock price seems juicy for private investors to take up stakes for sale. Heck, since most of the research houses are still reluctant to give a higher value on its stock AirAsia might as well take it off from the Kuala Lumpur Stock Exchange. Nevertheless the privatization plan could fail if the minority shareholders think the RM1.35 a share is too pathetic an offer to accept. OSK Research thought a 20 percent premium should be an attractive price but I want more. You should know by now how greedy I am, don’t you *grin*? By the way, it appears Dow Jones and Apple Inc. (Nasdaq: AAPL, stock) are still bleeding.

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Monday, October 06, 2008

Dow below 10,000; $700B bailout plan was the poison?

Lame-duck and flip-flop PM Abdullah Badawi said he will announce the decision on whether he would defend the UMNO presidency either tomorrow or by Wednesday. Although he would most probably quit, the Malaysian PM might just show his infamous indecisive leadership again – he might announce he still has many things to do and people are still supporting him so he’ll only decide when he crosses the bridge next Mar 2009. Bet his anxious deputy, Najib, would be fuming with anger because his wife could be waiting at home and ready to slap him for not pushing the sleepy-head enough. She had made the necessary arrangement for the big day – to be the country’s First Lady (although hierarchy-wise the wife of PM is not the First Lady but who cares).

DJIA chart Heck, who cares if Badawi decided “not to retire” officially by Mar 2009 - just for the fun to frustrate Najib and those Supreme Council warlords who dared to tell Badawi to get lost? Even if Najib managed to poke his finger again into Badawi’s butt to wake him up and surrender his trophy, would that make any difference to the nation’s economy, education, administration and people’s welfare? Dow Jones has just plunged 300 points within the first 30-minutes of trading hour and it appears the bottom is still quite far away. Chances are high that both the clueless Badawi and Najib will not be able to strategize preventive measures to minimize the global recession when the full-scale tsunami reaches the country’s shore. We know for sure that the country will still on auto-pilot mode for the next six months simply because none of the top government officials will care about the economy – they’re too busy politicking.

For the first time since 2004 the much-respected Dow Jones Industrial Average fell to below 10,000-level. The European governments were scrambling to save their financial institutions from bankruptcy which saw major indexes in London, Paris, and Frankfurt all down about 5 percent. Amazingly the trading on banking stocks was halted after indexes fell more than 14 percent in Russia and Iceland. Germany agreed to pump a mind-boggling $68 billion to bailout commercial-property lender Hypo Real Estate Holding AG while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed. However investors were so pessimistic that they continue their selling spree, not even Germany’s guarantee of $785 billion in private savings and checking accounts could calm the situation.

Already the American consumers are cutting on their spending and this Christmas could be a boring one even if the current global oil prices were to plunge to below $90 a barrel. Bernanke and his boys could not afford to stand and watch the consumers do window-shopping only so the Feds might be force to cut the interest rate again. Now if you were to ask 100 people, I bet 99 percent of them will tell you the recession is inevitable. Only last week investors were brainwashed that without the $700 billion rescue plan and if the lawmakers do nothing, the U.S. economy will collapse. But today people (including me) are wondering if the law signed by President Bush was the right medicine or was it the catalyst (or poison) that is accelerating the recession. Average Joes are thinking that since the governments were so damn anxious to save the banks, the problems with these institutions must be really huge. Period. And so they’re selling the shares on their hand because their friends are doing the same thing. It’s the contagion of fear that is sweeping the trading floors.

AAPL profit AAPL stock chart Of course the participation of Warren Buffett’s (NYSE: BRK.A, stock) in scooping $3 billion of Electric Company (NYSE: GE, stock) and $5 billion of Goldman Sachs Group Inc. (NYSE: GS, stock) preferred shares could be seen as a sign of confidence and time to go into the stock market but the fact is his personal wealth of $62 billion is just chicken-feed compared to the scale of toxic facing the banking systems now. The Dow plunged more than 500 points during the morning trading session and I’m not going to wait and see if it could beat the 777-points recorded last week. Yes, I was greedy with my Apple Inc.’s AAPL Nov 110 Put Option initially but I decided it’s time to take some money off the table. The bull and bear are fighting very hard to stay above 10,000-level at this moment. Forget about all the technical indicators for the time being because it is the sentiment of fear that is ruling the game now.

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Sunday, October 05, 2008

Arrogance, Greed & Corruption – Will We Ever Learn?

Germany is a great nation. The country also saw the emergence of a great hero, or devil depending on how you look at it – Adolf Hitler. He participated in both worlds’ greatest war, World War I and II. I can’t imagine what would happen to Germany if Hitler never invaded Soviet Union and spared the three million elite German troops and the much feared and greatest tanks of all time, Panzer, to guard his newly acquired territory of Poland, Austria, Czechoslovakia, Denmark, Norway, France, Luxembourg, Netherlands, Belgium, Hungary, Northern African Countries, Romania and Bulgaria. Arrogance and greed were the main reasons that soon sent Germany to her defeat and Hitler his death. If only he listened to his advisors.

Amazingly both countries that were defeated in the World War II, Japan and Germany, rebound and becomes world’s third and fifth largest economy respectively. However the Germans are not so happy lately. As expected the U.S. Congress finally passed (263 – 171 in favor) and President Bush signed the $700 billion rescue plan. So I guess everything is settled as if we’ve traveled through the time machine back to the future to the good time, no? At least the Dow didn’t panic and only drop 157 points, better than the previous 777 points drop *grin*. The Congress’s vote of approval might help to calm the stock market in the sense that wild volatility would most probably contained and depositors don’t need to worry about their money now that the amount of deposits covered by FDIC increased from $100,000 to $250,000.

Unfortunately an economic downturn is happening. You can choose to argue until the cows come back whether U.S.’s economy is technically in recession (Warren Buffett believed so months ago) but in reality the times are getting tougher. Despite Germany’s surplus of $185 billion compared to United States’ deficit of $731 billion in 2007 and the fact that the Germans save on average 11 percent of their incomes into savings accounts, the country that once ruled most of the European countries is mumbling about having to bailout their financial institutions as a result of United States’ own problem. Not even the mighty “Terminator” Governor Arnold Schwarzenegger is immune from current crisis that the California state isscreaming for $7 billion emergency loan from federal government because it is running out of cash.

All the eyeballs are now monitoring on how the $700 billion will be disburse effectively to meet the objectives. But if the Dow’s performance is any indicator to goes by, it appears that majority of the investors, analysts and economists do not think the $700 billion bailout plus the $150 billion tax breaks will do any good and the monies are as good as flushed down the toilet. Sure, now that the U.S. economy is in a huge mess it quickly becomes the laughing stock. Countries (such as Malaysia) that was criticized (and laughed at) because it didn’t subscribe to the IMF medicine during the 1997-1998 Asia Crisis are now giggling and laughing back at the military power-house United States. No doubt that U.S. is literally bankrupt and relies on printed monies without the backing of gold reserve (go check the Fort Knox) as claimed by such parties but like it or not all the economic super-powers are holding huge amount of U.S. Treasury bills. Japan owns $593 billion and China has $519 billion while Asian countries hold more than $1 trillion of these IOUs. Why?

George Bush Mahathir asking for bailout Now I realized the truth when one of the wise-man told me “If you want to owe money, make sure your debts is as huge as possible”. Try to owe the bank millions of dollars yourself and chances are high you’ll be given VIP treatment and you can negotiate for the lowest interest rate in town. Go try it if you don’t believe me. As of now the U.S. national debt stands at $10 trillion with each citizen’s share of about $33,300.00. You can laugh back at the U.S.’s economic backyard now but it won’t take another decade for the same mess to happen in another countries. The point here is do we learn from our past mistakes and take the “right” medicine no matter how bitter it is? I doubt so and if you have politician suckers running the financial show as well, chances are high the taxpayers’ money will be used again to bailout many more inefficient fat cats.

I read that the blogger, Kickdefella, was toying with the prospect of being kicked into the detention center without trial (ISA) when he claimed that the outgoing PM Abdullah Badawi actually received RM200 million from the total of half a billion ringgit commission gotten from the submarine deal. He claimed the money was paid by deputy PM and PM-in-waiting Najib Razak’s wife, Rosmah. This is absolutely ridiculous because Malaysian politicians are the cleanest and can never be so corrupt, can they? RM200 million is a lot of money and I can tell you a dozen of good companies to buy over after their share prices took the beating lately. Do we really have that US$119 international reserves as claimed by the new Finance Minister Najib recently? It would be interesting to get an independent auditor to perform such check else all our jaws will drop to the floor one fine day when we open the vault only to find a couple of pussy meowing inside.

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Friday, October 03, 2008

Waiting for Congress’s “Aye” but the Problem is Gigantic

When you read from the government-controlled media that Malaysia’s economy has the capacity to weather the destabilizing consequences of developments in the US economy and international financial markets, that’s when you need to start worrying about the economy. It’s better for newly appointed Finance Minister Najib Razak to shut his mouth and do what his boss didn’t do for the last four years – listen to foreign (and domestic) investors what they want in order to attract them into the country and carry out those reforms. Stop bragging about the US$119 billion international reserves because going by the rate FDI outflows are pulling out, the chicken feed of US$119 billion will not help in the long run.

The fact is many countries are still depended on U.S.’s economy and if this super-power is not doing well chances are high that countries such as Malaysia will be affected. Like it or not diversification can only do so much and you still need foreign investors to bring in their hot money to excite the domestic activities. It would be foolish and disastrous to underestimate the current problem of U.S. financial crisis. Former premier Mahathir had tasted the medicine before during 1997-1998 Asia Crisis and the old man screamed the exact same wordings – country’s international reserves were strong, economic fundamental was strong, banking sector was strong, export was healthy and heck, everything were strong. The dictator almost ran a one-man show with total control over Malaysia’s economy and he spent lavishly to build the biggest and the tallest, apparently in his obsession to search respect from the West.

Mahathir Najib Yet when the stock market nose-dived to 200+ points from 1,000+ points back then, Mahathir pointed his fingers are outsiders particularly the speculators and the Jews. It was so bad (the stock market) that Mahathir was literally asking the rich topawn their jewelry overseas and bring back the money to the country in order to replenish the treasury. He also begged average-Joe to donate their jewelry to help the country’s economy but of course nobody gave a hoot about it. People were also asked to plant vegetables in their front yard to reduce foreign bill for food. Wonder what happened to that “silly program”.

On Wednesday, U.S. Senate strongly (74 to 25 in favour) endorsed the $700 billion economic bailout plan and the ball has been passed back to Congress which had earlier rejected the plan causing the Dow Jones to tumble 777 points. Congress will decide again on Friday whether to approve the rescue plan after sweetener of $150 billion in tax breaks for individuals and businesses was included. Analysts expect the latest modified $700 billion plan to get the backing from Congress this time.Really, after the 777 points drop and many fingers pointed at Congress it would be interesting to see if Congress dares to screw up again. Frustrated, some investors were asking whether Nancy Pelocy, a hippie from San Francisco, is more qualified to make critical economic decisions than Secretary Paulson, the former CEO of Goldman Sachs.

Warren Buffett becomes greedy National service or not, Barack Obama and his Republican rival, John McCain, scrambled to make personal calls in their attempt to switch “Nay” lawmakers to “Aye”. If things are not bad enough, U.S. auto sales dropped below 1 million last month for the first time in more than 15 years thanks to difficulties in getting loans. The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, the highest since the Sept 11, 2001 terrorist attacks. Commerce Department reported that factory orders in August plunged by 4 percent compared to July, steeper than 2.5 percent drop expected. Another sign of economic distress is the sudden “Sales” and promotions from stores nationwide. Heck, even Berkshire Hathaway's (NYSE: BRK.A, stock) furniture and jewelry stores are not spared by the U.S. economic problems.

Billionaire investor Warren Buffett said the nation has been hit with an "economic Pearl Harbor" and predicts that the rest of the "Main Street" economy will start to have problems if the government's financial bailout plan doesn't pass Congress soon. Buffett who has always tries to be greedy when others are fearful is still shopping for good deals, the latest being $3 billion of preferred shares of Electric Company (NYSE: GE, stock), which carry a 10 percent dividend – that’s $300 million a year dude. Last week, the Sage of Omaha invested $5 billion in preferred Goldman Sachs Group Inc. (NYSE: GS, stock) shares which comes with a 10 percent dividend string attached – that’s another $500 million a year, mind you. But the icing is the warrants to buy $5 billion in Goldman Sachs common shares at a strike price of $115 that can be exercised at any time over the next five years in addition to the right to buy $3 billion in GE common shares at a price of $22.25.

The question on traders’ mind before the stock market starts Friday morning is whether an endorsement by the Congress will help push up Dow Jones permanently. Using the indicators (Dow erased almost 350 points) after the closing bell Thursday, the answer is an obvious “No”. Buffett said in his adult lifetime he has never seen people as fearfuleconomically as they are now and that was precisely the sentiment on the trading floor Thursday. It simply means the $700 billion won’t save the economy from a potential severe recession. So will Dow register positive gains after Friday’s closing? Most probably! Will we see the sunshine again thereafter? Most likely not simply because the problem is too gigantic in scale to be solved by a $700 billion bailout alone so don’t expect an immediate recovery! If you’ve some Put Options on hand and it’s in profitable territory, prepare to dispose some. It’s always nice to take some money off the table instead of expose it to the risks.

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Wednesday, October 01, 2008

Should we rejoice or mourn on Maybank-BII deal?

Let’s rejoice and celebrate because Malaysia’s largest lender, Malayan Banking Berhad (KLSE: MAYBANK, stock-code 1155), has just managed to beg PT Bank Internasional Indonesia’s (JAK: BNII) major shareholder Fullerton Financial Holdings, a unit of Singapore's Temasek, for more sweets. Maybank agreed to a rebate of S$315.2 million (RM758.9 million) after rejected the initial rebate of S$236.4 million (RM569.2 million) – an improvement of a whopping 33.33 percent, mind you. At last, the state-owned bank knows how to negotiate, big deal. I bet Maybank’s board of directors was popping the Champaign as if it was the greatest victory on earth.

With the current weak market sentiment it’s only logical for Singapore’s Temasek to back down and compromise on a lower offer. Seriously it was a pathetic offer and what is an extra of S$78.8 million to Temasek compared to the still-overprice deal pushed into Maybank’s throat? The joke here is that while the latest rebate is welcome, it only reduces the offer price to 433 Indonesian Rupiah from the initial 511 Indonesian Rupiah per BII share for the first 55.6 percent stake. Maybank willstill have to pay 511 Indonesian Rupiah per BII share for the remaining 44.4 percent stake. Therefore Maybank will pay a total of RM4.26 billion ($1.24 billion) for 55.6 percent and RM3.8 billion ($1.11 billion) for the remaining 44.4 percent stake.

This is perhaps another classic example of how incompetent the decision-makers (or politicians) at the negotiation table. It is still unbelievable how generous Maybank was in its offer of 4.6 times book value for BII. Rumors were flying that former Finance Minister, Daim Zainuddin, had his hand on the deal and is set to make handsome profit from Maybank’s coffer. As the new deputy Chairman of Khazanah the newly Finance Minister cum deputy PM, Najib could probably shed some lights on this acquisition since Maybank is part of Khazanah’s Transformation Program for Government-linked Companies (GLCs). One of the intentions of the program it to continue Maybank’s Economic Profit, lest the special “friendship” with Temasek has blinded the objective and reverse it to Economic Loss *grin*.

Maybank BII extra rebate Obviously it was not a smart move to acquire BII in the first place simply because it was done at the wrong time and most likely by the wrong people (board of directors under instruction from politicians?). Maybe the money is better spent acquiring some trouble but potential financial institutions from U.S. You don’t need to be a brain-surgeon to scout for such companies and guess what. For once Malaysia could claim victory because it would definitely be able to buy U.S. assets at a lower price than Singapore. That’s right! Singapore’s Temasek Holdings bought into U.S. financial companies such as Merrill Lynch & Co. Inc. (NYSE: MER,stock) end of last year and is planning to raise its stake to 13.7 percent from 9.4 percent. Just follow the money and buy at a lower price and you can laugh at Singapore, no sweat.

Admit the mistake that the BII’s acquisition is indeed pricey and stop making a fool of yourself with announcement that you’re happy with the agreement (better rebate offer) when in reality it was a bad deal. The only party that can afford a celebration is Temasek Holdings which is making roughly fivefold profit from the sale. And they are still giggling all their way to the bank, thinking of Maybank’s stupidity. With BII’s last traded stock price at 310 Indonesian Rupiah a share, it will take more than a rebate coupon to convince investors that the deal was a freaking good one.

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Tuesday, September 30, 2008

Economic 9/11 after $700 billion Bailout Plan Rejected

Boeing is a trademark synonym with domination in aerospace and by far the largest global aircraft manufacturer. Mentioned 777 and chances are the awesome “Triple Seven” world’s largest twinjet jumbo plane appear in front of you. It’s jumbo alright and when you’re talking about something this huge and heavy, it would be disastrous should there be a crash. After I closed my Apple Inc.’s AAPL position yesterday to lock in the profit, I didn’t look back. Little did I realize the huge crash following thereafter on the U.S. stock markets – a jaw-dropping historic 777 points decline on Dow Jones. Guess that should be the expected result from the $700 billion failed bailout plan by Bush administration when the vote in the House showed 228-205.

It was the biggest one-day fall ever beating even the 684 (721 at one point) points plunge on the first day of trading after the Sept 11, 2001’s terrorist attacks on U.S. soils. There’s only one work to describe the scenario – “panic” selling. Dow closed at 10,365.45; it’s lowest in three years but percentage-wise the 777 points drop (almost 7 percent) is still the 17th-biggest decline in Dow’s history. Hopefully we will not live long enough to see the 20-percent-drop occured on Black Monday in 1987 and before the Great Depression. Light, sweet crude fell $10.52 to settle at $96.36 on the New York Mercantile Exchange as investors feared energy demand would continue to slide amid further economic weakness.

Rates on three-month Treasury bills declined 55 basis points to 0.29%, nearing the levels hit on Sept. 17 when they hit their lowest level since World War II. The TED Spread - the difference between what banks and the Treasury pay to borrow for three months, widened to 3.59% when it was 1.10 percent a month ago. The three-month London interbank offered rate (LIBOR), a key measure of lending rates between banks climbed to 3.88%. In short, banks are extremely reluctant to lend money to people on the street as well as businesses. Americans do not save but spend more than they earned instead (to some extent) hence the Feds is playing the role of a father trying to distribute money into financial institutions so that people can go to these banks for cash, literally. This brings back the good memory of 1997-1998 Asia Financial Crisis *grin*.

Of course not all the lawmakers who participated in the voting session voted with good knowledge about the current financial problems. Some of them voted according to the wishes of the people’s sentiment on the street lest they wish torisk their political seats with five weeks before the elections. You can’t blame the people when the fact remains the plan was designed to bailout the problematic financial companies, not the average Joe. It was reported that more than two-thirds (133 votes) of Republicans and 40 percent (95 votes) of Democrats opposed the bill. Now the ball has been passed to the Federal Reserve’s court.

Dow 911 and Financial Crisis However the fact remains that even if the plan succeeded (from the voting), majority of analysts predicted the U.S. economy will probably turns for the worse before it becomes better. Final quarter of 2008 and first quarter of 2009 would be gloomy. Now that the Congress is not moving, the economic forecast will be slashed and the contractions will nosedive further. Already the unemployment is at five-year high of 6.1 percent and it could hit 7.5 percent by end of 2009. Whatever it is one thing is for sure, more banks could appear on the news screaming for helps. Let’s wait if the Malaysia government politicians will still yell “We’re not affected by U.S. economy crisis … The fundamental is still intact …The economic growth of 6 percent remains … blah blah blah”

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Monday, September 29, 2008

Panic again, $700 billion is insufficient to treat disease

Wachovia Corp., just like Washington Mutual Inc., is probably one of the classic examples of investing at the wrong time. It suffers huge losses after it acquired mortgage lender Golden West Financial Corp in 2006 for a whopping $24 billion. The acquisition was done at the peak of housing boom – talk about bad timing huh? Days after CEO Robert Steel assured Wachovia employees that the company was doing fine and remained strong, Citigroup Inc. today announced it will acquire the company and will absorb about $42 billion of losses from Wachovia’s $312 billion loan portfolio. As a result Citigroup it will sell $10 billion in common stock and cut its quarterly dividend in half to 16 cents.

Wachovia stock price tumbled 91 percent *Ouch!* to 94 cents. I’ve wrote earlier that despite the $700 billion (let’s put it at $1 trillion, shall we?) injection into the financial market the fear factor will remains and it’s not the right time to become a hero and long the stocks. Seriously your chances of making money is better off shorting the stocks (not naked, mind you) or playing the Put Options – if you do not mind the volatility. Hey! This is the greatest time to put your psychology into this greed and fear into the testing chamber. At one time the Dow Jones plunged to more than 300 points in the morning trading session – everyone is waiting for the bailout vote. I’m not taking any chances and my AAPL trade got triggered so I’m taking my money and run further up the hill to get a clearer picture of the fight between bull and bear on the trading floor.

AAPL profit If you think this could be the bottom now that a solution was found for Wachovia maybe the statement from FDIC that there’re roughly 117 banks still in trouble could change your thought. You’re really a brave soul if this news is not enough to hold you back to at least stay at the sideline should your intention was to long the stocks. It would be interesting to see if KLSE could take the punches after the opening bell tomorrow morning.

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Maybank-BII deal goes wrong? Taste your own medicine

Only after heavy criticisms and sell-off of Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) shares as a sign of protest, the Malaysia’s Central Bank woke up (from sleep) and told Maybank to behave and re-negotiate for a better pricing in its acquisition for PT Bank Internasional Indonesia (BII) (JAK: BNII). The Minority Shareholder Watchdog Group (MSWG) did bark against the silly deal but as expected the authorities did not give it much thought since the group is toothless. The proposed deal was the laughing stock within Abdullah Badawi’s administration simply because the 4.6 times book value was more than twice the book value of state-owned Maybank itself and the highest amongst Indonesian banks. Indonesian leading lender, Bank Mandiri’s own book value is only 1.98 times. Instantly speculation was floating that the deal was filled with hanky-panky hands.

Foreign investors and local fund managers dumped the stock, a normal reaction to such a silly business transaction. It’s puzzling that while buyer normally fights tooth and nail to get a better pricing Maybank’s board of directors seemed to see it fit and happy with such a generous offer price regardless of how attractive Indonesian banking business is. You don’t just raise your hand unnecessarily to bid for the highest price without a limit. Only fools will blindly do such thing and considering Maybank is the largest lender of the country, such ignorance is disturbing as the shareholders and depositors’ money were being spent lavishly. But of course you won’t hear any single brave soul from the Maybank’s board of directors resign to take full responsibility.

Maybank BII deal goes wrong Long story short, on Saturday Maybank reportedly did not accept the last-minute rebate of S$236.4mil (RM570mil) by Singapore’s Temasek unit Fullerton Financial Holdings Pte Ltd to close the controversial sale of BII. Sure, Maybank dare not accept such an offer as it would be an insult to accept such a cheap sweet in exchange for the US$2.7 billion deal. But would Maybank’s losses limited to only RM480 million deposit should the deal goes bad? Knowing how smart Singapore’s government is in doing business, could there are clauses (surely Maybank’s board of directors knew about it) within the “Sale and Purchase” agreement that wouldenable Temasek to sue Maybank for losses *time for easy money, Temasek*?

In fact Temasek would be happier if Maybank decided to abort the plan at this stage because it could sue for more money while maintaining its stake in BII, theoretically. Earlier Maybank MD, Abdul Wahid Omar, said that the loss from the RM480 million deposit would narrow to RM290 million due to unrealized foreign exchange gains (parked in Singapore) of RM193 million. Nevertheless if Maybank was idiot enough to sign a blank check in the sense that the Malaysia largest lender is willing to pay the difference of the agreed 4.6 book value and the maximum book value that another buyer is willing to pay for the stakes should Maybank walks away then Maybank could be in deep trouble, though I doubt Maybank is so stupid. The potential losses could be huge if Temasek has the option and decided to seek legal case.

Heads need to roll and it’s high time to clear all the doubts. Transparency and accountability are all we are asking. It’s not that the minority shareholders and the public are asking for those responsible for the deal to be put behind bars, not that you can dream of such action in Malaysia. All we’re asking is for those responsible to admit the mistake and resign with honour. Is this too much to ask? Who are the people that the authorities are protecting here? As much as you hate Indonesian’s flip-flop policies, Maybank is actually tasting it’s own medicine when Malaysian government is practicing the same pathetic flip-flop policies which are driving many investors away, no?

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Sunday, September 28, 2008

Lame Duck PM to quit? Or another Mother of All Lies?

