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Dennis Shares His Views on Singapore Property Market and Housing Loans Interest Rate Outlook Print E-mail
Dennis was invited to share his views on the Singapore Property Market, why is the market hot and his advice for home-buyers. Interest rates on Housing Loans are currently low, are rates likely to remain low in next 3 years? Dennis Ng from www.HousingLoanSG.com shares with us on Channel News Asia's Cents and Sensibilities. 

 
The World Bank could run out of money in 12 months... Print E-mail
The World Bank is close to running out of money, its president, Robert Zoellick, has disclosed.

The Bank, whose job it is to support low-income countries, has had to hand out so much cash in the wake of the financial crisis that its resources could run dry within 12 months.

“By the middle of next year we will face serious constraints,” said its president Robert Zoellick, as he launched a major campaign to persuade rich nations to pour more money into the Washington-based institution.

He conceded that such a task was likely to be extremely difficult, given the difficulties facing countries in the wake of the developed world’s biggest recession since the Second World War. However, Mr Zoellick, speaking at the opening of the IMF and World Bank annual meetings in Istanbul, said the Bank needed a capital increase of as much as $11.1bn (£6.9bn) to keep functioning. He said he hoped that its shareholders, including the UK and other leading nations, would decide on resources before its spring meeting next April.

The money would be shared between the International Bank for Reconstruction and Development – the key part of the bank, which lends to poor nations – and the International Financial Corporation (IFC), which lends to companies.

Mr Zoellick said: “We recognise that all countries are under budgetary strain and it is not an easy time to be asking for these things”.

He said that a shortfall of cash for the IFC was a cause for particular concern, Mr Zoellick added, “because one of the issues in this recovery is the hand-off from government stimulus programs to private-sector development.”

The Bank has had to lend significantly more cash than the three-year $100bn programme it committed to last year because of the virulence of the financial and economic crisis. The majority of the money has been spent ensuring the survival of the most vulnerable nations.
 
98 U.S. Banks Closed Down in year 2009, 3 closed down on 2 Oct 2009 Friday alone... Print E-mail

WASHINGTON (Reuters) - Three U.S. banks failed on Friday, bringing the total to 98 this year, as regulators continue to shutter financial institutions that are overwhelmed by bad loans and liquidity problems.

 

The Federal Deposit Insurance Corp said that Warren Bank in Michigan was closed, with Huntington National Bank of Ohio taking over its deposits. It had $538 million in assets and $501 million in deposits.

 

Jennings State Bank in Minnesota was also shut down, with Central Bank in that state assuming its deposits. It had $56.3 million in assets and $52.4 million in deposits.

 

The third bank closed by bank regulators was Southern Colorado National Bank, with Legacy Bank in the state taking over its deposits. It had $39.5 million in assets and $31.9 million in deposits.

 

All the branches of the institutions will open on Saturday under their new owners and customers can continue to use checks, automated tellers and debit cards to access their funds.

 

Combined, the three latest failures are expected to cost the FDIC's insurance fund a total of about $293 million.

 

Earlier this week the FDIC took steps aimed at shoring up the depleted insurance fund by proposing that banks prepay three years of their regular assessments.

 

The insurance fund's balance dipped negative as of this week, as a spike in bank failures have been draining the FDIC's resources. The agency said it expects the total bill for bank failures to come to $100 billion from 2009 through 2013.

 

The prepayment of assessments will give the FDIC an additional $45 billion in liquidity, and was seen as an attractive alternative to charging banks a hefty special fee.

 

Banks will prepay the assessments at the end of this year, but not have to recognize the fees as an expense on their books until they are normally due.

 

The FDIC insures accounts up to $250,000, and notes that those deposits are fully protected, despite a negative insurance fund balance.

 

The agency also has the option of tapping a $500 billion line of credit with the U.S. Treasury. It last borrowed from Treasury during the savings and loan crisis of the late 1980s and early 1990s.

 

The FDIC said it expects failures to peak in 2009 and 2010, and that industry earnings will recover in 2011. Chairman Sheila Bair has said failures are a lagging indicator, and that the banking industry will continue to suffer, even as the economy shows encouraging signs of healing.

