What is safe to purchase for long-term investments?

It has been well known that investments Gold, Silver, Real Estate, and precious metals are good ways to hedge the inflation. Right now after the major stimulus by governments around the world, we are all anticipating for inflation. However, what are good to buy at this moment. For me, I would strongly encourage Silver. Gold has gone over $1150 US an ounce. It will still go up but Silver should be a better choice. Silver has risen a lot in the past year but it has not gone up as much as gold. The reason is that gold has gone up that much mainly because of the higher demand in Asian countries such as China. Besides, Silver price has been less volatile than gold.

In the charts provided by kitco.com, it clearly shows that silver and gold move in similar directions but gold is more volatile and has risen more than silver. Thus, why buy gold? Buy Silver instead. At this stage when there are still so many uncertainties in the global market recovery, I recommend investors to purchase a portion of assets on commodity and silver would be my recommendation. Right now, the price is $17 per ounce. I will buy anytime now.

Thanks

MC

China May Consider One-Time Yuan Gain, Goldman’s O’Neill Says

Jan. 23 (Bloomberg) -- China will probably let its currency appreciate by at least 5 percent in a one-time move and raise interest rates to cool the economy and curb inflationary pressures, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said.

The Chinese government may allow the yuan to have “a bigger one-off move than people talk about, at least 5 percent, maybe more,” O’Neill said in an interview today at the London School of Economics. “They may also consider having a wide band to let it move more frequently on the daily basis to stop speculative players.”

China’s economy rebounded stronger than anticipated in the fourth quarter, and the inflation rate accelerated to a 13-month high of 1.9 percent in December, igniting speculation the government will abandon the yuan peg to avoid the economy from overheating. China has kept a lid on its currency since July 2008 after it strengthened 21 percent against the dollar over the previous three years.

“Part of the idea of doing these things is to surprise people so we are not going to get any hints of it happening,” said O’Neill. “We’ll just wake up on an unpredictable day and see it happen.”

Besides loosening controls on the exchange rate, Beijing will also raise interest rates soon, according to O’Neill.

“It will definitely happen, and it could happen any day,” he said.

China’s yuan traded at 6.8269 per dollar in the spot market as of 3 p.m. in London.

Thanks
Paul Ink

Paul Krugman from NY times

Op-Ed ColumnistBy PAUL KRUGMAN

Published: January 17, 2010
What Didn’t Happen

Lately many people have been second-guessing the Obama administration’s political strategy. The conventional wisdom seems to be that President Obama tried to do too much — in particular, that he should have put health care on one side and focused on the economy.

I disagree. The Obama administration’s troubles are the result not of excessive ambition, but of policy and political misjudgments. The stimulus was too small; policy toward the banks wasn’t tough enough; and Mr. Obama didn’t do what Ronald Reagan, who also faced a poor economy early in his administration, did — namely, shelter himself from criticism with a narrative that placed the blame on previous administrations.

About the stimulus: it has surely helped. Without it, unemployment would be much higher than it is. But the administration’s program clearly wasn’t big enough to produce job gains in 2009.
Why was the stimulus underpowered? A number of economists (myself included) called for a stimulus substantially bigger than the one the administration ended up proposing. According to The New Yorker’s Ryan Lizza, however, in December 2008 Mr. Obama’s top economic and political advisers concluded that a bigger stimulus was neither economically necessary nor politically feasible.

Their political judgment may or may not have been correct; their economic judgment obviously wasn’t. Whatever led to this misjudgment, however, it wasn’t failure to focus on the issue: in late 2008 and early 2009 the Obama team was focused on little else. The administration wasn’t distracted; it was just wrong.

The same can be said about policy toward the banks. Some economists defend the administration’s decision not to take a harder line on banks, arguing that the banks are earning their way back to financial health. But the light-touch approach to the financial industry further entrenched the power of the very institutions that caused the crisis, even as it failed to revive lending: bailed-out banks have been reducing, not increasing, their loan balances. And it has had disastrous political consequences: the administration has placed itself on the wrong side of popular rage over bailouts and bonuses.

Finally, about that narrative: It’s instructive to compare Mr. Obama’s rhetorical stance on the economy with that of Ronald Reagan. It’s often forgotten now, but unemployment actually soared after Reagan’s 1981 tax cut. Reagan, however, had a ready answer for critics: everything going wrong was the result of the failed policies of the past. In effect, Reagan spent his first few years in office continuing to run against Jimmy Carter.

Mr. Obama could have done the same — with, I’d argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America’s economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration’s refusal to regulate the banks.

But he didn’t. Maybe he still dreams of bridging the partisan divide; maybe he fears the ire of pundits who consider blaming your predecessor for current problems uncouth — if you’re a Democrat. (It’s O.K. if you’re a Republican.) Whatever the reason, Mr. Obama has allowed the public to forget, with remarkable speed, that the economy’s troubles didn’t start on his watch.
So where do complaints of an excessively broad agenda fit into all this? Could the administration have made a midcourse correction on economic policy if it hadn’t been fighting battles on health care? Probably not. One key argument of those pushing for a bigger stimulus plan was that there would be no second chance: if unemployment remained high, they warned, people would conclude that stimulus doesn’t work rather than that we needed a bigger dose. And so it has proved.

It’s important to remember, also, how important health care reform is to the Democratic base. Some activists have been left disillusioned by the compromises made to get legislation through the Senate — but they would have been even more disillusioned if Democrats had simply punted on the issue.

And politics should be about more than winning elections. Even if health care reform loses Democrats’ votes (which is questionable), it’s the right thing to do.
So what comes next?

