Market Overview on 23 June 2009

After the 3 month uncommon bull run (or perhaps the bear market rally?) for the global financial market by gaining more than 30%, I believe the bull market peaked on 12/06/2009. The mood in the financial markets can be as unpredicatable as the weather. Some important thing contribute to this bull are:-
1. A series of better than expected US home sales and factory orders data reported.
2. Fed to enhance the power of printing press by print new notes amounting 1.2 trillion.They will used this money to buy US treasury bond,
3. OBAMA's Government 1.2 trilion plan to clean up the toxic assets in the Bank's
balance sheet.
4. Better than expected result reported from finacial sector like Citicorp, Bank of America,Well Fargo.
5. G20 pledging a 1.1 trillion package to IMF to revive global economy.
6. US policy maker to relaxed the Mark to Market rules into the book of Bank.

I believe US market won't reach below 6547 due to the
below reason:-
1. FED is printing USD1.3 trillion to flood the banking system with liquidity. Subsequently, the inflation will be seen, inflation is bode well to the commodities, equity, property.
2. The risk of the bank to be nationalized waning due to 1.2 trillion toxic cleaning plan & easing of Mark to marked regulation.

But the Bull market won't come to town yet due to US economy not out of wood :
1. Umployment rate at the 30 year high 8.5%, expected will be reach 10% end of 2009.
2. Credit card crisis in the offing after 10% unployment got no money to pay the bill.
3. More foreclosures will be happen after 10% unployment.
4. 75% of the GDP of US coming from the spending of consumer, As far as i know,
American already swift from living beyond their mean to the conservative saving
lifestyle like Asian, In other word. The high saving rate of American not bode well for the economy which is highly depend on the domestic demand.
5. The effect of the wealth disruption due to deleveraging of global financial assets still not completely felt by man in the street. I mean some of the consumer still not fell the pain yet.

Although some of the economist & expert claim that the green shoot already seen in
the US, but I believe worst is over & I didn't expect good time already in town due to saving rate in US gradually increase from 0% to 4-5% at the year end, I don't see
any mamooth can be substitute the consumer of US at this moment...

Invest2rich