 

(Reporting by Karey Wutkowski and Jeremy Pelofsky; Editing by Richard Chang)

 
U.S. Jobs Lost Worse than Expected, Unemployment Rate rises to 9.8%... Print E-mail

A few months ago, I seem to be the "lone" voice saying the possibility of a "W" shape economic recovery. In recent months, most analysts have turned from Bearish to Bullish, and think that the global economy will recover in a "V" shape (fast) recovery...

 

However, the latest Job Loss data from U.S. clearly shows that the economic fundamentals of U.S. is not showing much improvement, and that the chancce of a  W shape economic recovery has risen. In recent weeks, even Mr Tharman (Singapore's Finance Minister) and BG Lee Hsien Loong (Singapore's Prime Minister) also warned the possibility of a "W" shape economic recovery.

 

Regards.

 

Dennis Ng, http://www.MasterYourFinance.com

 

WASHINGTON (Reuters) - U.S. employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 percent, according to a government report on Friday that fueled fears the weak labor market could undermine recovery from a prolonged recession.

 

The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months.

 

Read more...
 
U.S. Car Sales Plunge, Raising Risk of Double-Dip Recession... Print E-mail

Some figures to chew on. China and India contributes 7% and 2% to the Global Economy. U.S. alone contributes 24%.

 

70% of U.S. economy depends on U.S. local consumption, or in other words, U.S. consumption determines 16.8% of the world's economy, about double that of combining China and India.

 

U.S. unemployment rate is inching up to 10%, with unemployment rate sky high, consumption in U.S. will take time to recover...now reality starts to set in, which explains why U.S. Stock Market last night plunged by over 2%, or 203 points to end lower at 9,509 points...

 

Another sign that U.S. consumption is NOT recovering YET, is the plunge of 23% in Car Sales in Sep 2009. (More news below).

 

Regards.

 

Dennis Ng, http://www.MasterYourFinance.com - When You Master Your Finances, You Master Your Destiny

 

DETROIT (Reuters) - U.S. auto sales tumbled by 23 percent in September as showrooms emptied after the government-funded boom from the "cash for clunkers" program, with General Motors Co and Chrysler hardest-hit.

 

Sales for General Motors Co and Chrysler -- the two U.S. automakers struggling to regain momentum after emerging from bankruptcy -- dropped by 45 percent and 42 percent, respectively.

 

Read more...
 
Latest News Raises Chance of a "W" Shape Economic Recovery... Print E-mail

Most Analysts are of the view the economic recovery will be fast, in the form of a "V" shape recovery. However, the latest news seems to indicate that "W" shape is possible.

 

Regards.

 

Dennis Ng, http://www.MasterYourFinance.com

 

Share prices have moved too far ahead of economic reality

After hitting its best levels of the year on Wednesday ahead of the Federal Open Market Committee’s (FOMC) communiqué, the S&P 500 Index ran into heavy weather on the realization that the Fed could start scaling back on emergency support of the economy. US equities dropped further later in the week on renewed concerns about the state of the troubled housing market and weaker-than-expected durable goods orders.

 

In addition to global stock markets declining, risky assets such as commodities, oil, gold and other precious metals all sold off as pundits worried about the winding down of quantitative easing puncturing the “liquidity rally”. Government and corporate bonds, as well as the Japanese yen, emerged as winners.

 

As stated often before, share prices have moved too far ahead of economic reality. This calls for a cautious approach in anticipation of the market working off its overbought condition and fundamentals reasserting themselves. I will bide my time while the fundamentals play catch-up, especially as we could be seeing one of those occasional all-change signals in the short-term trends of a number of markets.

 

Read more...
 
Stock Market Correction Coming? A Case of "Too Fast, Too Furious?" Print E-mail
THE US stock market has been soaring. It may have gone too far, too fast.

Gina Martin Adams, an equity strategist at Wells Fargo Securities, certainly thinks so. 'I would definitely tread very lightly in stocks,' she said. At the moment, there appears to be enough momentum to keep propelling the rally forward until it 'stumbles on some speed bumps', she said, but she warned that stocks were no longer cheap, especially with the economy still fragile.