At this point Mr. Obama probably can’t do much about job creation. He can, however, push hard on financial reform, and seek to put himself back on the right side of public anger by portraying Republicans as the enemies of reform — which they are.

And meanwhile, Democrats have to do whatever it takes to enact a health care bill. Passing such a bill won’t be their political salvation — but not passing a bill would surely be their political doom.

RBC Economic Research / The Bank of Canada's Monetary Policy Report

The Bank of Canada's Monetary Policy Report – raises 2010 inflation profile though does not signal change to policy outlook

In the final analysis, the details of the Bank's forecast show a mild nudge up in its expectation for growth in Canada's economy over the next couple of years. The 2010 real GDP forecast was trimmed back to 2.9% from 3.0%, while 2011's forecasted growth rate rose to 3.5% from 3.3%. Not significant changes on either year's growth rate, but they balance out to a 0.1% overall increase compared to the October projection. The Bank was more aggressive in terms of upgrading its forecast for the global economy with world GDP growth forecasted to increase by 3.7% in 2010 (from 3.1% in October) and 4.1% in 2011 (from 4.0%). In terms of its outlook for inflation, the Bank boosted the 2010 headline and core forecasts. The updated forecast looks for the core rate to average 1.6% in the first-quarter 2010 (from 1.4% in October) and 1.7% for the entire year (from 1.5% in the previous forecast). The headline rate was also bumped up in 2010 and forecasted to average 1.8% (from 1.4%). Forecasts for core rate were unchanged in 2011 while the headline rate is expected to be one-tenth higher in the first quarter of 2011 and then settle back into the prior forecast.

The other notable change in the forecast was oil prices, which are assumed to be higher over the forecast horizon, averaging $83.50 in 2010 (from $76.5) and $88.00 in 2011 from ($80.00). The assumed level of the Canadian dollar was unrevised at 96 U.S. cents, and the Bank still expects non-energy commodity prices to increase "progressively" and credit conditions to "gradually improve."

The report presented changes to the quarterly profile for growth in Canada's economy throughout 2010 and the first quarter of 2011. Growth is expected to be slightly milder in the first quarter of 2010 but to accelerate at a faster pace in the following four quarters. The combination of a strong Canadian dollar and weak U.S. demand will weigh on net exports, which are forecasted to trim 1.2% from the 2010 growth rate. Imports are expected to increase at a faster pace than exports this year likely helped along by the stronger currency making purchases from abroad less expensive. In 2011, however, higher commodity prices and a stronger U.S. economy will see net exports contribute to growth in this update, a switch from the October outlook, which forecasted that the sector would restrain overall growth in 2011.

Government expenditure, which was a key support for the economy from 2008 to 2010, will act as a small drag in 2011 as funds flowing from the stimulus package evaporate. Consumer spending and business fixed investment combined with inventory rebuilding will take up the mantle and support the economy next year. To that end, the Bank discusses the risks to the outlook in the context of a stronger-than-expected recovery in the global economy and Canadian domestic demand on the upside being balanced off against weaker net exports due to a stronger Canadian dollar on the downside for Canada's economy.

With the macro risks judged to be balanced, the Bank views the risks to its inflation outlook as slightly tilted to the downside due to the current policy rate being at the effective lower bound. Once again, the Bank discusses this tilt in the risk profile in the context that it could respond to stronger-than-expected growth with a traditional policy response (raise the overnight rate). However, because the rate is already at its lower bound, should the downside risks materialize, the Bank would have to employ "unconventional policies."

The slight revision to growth over this two-year period resulted in no change in the timing of the closure of the output gap (the difference between actual GDP and an estimate of potential GDP where all inputs are fully utilized) from its October estimate, which is expected to occur in the third quarter of 2011. At the same time, inflation is forecasted to return to the 2% mid-range target. In order to ensure that the inflation rate does not exceed the 2% target, the Bank will need to return the overnight rate to a neutral level, and we expect the process to begin this summer because of the lags between changes in monetary policy and their impact on the economy. Our economic forecast points to the process of rate neutralization starting this summer, and we look for 100 basis points of rate increases to be implemented before the end of the year with another 225 basis points in 2011.

Dawn Desjardins, Assistant Chief Economist, RBC Economics

What Are You Thinking? Warren Buffett. (Part One)

On Wednesday January 20, 2010, 4:57 pm EST

By Michael O'Boyle

NEW YORK (Reuters) - Warren Buffett's move to split Berkshire Hathaway Inc (NYSE:BRK-A - News) Class B shares will tempt smaller investors to buy into the once high-priced stock and could lead to its eventual inclusion in the S&P 500 index.
Shareholders of Berkshire, the Omaha, Nebraska-based insurance and investment company, approved on Wednesday a 50-for-1 split of Class B shares (NYSE:BRK-B - News) in connection with the conglomerate's takeover of Burlington Northern Santa Fe Corp (NYSE:BNI - News) at a special meeting in Omaha.

The split pares the partial shares Berkshire issues to BNSF investors. Buffett said at the meeting that the split was needed to make the transaction easier for small investors.
Investment managers and analysts expect the move will boost demand for the B shares, which closed New York Stock Exchange trade at $3,476, up more than 4 percent after the vote. With the split, each share would be worth about $69.

"This will definitely increase demand. The high share price left out many people from getting involved in something they otherwise would very much like to have," said Patrick Watson, an analyst at Capital Cities Asset Management in Austin, Texas.

Advisers said the split would boost liquidity and could raise the chances that Berkshire may be included in the Standard & Poor's 500 stock index (^SPX - News), which could further increase demand for the stock.

"It will be a good situation if it gets into the S&P 500, since there is all that built-in buying with different index funds," said Alan Lancz, head of Alan B. Lancz & Associates Inc., an investment advisory firm in Toledo, Ohio.

Berkshire is the largest U.S.-based company by market value not included in the S&P 500 because the highly priced shares traded on thin volume. Before the split, the Class B shares traded at six times the price of Google, the highest priced stock in the S&P 500 at $580.41 a share.

One tripping point for Berkshire's inclusion in the index is its first quarter loss last year, said Howard Silverblatt, senior index analyst at Standard & Poor's Indices in New York. S&P looks for four straight quarters of profitability when choosing stocks to include in the index.
"There are other criteria such as leverage and balance sheet that could make up for that one-time item. And let's face it, the last year has not been the best for earnings for anyone," said Silverblatt, though he gave no indication that Berkshire was being considered for inclusion in the index.

VERY UN-BUFFETT
Buffett, 79, had never split Berkshire's stock. One of the world's most respected investors, Buffett reasoned in the past that splits could attract speculators rather than the long-term investors he prefers.

Buffett controls 31.6 percent of the voting power of Berkshire stock and advisers said it was surprising that the so-called "Oracle of Omaha" would dilute the value of his pricey shares.
"Buffet has never been someone to split the stock. But when they launched the B shares, it was a de facto split, so it is really moot," said Richard Steinberg, of Steinberg Global Asset Management Ltd in Boca Raton, Florida, who manages about $470 million, including over 4 million in Berkshire shares.

Jeffrey Saut, chief investment strategist at Raymond James in St. Petersburg, said the "un-Buffett-like" split followed the move to buy BNSF at a premium -- a move Saut called equally out of character for an investor known for exemplifying the creed of buying low.

"I think he was just sitting on too much cash. There is talk he will pass the torch and I think he was worried the heir apparent could invest in the wrong thing," Saut said.

While most advisers thought the split would be a boost for the stock, others thought the move could attract the kind of investors that Buffett had long worried about.

"History shows that stocks that are split to achieve a lower price are degraded," said Frank Pavilonis, senior market strategist at Lind-Waldock, a retail brokerage firm, in Chicago.
Increased demand will likely lead to more analysts at Wall Street firms and other major brokerages to cover Berkshire, which has received little attention from research analysts. The issuance of "buy" ratings could help reinforce demand, advisers said.

"Some people feel more comfortable when they see things in writing and can get reports from several different firms," said Lancz.

(Additional reporting by Leah Schnurr; Editing by Kenneth Barry)

RBC ECONOMIC RESEARCH (US) / PPI

U.S. Housing starts disappoint and producer price inflation, excluding food and energy costs, moderated

Housing starts fell 4.0% to an annualized 557,000 in December from a revised 580,000 in November and from an earlier estimate of 574,000. Expectations were for starts to come in at 575,000 units. Permits, however, posted a solid 10.9% gain in December rounding out 2009 at the fastest pace since October 2008.

By type of housing unit, starts of single-detached homes slowed in December while multiple units trended higher and came in at 101,000 units (+12.2%). All major regions, except the South (+3.3%), posted declines in December led by a 19% dip in the Northeast followed by the Midwest (-18.5%) and the West (-0.9%).

Housing starts have been extremely volatile although were running at a faster pace in the second half of 2009, which is consistent with other reports showing that the worst for the U.S. housing market has passed. The pace of sales is well above the recession lows, and the stock of homes available for sale, while still elevated, has moderated somewhat. Still, the homebuilders' association reported, yesterday, a second monthly deterioration in builder confidence occurred in January. With that said, the index remained well above its recent low recorded early in 2009. This weakening was reported to reflect worries about labour market conditions and the increasing number of foreclosed properties coming onto the market. The expectations component of the index held steady in January while the current conditions components softened, suggesting that, as labour market conditions stabilize, construction activity will pick up pace.

Even with all the gyrations in the data, the balance of the reports indicate that the U.S. economy pulled firmly out of recession in late 2009, and we forecast real GDP expanded at a 4.5% annualized pace. The Fed will no doubt be pleased to see the significant improvement in growth and will be watching to see if this translates into a pickup in the labour market. Until this process occurs, we see little chance of a material change to Fed's current policy stance and expect the Fed funds will be left unchanged at its current range of 0.00% to 0.25% at next week's meeting with the central bank likely to reiterate that low interest rates will be maintained for an “extended period.” We look for the first rate increase to come in late 2010 on indications that the economic recovery has picked up pace alongside a sustained improvement in the labour market.

In a separate report, the producer price index rose by 0.2% in December, firmer than forecasts for the index to hold steady. The annual producer price inflation rate jumped to 4.4% from 2.4% in November. The surge in the annual inflation rate occurred because of the sizeable 9.1% monthly drop in the energy index in December 2008, which related to a plummet in gasoline prices, dropped out of the calculation. The core measure, which eliminates the effect of food and energy price gyrations, was unchanged in December with the year-over-year rate slowing to 0.9% from 1.2% in November. Forecasters were looking for the core PPI inflation rate to come in at 1.0%.

Dawn Desjardins, Assistant Chief Economist, RBC Economics

THANKS
Paul Ink

Unveil The Statue of GOOGLE

When an incident happens accidentially, we call it accident. When incidence happen all in the same time, it should not be considered as accident anymore.

Google, the firm which everybody fimilar with, has announced that it will evacuate from the market of our great China, a week before its Q4 financial report. The main reason which Google has provided is that some of the users accounts have been hacked by the government of China. So, by evacuating from the market, users accounts will no longer be hacked since gmail or Google will not exist in China anymore. Is that how Google wants the story to end?