Game over for lame duck Abdullah Badawi! PM to quit next Mar 2009! Early transition of power in Mar 2009 instead of June 2010! The headlines go on and on after Friday’s UMNO supreme council meeting. On paper it appears the sleepy PM, as he often labeled will have to enjoy his sleep to the fullest for another six months before start his packing and show his successor Najib around his bedroom – the place PM will miss the most. Just like someone who has just been diagnosed of having cancer reaching stage four and has only maximum six months of life, the PM looks equally sad and confuse at his fate.

Heck, most probably the lame duck might not even have the luxury to enjoy the maximum six-month face-saving exit plan. A round of applause should be given to Badawi who managed to issue brave yet empty and silly statement that he would decide by Oct 9 (11 days away) whether to defend his post in the party. I believe all the journalists were giggling at the lame duck because he still has the cheek to deny he was under tremendous pressure to quit. Doubly silly was his laughable response that he has a lot of work to do when asked if he will be going on leave. Right, if he couldn’t do a single right thing in the past four years did he expect people to be so stupid to believe he could pull the rabbit out from the hat in the next 6-months, provided the 25 supreme council warlords allow him to stay that long? Sometimes you can’t help but wonder if he was really out of vocabulary when he answered the press.

It’s an open secret that his deputy, Najib, is rushing against time to become the sixth Prime Minister since he has so many skeletons in his closet and if not for the fact that the pit-bull of political bloggers RPK was thrown into detention center without trial, more worms could be seen crawling from his jacket. As much as he likes to shake off the allegations that he had a sexual relationship with a murdered Mongolian woman (Altantuya) before passed her to his political advisor, the public perception of Najib as a tainted politician persists. Najib might be the best candidate to take over from the weak Abdullah as far as UMNO’s 25 powerful supreme council warlords are concerned but he has yet to be put to test in winning back the people’s mandate come next general election. Abdullah is paying the price for being indecisive and weak but the same fate would knock on Najib’s door if he is no difference from his predecessor.

So, the R.A.H.M.A.N Prophecy, the thought that the prime minister of the country has been somehow per-determined by the order of RAHMAN, really works huh? I’m not sure who started this prophecy but just like the Indiana Jones’ adventure in solving some ancient artifacts mystery, if Najib was destined to be the country’s sixth prime minister from the ruling government then the prophecy is complete. But would Najib be the last prime minister from UMNO that this country will see? His father didn’t manage to live long to enjoy the fruits from his coup d’état together with Harun (Selangor Chief Minister) from the first PM, Tunku Abduk Rahman. So, does the son who is almost certain to become the sixth prime minister has what it takes to navigate this country to a greater height? The four warlords namely Muhyiddin, Rafidah, Hishammuddin (Najib’s cousin) and Shafie Apdal will definitely be rewarded handsomely for their roles in threatening Abdullah Badawi into submission.

Obviously Najib was the invincible hands behind the curtain that architected the plan to fast-forward Badawi’s downfall, no? Did he play any part in Anwar’s huge victory in Permatang Pauh recently? How dare the supreme council warlords demanded Abdullah to quit or else face the embarrassment of not getting even the 30 percent minimum nominations (58 votes) to defend his presidency – unless of course there’s a powerful person who was pulling the string from behind. Maybe Najib was panic after intelligence told him that Anwar is set to meet-up (or already has met?) with the King. If that happens Abdullah might just concede defeat and grant Anwar the much needed vote-of-confidence session provided Anwar promise to take care of his son-in-law, Khairi.

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Friday, September 26, 2008

FDI Out-Flows began rushing the day Badawi becomes PM

Just like history, numbers don’t lie unless someone deliberately twist it. Fortunately somewhere within this globe the real facts about history or numbers will be kept and archived. Something is definitely very wrong with the current government judging from the numbers lately. No matter how you crunch the number and try to hide from the public, the fact remains that Abdullah Badawi administration is the worst PM this country ever produced since independence. One wonders where have all the smart and genius economic advisors who used to assist the former premier Mahathir gone. You don’t think Mahathir was that smart, do you? Yeah, the old fox might be one of the most racist PM ever but he knows how to leverage on smart people.

Inflation rate jumped to a 27-year high of 8.5 percent in August, thanks to the genius plan by Badawi’s 41% sudden fuel hike. Still, I have doubt about this so-called 8.5 percent inflation rate number. It’s not important though as most of the average-Joes on the street are mumbling about the next plate of food on the table. The latest numbers that spark the concern is the direct foreign investment (FDI) outflows from Malaysia. If you do not know what the heck is this and don’t bother, wait till you get laid-off *grin*. The latest numbers compiled by UNCTAD (United Nations Conference on Trade and Development) shows Malaysia scores another “first”.

Malaysia FDI inflows outflows For the first time, outflows of FDI surpassed the FDI inflows in 2007. Abdullah Badawi was right when he said the FDI inflows registered positive numbers – 38.94 percent increase to US$8.403 billion in 2007 from $6.048 billion in 2006. But what he didn’t or too afraid to tell you is the fact that the “FDI outflows”recorded a whopping 81.92 percent to US$10.989 billion in 2007 from US$6.041 billion in 2006. If you look at the chart for Malaysia FDI and if this represents the cash-flow of a company seeking listing (IPO), you had better run away fast from such “company”. In fact the FDI outflows were already bad in 2006 when it registered a puzzling 103.33 percent.

South East Asia FDI inflows outflows If you care to look closer at the chart, you’ll be surprise to note that the FDI inflows retracted in 2005 after Badawi took over the premiership. Of course the PM cannot put the blames on the regional foreign investment because for the same year (2005), the FDI inflows to the South East Asia increased by 10.91 percent. In fact in 2005 when the South East Asia FDI showed negative outflows (minus 18.77 percent), Malaysia continued to registered positive outflows of 44.15 percent *gulp*. And you know what is really funny about the statistic on Malaysia’s FDI inflows and outflows? Since Abdullah Badawi took over as PM from Mahathir in 2003 it appears that the “FDI outflows” (blue-bar in the chart) is racing at top speed to over-take the ”FDI inflows”. The F1-race was over in four years and finally the FDI outflows won the race when it successfully surpassed the FDI inflows for the very first time in 2007.

So can Abdullah Badawi put the blame on Anwar and accused him as a threat to national security and the country’s economy when he himself screwed-up the economy because he preferred to sleep on job? And now he’s passing the shits to his deputy after found his new toy (hopefully he doesn’t mistake the C4 as firecrackers during the coming Hari-Raya festival). There’s something funny and fishy about the episode of Anwar slowing down his pace in taking over the government. With Najib refused to go (cancelled) overseas and preferred to stay back in the country, the rumors that Badawi will be forced to announced his early retirement latest by next June (or March?) 2009 could be true after all. I bet Anwar likes Badawi to stay a bit longer as he has just began to have fun with this game of hide-and-seek.

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Wednesday, September 24, 2008

Google Android G1 Phone – this Beast is Features-Rich

Finally, Google Inc. (Nasdaq: GOOG, stock) unveiled its first Android cell-phone. Android actually refers the phone’s operating system. Features-wise it appears the Google G1 cell-phone could easily kick Apple Inc.’s (Nasdaq: AAPL, stock) iPhone miles away. Touch screen, Wi-Fi, Bluetooth, Google Maps, 3-megapixel camera, GPS-capabilities, full-screen web browsing, on-the-air downloadable Apple and music store, removable battery, memory expansion card slot (pre-installed 2GB Micro SD memory card expandable to 8GB), voice dialing and most importantly a physical QWERTY keyboard hidden beneath the screen. Although it plays music sadly it doesn’t play video except YouTube videos.

Google Android G1 phone If you hate iPhone’s AT&T’s 3G network, then you can take your revenge by owning this G1 phone because it comes from T-Mobile. Unfortunately T-Mobile 3G network covers only 19 cities compared with AT&T’s 280 but who cares if your intention is to unlock this latest cool phone after 90 days. Since G1 is based onopen-source and free, it simply means you can put in any SIM-card from any carrier and it will work within seconds. You can make changes and add your own applications without paying a penny to Google and I promised you won’t be thrown into detention center without trial. Obviously Android G1 is not as beautiful as iPhone but if you’re looking to build a mini super-phone (build your own applications on top of it) then this is what you should have.

Google Android G1 phone iPhone vs Android G1 Not convinced yet? How about a $20 cheaper G1 than iPhone at $179? The G1 which comes with black, white and brown color also has this little built-in compass feature which displays a 360-degree Google Street view based on location. G1 is a bit thicker but slightly narrower than iPhone. Google hopes the open-source Android software powering the G1 will eventually become the dominant operating system for mobile phones and make handsets compatible with the networks of multiple carriers. Good news for blogger - The T-Mobile G1 will soon also offer users the ability to upload and post pictures to blogs.

The T-Mobile G1 will be released on T-Mobile's U.S. network on October 22 for $179 with a two-year contract. UK will see the phone sometime in November 2008 while other European countries such as Germany, Austria, Czech Republic and the Netherlands will get it in Q1 2009. Google targeted to sell around 400,000 Android phones by end of 2008. Android is position to give iPhone a run for its money but it will need more cosmetic jobs to pull the crowds away from iPhone but Google is prepared for the long-term marathon competition. No doubt Android G1 phone is the beast compared to the beauty of iPhone.

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Tuesday, September 23, 2008

RPK sent to detention without trial, FCUK you Big Bully

As expected the most controversial yet favorite blogger of Malaysia netizens, Raja Petra Kamarudin (RPK), has been sent to Kamunting Detention Center today to begin his two-year detention under ISA –WITHOUT A TRIAL (MalaysiaKini was the first to repot it). No matter how many bloggers scream in objection of such action designed primarily to shut RPK’s mouth for good and generally to threaten and intimidate other bloggers, the current chaos ruling government could not care less. It would be very strange indeed if they were to free RPK considering the amount of damages he has wrote about the PM (Abdullah Badawi) and his deputy (Najib Razak).

Now that the throne is inches away within his reach it would be mad for Najib to forget, forgive and free the sensational blogger. And you can bet your last penny that one of the most-hatedminister, Home Minister Syed Hamid Albar, has swung his arms of support to the PM-in-waiting Najib. You can FCUK the whole day but this Hamid Albar has just signed the paper to throw RPK into the detention center. RPK can only smell the air of freedom by either a “Prison Break” attempt (needs Michael Scofield’s help), an intervention from the King or hopefully Anwar could topple the current government. Many bloggers will miss RPK’s “entertaining” articles for the next two-year *sigh*. It appears that unless you blog “I love this government” or “The PM and his deputy are the most spectacular people I’ve ever known”, you might find yourself in hot soup.

Although the fact remains that the government has been using the ISA as a tool to silence critics, those who oppose the draconian law are helpless against the government; what more with the police on their side. The threat of ISA could also be the main reason why Anwar has not check-mate Badawi yet. ISA has been used very successfully to frustrate and curb the freedom of speech in Malaysia. As long as you’re a threat (criticize) to the ruling government, you would be thrown into detention without trial in the name of “national security threat”. Who needs Hitler’s Gestapo when you have ISA?

You’ve heard unhappy voices in the blogosphere condemning the forever postponement of Anwar’s supposedly plan to take over the government. After 916, 923 and now 1001 it seems the number will continue to change. Yeah! Anwar could be bluffing all this while and his 916 could be the biggest April-Fool joke ever but he could also be playing mind-games with the ruling government. Remember the 1982 movie Rambo: First Blood? The arrogant Sheriff Will Teasle leads his junior team members into the woods to capture Rambo only to be sent into disarray with booby traps. One of the Sheriff’s team members said instead of hunting Rambo, it appeared they were the one who were being hunted instead. If you look at the scenario now, it is obvious Anwar has created the fears, panics, uncertainties and doubts to the whole government. Guess it’s true when Mahathir said recently that Abdullah Badawi is no match for Anwar Ibrahim.

RPK Prison Break Maybe Anwar is waiting for the right time to be at the right place in order to meet the right person. The timing is definitely not now with dozens of Special Branch spies tracking his every movement. There’s no trial and error. It has to work on the first attempt lest Anwar miss RPK so much he wishes to become the latter’s cell-mate at Kamunting. No doubt the ruling government is trembling in fears but they would rather risk labeled as racist, dictator, brutal etc than to lose power (and luxurious contracts). Many demanded the ISA be repeal in totality but I say keep it in order for people such as Mahathir, Badawi, Najib, Syed Albar and all the government ministers to taste their own medicine – provided Anwar has the number to kick Badawi out of office.

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PM to proceed with Gunfight, forgotten about fuel prices?

You had Saddam Hussein’s “mother of all battles”, Anwar Ibrahim’s “mother of all by-elections” and now you have U.S.’s “mother of all bailouts”. I bet former premier Mahathir is giggling now looking at the financial havocs that prompted Bush administration to seek a whopping US$700 billion to buy up bad loans. It was about 10-years ago when Mahathir was criticized for bailing out Malaysian listed companies after the 1997-1998 Asia Crisis that left these companies licking their wounds. The difference was while the financial institutions in U.S. are in critical situation (Lehman Brothers is bankrupt) due to subprime crisis and the U.S. lawmakers are studying and seeking approval from Congress to help “qualified” financial firms, Mahathir’s approach was to help only certain companies largely seen as his cronies “without” approval from the “Congress”.

Regardless whether the bailouts will chew up $700 billion or $1 trillion, the question is would such huge taxpayer money bring back the consumers and investors confidence to the financial markets as if nothing has happen? It’s not like you have Hiro Nakamura from the “Heroes” TV series who can stop the time, load the $700 billion into the financial institutions and pretends everything is OK. Treasury Secretary Henry Paulson acknowledged that the nation's outdated regulatory system for financial markets must be overhauled. It’s true that at this moment you should not look at the 400-point up and down swing but rather the credit markets, which are still fragile. Investors are silly not to lock in any profit from the fierce swings (up or down) but nevertheless greed and fear will determine if you’re making money or otherwise.

Bailout Fail to lift stocks U.S. total mortgages amounting to $12,000 billion hence the $700 billion is not a huge amount, so much so the U.S. Treasury and Feds have to burn the midnight oils to identify and qualify the institutions that genuinely need rescue. The fact remains that whether the U.S. government latest action is the ultimate pill to cure the current sickness in the long run remain to be seen. There’re two companies which benefit from the current crisis though. Uncle Sam’s last two major investment banks, Goldman Sachs Group Inc. (NYSE: GS, stock) and Morgan Stanley (NYSE: MS, stock), have been granted their wishes to become full-fledge banks – a status that will allow both to take deposits. Nonetheless, nobody has the crystal ball to tell if the market will reach its bottom after this bailout.

With millions of eyeballs looking at U.S. stock markets for the coming trading days, it’s different problem in Malaysia. Former premier Mahathir was trying to push his old toy again - pegging the ringgit to the dollar. It was shot down by the new Finance Minister Najib today who promised not to re-peg the local currency now or in the future. Obviously Mahathir has not learnt his lesson 10-year ago but for the time being the thrilled deputy PM Najib is not going to scare the handful remaining foreign investors away. Najib has cancelled his Middle East trip in an attempt to focus on the political uncertainties – opposition leader Anwar Ibrahim is supposed to spring into action on Tuesday (tomorrow) after his initial two attempts to meet the PM and a vote of no-confidence were ignored by Abdullah Badawi.

The famous Gunfight at the OK Corral more than 125-years ago in Tombstone, Arizona, is set to repeat again here. The only difference this time – it’s a one-to-one gunfight between Abdullah and Anwar. Cowboy PM Badawi is waiting for Cowboy Anwar to draw his “gun” so that he can draw his pistol tucked into the waistband of his pants – ISA (internal security act). While deputy PM Najib rejoiced after he was crowned the new Finance Minister, he was nevertheless given the post as deputy chairman of Khazanah Nasional Berhad only while the chairmanship still belongs to PM Badawi (after a check from Khazanah website). Whether the portfolio swap (between PM and his deputy) was a temporary carrot to pacify Najib and his gang is up to your interpretation.

Badawi Anwar Gunfight After bombarded by four warlords to resign not later than 9 Oct at the UMNO’s supreme council meeting, Abdullah Badawi was rumored to have decided to throw in the towel until his son-in-law, Khairy, jumped in and persuade his father-in-law to reconsider and continue to fight for his survival for the position as president of UMNO. It’s only normal for Khairy to prolong Badawi’s tenure because the former’s political survival depends solely on the latter’s position as PM. Furthermore political calculation reveals Najib will most likely refrain from challenging his boss should Badawi decided to defend his position. Interestingly Teresa Kok was released after just a week under the draconian ISA-law prompting the speculation if Najib has anything to do with it. It doesn’t help to inherit an unstable government if it’s fated that the country will have Najib as the next PM.

It’s definitely stupid to win the UMNO president post but to get the boot from the people come the next election. So expect more slogans from Najib on how he’ll be the PM for all Malaysian, provided he wins the race against Anwar Ibrahim. Entertainment asides, people are more interested to know if the government would bring down the fuel prices now that the global oil prices is below the level when the 78 sen a liter (petrol) increase was announced recently. Going by the same logic shouldn’t the government re-adjust the petrol price to at least RM1.92 a liter now? Sadly the PM pretends nothing happens and gave lots of silly excuses not to lower the fuel prices.

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Friday, September 19, 2008

Short-Selling Crackdown on Naked Shorties but will it help?

In my previous article (before the trading ends) I wrote that even if the Dow were to rebound 400-points investors were not ready to show their hands. Guess what, the Dow did precisely that and rebound about 400-points. I think I should bet some dollars on 4D or 3D for that matter. It was a coincidence really and the fact that the U.S. Congress promised quick action in support of Bush administration to rescue banks from bad debts helped to push Dow above 11,000-level once again, at least for now.

Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and other officials planned to work through the weekend on a comprehensive plan to take away bad assets and debts off the books of struggling financial institutions. Since the plan requires Congress approval, it will most likely involves empowering the government to buy over bank assets, something similar to the 79.9 percent stake acquisition of American International Group Inc.’s (NYSE: AIG, stock) but on a larger scale. Despite flooded the street with $180 billion by Feds, banks remained cautious and reluctant to lend money. U.S. regulators, SEC, also tightened rules on short-selling with a temporary emergency ban on all short-selling – naked or non-naked. However such action hasn’t been publicly announced yet.

naked short selling This is absurd and if the SEC really wishes to implement such ban, it should only restrict it to “naked” short-selling only. I disagree with “naked” short-selling myself and if you’ve read my previous article on How to Write Check to Yourself Every Month?, I’ve warned against getting yourself naked *grin*. Nevertheless the news of short-selling ban ultimately helped the huge jump in Dow Jones. British regulators, citing "current extreme circumstances" has slapped the temporary ban on short-selling Thursday. Meanwhile New York state attorney general announced a probe into illegal short-selling practices that may have hurt finance firms including Lehman Brothers and Morgan Stanley. Attorneys general from Texas and Connecticut are also doing the same (cracking the short-sellers). But short-selling is just the small part which contributed to the Dow’s bleeding. No doubt they’re the opportunists who made great money during such trying time but they’re definitely not the root of the problems of the global economy meltdown.

Talk about naked short-sellers and chances are you cannot help but to read about “Emperor was without clothes” written all over the blogosphere. The emperor was associated with the current PM Abdullah Badawi obviously. Well, the PM has been walking naked for too long until yesterday’s UMNO supreme council meeting. Apparently some warlords demanded Abdullah Badawi to step down by Oct 9 or risk the embarrassment of not getting the minimum nominations for the president post. Some naughty insiders even went the extra miles and said the PM was seen weeping after bombardment of lectures thrown at him until his deputy, Najib came to his rescue. I bet Najib was enjoying the sight of his boss being screwed left, right and center.
abdullah badawi deadline The latest breaking news was that Seputeh MP (Member of Parliament) and senior Selangor state executive councillor Teresa Kok was released from detention under the draconian ISA (Internal Securtity Act) at about 1pm today after one week (of tortured?) behind the dark room, thanks to an article in Utusan Malaysia quoting former Selangor Mentri Besar (Chief Minister) Khir Toyo who made a baseless accusation that Teresa was petitioning a mosque to reduce the volume for azan (the call to prayer) – an accusation which was denied even by the Kinrara mosque committee chairman and Kota Raja MP Dr Siti Mariah. However I doubt the authorities will let RPK out anytime soon especially after he has aimed and let off many cannon balls at deputy PM, Najib. Surprisingly former premier Mahathir who got so fond of this toy called ISA commented that there is no justification for arrest of the bloggers.

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Thursday, September 18, 2008

Nightmare on Dow Street & the shadow of Deep Depression

Shorties are laughing all their ways to the bank. That’s right! If you’re one of the traders or investors who were and still are not convinced of the $85 billion American International Group Inc.’s (NYSE: AIG, stock) rescue plan by the U.S. government, you should be rejoicing by now, provided you short the stocks or bought some Put Options. In fact almost any stocks you shorted would have yield fruits by today. It’s pretty hard isn’t it? On one hand if the government does not bailout the financial institution it could collapse and affect many life but after it did that investors’ fear many more companies would face the same fate (bankruptcy). It was a “lose-lose” situation for the authorities.

Every regional stock exchange depend very much on U.S. economy and practically all the bourses fell in tandem with Dow Jones which tumbled about 450 points. It was a complete collapse of confidence and the thing that is playing on every investor mouth is – if the largest insurance company can fail then any grandma can tell you that no one is safe. While the stocks collapsed, the rush for gold pushed the metal by a whopping $90.40 to $870.90 (Dec delivery) an ounce. But where does Uncle Sam come up with such a huge sums of money for the multiple rescue plans? The U.S. government has to tap its reserve and borrows elsewhere. The Treasury Department was asked to sell debt on behalf of the Federal Reserve.

US Treasury Department Already the Bush administration is projecting a deficit of $480 billion for the new budget but with the bailouts the deficit could ballooned but it’s not something that Bush will need to worry because the baton will be passed to the next president. You’ve stimulus checks totaling $168 billion, Treasury’s $200 billion for Freddie and Fannie, $29 billion loan for Bear Stearns, $85 billion for AIG and God knows how much more are needed. Japan’s central bank has injected another $24 billion for the sixth time this week bringing the total of injection to a mind-boggling $76 billion in order to flood the market with sufficient cash. If you think the economy tsunami has settled then you might be wrong (long live shorties!).

Let’s hope this does not materialize but New York Mayor Michael Bloomberg warned the "next wave" of financial pain may come from overseas if foreign entities stop buying U.S. debt. Fortunately so far foreign investors are still willing to buy U.S. debt but Bloomberg was concerned that a prolong credit crisis in the United States may scare off these buyers ultimately. The joke of the town is to make money by betting which is next to fall. Washington Mutual which once considered by many as the Starbucks of banking is rumored to be the next to be affected. Washington Mutual’s stock price is now lower than that of a latte. The havoc in the U.S. financial market is so bad that even the $60 billion Reserve Primary Money Fund, one of the oldest money market funds in the country, has become the first money-market fund in more than a decade to lose money because it was forced to write down $785 million due to losses in Lehman Brothers paper that it held.

DJIA plunged The sentiment on the trading floor is such that fears still dominate the overall stock market and any rebound on sight will be met with selling. Even if the Dow were to rebound 400-points today investors are not ready to show their hands. Meanwhile Malaysian stocks finally breached below the important 1,000-level to close at 991.66-level. Volume was relatively high at above 550 million shares but it was a result of foreign selling. With Dow and KLCI went down below 11,000 and 1,000 respectively, would the PM Abdullah Badawi goes down as well as the weakest PM the country ever produce? Sure, he has just chickened out and refused to call an emergency Parliament session as requested by opposition leader Anwar to deliberate on a vote of no-confidence against the PM.

It’s pretty simple really – if the PM is damn sure Anwar was playing high-stake poker and was bluffing from the start about forming the new government, by all means the PM should just call for a vote of no-confidence and put to rest once and for all that Anwar is indeed a big-time liar, unless of course the PM knew very well that Anwar actually has the numbers in his pocket. The more the PM runs away from Anwar the more people will believe the latter. Badawi should just confront the reality and move forward instead of intimidate with ISA’s threat. It won’t help the country’s economy to have a weak, incompetent, indecisive yet arrogant, stubborn and power-crazy leader walking the corridors of power.

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Wednesday, September 17, 2008

Badawi to Quit but not before Anwar is put under ISA?

Two bailouts within a month and the amount of taxpayer’s money for the exercise amounted to a staggering $185 billion. After prepared to put up as much as $100 billion for mortgage giants Freddie Mac and Fannie Mae, the U.S. government is injecting $85 billion to bailout American International Group Inc.’s (NYSE: AIG, stock) but it appears more like a take-over instead of a bailout mission since the government will get 79.9 percent stake in AIG. The spillover effects can be seen elsewhere including Singapore when anxious and worried Singaporeans queued up for a second day on Wednesday to surrender policies in exchange to whatever little money left on fears the U.S. insurance giant could tumble.

Although the Dow reacted positively and closed above 11,000 points, the stocks reverse and erased all the gains today during early trading. The fact is investors are still nervous and the risk of more financial system’s problems could emerge. Let’s face it – how many more billions of dollars of taxpayers’ money can the government use to rescue problematic companies? The Commerce Department reported Wednesday that housing construction dropped a surprise 6.2 percent last month, the lowest level in 17 years and larger than the 1.6 percent drop analysts expected.

Taking the cue from the Singaporeans who were willing to surrender their policies in order to hold “Cash” instead, it’s everyone’s (those who have sold-off their stocks earlier) hope that the repeat of 1997-1998 Asia Crisis’s effect will arrive soon. If you’ve missed the opportunity 10-years ago and you’re waiting anxiously to accumulate cheap stocks listed on KLSE, just be patience and hold on to your cash. Refrain from any new expensive purchases such as new car(s) or house(s) because your investment from the cheap stocks would reward you handsomely. It is no-brainer that the more the current ruling government screw-up, the better it is for us because the stocks would tumble further. That’s the whole idea – to scoop as cheaply as possible *grin*.

Najib Badawi swapped portfolio

Today, PM Abdullah Badawi handed the key finance ministry post to his Deputy Prime Minister Najib Razak and hinted he might leave the powerful job earlier than 2010 as planned. At the same time the PM is assuming Najib’s Defence Ministry post, raising many eyebrows. On the surface it looks like he (PM) began to handover and delegate more duties to Najib, obviously to appease critics within his own party, UMNO. However that didn’t stop many speculators from thinking of the unthinkable – with the armed forces at his disposal, he could just execute desperate action(s) *sweating* soon. The laughing stock about the whole portfolios swapping story is indeed about the incompetency of both PM and his deputy in their new respective portfolios.

It’s no secret that the PM knows nuts about economy 101 so it was kind of disastrous as far as nation’s economy management is concerned. And now the same guy is toying with the military equipments? The same goes to his deputy Najib who knows nothing about macro and micro economy except the billions of dollars stashed inside the vault. The joke of the town was that the happiest person with this latest portfolio swapping was Rosmah (not sure what was the reason though) *grin*. But the most disturbing statement that came from the PM’s mouth was that opposition leader Anwar is a threat to national security (you meant UMNO’s security PM?) and the country’s economy. He said Anwar had spread wrong information of the country’s economic stability overseas to the extent that investors had reported that Malaysia was not a good country to invest in due to the political instability.

badawi anwar ISA

Pardon me but every Tom, Dick and his dog knew the political landscape has changed the moment the Mar 8 tsunami hit the nation. An estimated RM125 billion of capital had left the country in the fist half of the year. It would be an insult to assume Deutsche Bank and Nomura’s KLCI target of 975 and 960 points respectively were the result of Anwar’s naughty act. Instantly rumors were flying like wild fire that PM was actually hinted that Anwar could be next on the list to be arrested under the draconian ISA. So, could Anwar’s second attempt on the premiership be dashed again from the brutal yet effective ISA? It looks very likely unfortunately.

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Economy Meltdown – Stop being Selfish and Stubborn

As expected 916 is another peaceful day with the same old boring and incompetent government still in power. But opposition leader, Anwar Ibrahim, can’t just let the day passed without making any statement since he has promised 916 (Sept 16th) which is also the formation of Malaysian federation in 1963, to be the day a new government will be formed. Thus Anwar claimed he had secured enough parliamentary (more than 31 MPs) backing to bring down the government but he refused to reveal the names of the defectors. Nevertheless Anwar told a press conference on Tuesday (916 - today) that he would give the list of the names to the Prime Minister when he meets him.

So it’s rather silly for PM Abdullah Badawi to continue with his denial syndrome and arrogance by saying he refused to meet Anwar. If Anwar was lying then it won’t do any harm just to meet –up with him and hear what the opposition leader has to say. At the same time he also could have the first hand on the lists of the frogs, something which I believe the PM would like to know very much himself. The PM should be man enough to have a face-to-face talk with Anwar. How could Anwar harm him in any way when the meeting can be held at Putrajaya or even his bedroom *grin*? The major reasons why Anwar couldn’t reveal the names of the defectors are simply no-brainer – anyone who has properly functioning brains wants to inherit the throne as smoothly as possible lest he wish to be labeled as rebel.

Anwar Badawi final countdown To ensure a smooth transition Pakatan Rakyat (opposition People Pact) demanded the following of which I believe make lots of sense:

That Barisan (ruling government) does not hinder or prevent the MPs from acting in accordance with their conscience, constitutional rights and independent judgement;
That the Barisan government should not invoke the Internal Security Act to detain the MPs or any other current Pakatan MPs;
That the Barisan government does not invoke emergency laws or police powers or suspend the Constitution or dissolve Parliament; and
That the Barisan government shall not impose roadblocks or impede MPs from going to Parliament or any institution of government.

Anwar was part of the ruling government before and he knows more than anybody else in this world what options the ruling government could invoke just to cling to power and the above four could just be some of the options left for the desperate ruling government. Instead of hiding and pretends he’s still in control, it’s about time for the PM to have a gentlemen and leader face-to-face talk with Anwar. If Anwar is indeed bluffing then Abdullah can have good night sleeps and move forward in managing the country’s economy, not to mention he can abandon any future silly, stupid and childish plan to send 51 MPs (one third of his army) away on agricultural study trip to Taiwan in the peek-a-boo game.

As much as PM Abdullah Badawi wouldn’t want to face the reality political analysts said it was likely that Anwar had his majority. Assuming Anwar had in his possession the letters of support from the defectors and is granted an audience by the King, the King (Yang DiPertuan Agong) would ask the Speaker of Parliament to hold a formal vote on the PM’s post. Anwar has said he would not want to drag the King into the matter, if possible. Unless Anwar was bluffing, the list of defectors could had already reached the King’s hands many days ago and what Anwar is waiting now is to give PM Badawi the last chance to handover the power smoothly. While Anwar has other option to topple the government should the PM stubbornly refuse to meet-up and handover the power, Abdullah Badawi seems to have very limited options. Of course Badawi could try to suspend the parliament by calling a state of emergency but this option requires the King’s consent.

Companies in Toubles The fact remains that the current premiership is incompetent in navigating the country ahead of the current global stormy economy. Dow Jones plunged more than 500 points yesterday to below the psychological 11,000 level - its steepest point drop since the day the stock market reopened after the Sept. 11 attacks. A whopping $700 billion evaporated from retirement plans, government pension funds and other investment portfolios. Lehman Brothers Holdings Inc. (NYSE: LEH,stock), an investment bank that is 158-year-old and survived the 1929’s Great Depression, filed the largest bankruptcy (Chapter 11) in American history. Merrill Lynch & Co. Inc. (NYSE: MER, stock), the world’s largest and most widely recognized brokerage, has agreed to be bought over by Bank of America (NYSE:BAC, stock) in a $50 billion deal values Merrill at $29 a share. The iconic bull mascot brokerage founded in 1914 has posted quarterly losses for four straight quarters and written down a mind-boggling $40 billion. Today trading saw American International Group Inc.’s (NYSE: AIG, stock) shares fell nearly 74 percent and analysts are not discounting the possibility of AIG’s bankruptcy after it has suffered $18 billion of losses in the last three quarters. To add salt to the wound the largest U.S. investment bank, Goldman Sachs Group Inc. (NYSE: GS, stock) announced its third-quarter earnings which plunged 70 percent.

Even the oil prices tumbled to below $92 a barrel despite OPEC’s production cut of 520,000 barrels a day inline with U.S. oil demand which fell by 800,000 barrels a day. It was a chaos day and if today’s trading pattern is anything to goes by, it would be another bloody day. It was puzzling that local stock market, KLSE, only plunged 20 points but I would bet 50% of my money on the gambling table that the index (KLCI) could just go back to below 1,000 point before the year-end. It’s possible that 900 points could be within reach if the current political havoc continues to send the foreign investors away. Already, the cost of insuring the country's debt has risen sharply to around $153,056 per $10 million from $90,185 prior to the March election, based on prices for 5-year credit default swaps, a barometer of risk – reported Reuters.

country on auto-pilot The question is how much worse could it be for new government to be formed at the current state now? It’s not that the government is competent in managing the economy so a kick at the butt could just do the trick although the external factors would still haunt the country’s economy. But at least the foreign investors have another destination on their checklist (they still need to park their money regardless of the quantum) instead of a pilot who continues to depend on auto-pilot while sleeping in the cockpit. The next 24 to 48 hours are indeed very crucial andAnwar needs to check-mate fast before Badawi has the chance to launch the final ISA-assault.

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Friday, September 12, 2008

Operasi ISA Started? Climate of Fear for the Country

You’ve watched many American TV series or movies on how the bad guys were arrested by special force because they threatened the national security. One of my favorites is definitely “24” although sometimes you wondered if Jack Bauer really possessed the super-stamina throughout the entire 24-hours. But the baddies were really bad because they were toying with chemical and nuclear bomb so it’s no-brainer that such acts are tantamount to threats to the national security. I guess that justify the need to poke knife into their finger-tips or inject them with special drugs to torture them in order to gain information.

But the concept of national security in Malaysia is definitely different. Here,whoever who dares to question the government in power is deemed to have threatened national security. So while the member of ruling government, Ahmad Ismail, was given a slap on the wrist and asked him to go on a 3-year-long holiday despite his racist remarks it was the innocent who got the show-cause letters and detention without trial. Three newspapers were issued show cause letters namely Sin Chew Daily, The Sun and Suara Keadilan. At the same time, Home Minister Syed Hamid Albar said Raja Petra Kamarudin (RPK) was detained under Section 73 (1) of the ISA as he was deemed a threat to security, peace and public order.

Operasi Lalang Again Earlier RPK claimed his article on Islam was the reason why his portal was blocked (and unblocked yesterday) but it’s not known which one of his articles was the catalysts for this latest move (to detain him). But it doesn’t matter because generally most of his articles are anti-government. Even if he didn’t expose the Altantuya’s connection to the deputy PM’s wife, his latest article on the Real Story of May 13 (Part 1) is enough to land him in hot soup. If his claim that UMNO fanned racial sentiments every 20-years without fail since 1968 is true, then this year (2008) would be the big-year for the party. Although the article was written nine years ago, RPK should have his own reason to republish it now.

The guy probably knew that another round of Operasi Lalang is on its way and more opposition leaders and activists could have been short-listed to be put behind bars under the Internal Security Act – to prevent them from seize power. Going by this logic then opposition leader Anwar Ibrahim could be the next guy to be RPK’s cell-mate. After imitated Mahathir’s tactic of sodomy accusation it appears the Badawi administration will most likely copy the Operasi Lalang as well. The publishing licenses for the three newspapers will probably be revoked and with RPK and Anwar behind bars, it’s almost game over for the opposition alliance. However it would be interesting to see if the crackdown will be expanded to include bloggers. The government has been pointing their blaming-fingers ever since they suffered their worst performance post Mar-election.

I guess it doesn’t matter if the ringgit going down the toilet because it seems nobody really cares about the country’s economy. The PM and his deputy PM are worrying about the Dec’s party election and with the deputy PM’s latest flip-flopMoody Economy’s prediction of the ringgit at 3.80 to a dollar by year-end might be an understatement. Heck! Who cares if the ringgit went down to 4.00 to a dollar? Going by how the economy is set on auto-pilot mode, it would be suicidal for the Central Bank to even try to intervene to stabilize the ringgit. Furthermore there’s no guarantee that the U.S. Federal Reserve will not cut the interest rate this year. And if that happened the pressure will be even greater for the Central Bank to increase its interest rate.

PM deputy PM tag-team But really, why only concentrate on oppositions for the ISA’s menu? Why notinclude Mahathir as well since he could be the person who will strip Badawi naked of his premiership? And don’t forget that deputy Najib could partner with Muhyddin to challenge Badawi. Hey! If Najib do that, has Badawi prepared his tag-team yet? How about Badawi-Khairy vs Najib-Muhyddin vs Razaleigh-Sanusi? Maybe Badawi-Najib vs Razaleigh-Muhyddin would be the most likely combination. Well the musical chair is still moving so I guess we’ll never know till the last minute. Nevertheless if RPK needs to get out, he has all the time to pray for Anwar’s success.

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Taiwan, Here I Come and I’m bringing RM25 Million

The problem with the current stock market is obviously not about the company’s fundamental but because of the political excitement. It’s excited because should the current regime falls the next government, if it survives, will most probably introduce many policies consistent with the CAT (competency, accountability and transparency) to attract foreign investment. On paper it looks promising but the fact is the corruption and hanky-panky has reached the deepest root you could ever imagine. It would take more than political will to clean up the mess. It needs paradigm shifts to clean up the corrupted mentality and it will have no other choice but to go through a long and painful journey to cleanse the dirt.

