FOMC Result: As Expected (Hitsaham) But The Fed See Economy Risk

Charting The Upcoming Recession, And Is Goldman Really Predicting A 2012 Year End S&P Range Of 700 – 900?

In his weekly chart packet, Goldman’s high frequency strategist, David Kostin, who now changes his year end S&P targets almost as frequently as the firm’s economic team changes its GDP forecast, once again gets decidedly fatalistic (very much like Citigroup did yesterday, and Morgan Stanley last week), and is now openly contemplating downside cases to his EPS forecast. And with 2012 EPS numbers thrown around like $91 based on what is certainly an upcoming (but for now still hypothetical) margin contraction, $82 based on a 2% drop (almost guaranteed) in GDP Y/Y, and $75 based on historical earnings plunges in a recession, it may be time to listen up, because apply a traditional contractionary multiple of about 9-10x, and you have yourself a tidy little range of 700 – 910 on the S&P in about a year, absent yet another round of fiscal and/or monetary stimulus.

Read More: http://www.themarketguardian.com/2011/08/charting-the-upcoming-recession-and-is-goldman-really-predicting-a-2012-year-end-sp-range-of-700-900/

Fed Economists – “We see a 15 year Bear Market for Stocks”
Bruce Krasting
The San Francisco Fed has come out with a research paper connecting the dots between the retiring baby boomers and stock prices. The thinking is that the boomers will divest themselves of stocks as they retire and eat into their savings. This is an old argument, but I still found it interesting. The authors, Zheng Liu and Mark M. Spiegel have attempted to quantify the implications. Their principal conclusions:

Read More: http://www.themarketguardian.com/2011/08/fed-economists-%E2%80%93-%E2%80%9Cwe-see-a-15-year-bear-market-for-stocks%E2%80%9D/

Nouriel Roubini
Double Dip is ahead for US & Europe: Philly Fed plunges after NY survey; Home Sales are collapsing; EU bank shares plunging & sov spreads up

What Happens If The U.S. Gets A Sovereign Credit Downgrade?

By EconMatters

After the debt deal is done, I think the biggest suspense of the markets is whether the U.S. will get a downgrade from its current AAA rating by one or more of the three major credit rating agencies.  Both Fitch and Moody's re-affirmed the U.S.'s Triple-A rating, albeit with a threat of possible future downgrade.  It looks like Standard & Poor's (S&P) could be the lone holdout among the Big 3, but some think the major rating agencies would not act in such a 'politically incorrect' way.

Meanwhile, continuing its tradition of going against the Big 3 rating agencies, China's Dagong dealt a fresh downgrade to the U.S. from A+ to A despite the U.S. raising the debt ceiling and averting a default, while U.S-based Weiss already put the U.S. just two notches above junk.

So what happens if the United States does get a downgrade?
Read More: http://www.econmatters.com/2011/08/what-happens-if-us-gets-sovereign.html

Why The Fed Must End QE2 on April 27th

By Dian L. Chu, EconMatters
The Federal Reserve has lost all credibility on Wall Street, and most of the American public with the absolute refusal to recognize the dire effects on asset prices that QE2 has created. But the refusal is part of the problem. It reinforces the wide spread belief of investors that the Fed is out of touch with reality, and that they sit in their Ivory Tower implementing an exceedingly loose monetary policy, with the stated goal of inflating asset prices.

Read More: http://www.econmatters.com/2011/04/fed-must-end-qe2-on-april-27th.html

Universal Broker Indonesia Securities Daily Newsletter Vol 406

PELATIHAN ANALISA TEKNIKAL II. PT UBI Securities & PT Harumdana Berjangka
Sabtu, 20 Maret 2010: 09.30 WIB. Menara BCA lt. 49 Jln. MH. Thamrin No. 1 Jakpus

Market Review
Aksi profit-taking menjelang liburan Hari Raya Nyepi (16/03), mendorong laju kenaikan IHSG terbatas pada hari Senin (15/03), dimana sempat mencapai level tertinggi 2.683,107 , meski akhirnya ditutup menguat tipis, setelah mendapatkan sentimen positif dari kenaikan peringkat kredit jangka panjang Indonesia oleh lembaga pemeringkat internasional Standard & Poors menjadi BB dari BB- dan lebih baik dari perkiraan data penjualan ritel AS bulan lalu, diikuti kinerja indeks saham Asia dan Wall Street yang menguat di awal pekan. Kenaikan saham di sektor properti, infrastruktur dan financial, topang IHSG dan membatasi tekanan penjualan di sektor aneka industri, manufaktur, pertambangan, perkebunan, konsumsi dan perdagangan. Rallynya sejumlah saham lapis kedua dan ketiga (SDRA, ASIA, KIAS, ASDM, SCCO) hingga ITMG dan PGAS, ikut topang kenaikan IHSG. IHSG naik 3,097poin(+0,12%), di 2.669,608,transaksi sebesar Rp 2,97triliun.

