Stock Preacher

The Group of Seven, convened again in Rome, has ceding its traditional power to rebuild the world economy to a broader body of governments that now wield greater sway over global growth., the Group of Twenty. The U.S. Treasury Secretary and European Central Bank President joined their G-7 counterparts, for the discussions but it is the G-20 that now occupies the responsibility in responding to the world financial crisis.

The shift in influence to the G-20, whose members range from the USA to China to Saudi Arabia, reflects the fact that industrial nations alone lack the resources to fix the world’s economic problems. That curbs the G-7’s scope to deliver new initiatives this week, say economists and former officials. “The world has changed,” says Paul Martin, Canada’s former prime and finance minister who attended G-7 meetings and helped establish the G-20 a decade ago. “The G-20 reflects the realities of the global economy. Its finance ministers are becoming the dominant policy-making body.”

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This is what happened last week…

Last Tuesday began what the world community views as a major event in US history, the inauguration of Barack H. Obama as its 44th President and its 1st Black American President.
Some of President Obama’s executive orders on his 1st day in office:

1. A freeze on salaries for White House staff earning $100,000 or more, about 100 people in all.

2. New Freedom of Information Act rules, making it harder to keep the workings of government secret.

3. Tighter ethics rules governing when administration officials can work on issues on which they previously lobbied governmental agencies, and banning them from lobbying the Obama administration after leaving government service.

The week in the markets, however, continued to be bathed in the glow of uncertainty within the financial sector and coupled with Qs about the timing of the economic recovery.
Couple that with headlines announcing that China’s Y 2008 Q 4 GDP contracted from 9% to 6.8%, the UK reporting a GDP decline of 1.5%, the largest since 1980, US housing starts fell to their lowest level on record, and initial jobless claims returned to Christmas levels, matching the 26 yr. high of 589,000 set in December 2008.
Though Microsoft disappointed, IBM and AAPL rang the bell with GOOG beating too, and coming in better than expected.
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US Treasury yields have moved South to the lowest levels since the ’40s, because investors are very fearful of this global economic downturn + the potential deflation on the horizon and have rushed to purchase the US government issued debt paper considered among the safest asset classes. The fact is that this may turn out to be the biggest investment bubble to date and may be on the edge of popping. According to a article in Barron’s today, the big risk to the Treasury market comes from the potentially inflationary impact of both the Federal Reserve’s extreme accommodative monetary policy, which sent short rates to zero +, and the huge fiscal stimulus slated to come from the US government this year. It is expected that it will take higher yields to attract investors, particularly foreigners, as the US Treasury works to fund an estimated deficit of US$1T + this year. Savvy analysts are saying “get out now”. Why, because other parts of the bond market are calling including municipals, corporate bonds, convertible securities, some mortgage securities and preferred stock. The average junk bond now yields 20%, compared with 9% at the start of 2008. Triple-A-rated Muni’s with 30-year maturities are yielding about 5.25%, almost double the yield on 30-year Treasuries. The yield differential between the two markets is unprecedented. Until this year, Munis almost always yielded less than US Treasuries because of their tax benefits. A Bearish stance toward US Treasuries and a Bullish one toward the rest of the bond market represents the consensus view. Most equity and bond analysts surveyed last month by Barron’s projected the US Treasury 10-year note would carry a yield of 3% or higher by the end of 2009. At the same time, it’s hard to find Bears on corporate bonds. It’s nice to be contrary. Sometimes, however, the consensus view is right.

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Below is the Forecast from one Chinese Astrologer that I read.

“The global economy will begin to recover from the financial meltdown. 2009 is a year of opportunities with the emergence of many new global empires.

Under the new administration of Barack Obama, Obama is a self element earth person, the Wall Street stock market will recover faster than expected as Barack Obama enters his peak luck cycle, as the world’s major economies put aside their differences to overcome this current financial crisis.

The full impact of the unison will be seen in the second half of 2009.

The property market of United States will continue to recover as 2009 is the Year of Earth.

Employment statistics will improve as US job market bounces back from the financial meltdown. This will lead to an improvement of the world’s stock market, as many major corporations will undergo restructuring or even a change in leadership.

All the best in 2009, the Year of the Ox, Charge!

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