Once an investor told me that as much as they were taken aback by how corrupted the country was under the previous Mahathir administration, they hate it more under the current Badawi’s administration. Sure, Mahathir’s 22-year in power has basically infected every component within the chain of government agencies but at least things get done. The joke was you should appreciate that the corruption was part of the standard procedure because you can be assured of the success factor rather than goes through the normal open tender. The country is still attractive as far as investment is concerned but the forever government’s “flip-flop” policiesare driving investors away.

Taiwan Today, the government has scrapped plans to levy 30% windfall taxes on independent power producers’ profits which if left unattended will affect about RM10 billion of IPP-related bonds (Ouch! It’s hitting deputy PM Najib’s brother, Nazir Razak, so damn hard). Independent power producers (IPPs) will instead make a one-off payment to the government, bringing much-needed relieve since the mini crisis erupted. Could the rumors that each of the 50 MPs (member of parliament) sent to Taiwan (to learn and explore agricultural and industrial technology) was given RM500,000 as pocket money related to this latest U-turn? It can’t possibly be true although in reality these IPP tycoons are politically-linked and are cronies in one way or another.

Hmm, half a million of pocket money is definitely attractive, so much so that opposition leader Anwar has sent four of his party’s leaders to Taiwan to try out their lucks *grin*. I’m not sure if it was a good idea to send one-third of ruling government’s MPs to Taiwan in the first place because the country’s journalistsare notorious for their “digging” skills. If they wish so they can even get a story on what brand and color of undergarments you’re wearing, together with the photos. So it’s a matter of time before things get discovered. It’s not everyday that you get 50 MPs land on Taiwan’s airport well-equipped with golf-sets so I would be puzzle if Taiwan’s journalists are not covering this strange expedition. It’s getting comical but it would spoil the fun if Anwar were to stop playing the game now. To be able to see Badawi’s daily confuse and speechless face would worth every penny spent.
Ah Mei Welcome 51 Frogs In another surprising U-turn the Multimedia and Communications Commission (MCMC) has decided to reinstate access to the controversial Malaysia-Today news portal after instructed all Internet Service Providers (ISPs) in the country to block the site. No doubt it was a laughing stock because people are still able to access the site using different methods. RPK should thank MCMC for the free publicity because I’m sure his visitors and daily page-views should have doubled. Hey! What happened to the racist drama? As expected the actor (Ahmad Ismail) who played the villain of a racist politician whose job was to flame the fire of hatred has been let off the hook with a mere 3-year suspension. What? No ISA or Sedition Act on his neck? The curtain has comes down and the show is over so the next agenda is Taiwan. Boy! What a free tourism promotion for Taiwan.

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Tuesday, September 09, 2008

The Myth of 916 and One Last Racist Drama from BN

Oops! It happens again. Malaysia stock operator, Bursa Malaysia Berhad (KLSE: BURSA, stock-code 1818), has suspended derivative trading for the rest of the morning session yesterday due to unresolved technical problem. Although the so-called glitch did not affect trading in equities and bonds the fact that such problem happened within a short span time since the last “hard-disk” failure (slightly more than two months ago on July 3) does not bodes well for Bursa.

But I guess nobody cares even if the whole stock exchange is not functioning from now onwards to the D-Day of Sept 16 or popularly known 916. The number 916 might offer 4-D or 3-D gamblers another new number to bet but if you’re a gold investor who have good collection of gold (jewelry), 916 is also the number that you’re fond of. Gold in 100% purity means it’s in liquid form and you can’t wear it silly. The quality of gold which is particularly popular in Asian countries is 916 gold (also known as 22-carat gold) – 91.6% pure gold with the rest consists of copper or/and silver metals.

The number 916

The countdown to 916 was made popular ever since newly appointed opposition leader Anwar Ibrahim blew his trumpet that the Sept 16 will be the day he topples the current government. Sept 16 is also the day Malaya, Sabah, Sarawak and Singapore agreed to join and formed the Malaysian federation in 1963. It might not carry much weight to the Peninsular Malaysia (Malaya then) but to then Sabahan and Sarawakian, 916 is the true Independence Day instead of Aug 31 celebrated currently. And if you do not know, 916 is also Singapore’s first Prime Minister, Lee Kuan Yew’s favorite date because it’s his birthday?

The first good news especially to employees if Anwar Ibrahim could indeed form the new government in another 7 days is an additional public holiday – Sept 16, as mooted by the opposition leader. No matter how much the ruling government rubbished the 916 as a political gimmick by Anwar, one cannot denies its’ possibility. If you care to sit and listen to coffee-shop talks from now till 916, you’ll hear of nothing but the much-awaited day. Foreign investors are not pouring their money in big-way into the stock market partly because of 916. In fact most investors secretly hope that 916 would become reality because they preferred Anwar than Badawi for obvious reason. Abdullah Badawi’s infamous flip-flop in decision-making created uncertainties which makes many investors perplex. According to Bank Negara's latest statistics, some US$1.1bn (about RM3.8bn) of foreign funds exited from the country during the period Aug 15-29.

916 – A Myth that send Government into chaos?

To say the ruling government is in denial mode is an under-statement; it’s more like in panic mode. It’s silly to plays racial cards again hoping to create “confusion” and “agitation” between ethnic Malay and non-Malay. It’s doubly stupid trying to lock potential defectors away by sending 49 naughty birds to Taiwan to learn and explore Taiwan’s agricultural and industrial technology. Gosh! Do you need to send one-third of the ruling government’s MP to learn agriculture? What a laughing stock. The statement by BBC (Barisan Nasional Backbenchers Club) chairman Tiong King Sing that they couldn’t go to China as they were short of time to process visas confirmed the desperation to meet the deadline (of sending the 49 MPs away) of 916. So, if 916 is just a myth as claimed by ruling government, why the rush as if the country is about to be hit by plague?

Get real, the ruling government is not stupid and with its Special Branch spies everywhere under opposition’s armpits, they could smell the 916 miles away. The story of defectors could be real but the 916 could be the biggest red herring ever used in the history of Malaysia’s politic. Years in the prison allowed Anwar to do lots of reading and the Sun Tzu’s Art of War could have transformed him into a wiser and better tactical politician. The PM and deputy PM have been visiting Sabah and Sarawak dozens of time, each trip with packages of goodies and promises hoping the leaders from the two states with a combination of 54 parliament seats will stupidly (are they still?) cling to the necks of the PM and deputy PM. But Anwar knew he couldn’t get all these 54 seats and even if he could he simply can’t proceed with the plan because Malaysia is still a very much ethnic-based country, politically. If the ruling government were to spread the racial propaganda that the Anwar’s newly formed government is controlled by non-Malay, it could just ignite the spark.

One last racial game before 916?

The ruling government is the master of racial card and nobody can beat them on this game. So here’s the theory. Somehow the small-fry Bukit Bendera Umno division chief Ahmad Ismail made a racists statement during the recent Permatang Pauh by-election campaign that the Chinese in Malaysia were immigrants or“squatters”, right under the nose of deputy PM, Najib Razak. MCA and Gerakan, two component parties within the ruling government sprang into action and criticised the racial remark but Ahmad went into hiding in order to let the PM and deputy PM to play their roles. The proud deputy PM who seldom apologise what more to the Chinese community made a surprising apology on behalf of UMNO. But the poor written script didn’t stop there.

Ahmad Ismail racists remark The flip-flop PM entered the show; first backed the racists Ahmad by saying the latter did not mean it but later agreed with Najib’s apology. To add more spices, Ahmad’s character will not dies so soon. He was supposed to be the hard-to-die actor and refuse to apologise even though under PM’s instruction. PM had a coffee meeting with Ahmad and in a 360-degree U-turn the PM somehow agreed with Ahmad and even put the blame on the Chinese media for twisting Ahmad’s racial statement. Ahmad was supposed to receive the support from all 13 UMNO divisions in Penang and asked the school-boy Gerakan’s Koh Tsu Koon and other Chinese leaders to apologise instead for being "immature." Sounds familiar so far?

That’s because the "drama" was retrieved from the ruling government’s “Standard User Manual” that was used over 50-years and it never fails to impress me. The fact is the spineless leaders from MCA, Gerakan, MIC will never leave BN (Barisan Nasional) no matter how they are being kicked around. They are not being called UMNO’s dog for no apparent reason. Heck, even the Jedi Master of Racial, Mahathir, played the same tune when he wrote in his blog supported the racists remark by Ahmad Ismail.

Who’s the UMNO biggest traitor(s) or frog(s)?

Everyone emerges hero – MCA and Gerakan leaders will be perceived (are they?) as heroes for fighting for the ethnic-Chinese while UMNO will still maintains it’s status as Big-Brother (taikor) who would defend the ethnic-Malay rights and will not think twice about asking the Chinese to go fly kite. PM and deputy PM will be seen as neutral in this latest episode of racial game. However this badly written script also will see the PM as weak and unable to control even a small-fry within UMNO. The question is – will the ethnic-Chinese and ethnic-Malay who were responsible in delivering the votes to kick the ruling government’s arses out from the five states are mature enough to understand this plot? The answer is it doesn’t matter because if Anwar’s plan to form the new government on 916 materializes, UMNO, MCA and Gerakan (of course MIC inclusive) leaders will be nowhere to be seen leaving the low-ranking officers like headless chicken running directionless.

916 Red Herring Forget about the keen defectors from Sabah and Sarawak because they’re not supposed to lead the defection. Someone from UMNO needs to lead the migration and rumors have it that it could be warlord Muhyddin Yassin. But this Muhyddin guy knows better than anybody that he needs plan-B just in case Anwar plays him out (of deputy PM post) or 916 goes down the drain. His plan-B was to persuade former premier Mahathir back to UMNO (yeah, the old fox quit the party recently) and this time Mahathir is backing Tengku Razaleigh Hamzah to become the next President of UMNO in December after the former premier was disappointed with Najib who chose to stick with Badawi. Either way Muhyddin hopes to become the deputy PM. But wait! Won’t December a little bit too late if Anwar’s plan is real? Hmm, maybe 916 was a red herring after all. It was a diversion that managed to fool almost everyone. Since this might be the last racists drama from the ruling government everybody should give them a round of applause *clap clap*.

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Saturday, September 06, 2008

Apple AAPL set to rally? Are you ready to Rock&Roll?

During current uncertainty and volatile stock market one has no choice but to pay extra attention and double the homework in order to pick the right stock(s) to trade. Essentially you have to know when is the right time to enter the stock market or to open new position(s). Nope, I don’t have the magic bullet and please do not believe completely those freely available analysts’ reports that urge you to buy or sell certain stocks. The old trick still works – they asked you to buy so that they can unload, the same way they begged you to sell in order for them to buy cheap.

One’s meat could be one’s poison. Hence if your method works then it’s the best way that you should adopt in order to make money investing stocks or trading option. Be yourself and stop copying others’ method because it might not suit you or your trading behavior. You can enhance your trading style by applying certain methodology but you’ve to be comfortable with it. It would be disastrous if you try to make a complete swing in terms of trading style. You are who you are and that’s the reason why there could only be one Warren Buffett until today. Not even his own flesh, his son, could inherit half of his investing style.

AAPL sotck chart Let’s pay a visit to Apple Inc. (Nasdaq: AAPL, stock) because something interesting seems to have developed. Many technical analysts are starting to make a call now on this stock. Five months was a long wait but such patience is worthwhile. I’ve been monitoring AAPL stock for the whole day hoping it would bottom to at least $155 because that was the point where it gapped-up less than five months ago. The stock could be ready for a rally and it’s time to pick up some small pieces lest you want to miss the train. But what if AAPL does not behave and decided to go the other way round? Well, in that case all hell breaks loose and the stock would probably experience a freefall to $120 a share.

Coincidently the Dow and S&P are testing the important level of 11,000 and 1,200 respectively. And need I tell you what would happen when the index touches this sensitive figure? We won’t know if Dow and S&P would rebound to the North or decided to plunge to the South but we do know that we need to make a decisionat this critical moment. Miss the boat and you’ll have to wait for the next opportunity. AAPL tried to stage a mini rally to break out from the $160 range just now but the resistance seems to be too strong. At the same time the stock refused to go down to $155 level.

AAPl profit Why am I hoping for Apple to be whacked to the $155 a share, at least for the day? Because I need to close my position *grin* - AAPL Sept 175 Put Option. Somehow people are seeing the opportunity in Apple and willing to buy a few notches up. Heck, don’t you hate it when you can’t sell at your preferred price. It appears the market makers somehow know your target price and they’re playing mind games with you. This is absolutely frustrating. Anyhow profits are still profits so it won’t kill to take it off the table.