Here are some information of Google.cn :

• Google controls about 31.3 % of chinese web search vs 61.90 % of baidu


• Google.cn started its business in China in 2006


• Google generate about 200M US dollar annual sales in China


• Several hundred salespeople and engineers in the country in 3 offices: Beijing, Shanghai & Guangzhou


• Baidu employs about 4000 sales and customers service personnel alone.

From the data, we can see that Google.cn is doing good. Several hundred of salespeople and engineers generated about 200M US dollar annually in the past. In fact, Google will not give up this piece of hot cake. Under the situation of US and Europe market have been saturated, it is a good time for Google to expand its business in Asian countries like others big corporation are doing.(e.g HSBC, SOROS Funds...)

To fight for market shares, Google decided to induce the high moral selling point, " PRIVACY ". So in the coming futre, if Google.cn still exist in China, Google will provide you with the highest privacy in China. Neither your wife, nor the GOVERNMENT can touch or read your gmail. The bottom line is, it successfully created a private, secured and safe image to the public right before the Q4 financial reporting. Will this goodwill increase its potential earning in the future? Will Google evaculate from China? Will Google stock price boost up if China make up some agreement with Google in the coming short future. You shall have the answers.

Thanks
Paul Ink

Earning Announcements For Next Week (Highlight)

Monday:
1. Citigroup Incorporated C
2. Forest Laboratories Inc FRX
3. International Business Machines IBM
4. Ppg Inds Inc PPG
5. Td Ameritrade Holding Corp AMTD

Tuesday:
1. Us Bancorp USB
2. Blackrock Inc BLK
3. Wipro Limited WIT

Wednesday:
General Electric Co GE
Bank Of America Corp BAC
Wells Fargo Company WFC
Us Bancorp USB
The Bank Of New York Mellon Corp BK

Thrusday:
Google Inc GOOG
Johnson & Johnson JNJ
Bank Of America Corp BAC
Taiwan Semiconductor Manufacturi TSM
American Express Company AXP

Friday:
Apple Inc AAPL
General Electric Co GE
Abbott Labs ABT
Schlumberger Ltd SLB
United Technologies Cp UTX

Saturday:
Black Hills Corporation BKH

Sunday:
DayOff

Cheers~
Paul Ink

RBC ECONOMICS RESEARCH (US) / CPI

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 15, 2010

U.S. December CPI rose less than expected although the annual rate jumped to 2.7%. Consumer prices in December rose only 0.1% in the month. This was down from increases of 0.4% and 0.3% in November and October, respectively, and compared to an expected 0.2% gain going into the report. Core prices were also up modestly and in line with expectations rising 0.1% month-over-month. Despite the modest increase in the overall CPI, the year-over-year rate jumped to 2.7% from 1.8% in November. This largely reflected the sizeable declines in gasoline prices of December 2008 (19.3%) not being repeated for December of 2009 because prices inched 0.2% higher. The annual increase in core prices was a much more moderate 1.8% although this was up from 1.7% in November.

In part, the larger monthly increases in the CPI during prior months of 2009 reflected rising gasoline prices, which were up 6.4% and 1.6% in November and October, respectively. In December, however, this component was up a modest 0.2%. Food prices were up a similarly moderate 0.2% although this compared to gains of 0.1% over the previous two months.

The moderate 0.1% rise in core prices was helped by new car prices falling 0.3%, after gains of 0.6% and 1.6% in the previous two months that reflected the introduction of the 2010 car lines during these months. This helped to provide an offset to a 2.4% jump in air fares and a 0.4% gain in apparel prices. Air fares have shown large gains over the last three months although the increase in apparel prices follows declines of 0.3% and 0.4% in November and October, respectively. The modest overall gain in prices suggests that retailers remained cautious about pushing through price increases throughout the Christmas shopping period.

Today’s CPI report indicated that, despite the modest monthly increase in December, the annual rate jumped almost a percentage point to 2.7% from 1.8% in November and well above the Fed’s implicit target of 2%. Most of the pressure, however, reflects the effect of large gasoline-price declines at the end of last year not being repeated this year. The less-volatile core measure shows an annual price increase at a more modest 1.8%. The still high unemployment rate and implicit unused capacity in the economy are expected to keep core prices low and moderating throughout 2010. This will allow the Fed to concentrate on assuring that the recent return to positive growth in the third quarter of last year is sustained. Our forecast does not have Fed funds rising from its current range of 0% to 0.25% until the fourth quarter of 2010.

Paul Ferley, Assistant Chief Economist, RBC Economics

2009: Worst U.S. industrial production decline since 1946 although pace moderated over the course of the yearIndustrial production logged a 0.6% increase in December, bang on market expectations. There were offsetting revisions to the November and October levels. The capacity utilization rate rose to 72.0% from November's 71.5%, higher than the 71.8% expected by markets.

December's rise in industrial production was concentrated in the mining and utilities industries. Utilities output shot up by 5.9% in December after falling by 2.4% while mining output increased by a mild 0.2%. Manufacturing production dipped by 0.1%, only serving to dent November's solid 0.9% rise. Motor vehicles and parts production slid 0.1% following November's 1.5% rise and October's 2.4% decline. The rise in the capacity utilization rate was relatively broad based with the largest gain coming from the utilities component. After falling to a record low in June 2009, capacity usage increased by 3.7 percentage points in the second half of the year although it remained well below the 20-year average of 80.2% indicating that significant excess capacity exists in the economy.

Today's IP report wrapped up the data for 2009, which showed that on average industrial production was running 9.7% lower than in 2008. On a fourth-quarter over fourth-quarter basis, which is thought to capture more fully activity over the course of the year, the drop was a more modest 4.6%, the slowest pace of decline since the third quarter of 2008.
More importantly production increased in each of the past six months. This advance was mirrored in the third-quarter real GDP report, which showed a 2.2% annualized increase. Our monitoring of the monthly data indicates that the economy grew at a faster pace in the final three months of 2009 with real GDP growth tracking a 4.5% annualized gain. Some of this rise is attributable to a sharp slowing in the pace of inventory liquidation; however, our tracking indicates consumer and construction activity also posted gains in the quarter. While the pick up in the fourth quarter is good news and signals that the U.S. economy moved firmly out of recession, these gains will only dent the large output gap that was created during the recession meaning that the significant level of spare capacity will persist in 2010. The 10% unemployment rate and historically low capacity utilization rate attest to that. Given the amount of slack in the economy, we see little scope for the Fed to start raising rates in the near term with the focus remaining on unwinding its less-traditional programs.

Dawn Desjardins, Assistant Chief Economist, RBC Economics

Thanks
Paul Ink

RBC ECONOMICS RESEARCH (US) / Retail Sales

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 14, 2010

U.S. December retail sales unexpectedly fell although the gain in November was revised upwards

Retail spending in December unexpectedly fell by 0.3% in the month suggesting a weak finish to the Christmas shopping period. Market expectations had been for a 0.5% gain; however, the disappointment with the decline was tempered by the fact that sales in November were revised up to a robust 1.8% from the previously estimated 1.3%. This suggested unsustainably strong momentum going into the final weeks of holiday spending.

The unexpected weakness was in part the result of the motor vehicle and parts component dropping 0.8% in the month after a 1.2% gain in November. The earlier reported unit auto sales data suggested that activity continued to rise in December although at a more moderate rate compared to November. (The missing sales activity may reflect business purchases of autos that will be captured in business investment data.)

Sales growth at service stations slowed to 1.0% from 9.6% in November though such had been flagged by indications of flat gasoline prices in December. More unexpected was sales excluding autos and gasoline dropped 0.3% compared to expectations of a 0.2%. The decline, however, followed a much larger and upwardly revised 1.0% surge in November that had previously been reported as up 0.6%.

The drop in December retail sales was disappointing although it was tempered by the upward revision to November, which provided almost a full offset. Thus today’s data remain consistent with our forecast that consumer spending, on a volumes basis, continued to rise in the fourth-quarter 2009 by an annualized 1.7%. This is slower than the 2.8% rise in third-quarter 2009; however, that quarter had been helped by the ‘cash-for-clunkers’ auto rebates. There had been some concern that the strength in the third quarter was just advancing activity from subsequent quarters. To some extent that has happened because consumer spending on durables is expected to drop around 2% in the fourth quarter after the 20.4% surge in the third quarter; however, this payback is relatively muted and is being offset by strengthening growth in consumer spending for non-durables and services.

The other upside surprise in the fourth-quarter data to date has been the relative strength in inventories, which could help double fourth-quarter GDP growth relative to the 2.2% annualized gain in the third quarter. This pace of growth, if sustained, would start to put greater downward pressure on the unemployment rate. With about one-half of the Q4 gain expected to come from inventories, however, the sustainability of above-trend growth is doubtful. Our expectation of a return to more moderate growth in 2010 implies the Fed keeping Fed funds steady in the current range of 0% to 0.25% until the fourth-quarter 2010.

Jobless claims for the week ending January 9, 2010 rose slightly to 444,000 from 433,000 the previous week (downwardly revised from 434,000). Improving labour market conditions are more evident looking at the four-week moving average for claims, which dropped to 441,000 from 450,000 over the same period. For the week ending January 2, 2010, continuing claims dropped to 4,596,000 from 4,807,000 the previous week.

Paul Ferley, Assistant Chief Economist, RBC Economics

Thanks
Paul Ink

Can Dow go any higher?

Today is January 14,2010. This morning, Dow has rise above 10700. The first thing that came through my mind is “Wow”. However, will it be able to climb anymore up? My answer to this is definitely a “NO”. The market has risen far too much. It has rebounded over 60% from last year’s bottom in March. There are two main reasons why this has happened. First, investors are too optimistic about the global recovery. It seems like they have one eye, “the rational eye” covered throughout this rally. Second, investors push the market a lot lower that it should be in last year’s March. As a result, company’s can easily beat the market’s expectation and where this rally has started. There have been lots of people who lost lots of money but there are lots of people who made tons of money from last year’s financial crisis. Those investors basically set a trap for investors who lack of economic knowledge. Furthermore, as of today, those investors in Wall Street has done it again using the same strategy but in an opposite way. This time, they have pushed the market way too high so that they can sell their assets and wait for it to go down again. Thus, my assumption is that the train has left the gas station. There is no way that it could go up anymore in the near future. Maybe maximum to 11000, I guess. But there is no way it could go above 11100. A lot of people including myself are just tired of this rally. Dow Jones will definitely go down. My prediction is Dow will go back to 9000-9200 within the next two and a half month. Those results in 2010 will look a lot worse than it seems now. Therefore, don’t get fooled by the optimistic news.

Here are a several stocks that I think you guys can buy to hedge the risk if you are planning to keep some stocks on hand.

1. FAZ. Buy below $17

2. SLV. Buy anytime

3. UCO Buy below $12

Hope this helps

MC

RBC ECONOMIC RESEARCH (US) / Trade Deficit

U.S. Trade deficit widens in November on imports gain

The U.S. trade deficit increased to -$36.4 billion in November, outpacing market expectations for a smaller decline to -$34.6 billion. October’s deficit was revised to -$33.2 billion from an initially reported -$32.9 billion. Exports rose by 0.9% while imports surged 2.6% in November.

