What is Gold?

Gold (pronounced /ˈɡoʊld/) is a chemical element with the symbol Au (Latin: aurum, "shining dawn") and an atomic number of 79..................

As for economists, I am pretty sure that’s already too much chemistry information. In fact, let us get back to the real topic, what does gold stand for? To be honest, gold price has been increased quite a lot in the past 5 years. (Getting the reference price from a GOLD ETF, name GLD, I calculated that the gold price has increased more than 154.68% within this 5 years.) But why has gold increased that rapidly in the past few years and why in recent, every fund or even chemistry students will tell you that gold will be a good place to invest in.

Back to the basic, back to the economic, gold act as a hedge for fiat money. Not only US dollar, but also currencies that are categorized as fiat money. ( Make it simple for now, fiat money means paper money, for more details, please do some Home Work) In an economic crisis, investors are frightened and their risk appetite change. They afraid depreciation and depression, and so, they tend to invest in gold which shall be the safest place to store their purchasing power during depreciation and depression. That is the main reason why gold price has increased that many in the past.

But will this trend go forever? I do not think so. Following by the stability of the economic worldwide and steadiness of value of fiat money, the golden trend will not go forever. When the mist in US, POUND and EURO clear themselves, golden trend has to stop. No sooner or later, gold shall become back to a chemical element with a symbol of Au, and might only chemistry students know the meaning of GOLD. So be aware not to invest that heavy in gold in the coming days.

Thanks
Paul Ng

Is there a shortage of supply of local manufacture companies?

Nowadays, manufacturing clothing in developing countries such as China, Thailand, Indonesia, and Vietnam are popular since the lower cost of labor and manufacture materials. However, while the majority of clothing company produces in these developing countries, is there a supply shortage in local manufacture clothing companies? Today, I will use the company Lululemon as a reference to analysis this issue.

Lululemon Athletica Inc. Is founded in 1998 is a yoga-inspired athletic apparel company who has its factory based in Vancouver, Canada. The concept of the company is that it produces locally in Vancouver. However in 2004, the company starts to expand its factory outside of Canada such as China and Taiwan. Later in the early January 2010, Lululemon is planning to have the majority of its production shifting it to China. Immediately, there has been a large debate local Vancouver consumer. They strongly object this idea by Lululemon. They think Lululemon has broken their philosophical practice when it is first set up. People in Vancouver actually really like the idea of local manufacture clothing companies.

This reaction by local citizens in Vancouver shows that there is a shortage of supply of local manufacture clothing companies. Also, it shows that there are markets and that producing local clothing can make profits. Consumers are more than willing to pay more bucks for local brands. Thus, I think while the majority of clothing companies shift towards foreign countries, one can try to produce their own brands locally in North America. There is an opportunity out there it is worth trying. Even though the cost many be higher and products could be priced higher, there are consumers out there that are local friendly to support local production companies.

Thanks

MC

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