Mayoritas indeks saham di regional Asia meningkat kemarin, dipimpin oleh saham dari perusahaan financial dan consumer, di tengah spekulasi bank sentral Jepang akan mengambil langkah-langkah untuk mengatasi deflasi. Saham Sony Financial Holdings menguat berkat perusahaan akan meningkatkan kepemilikan obligasi, Toyota Motor Corp, Kia Motors Corp Korea, menguat kemarin. Sun Hung Kai Properties terkoreksi setelah Hong Kong mengambil langkah untuk meredakan harga real-estate. Indeks saham MSCI Asia Pasific naik 0,1% menjadi 122,88 kemarin. Indeks Shanghai naik 0,5%, Taiex Taiwan naik 0,8%, Nikkei 225 & Hang Seng melemah 0,3%.

Ind P/E (x)
EPS
Y/Y Y/Y Suku Bunga* Inflasi*
Y/Y GDP*
Y/Y
IHSG 31.2 8% +101.1% 6.50% 3.81% 5,4%
STI 21.2 16% +55.39% 0,5% -0.30% -3.5%
KLCI 15.7 10% +42.57% 2.0% -2.04% -3.9%
SET 30.00 4% +60.13% 1.25% -1.00% -4.9%
SSE 31.5 36% +50.17% 5.31% +2,7% +10,7%
N225 46.5 -1% +25.3% 0.10% -2.5% -5.1%
HSI 23.5 19% +52.97% 0.50% -1.60% +2,3%
DJIA 16.03 3% +26.5% 0.25% +2.6% +5.9%

IHSG Outlook
Potensi kenaikan IHSG masih terbuka, dari solidnya pertumbuhan ekonomi dan kinerja emiten (earning & pemberian dividen 2009) domestik hingga situasi sosial politik di dalam negeri, dapat meningkatkan keyakinan investor lokal dan asing masuk ke pasar modal, dapat mendorong aliran dana masuk ke Bursa Efek Indonesia (BEI) di pekan ini. Sementara potensi penguatan rupiah terhadap dolar AS (target Rp 9.000/9.100), berkat katalis positif dari pelemahan dolar AS terhadap mata uang Eropa dan Asia, penurunan CDS (credit default swap) Indonesia ke 155,87 hingga kenaikan peringkat kredit RI menjadi BB dari BB- oleh Standard Poors (akan diikuti Moodys di bulan mendatang), topang kinerja IHSG di pekan ini. Sejumlah perkembangan yang positif dari bantuan Uni Eropa kepada Yunani, rencana pemerintah Jepang mengatasi deflasi hingga The Fed AS akan pertahankan suku bunga di nol persen untuk menjaga pemulihan ekonomi, seharusnya memberikan support kepada IHSG. Meski
faktor teknikal yang overbought dalam trend bullish, dapat membatasi laju kenaikan IHSG di pekan ini, dibayangi kekhawatiran potensi kenaikan suku bunga China di bulan depan.

Stock Picks:Average last 35week +148.783%. Target 0-30%+, Risk < -10%
Top Pick UBI = +356.662% = +17.833%/saham.

Stock Picks:
# INTA: Hold #GJTL : Outperform

Global  Outlook

Indeks saham regional Asia, Eropa hingga Wall Street diperkirakan masih mempertahankan momentum bullish jangka pendek di awal pekan ini, berkat the Fed AS masih mempertahankan suku bunga di kisaran nol persen hingga waktu yang lebih lama untuk menjaga pemulihan ekonomi, meredanya kekhawatiran terhadap ancaman penurunan rating kredit Yunani oleh Standard & Poors berkat usaha untuk mengurangi deficit anggaran dan Uni Eropa berjanji memberikan bantuan kepada Yunani kemarin hingga spekulasi bank sentral Jepang akan mengambil langkah untuk mengatasi deflasi di Jepang, dimana masih mendukung perkiraan stimulus global masih akan meningkat di bulan mendatang dan dipertahankan hingga ada jaminan pemulihan ekonomi terjaga. Hasil riset dari Bank of America Merrill Lynch menunjukkan risk appetite meningkat karena meredanya kekhawatiran bahwa suku bunga akan meningkat di akhir tahun ini, mendorong investor memangkas kepemilikan cash (tunai) dan membeli saham. Meski kekhawatiran terhadap sektor perumahan AS (pernyataan analis Whitney) dan spekulasi kenaikan suku bunga China, dapat membatasi momentum kenaikan indeks saham global.

