UCLA Anderson Forecast report said U.S. recession will only worsen next year as unemployment, weak home, plunging stock prices and debt-laden businesses would reveal its true color by then. UCLA also expects the real GDP to shrink by 4.1%, 3.4% and 0.8% for fourth-quarter 2008, first-quarter 2009 and second-quarter 2009 respectively. Looking at the figures alone it seems on surface the U.S. economy could bring cheers from third or possibly fourth quarter of 2009 onwards – if we’re lucky and President-elect Obama could do wonders immediately, not to mention no-more ugly surprise factors. However the UCLA report does not talk about unemployment problem which was predicted to hit 8.5% by end of 2009. The Labor Department has just reported jobless claims hit the highest level since Nov 1982 at 573,000 for the week ending Dec 6.

Besides Europe and Japan which are already in recession the eyes are on China. China’s economy is expected to grow at 8.2 percent in 2009 compared to 9.5 percent in 2008. Inflation also dropped surprisingly to a 22-month low of 2.4% in Nov from 4% in Oct, a good sign that China’s economic is not overheating. But this also means the deflation possibility has grown. An analyst with CEB Monitor Group research firm in Beijing even predicted China’s inflation could reach negative 1.5% at the end of first-quarter 2009. As fun as it may be, investors are monitoring if the global crude oil prices could go under the psychological $40 a barrel. The fact is OPEC is fighting a losing battle to keep the oil prices high but now that Russia planned to lend its help to support the black gold prices it appears the foundation of $40 a barrel has increased in strength.

If you’ve been monitoring the Dow Jones performance lately you can’t help but to wonder if the bottom was behind us. Any investors will tell you that at this particular moment the chances of DJIA breaching below 8,000-level is history. There’re people (fund managers included) who cried that they have missed the bottom and scrambling to buy in case the stock market suddenly come charging. So, what happens to the “stocks will get worse before it gets better” trumpeted by the professional fund managers? Have we really seen the worst? I have not seen the worst yet therefore I can’t say it’s time for us to rock and roll. Has AIG suddenly recovered? Will we hear no more of companies planning to put thousands of staffs on the chopping board? Maybe the Detroit’s top three automakers bailout is the last that we’ll see. But hey, it appears the Senate refused to endorse (52-35 vote) the $14 billion rescue plan and the 3 million jobs are at risk here *scary, scary*.

So, are you tempted with the current stock market direction which is slowly forming volatility within “controllable range”? It’s neither too wild nor too mild, a heaven for swing traders. People still makes good money during such situation because the trading range is more predictable but you got to run for your life when you hit the threshold of profit. There’s no room for greed unless you wish to get slaughtered. Nevertheless you won’t know if the current nice weather is in fact another preparation for yet another fierce storm to come. Don’t get tricked that just because the local banking sector is not affected seriously (for the time being), it means 2009 will be the same. It’s not like the meteorite that hit the earth millions of years ago that wiped out the dinosaurs instantly. It’s a poison that is slowly spreading. In reality, we’re still savoring the meat from last year’s hard work with only days to go before the New Year *fireworks please*.

If you must because your hands are too itchy so much so that the doctor that you consulted concluded there’s no cure for such disease then please do your homework and do some research on the company’s financial report, not to mention the dividend factor. I’m wondering how long can Public Bank Berhad (KLSE: PBBANK, stock-code 1295) take the punches because this is one of the stocks that you cannot ignore. It would be a waste not to accumulate this stock but at the current price of RM8.30, I’m not tempted (please sell down this stock so that I can accumulate please *grin*).

Other Articles That May Interest You …

• Dividend Yield Stocks (Part 3) – Carlsberg Brewery
• Ten years after 1997 Crisis, another Window of Opportunity?
• JTI Revisit – still an attractive Dividend Stock
• Dividend Yield Stocks (Part 2) – JT International
• Dividend Yield Stocks (Part 1) – Berjaya Sports Toto
• Which Stocks to Invest – GENTING OR Public Bank?
• Teh Hong Piow – Malaysian’s Warren Buffett

Tweet

December 12th, 2008 by financetwitter

If you enjoyed this post, what shall you do next? Consider: