KLCI Market Outlook 2009

The fastest roller coaster in the world goes from 0 to 128 miles an hour, straight up, like a rocket, then down 41 stories, twisting in a 270-degree spiral. Total time: 28 seconds. Are you scared yet? Happy reading ... :)

Hubbert peak theory

The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of 32 to 35 years.[1][2] The theory is named after American geophysicist M. King Hubbert, who created a method of modeling the production curve given an assumed ultimate recovery volume. Hubbert's Peak was achieved in the continental US in the early 1970s. Oil production peaked at 10.2 million barrels a day. Since then, it has been in a gradual decline. Peak oil as a proper noun, or "Hubbert's peak" applied more generally, refers to a singular event in history: the peak of the entire planet's oil production. After Peak Oil, according to the Hubbert Peak Theory, the rate of oil production on Earth would enter a terminal decline. Based on his theory, in a paper[3] he presented to the American Petroleum Institute in 1956, Hubbert correctly predicted that production of oil from conventional sources would peak in the continental United States around 1965-1970. Hubbert further predicted a worldwide peak at "about half a century" from publication and approximately 12 gigabarrels (GB) a year in magnitude. In a 1976 TV interview[4] Hubbert added that the actions of OPEC minght flatten the global production curve but this would only delay the peak for perhaps 10 years. (read more...)

Zentrader Note: Since 2005, US economy was push down by the tightening rate and oil shock. We know that high oil price is a form of "tax" to the broad economy. The deepness of this recession was basically hard pressed by Mr. Bernanke's tight money policy since 2005 combined with very tight fiscal environment caused by high oil price. Happy reading.

Bernanke: There's No Housing Bubble to Go Bust

Washington Post Staff Writer
Thursday, October 27, 2005

Many economists argue that house prices have risen too far too fast in many markets, forming a bubble that could rapidly collapse and trigger an economic downturn, as overinflated stock prices did at the turn of the century. Some analysts have warned that even a flattening of house prices might cause a slump -- posing the first serious challenge to whoever succeeds Fed Chairman Alan Greenspan after he steps down Jan. 31. Bernanke's testimony suggests that he does not share such concerns, and that he believes the economy could weather a housing slowdown. (read more...)

Zentrader Note: I think since 2005 Bernanke was having his Big Picture seriously wrong that US economy were strong enough to weather a housing slowdown and his major policy mistake causing the DEEP recession was the fact the interest rate over tightening since 2005. Japan's interest rate has been at the low of near zero percent for more than ten years but until today so far we still don't see their economy forming a Property Bubble. My view is that whether the housing market were to crash or not US economy will eventually heading towards this severe economic downturn. This is because their fundamental economy structure has changed. Their automobile sector is losing market share to Japan Inc., IT to India and manufacturing works to China. I could be wrong but I think if Mr. Bernanke didn't over tightening the money policy the economic scenario today will be quite a different one ie US will be in soft landing mode instead of the hard landing one that even their overall banking system almost in deadlock condition. Just my view only.

U.S. recession in Dec 2007 and China Olympic in Aug 2008

The National Bureau of Economic Research, a non-profit panel of economists that dates American business cycles determined that U.S. entered a recession in December 2007. Lehman Brothers Holdings Inc. collapsed on Sept. 15 2008 and caused the most powerful financial tsunami that lockup the whole banking sector. What impressed me was the fact that this whole banking drama was able to delay until China performed the most glory 2008 Beijing Olympic Game in August. See the big picture?

Looking at the Fed Fund Rate chart it can be argue in theory that the American business cycle was push down by the rate tightening since 2005. Most people blamed that the recession was caused by property bubble but I think whether there was any bubble in US housing market was debatable topic with no right or wrong answer. I think most likely cause of this recession which started in December 2007 was the over tightening rate since 2005 and obviously this was a policy mistake which FED chairman will never admit. Just my view only.

Composite Index

KLCI to monitor the water level of 827.39 and 862.23 for price action. My Cycle analysis said 23 December 2008 is holding the KEY!


TNB today closed at RM6.00 so watch out for this power house. Happy reading.

Residential property sector turns the corner

THE number of unsold houses in Malaysia fell for the first time since 2002, reflecting a buoyant property market, a deputy minister said. "The overhang value stood at RM3.82 billion. Compared to last year, the overhang volume dropped by 6.9 per cent, while the value reduced by 8.8 per cent," Deputy Finance Minister Datuk Kong Cho Ha said. (read more...)

Composite Index

KLCI to monitor the water level of 1300.49 for Price Action.

The Rise of the Chinese Consumer

By 2014 in US-Dollar terms we think that China will have become the second largest consumer market overtaking Japan. Property is a very important part of Chinese consumer wealth. And they are quite unleveraged in the housing sector. Only about 10 percent of our respondents have any kind of a mortgage on their property. The reason for that is that the state used to own all the property. It actually does own the free hold land. But property was privatized in the cities. People were effectively given a long lease on their apartment or house almost for free in the 1990s. And now, as people’s income goes up they are trying to trade up. (read more...)

Composite Index

It is important that KLCI to hold firmly above the water level of 1285.84 on Thur and Fri trading.