The U.S. trade deficit widened in November, with a seventh consecutive gain in exports (0.9%) offset by an even larger (2.6%) rise in imports. The rise in exports was relatively narrowly based with outsized gains in foods and feeds (16.6%) and autos (9.0%) largely offset by declines in industrial supplies (-1.9%), consumer goods (-5.2%) and other merchandise (-8.8%). The gain in imports was more broadly based with strong gains in industrial supplies (5.1%), capital goods (3.8%) and consumer goods (3.7%) being only partially offset by a 2.3% decline in food and feed imports. The real-goods balance widened to -$40.7 billion in November with a 1.8% rise in imports of non-petroleum products offsetting a 0.3% rise in non-petroleum exports.

In recent weeks, expectations for fourth quarter GDP growth have been buoyed by reports that manufacturing and wholesale inventories increased for the second month in a row in November, suggesting a sharp slowing in the pace of inventory liquidation in the quarter. Today’s trade report supports the argument that a portion of these inventory gains were likely the result of increased imports rather than increased domestic production; however, even with a likely offset from trade, it appears that GDP growth for the quarter could be closer to 4% than our current 3.4% forecast.

While indications of stronger-than-expected growth in the fourth quarter are encouraging, they are largely a reflection of stronger-than-expected inventory numbers with growth outside of this component likely to remain relatively subdued. As a result, we expect the Fed to remain cautious about tightening policy until the economic recovery is on more solid footing and the large build-up of economic slack evident in December’s 10.0% unemployment rate begins to dissipate. Our forecast assumes that the first increase in the Fed funds target from its current range of 0% to 0.25% will not be required until the fourth quarter of 2010.

Nathan Janzen, Economist, RBC Economics

Thanks
Paul Ink

RBC ECONOMICS RESEARCH (Canada) / Housing

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 11, 2010

Housing starts jump 5.9% to an annualized 174,500
Canadian housing starts in December 2009 continued the upward trend seen since the recent trough in April, rising a greater than expected 5.9% to an annualized 174,500. Expectations had been for starts to rise to 161,800. For the year, housing starts averaged 145,200 in 2009, down 31.1% from 2008.

The overall increase was the result of a 6.4% rise in urban singles and a 6.7% gain in the volatile urban multiples component. Today’s report extends a strong upward trend seen since April 2009, particularly in the more stable and indicative singles component.

The strength was relatively broad based. Solid gains were recorded in Quebec (17.8%), Atlantic Canada (15.0%) and British Columbia (8.7%), while Ontario saw a more modest increase of 2.9%. The Prairies were the only region to have activity fall, dropping 3.8% in the month.

Low mortgage interest rates and improving consumer confidence are providing significant support for housing demand, leading to rising home sales and falling inventories of unsold houses. This in turn is pushing builders to increase the pace of new homes coming onto the market and spurring on growth in residential investment. Despite this recent pick up, however, housing activity levels remain well below recent peaks, and last week’s somewhat disappointing labour market report showed that there is still a considerable amount of slack in the economy that will take some time to wear away. Thus, although the housing market continues to improve, indications of unused capacity in the economy as a whole mean that the Bank of Canada is likely in no rush to start tightening policy. We continue to expect that the central bank will maintain its conditional commitment of holding the overnight rate at 0.25% through the middle of 2010.

David Onyett-Jeffries, Economist, RBC Economics

Thanks
Paul Ink

Temporary Effect?

As rational investors, we have to make clear between a temporary and sustainable effect.
For example, earthquake will be an temporary effect for the stock market. (Of couse, if a place keep on having earthquake, then earthquake will become an sustainable effect for that place.) Like the definition of inflation, it is define to be a sustained, rapid increase in the general price level. Thus, inflation will consider to be an sustained effect. That is also why investors pay more attention to CPI or PPI data.

Yet, the point to share these ideas is that I consider the weather variables or effects that push the oil to $83.20 in recent is so temporary, especially in this week. Will the harsh weather exist forever? No way. This is the first support to bear on oil. ( -$2.50 ~ -$3.00)

On the fundamental side, high oil price hurts the worldwide economy, especially in those high unemployment rate countries. Conversely, it is actually the economy that cannot support the hige oil price. I believe the US government should know the reality.
This is the second support to bear on oil. ( -$ 2 ~ -$2.50 )

Overall, the range I give out for the coming week is:
$84.50 ~ $$77 per Barrel

Thanks
Paul Ink

RBC ECONOMICS RESEARCH (US) / Payroll Employment

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 8, 2010

Payroll employment showed a disappointing decline yet November eked out a gain. The December labour market report indicated that the U.S. economy disappointingly returned to job losses with payrolls down 85,000 in the month. Expectations had been for employment to remain unchanged in the month. Revisions to November 2009 resulted in the month showing an increase, the first in 23 months, although barely rising by a negligible 4,000. The decline in October 2009 was revised to show a larger drop of 127,000 relative to a previously estimated -111,000. The unemployment rate in December held steady at November’s 10.0%; however, the October rate was revised down to 10.1% from the earlier estimate of 10.2%. (This resulted from the BLS, which compiles the employment report, re-estimating its seasonal-adjustment factors, as it does at the end of every calendar year.)

The declines were broadly based although skewed toward goods-producing industries where employment fell 81,000 in the month led by construction (-53,000) and manufacturing (-27,000). In total, service-producing industries had a much smaller drop of 4,000 although this masked larger movements in some of the sub-components. For example, there were large declines in trade, transportation and utilities (-37,000) and leisure and hospitality (-25,000) with a sizeable offset from professional and business services (+50,000).