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Friday, September 05, 2008

Tsunami Politic Tsunami Stocks, waiting for Perfect Storm

The stock market tumbled when Dow Jones erased 345 points (3%) to 11,188.23 Thursday. The S&P lost 3% to 1236.83 and the Nasdaq fell 3.2% to 2259.04. This is the worst decline since June 6 and you should take note seriously because it appears the S&P will break 1,200 while Dow might break the 11,000 level. Remember when I said don’t open the champagne before Dow comfortably sails above 12,000 level not many moons ago? Well, the surge in jobless claim and weak same-store sales report, not to mention the surge in people visiting discounters such as Wal-Mart, adds energy to the Bear.

It’s been quite some time since we talk about subprime crisis. By now everyone who cares to read the financial columns should know what is “subprime” that spooked almost all Americans including the President of the United States. It’s not over yet if that was what you was thinking, at least not the after-effect. After the Freddie Mac and Fannie Mae’s (what a great name!) financial troubles that required bailout, analysts warn that a “financial tsunami” will hit if the U.S. government doesn’t help the average Joes on the street via subsidized home loans. Consumers’ slower spending, waning demand for construction equipment, sluggish auto sales and mortgage cutbacks show the good time is not here yet. Not even the dead of Hurricane Gustav could sustain the stock market rally on Tuesday.

Great Depression 1929 2009 In fact home prices which have already down almost 20% could still be heading south and once it reaches 30%, you have just experience the 1930s Great Depression. The problem is housing markets do not recover in a “V” shape format so it would be a long and painful wait. That is why you should equip yourself with some financial knowledge and able to see what’s happening from the macro-economic point of view. I almost fell off my chair when I read from a blog that suggest the bull is finally here again after the 30-point rally right after the Malaysian 2009 Budget was revealed. Such a shallow opinion that yells “Buy” call could send many beginners to kamikaze mission, don’t you think?

And what do you think about Anwar’s threat to form the next government by Sept 16? With all the spies deployed everywhere even within the palace itself, could it be true that Anwar had actually met the King at the Istana Negara to submit the name of ruling government defectors? Although Anwar denied it but not before he grinned about the rumors. But if it’s rubbish at all then why the trouble and pre-caution plan to ask ruling government MPs (Member of Parliament) to handover their passports for the so-called overseas study trip now? Surely it can’t be coincidence again, can it?

Brainless PM As much as I wish to have a new government that has properly functioning brains to administer the country, the date (Sept 16) is just too near for any major changes to happen. But then the sea was super calm before the deadly Christmas Eve tsunami of 2004 strike. So, going by the same logic PM Abdullah Badawi might have a couple more nights to sleep at Putrajaya before packs his bolsters and pillows. For all you know, Anwar could be bluffing and it was just a strategy to send the enemy into panic state before the actual assault. Who cares if Anwar (or anybody in this matter) were to take over the throne as long as he knows how to administer the country’s economy? I just wish to see if Mahathir will migrate as claimed (here I come Zimbabwe!) if Anwar succeeded in becoming the sixth Prime Minister of Malaysia.

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Thursday, September 04, 2008

Fuel prices set to be revised but the Damage is done

The good news – oil prices extended its decline to $107.91 a barrel, down $1.80 yesterday before it gained strength to $109 a barrel today (while waiting for U.S. crude inventory report). Since July 11th the black gold has fallen from the price of $147 a barrel. More good news – the dollar strengthen against major currencies inclusive of ringgit. The ringgit traded at 3.4215 against the dollar as at 9.20 am in Kuala Lumpur today (I can see many smiling faces who short the ringgit).

In fact Malaysia’s biggest economic think-tank, MIER (Malaysian Institute of Economic Research), which had predicted the ringgit would strengthen to 3 per dollar by the end of 2008 has just made a U-turn – the ringgit will be “almost a washout” and will probably weaken to 3.5 per dollar by year-end. Gosh! You don’t need PhDs to make such prediction, do you? *grin*. The body is right on certain items though – growing deficit, political uncertainties, poor country’s leadership and damaging budget proposal are turning investors away.

The latest good news to the people on the street – the government is ready to cut petrol prices by probably 15 sen a liter if the global oil prices stay at US$109 a barrel or less. Of course PM Abdullah Badawi has no other choice but to pacify many angry faces on the street especially before Hari Raya festival (could there be a snap election?). But everybody would bet their last dollar that it won’t bring down the prices of goods with such fuel reduction agenda. Whatever went up will never come down. If only the administration has brain half the size of Britney Spears (Oops) they would not have increased the fuel price by a whopping 41% in one shot.

Now it’s almost an uphill battle to control the inflation. Consumer spending is worsening if you care to survey the business during the current fasting month. Gone were the days when Muslim fellows flocked to KFCs, McDonalds, Shakey Pizzas, Pizza Huts etc to open their fast. The sight of all the tables being taken up is gone, at least for this year. It’s true that people are still angry and the result from the recent Permatang Pauh by-election speaks volume. People have stop spending luxuriously or at least think twice before reaching their wallet for that piece of good. And this trend is extremely dangerous because it could just bring the country’s economy to its knee.

Abdullah Badawi might thought by spending lavishly it could trigger the magic but someone has to pay for the deficit. And he doesn’t understand the economy 101, let alone to stimulate domestic demands to roll the economic dice. But I supposed he won’t care because he could sense his days are up and what better way than to prepare a huge deficit for his successor – either Najib Razak or Anwar Ibrahim. So, what should you do at the current situation? Unless you’ve endless ammunition, you should just relax and stay sideline the same way I’m doing now. Furthermore activities are pretty slow during the current fasting month and this has direct impact on the stock market.

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Tuesday, September 02, 2008

TM gets Broadband project, Adnan lost the pot of Gold

Finally the guessing game of who will get the huge chunk of the broadband project reaches its peak when Telekom Malaysia Berhad (KLSE: TM, stock-code 4863) received a letter of award from the Government today. From the start it was almost certain that the country’s dominant fixed-line provider, TM, would get the deal considering its monopoly status. The state-controlled company will be investing RM8.91 billion and the remaining RM2.4 billion will be funded by the government in the ambitious RM11.31 billion project over 10-years– HSBB (High Speed Broadband) project.

The project’s objective is to increase broadband penetration from current 18% to half of all homes by 2010 and it was thought to be safely in Telekom’s hand. The risk was high and investors were worried that Telekom’s dividend payout could be affected. At the eleventh hour of signing ceremony suddenly it was called off hastily when a Pahang-based High Speed Broadband Technology Sdn Bhd (HSBT) stormed into the picture and forced a presentation to the Cabinet. Interestingly HSBT proposed an alternative plan which costs less and does not require financing from the government.

The mind-boggling news back then – Pahang Menteri Besar (Chief Minister) Adnan Yaakop was to lead the Pahang team to present its RM18 billion proposal to the deputy PM, Najib Razak. Strangely Adnan Yaakop is the chairman of Pahang Technology Resources Sdn Bhd which owns 20% stake in HSBT with the remaining owned by Bumiraya Resources Sdn Bhd. It was rumored that the 20-minute presentation made by Adnan Yaakop was just a concept paper and things were very sketchy. HSBT plan was to bring in technology partners from Japan, South Korea and Sweden which means HSBT has no value at all except to own and operate (after built by the foreigners) based on a 25-year concession before returns it to the government. Yeah! It’s something like the toll operator PLUS Expressway Berhad (KLSE: PLUS, stock-code 5052), easy money huh?

However people are still wondering why such huge project does not involve open tender. Rumors also said Adnan was actually Najib’s proxy but such claims could not be true, could it? The stake is just too high to gamble away RM18 billion at the current sensitive political climate and you do not need Anwar to start the accusation of corruption should the incompetent HSBT be given the project. In actual fact whoever wins the project there’s a hidden winner who manufacture fiber-optic cables, the main component which estimated would eat about 15% - 20% of the project’s total cost – RM1.7 billion to 2.3 billion. Opcom Holdings Berhad’s chairman and MD, Mukhriz Mahathir, is said to be optimistic and is seen smiling all the way to the bank.

Can you imagine such person given the RM18 billion project?

Still, the government should promote competitive via open tender (yeah, I’ve said that earlier) to get the best pricing and technology but then without this project, TM would be almost worthless. Well, I meant what else could move TM’s big fat arse from its comfort chair if not to hurt where it hurts the most – its pocket? Has TM Net’s Streamyx improves since donkey years ago? Like it or not, we are where we are today partly because TM was given the privilege of monopoly.

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Budget 2009 is as damaging as Hurricane Gustav?

None of the people I’ve met since the 2009 Budget was revealed has anything good to say about it. It was definitely not a “caring budget”(as claimed by PM Abdullah Badawi) and the 1 percentage point income tax cut does not translate to something that you should shout about considering the current high inflation. Sure, employees’ transport allowances are made tax-deductible but seriously how many of you enjoy such benefit in the first place? There’re huge differences between short-term sweeteners and long-term solution to address economic fundamental flaws.

As much as I hope the 30-points stock-market rally after the budget announcement could sustain, I would be lying to say that the gloomy days are over and the bull should be charging from now onwards. Bloomberg reported Friday that the widening budget deficit is putting the country’s credit rating and currency at risk, thanks to Badawi’s record RM208 billion budget for 2009 despite his earlier promise to cut Malaysia’s budget deficit from 4.8 per cent in 2008 to 3 per cent of gross domestic product by 2010.

There wasn’t anything in the budget that suggests the government is taking the bull by the horn to tackle the inflation problem. Of course everyone hope the RM35 billion proposed to improve public transportation from 2009 – 2014 would materialize this time around although many think a huge portion would most probably evaporate due to leakages. The fact remains that the damages as the result of the 41% increase in fuel hike recently is beyond repair and this budget has done very little to help the people affected. The long-term effect is more damaging than the current Hurricane Gustav.

After three years Hurricane Katrina created havoc and sent the oil prices to the roof, the eye of Hurricane Gustav made landfall near Cocodrie, Louisiana about 10:30 a.m. ET. Oil production in the Gulf region was shut down with President George Bush rushed for Texas to monitor emergency preparation. Although the Gustav weakened to a “Category Two” storm, water surge of up to 14 feet is enough to bring life-threatening flooding. Property damage from Gustav could total $8 billion or just 25 percent of Sunday's estimate of $32.8 billion. Fortunately the earlier worries on damage to drilling rigs and refineries eases with crude oil for October delivery fell as much as $4.83, or 4.2 percent, to $110.63 a barrel in electronic trading on the New York Mercantile Exchange.

Now that the Hurricane Gustav has made its landfall, all the eyes are waiting to see if the ruling government led by Badawi would expedite Anwar’s fall by rushing the silly DNA Bill to put the opposition leader behind bars. Judging by the government’s stupidity in breaching the MSC’s Bill of Guarantees with its recent crackdown on bloggers, it appears the desperate government would resort to anything just to cling to power. With 16 more days to go, it won’t kill if you just wait on the sideline to see if a new government could indeed be formed (I doubt so), would it?

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Friday, August 29, 2008

Crackdown on bloggers’ websites? Stop the Stupidity

Now that the fact is on the table that opposition de-facto Anwar Ibrahim has been chosen by the people into the Parliament to provide serious check and balance (or tough time?) to the ruling government, it’s thesecond wake-up call to the PM Abdullah Badawi to restructure the way his inefficient Cabinet governs the country. Accept the fact that BN (National Front) has been buried (temporarily) but it’s not too late to change and reform for the better, if there’s political will. But looking at how Badawi (still) refused to acknowledge that the Permatang Pauh by-election is actually the “trend” of how the people think of current government despite his candidate slaughtered with more than 15,000-vote majority, the arrogance built over 50-years has indeed taken a deep root.

On surface Abdullah Badawi is maneuvering a sinking ship, and most likely will take everyone onboard with him – that’s UMNO, MCA, MIC, Gerakan, PPP, SAPP etc. But he’s, well, a stubborn head that refuse to let go despite criticism within his own party. He’s not a fighter but he’s definitely a boulder that would not budge no matter what you say. In fact those MLM agents out there should try to recruit Badawi because he can survive rejections from potential customers. You can curse him, call him sleepy head and do all sort of things to shoo him away but he would not care and will persists, never mind he couldn’t bring back any new sales.