At some point, she said, a host of fundamental problems would pull stocks back down to earth - but, of course, she could not say when. 'There's a difference between where the market will trade and where it should trade,' she said.

Stocks have certainly come a long way since their March 9 lows, with the Standard & Poor's 500-stock index rising 58 per cent in one of the most powerful upturns since the Great Depression. The recent rally, of course, followed the steepest decline in decades. The index stands at 1,068.30, still well below its October 2007 peak of 1,565.15.

A rebound of some sort was likely after the battering inflicted on financial markets during last year's panic. In a speech on Wall Street last week, commemorating the anniversary of the collapse of Lehman Brothers, President Barack Obama said the most acute phase of the financial crisis was behind us. But he cautioned that the economy remained weak with rising unemployment, and that a variety of emergency government programmes would continue to play a significant role. Ben Bernanke, the chairman of the Federal Reserve, warned in Washington that while the United States was probably out of recession from a 'technical perspective', the economy would still 'feel' very weak for some time.

Despite this grim backdrop, Laszlo Birinyi, president of Birinyi Associates, a stock market research firm in Westport, Connecticut, said he believes that we are in the early stages of a classic bull market that has plenty of room to run. 'At any juncture during a bull market over the last 50 years you could point to economic problems,' he said. 'The obvious problems aren't the ones that I worry about.'

In his view, the economic weakness has been documented so well that the market has already taken it into account. 'The negatives are right in front of your nose,' he said. 'The market is looking past it.' Unless there is another shock of some unknown kind, he said, 'I don't think we'll have a correction, not at this point of the cycle. It won't happen while everyone's looking for it.'

In fact, he said he was encouraged that 'there's continuing concern' - including articles cautioning that the market would stumble. 'Almost no one seems to accept and use the term 'bull market' for the current rally, Mr Birinyi said. That implies that there is plenty of cash still on the sidelines that will enter the market as it rises, he said, pushing stocks up even further.

Where Mr Birinyi emphasizes opportunities, however, others are focusing on the dangers. David Rosenberg, the former Merrill Lynch economist who is now with Gluskin Sheff and Associates in Toronto, did not expect so robust of a rally, and said that underlying structural weaknesses in the economy implied that the market was due for a big fall. 'What happened was that the economy received a heavy dose of medication from Uncle Sam,' he said. 'The reality is that no one has a clue as to what the economy really looks like because it's been so dramatically sedated by the federal government. It's as though we've received a massive tranquillizer,' he said, 'but eventually, tranquillizers wear off.'

Mr Rosenberg says we are experiencing 'an impressive bear-market rally' - a short-term upturn in a 'secular' bear market - that still had perhaps eight or nine years to run. He advised stock investors to take profits now. Energy commodities, he said, appeared to be a better value.

Ms Adams shares this bearish long-term view. Among the many worrisome signs s1he sees are Treasury yields that remain low, especially considering the enormous supply of bonds the government is auctioning regularly to finance its yawning deficit. This suggests that deflation continues to be a big worry, she said. If we lurch into deflation, it could devastate the economy and the markets.

Gold has prospered recently - it stands at about US$1,007 an ounce - partly because investors cherish it as a hedge against both inflation and deflation, said George Milling-Stanley, a managing director at the World Gold Council, an industry trade group based in London. 'One of the beauties of gold,' he said, 'is that it just doesn't have any statistical correlation with any other market or asset class.' There is one possible exception, he said: 'When the world's main reserve currency - now, the dollar - weakens, gold tends to strengthen.'

Because the consensus in currency markets is that federal borrowing will weaken the dollar, this, too, has tended to benefit gold.

The Federal Reserve is steering a tricky course, attempting to stave off deflation by creating enormous quantities of money and holding its benchmark short-term rate near zero. At the same time, Fed policymakers say they are preparing to reverse themselves to head off inflation.

Watch the 10-year Treasury yield closely, Ms Adams said. It's now 3.47 per cent. If it stays low, she says, it could be a sign that the economy and stock market are in real trouble.