The workweek held steady at November 2009’s 33.2 hours, thus holding onto the gain from October 2009’s 33.0 hours. It was a similar story for the manufacturing sector with the workweek averaging 40.4 hours in both December and November, which was up from 40.1 hours in October. The index of aggregate weekly hours, which reflects the impact of both employment and hours worked, was unchanged in December after the 0.6% jump in November and a 0.4% drop in October. The earlier weakness resulted in the fourth quarter 2009 average still declining an annualized 0.5%; however, this represented a marked improvement from declines of 2.5% and 7.8% in third and second quarters, respectively. This reinforces expectations that GDP growth will likely continue to improve throughout the fourth quarter 2009.

The index of average hourly earnings, the main wage measure in the report, was up a modest 0.2% in the month, which allowed the year-over-year rate to moderate to 2.2% from 2.3% in November.

Today’s report did result in a return to job growth, although barely so, with the November gain representing the first increase in 23 months. Thus despite the disappointing drop in December, data are still consistent with an improving trend in labour markets. The improvement, however, has not prevented the unemployment rate remaining in double digits. This persistence of unused capacity in the economy is expected to keep monetary conditions accommodative to assure that the recovery is sustained at a pace to absorb this slack. Our forecast assumes that increases in Fed funds from its current range of 0% to 0.25% will not be warranted until the fourth quarter

2010.Paul Ferley, Assistant Chief Economist, RBC Economics

Thanks
Paul Ink

RBC ECONOMICS RESEARCH (Canada) / Unemployment Situation

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 8, 2010

Labour market cut 2,600 jobs in December, unemployment rate steady at 8.5%
Canada's labour market was relatively stable in December, compared to the previous month, with the economy trimming 2,600 from payrolls. This disappointed forecasts for a 20,000 rise in employment; however, December's slip followed a staggering 79,100 increase in November, which more than made up for the 43,200 jobs lost in October. On net, there were 33,300 new jobs created in the final quarter of 2009. The unemployment rate held steady at 8.5% as 8,900 left the labour force in the month.

December's small-jobs decline reflected steady part-time employment with the number of full-time jobs falling by 2,400. Despite this moderation, full-time employment increased by 52,700 in the final quarter of 2009. Gains in the services-producing industries' employment totalled 9,400 in December, which masked rather substantial movements across industries. Strong gains in wholesale and retail trade, professional services, health care and accommodation services were nearly offset by falling employment in finance, insurance and real estate, public administration, business support services, transportation and warehousing. In the goods-producing industries, 12,000 jobs were cut with a rise in construction jobs being offset by declines in all other categories. Manufacturers reduced their payrolls by 9,700. Private companies cut 2,600 from payrolls, and the number of self-employed rose by 17,800, dampening the positive news in the report.

Alberta saw payrolls rise while Ontario, Manitoba and New Brunswick posted job losses.
The annual gain in the average hourly wage rate for permanent workers edged up to 2.2% from 2.1% in November, which was the slowest annual pace since March 2007.

Today's report supports our forecast that the economy had a better quarter in the fourth quarter 2009 with 33,300 jobs created, the largest quarterly increase since the third quarter 2008 and building on the 13,200 job gains in the prior quarter. This improvement in the labour market jives with our forecast for real GDP growth of 3.4% annualized in the final quarter of 2009. Despite the rise in employment in the final half of the year, the recession took its toll on the economy in 2009 and 240,000 jobs were lost over the course of the year.

The stable unemployment rate highlights that even though economic activity has picked up pace, the amount of slack generated during the recession will take some time to wear away. As a result, the unemployment rate will remain elevated in the near term. Against this backdrop, inflation pressures will remain benign as well. For the Bank of Canada, the economic conditions do not warrant any deviation from the conditional commitment to a 0.25% overnight rate until the end of the second quarter. The rally in the housing market and improved labour market conditions indicate that the economy started 2010 on firm footing, and we have recently upgraded our forecast for growth in the first half of the year. As the economy's momentum builds, the Bank will look to remove monetary stimulus, and we forecast 100 basis points in rate hikes in the final six months of 2010. Today's report is unlikely to see the Bank change its stance at the next fixed action date on January 19, 2010, and we look for the conditional commitment to a 0.25% overnight rate to be maintained.

Dawn Desjardins, Assistant Chief Economist, RBC Economics

Thanks
Paul Ink

Foot Locker to cut 120 jobs (From Yahoo)

On Friday January 8, 2010, 5:00 pm EST

NEW YORK (AP) -- Foot Locker Inc. said Friday it plans to cut about 120 jobs and to have closed 117 stores by the end of this month as it looks to become a more efficient and competitive business.

The footwear and accessories company also said it will consolidate its management staff in order to sharpen its attention to female shoppers' needs.

The company's stock gained 43 cents, or 3.6 percent, to close at $12.25 Friday.

The retailer has tried to offset slowing U.S. sales with tighter inventory management and increased cost control efforts.

The company said the job cuts would come in its home office and field management operations. It did not say in a news release what stores would be closed.

Calls to a company spokesman for comment were not immediately returned.

Foot Locker said it plans to open 37 stores, close 190 stores and remodel or relocate 160 stores in its fiscal year that ends this month. It said 117 stores -- mostly domestic Foot Locker and Lady Foot Locker locations -- were likely to be shuttered in the fourth quarter.

It currently has about 3,600 stores in 21 countries in North America, Europe and Australia.

The company said it will consolidate Lady Foot Locker's management with that of its Foot Locker U.S., Kids Foot Locker and Footaction businesses.

Richard Johnson, president and CEO of Foot Locker Europe, will become president and CEO of the combined division. Lewis Kimble will succeed Johnson as president and CEO of Foot Locker Europe. Kimble previously served as managing director of the Foot Locker Asia/Pacific unit.