Technical Analysis:
IHSG menunjukkan signal positif dari pola candle spinning top (momentum penurunan terbatas),  berada di atas channel support di 2.602dan dalam uptrend channel, ditutup di atas 2.664 (5-day MA), seharusnya mendukung potensi kenaikan. Kondisi tersebut didukung ADX meningkat (momentum kenaikan mereda), stochastic bullish kendati overbought, MACD bullish, menunjukkan potensi kenaikan masih terbuka. Hitungan EW: tembusnya high 2.619 menunjukkan wave iv/3 dalam impulse final 5 kemungkinan berakhir untuk proses v/3 – 5 target 2.689/2.735 (161.8 Fibo). Support di 2.645/2.620. Analisa W.Gann menunjukkan target 3.150 di Q2/Q3 2010, jika ditutup diatas 2.735 (FR 161.8%) di bulan ini. Hold Sell  2.670/2.689 target 2.600 (+20p). Buy 2.645 & buy break 2.690 target 2.735, stop 2.670.
Resistance: 2707.25/2694.98/2688.63/2676.36. P2670.42
Support    : 2664.08/2657.74/2645.872633.59 

U.S. Economy to Surge Says Most Accurate Forecaster

(Bloomberg) -- The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki, the most-accurate forecaster in a Bloomberg News survey. The world’s largest economy will expand 3.5 percent in 2010, according to Maki, the chief U.S. economist at Barclays Capital Inc. in New York. The rebound in stocks and rising incomes will prompt Americans to do what they do best -- consume, said Maki, a former economist at the Federal Reserve. Faced with dwindling inventories and growing demand, companies will soon become confident the expansion will be sustained, he said.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6hfchM9LqBw

U.S. rate hikes in 2010? Plausible, but not a given

(Reuters) - Wall Street's raging bulls may be getting ahead of themselves.

Economy
From the first inklings of U.S. economic growth after the deepest recession since the 1930s, some investors have extrapolated a robust expansion that will force the U.S. Federal Reserve to raise interest rates in the second half of next year.Their reasoning, based on the notion that companies overreacted to last year's epic financial meltdown by cutting staff and production too sharply, has some merit. Yet judging from the core of the central bank's rate-setting Federal Open Market Committee, most prominently Chairman Ben Bernanke and his No. 2, Donald Kohn, policymakers are hardly trigger happy.

http://www.reuters.com/article/idUSTRE5BN26420091224

Americans Most Pessimistic They've Been Since January

By: CNBC.com
Americans are the most pessimistic they've been since the beginning of this year, when the US was mired in a deep recession, while confidence in President Obama and Congress is at the lowest level of 2009, according to the latest NBC/Wall Street Journal poll.Of those surveyed by telephone during the past weekend, 55 percent feel the nation is headed in the wrong direction, compared with 33 percent who felt the US was headed in the right direction. That's the worst showing since January, during the height of the economic crisis, when 59 percent felt that nation was on the wrong track and 26 percent felt it was on the right track.President Obama's approval rating also edged to the lowest level since he took office in January. Only 47 percent approve of the job he's doing, while 46 percent disapprove. That compares with a 51 percent approval rating in October and 60 percent in February.

http://www.cnbc.com/id/34450869

Fed May Delay Tightening Next Year as Congress Debates Powers

(Bloomberg) -- Proposals in Congress to trim the Federal Reserve’s powers and subject it to greater scrutiny mean Chairman Ben S. Bernanke may have to think twice about raising rates in 2010 as long as unemployment stays high. Bernanke and his colleagues on the Federal Open Market Committee meet for the last time this year under the shadow of proposals to audit the Fed’s monetary policy decisions, strip it of bank-supervision authority and give politicians a role in choosing regional Fed bank presidents.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_.PPhXquoVI&pos=6

Fed Expected to Keep Rates Low at Final Meeting of Year

By: Reuters
The Federal Reserve will likely close out the year this week by repeating a pledge to keep interest rates extraordinarily low for an extended period even as it nods to signs of economic healing.The central bank's policy-setting meeting on Tuesday and Wednesday will mark a year since the Fed cut benchmark interest rates to near zero to combat the worst economic crisis since the Great Depression.A year later, the economic picture has vastly improved and the recovery is gaining strength, no doubt bringing closer the day the Fed starts to inch away from its supportive policies.

http://www.cnbc.com/id/34405812

Economists Say: The Recession is Over! Why This Outlook is Worrysome

Credibility - everybody wants it, few have it, and once possessed it's easy to lose. Credibility is as important as it is rare, particularly when it comes to investing and market forecasting.A study conducted by the National Association for Business Economics shows that no fewer than 80% of professional economists believe the recession is over. Such statistics seem credible, as do the polled economists. After all, many, if not most of them, went to Ivy League schools and should know what they're talking about.

http://finance.yahoo.com/news/Economists-Say-The-Recession-etfguide-3278516152.html?x=0&.v=1

Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash

(Bloomberg) -- Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.” “All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”