In the meantime, enjoy the rally. -- NYT
 
Why Economic Recovery Might be "W" Shape? Print E-mail

Why There Might be a W Shape Economic Recovery?

Currently, most analysts are of the view that the global economy recovery will be “V” Shape, fast recovery. However, a few months ago I warned that it is possible for a W Shape economic recovery. In recent weeks, both Tharman (Singapore’s Finance Minister) and Prime Minister Lee also warned of the possibility of a double dip recession.

 

Why is a double dip recession (W shape recovery) possible?

Let’s look at the BIG picture. Do you know that U.S. alone accounts for 24% of the Global Economy? While Euro Zone accounts for another 30%.

 

Many people are celebrating that China’s economy might be able to grow at 8% (what they Aimed for) in year 2009. However, do you know that China’s economy currently only accounts for 7% of the World economy? What about India you might ask? Sorry to disappoint you, India accounts for only 2%.

 

So even if BOTH China and India economy do well and stage a fantastic recovery, the 2 of them would account for 9% of the Global Economy.

Read more...
 
Dennis selected to Blog at CPF Board's www.imsavvy.sg Print E-mail

As you  might know, CPF Board set up a new website to educate the public http://www.imsavvy.sg  

they have selected a few Financial Experts to blog. And I'm one of those selected.

You can read what I wrote at   http://www.imsavvy.sg/     click "savvy blog corner".

 

I'm glad to be able to contribute in my own small way to educate the general public.

 
BIS Chief Economist warned of possible "W Shape Economic Recovery... Print E-mail

Currently, most analysts are of the opinion that the economic recovery is V shape, ie. fast economic recovery. However, recently, Tharman (our Finance Minister) and Our Prime Minister Mr Lee warned that there is a possibility of a "double-dip recession, or a "W-shape Economic Recovery".

 

The fact is as early as May 2009, I already warned about the possibility of a "W shape economic recovery" in this newsletter.

 

http://www.housingloansg.com/web/index.php?option=com_letterman&task=view&Itemid=48&id=62

 

In June 2009, I warned again http://www.housingloansg.com/web/index.php?option=com_letterman&task=view&Itemid=48&id=67

 

Interestingly, on 16 Sep 2009 William White, the highly-respected former chief economist at the Bank for International Settlements, warned that world might slip back into a recession. (full article below).

 

Cheers!

 

Dennis Ng, http://www.MasterYourFinance.com

 

Below is extract of what I wrote in June 2009.

 

As a Retail Investor, what can you do if recovery is “W” Shape?

A simple way to reduce risks is to diversify your investments, do not put all your money into stock markets or unit trusts alone.

 

For instance, in the event of a stagflation, ie. Global economy remain stagnant but inflation goes up, the prices of “real assets” would go up. My investments into Gold and Silver, Land Investments and French Fine Wine would do very well.

 

In the event stock markets continue to go up, my 30% allocation to stock markets would also make me money. In the event that the economic recovery is “W” shape, ie. Prices might drop again in the months again, I can use the Opportunity Fund I have to go into markets to bargain hunt.

I have positioned myself to win and to make money no matter which scenario happens.

 

 

 

Source: MoneyNews, September 16, 2009.

 

Financial Times: Economist warns of double-dip recession


“The world has not tackled the problems at the heart of the economic downturn and is likely to slip back into recession, according to one of the few mainstream economists who predicted the financial crisis.

 

“Speaking at the Sibos conference in Hong Kong on Monday, William White, the highly-respected former chief economist at the Bank for International Settlements, also warned that government actions to help the economy in the short run may be sowing the seeds for future crises.

 

“‘Are we going into a W[-shaped recession]? Almost certainly. Are we going into an L? I would not be in the slightest bit surprised,’ he said, referring to the risks of a so-called double-dip recession or a protracted stagnation like Japan suffered in the 1990s.

 

“‘The only thing that would really surprise me is a rapid and sustainable recovery from the position we’re in.’

 

“The comments from Mr White, who ran the economic department at the central banks’ bank from 1995 to 2008, carry weight because he was one of the few senior figures to predict the financial crisis in the years before it struck.

 

Read more...
 
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