Foot Locker President and CEO Ken Hicks, who left J.C. Penney Co. in July to take Foot Locker's top post, said the consolidation should help strengthen its brands' position in the retail sector and improve coordination of its women's product assortments.

Foot Locker expects the job cuts will result in a charge of $3 million, or 2 cents per share, in its fiscal fourth quarter.

It anticipates the job cuts and management consolidation will help save about $10 million in expenses in 2010.

Thanks
Paul Ng

Paul Krugman Talks about China

December 31, 2009, 1:23 pm

Macroeconomic effects of Chinese mercantilism

For something I’m working on: we know that China is pursuing a mercantilist policy: keeping the renminbi weak through a combination of capital controls and intervention, leading to trade surpluses and capital exports in a country that might well be a natural capital importer. We also know, or should know, that this amounts to a beggar-thy-neighbor policy — or, more accurately, a beggar-everyone but yourself policy — when the world’s major economies are in a liquidity trap.

But how big is the impact? Here’s a quick back-of-the-envelope assessment.

Start with the Chinese surplus. It has been temporarily depressed by the world trade collapse, but seems to be on the rise again. Blanchard and Milesi-Ferretti, at the IMF but speaking for themselves, project a Chinese current account surplus for 2010-2014 of 0.9 percent of gross world product.

You can think of this as a negative shock to rest-of-world net exports. (Technically, that’s not quite correct — because the shock depresses res-of-world GDP and hence rest-of-world imports from China, the realized trade surplus is smaller than the shock. But that’s a small correction.)

In turn, this negative shock is like a negative shock to government purchases of goods and services. So it should have a similar multiplier. Multiplier estimates are all over the place, but tend to cluster around 1.5. So we’re looking at a negative impact on gross world product of around 1.4 percent. Not huge — China isn’t the principal obstacle to recovery — but significant.

And, if we think of the United States as bearing a proportionate share, and also use the rule of thumb that one point of GDP = 1 million jobs, we’re looking at 1.4 million U.S. jobs lost due to Chinese mercantilism.

Thanks
Paul Ng

RBC Economic Research

RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE – January 6, 2010

ISM Non-Manufacturing Rises in December

The ISM non-Manufacturing Index rose to 50.1 in December 2009 from 48.7 in November 2009. Expectations within financial markets were for a somewhat stronger increase to 50.5. Business activity increased to 53.7 from 49.6 in November. With respect to inflation, the prices index edged up to 58.7 in December from 57.8 recorded in the prior month.

Sentiment in the non-manufacturing sectors of the U.S. economy improved in December 2009. The ISM non-manufacturing index rose back into expansionary territory with a 50.1 reading in December following the prior month’s 48.7 (a reading above the ’50-mark’ indicates expansion). Although new orders declined to 52.1 in December from the prior month’s 55.1 reading, business activity rose to 53.7 from November’s 49.6. Employment remains weak at 44.0 in December, although this represents a nice improvement over November’s 41.6 reading and a considerable improvement over the recent low of 31.1 recorded in November 2008.

The improvement in December’s ISM’s non-manufacturing report follows on the heels of the strong ISM manufacturing report for the same month. The strength in both reports is consistent with our forecast that the U.S. GDP growth accelerated in the final quarter of 2009. We project that the economy grew at a 3.4% annualized pace in the fourth quarter after rising 2.2% in the prior quarter. In terms of the payroll report, due to be released Friday, January 8, 2010, RBC expects an above-consensus 20,000 gain in non-farm payrolls for December; however, we anticipate that the unemployment rate will remain in double digits rising to 10.1%. We project that the Fed Funds rate will remain in its current 0.00%-0.25% range until the fourth quarter of 2010 because the Fed aims to support the recovery and bring down the ranks of the unemployed.

Josh Heller, Economist, RBC Economics

To view the economic data calendars with trend charts, go to:

http://www.rbc.com/economics/html_calendars/ca/calendar.html (Canada)

http://www.rbc.com/economics/html_calendars/us/calendar.html (United States)

Thanks
Paul Ng

How powerful is Goldman Sach?

Here is what Robert Kiyosaki thinks

http://www.youtube.com/watch?v=qc2ixSckRro

Note: "Cash is trash"

Take a few minutes and think about Robert's comment

MC

Are You Ready Yet??

CFA Level 2 Financial Statement
Thank You

Paul Ng

Investment Banking?

Thank You
Paul Ng

Stocks in radar

Today, the stock that I think investors should take into consideration is Simon Property Group Inc. (SPG) in the U.S. market under the S&P 500 index.

I am encouraging to buy this stock anytime at price between $78-$79 a share. I am looking this stock to rise to $85 within January. Simon Property Group is the U.S.'s largest shopping malls already before the acquisition of the Prime Outlet Inc. Now along with the buying of Prime Outlet Inc, I predict it is possible to monopolize the factory outlets in the United States. Since the U.S. is still finding ways out of the recession. People still prefer cheaper and better deal goods. This would bring higher revenue and earning for SPG since people will shift and spend on outlet goods.

Hope this will help
MC

Life Is Too Short

So make it simple. Buy at Dip! Sell at Peak. Safer to Buy at Dip

Stocks of the week

SLV = $15.30-$16.80
C = $3.25-$4.00
URE = $6.00-$7.25
BAC = $14.50-$16.00

Explanation will be provided later

Thank You
Paul Ng

The Born of Channel E

Today is not December 25. It is January 3, the born of Channel E. This is created by Economic Spectators that are extremely in love with the Financial Industry. The purpose of this blog is to analysis and predict the Economic trends.