Hungry Angry Kid A hungry man is an angry man, so goes the saying. I’ve written almost a year ago (Sept 2007) that Abdullah Badawi’s greatest challenge was the escalating oil prices, not his “dozing off” during meeting, not his “D” grade leadership, not his dependency on his son-in-law to run the country and definitely not because he bought a yacht or RM50 million luxury jet for that matter. If he didn’t manage the oil prices carefully, it would be as good as squeezing Mahathir’s grapes. And he did just that – raised the oil prices not once but twice with record-quantum, 30 sen and 78 sen per liter respectively. People are angry because it’s hard to bring back food to the table. If only he did it in a smaller quantum Badawi might not be as miserable as today. Not only people have lost the remaining confidence in him after the 8th Mar general election, somehow American’s trend of making fun of their President could be seen here.

Former premier Mahathir was right when he said Abdullah is no match for Anwar and the latter will make “life very difficult” for the PM. Mahathir was right that Anwar is going to raise issues and questions that will make both the PM and his deputy’s mouth wide-open without answers. Of course both Abdullah and Najib can choose to hide and not to turn up when Anwar is in the Parliament. The focus is definitely on Friday when Abdullah was scheduled to present the 2009 Budget. Anwar has promised to stare at him right between the eyes to ensure the PM will not fall asleep. I’m still awaiting comment from Mahathir on the Malaysia’s MSC 10-Point Bill of Guarantees which amongst other stated that the government promised there would be no censorship of the Internet.

Early of the year when the minister who thought it was a freaking good idea to buy the whole Russian Soyuz TMA-11 Space Rocket trumpeted that Google Inc. (Nasdaq: GOOG, stock) shown great interest to invest in Malaysia. I did pour cold water simply because I don’t think Google would want to be a laughing stock. The latest action by MCMC (Malaysian Communication and Multimedia Commission) was another stupid and desperate measure to crackdown on bloggers when it ordered all the 19 ISPs (internet service providers) in the country to block the influential but controversial Malaysia-Today portal. Instead of “if you can’t beat them, join them” strategy the panic and directionless government chose the silly “if you can’t beat them, shut them down” approach. Sure, the link to Malaysia-Today is dead but the mirror sites sprang alive almost immediately. But it’s internet dude and there’re many other ways to access blocked website such as:

go to http://mt.harapanmalaysia.com/
go direct using IP at http://202.75.62.114/2008/
use free proxy server such as http://www.unblocked.org/ orhttp://www.freeproxyserver.net/ orhttp://www.guardster.com/subscription/proxy_free.php
Change your DNS to OpenDNS server such as 208.67.222.222 or 208.67.220.220

Ways to access Malaysia Today If you google for “free proxy” you can find more than 3-million results and I would like to see if those MCMC brain-dead idiots can block all of them. You simply can’t block people from accessing web-sites unless of course the desperate government ordered all the ISPs to shutdown permanently and returns to Jurassic-Age. This also means no e-mails and definitely cripples all the businesses. If you’ve cases against RPK go and charge him. For the sake of the country’s name stop showing your stupidity to the world. MSC means Multimedia Super Corridor and notMalaysia Stupid Corridor.

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Wednesday, August 27, 2008

People kicked UMNO out of Penang, again? Ouch!

History repeats itself again, if the sentiments of the people on the ground which translated their voices into votes at P44 Permatang Pauh by-election were taken into consideration. If you still remember how the government-controlled electronic media kept quiet and the Chairman of Election Commission played dumb and delayed the result till past midnight after the 8th Mar 2008 general election that saw the opposition won big, expect the same scenario for this by-election. Almost all the television did not dare to talk about the Permatang Pauh’s by-election at its 8 pm news, 3 hours after the voting process ended.

Early signs of ruling government’s defeat

You knew immediately that the ruling government and PM Abdullah Badawi’s UMNO has lost with such syndrome. Heck, everyone knew that but what everyone did not know was by how much majority that Anwar could whack his opponent. The unconfirmed news that Abdullah Badawi flew back to capital Kuala Lumpur at 3 pm has almost certainly raised thousands of eyebrows. It wasn’t a trick or psychological game to make Anwar’s team complacent but in reality the people have just kicked (again?) Abdullah Badawi and his deputy Najib Razak back to Putrajaya so that they could enjoy the remaining days or weeks before pack their stuff.

Permatang Pauh election result MalaysiaKini, the independent news portal that played a major role in the recent general election with the latest update and result has again experienced huge traffic today. Based on the result, Anwar has successfully beaten his wife’s 13,388 majority votes – he has gotten a huge 15,671 majority votes *ouch*. So, the people still prefer a person whose hobby is to sodomize and guess what – they generously gave Anwar 31,195 votes against ruling government candidate, Arif Shah, who polled 15,524 votes. The multiple dirty tricks and campaigns used by the ruling government have actually backfired and if not for the intimidation tactics deployed, the turnout could be higher than 80% considering that Penang state government has declared today as the public holiday in order for voters to exercise their rights *bravo Lim Guan Eng*.

Intimidation and racial tactics are obsolete

There’re claims that heavy presence of security personnel and their “marching in formation” as if ready for battle in Chinese area has scared the Chinese votersfrom casting their votes. Only when the opposition deployed their Malay volunteers to fetch these Chinese on motorbike to the polling center could they cast their votes. It was a known fact that Chinese and Indians were ready to throw their support to Anwar due to the persistent racial policies and statements from the ruling government particularly UMNO. The scene was quite touching with the Malay (opposition) volunteers and supporters offered to protect the Chinese voters from possible harassment from the security personnel who were seen as zombies that follow instruction from the ruling government.

Anwar Ibrahim vs Najib Razak The whole idea was to deny Anwar a win of more than 10,000-vote majority so that the ruling government could at least find a little excuse to celebrate. There really isn’t much worth celebrating since five months ago (general election) and UMNO which is having internal crisis desperately looking forward for a little celebration (this by-election). But not even the “curse of Saiful” could do any major damage to Anwar. There was report that five buses that carry phantom voters(claimed by Anwar supporters) were stopped and prevented from entering the polling centers. Now that the people have rejected the obsolete dirty tactics used over 50-years by UMNO, it remains to be seen what else are there in the bag to prevent Anwar from moving forward to Putrajaya.

PM & deputy PM are hiding away from Anwar?

I bet deputy PM Najib who has been busy calling Anwar sodomy until his mouth foamed is speechless now but the greatest pain could be on PM Abdullah Badawi when he is scheduled to present (or rather read) the 2009 budget in Parliament on Aug 29. It would be nice and interesting to see how Anwar will sit inside the Parliament after an absence of 10-years and grill Abdullah Badawi on that day. But if what Lim Kit Siang blogged is true about the Speaker who said that the oath-taking ceremony to swear in the winner of the Permatang Pauh by-election today would most likely be held in mid-October and that he did not see any urgency to “fix a quick date”, then obviously the entire Cabinet Members are panic and running around just like headless chickens.

Anwar, Wife and Daughter It was understandable why both the PM and deputy PM dared not face Anwar in the recent debate but to deny Anwar his rights to represent the people in the Parliament is simply outrages. You can hide but you cannot run away dudes. If the composition of voters in Permatang Pauh is a reflection of the wishes of the ethnics consists of Malay-Chinese-Indian, it might be the best yardstick as to the direction of the next general election and chances are high that the ruling government, National Front (Barisan Nasional), will become irrelevant sooner than expected. But stubborn and arrogant people never learn. Meanwhile watch-out for UMNO-linked stocks tomorrow as the butchers are sharpening knifes to do some slaughtering. Stay out from the stock market!

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Monday, August 25, 2008

Currency Traders prepare to dump Malaysia Ringgit

Bank Negara (Central Bank) Malaysia has decided to maintain theovernight policy rate (OPR) at 3.50% today defying the pressure to raise it to fight the 27-year high inflation of 8.5 percent recorded in July. The central bank announced that domestic inflation was expected to remain high for the remaining part of 2008 and going into early 2009 before moderating substantially in the second half. Right! As if we do not already know that.

The 3.50 percent level has been unchanged since Apr 2006 but the bank's governor Zeti Akhtar Aziz said she had not bowed to pressure (from ruling government) in setting rates ahead of a by-election on Tuesday in which opposition de-facto leader Anwar Ibrahim is expected to score a major victory which could put him on a path to toppling the government. In her justification, Zeti, who rumored to have put in her resignation, said the decision was based on the fact that inflation has not reaches its dangerous level yet *huh?*.

While many investors expect the central bank to raise interest rate as that was the standard way or normal step to take in order to cool off inflation, one has to understand that the current spiral inflation situation is not due to hot money chasing for goods but rather the after-effect of the recent 41 percent fuel hike. In fact people are not buying unnecessarily. Just how bad is the situation? The 8th Mar 2008 general election was the best evidence that people were very unhappy with the country’s economy and if tomorrow’s by-election result shows increase in majority for Anwar, it’ll be another piece of proof that people are still not happy with the way the economic is being handled.

Ringgit vs US Dollar The stock market could just slide further and test the 1,000 level if Anwar could beat his wife’s huge majority – not an easy task considering the by-election can easily qualified as one of the dirtiest ever. Nevertheless the local currency, ringgit, can expect its value to depreciate further with the latest decision by the central bank. But who’s complaining when it did not offer any benefits to the people on the street when the ringgit hit below 3.2 to a dollar recently? Going by the rate the ringgit tumbles, it would be interesting to see if it could breach the 3.40 to a dollar after which it could depreciate further to 3.50.

HSBC Holdings Plc. which predicted that the ringgit could weaken to 3.50 per dollar end of 2008 also believed the currency will not be able to flex its muscle until at least 2010 due to falling commodity prices and rising political tension. RBS, the U.K.'s second-biggest bank, also predicted ringgit could be flushing down the toilet and will weaken to 3.50 by end of 2009. Gone were the days when a weaker ringgit benefited the country in terms of cheaper labour because China has taken that place. RBS report also touches on the possible of defection to opposition camp should Anwar wins big tomorrow as PM Abdullah Badawi could be sent into panic mode. What an opportunity to short Malaysia ringgit!

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Anwar’s real enemy – Gambling, Money Politic, Cheating

There’s a saying that if you wish to do business and become your own boss then your business focus should includes women and babies simply because it’s easier to get women to spend on themselves and for parents to spend on their babies. The willingness of women to spend cannot be underestimated. Besides the need to make themselves appeal to the opposite sex, females also need to look good within their own species – women. And if you happened to visit the “Parenthood Expo 2008” at Mid Valley which ended today, you might be able to conclude that this year’s event did not attract the amount of visitors compared to last year.

I visited last year’s and again I went to the same place yesterday (Saturday). While to was very crowded last year, this year’s was so-so with many stalls doing average, business-wise. The only stall that pulled huge visitors was “Huggies” which was doing a good promotion. Some stalls that was a magnet last year such as StemLife Berhad (KLSE: STEMLFE, stock-code 0137) and CellSafe International (CSI) didn’t do well judging from the stall’s emptiness and we’re talking about weekend, mind you. I didn’t notice CyroCord though, maybe I missed it. In fact many companies which dealt with babies-related products were missing this time around. Heck, in such a bad time it’s a luxury to store your baby’s stem-cells – I guess.

Anyway I was damn tired after the long walk but fortunately they provided some tables and chairs outside the expo area for people to take a rest. I can’t help but overheard the conversation from one of the family members (they might be relatives) about how Anwar might be slaughtered next Tuesday (polling day). The reason – gambling and money politic. The bet was at 5-1 for Anwar to win with 20,000 majority but now its’ 4-1 for 10,000 majority votes win. In fact the ruling government was so desperate that its’ Women, Family and Development Minister Ng Yen Yen gave away RM200 to about 200 senior citizens above the age of 60 in Seberang Jaya today but not before reminded them to vote for the you-know-who. There’re even rumors that if Anwar were to win by 10,000 majority votes, people will get RM200 and if the ambitious chap were to lose, then it’s RM1,000 up for grab.

The curtain of Olympic Games might have come down on Beijing but the battle had just begun at P44 Permatang Pauh. In a tit-for-tat, the Penang government which is controlled by opposition declared the polling day on Tuesday as a special holiday in order to allow people to vote after the Election Commission “specifically” set the date on a working day. In the latest allegation PKR claimed that a total of 949 voters who were listed in the last official roll approved in June are missing in the new roll even though 800 of them (majority opposition supporters) are still living in the area but would become ineligible to vote because their names are missing. Strangely the missing voters have been replaced with 861 new names, of which nearly half are non-residents who would cast their votes by post.

The most mind-boggling revelation comes from RPK (author of Malaysia-Today) when his latest article revealed his source that exposed deputy PM Najib’s wife as the person who ordered the Mongolian translator to be C4ed. But nothing beats his other revelation of Najib: Muslim by Birth, Hindu by Practice, no matter how difficult it was to believe it. With 24-hours to go before the polling day, there could be more revelations and hence explosive secrets to hit the fan.

Friday, March 6, 2009

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