U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aoRYl03Rw1_g

Goldman Sees U.S. Housing ‘False Bottom,’ Merrill Sees ‘Treat’

(Bloomberg) -- The stabilization in U.S. home prices won’t last, according to economists at Goldman Sachs Group Inc. in New York. Their counterparts at BofA Merrill Lynch Global Research see a “treat” rather than a retreat. “The risk of renewed home price declines remains significant,” Alec Phillips, head of Goldman’s Washington office, said in an Oct. 23 note to clients. “Our working assumption is a further 5 percent to 10 percent decline by mid- 2010.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVyvAuFInq_Y

'Dark Pools' Help Investors: Goldman Sachs
http://www.cnbc.com/id/33489842

Poll: US Economy Rebounded Strongly in Third Quarter

The U.S. economy likely grew at its strongest rate in two years during the third quarter, rebounding from a steep downturn that began in December 2007, according to survey of top economists released Saturday. Private economists polled Oct. 5-6 for the Blue Chip Economic Indicators October survey said gross domestic product grew at an annualized rate of 3.2 percent in the quarter, up 0.2 percentage point from what they estimated a month earlier.

http://www.cnbc.com/id/33253078

U.S. Economy May See Its Slowest Recovery Since 1945

The U.S. recovery may be the slowest since World War II to regain all the ground lost during the recession, even if economists’ more optimistic forecasts for expansion turn out to be right.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBj5AeyQqun8

Part II

‘Leveling Out’
Chairman Ben S. Bernanke and his Federal Open Market Committee colleagues two days ago said the economy is “leveling out.” The central bank has pumped about $1 trillion into the banking system in a campaign to end the crisis, triggered by mortgage defaults, that has caused more than $1.6 trillion in losses and writedowns among financial firms worldwide.

President Barack Obama last week said: “We are pointed in the right direction,” in remarks at the White House. “We’ve rescued our economy from catastrophe.” The administration anticipates a gathering impact from its $787 billion fiscal stimulus into next year.

Some companies are also seeing signs of a turn in the economy. Karen Hoguet, chief financial officer at Macy’s Inc., the second-biggest U.S. department store chain, said on a conference call Aug. 12 that the Cincinnati-based company is “cautiously optimistic” its sales trends will improve.

A rebound in equities in recent months will help repair households’ balance sheets and buttresses the outlook for spending, said Glassman at JPMorgan. The Standard & Poor’s 500 Stock Index has climbed about 50 percent from its low in March. U.S. stock-market capitalization has increased by almost $4 trillion in that time.

Economists’ Forecasts
Economists this month lifted their projection for third- quarter growth by 1.2 percentage points to 2.2 percent compared with July, according to the median of 55 forecasts in a Bloomberg News survey. That is the biggest such boost in surveys dating from May 2003. Forecasts for 2010 were raised to 2.3 percent from 2.1 percent.

Neal Soss, chief economist at Credit Suisse Group AG in New York, played down concern that the economy may suffer a “double dip” recession. “Historically these double dips are routinely forecast and actually very rarely come to pass,” Soss said in a Bloomberg TV interview this week. “Once the economy tends to get some upward momentum, it tends to keep going that way.”

No New Normal JPMorgan Sees V-Shaped Recovery in U.S.

(Bloomberg) -- Instead of a so-called New Normal of subdued growth, the U.S. may be heading for a robust recovery. The worst recession since the 1930s has created a reservoir of demand that will buoy the economy, say a growing number of economists led by James Glassman at JPMorgan Chase & Co., former Federal Reserve Governor Laurence Meyer and Stephen Stanley at RBS Securities Inc.

“Whenever we have plunged off a cliff and fallen into a deep hole in the past, for a while the economy has a tendency to bounce back very quickly,” said Glassman, a senior economist at JPMorgan in New York. Glassman and his colleagues this month said forecasts of 3 percent to 4 percent growth in coming quarters may be too low given “pent-up” consumer demand.

JPMorgan’s outlook contradicts the view popularized by Mohamed El-Erian at Pacific Investment Management Co. that elevated unemployment and record wealth destruction will keep growth at 2 percent or less for years. The divergence highlights the dilemma for policy makers, who must decide whether to maintain record fiscal and monetary stimulus or begin to pull back and prevent a surge in inflation should growth accelerate. El-Erian, chief executive officer of Newport Beach, California-based Pimco, said “the indicators we follow continue to point to sluggish medium-term growth in the U.S.,” when asked to respond to arguments for a so-called v-shaped recovery.

Retail Sales
A report from the Federal Reserve today added to signs of recovery as industrial production rose 0.5 percent in July, the first increase in nine months. A separate government report showed consumer prices were unchanged, emphasizing companies lack pricing power after the biggest drop in U.S. gross domestic product in any recession since the 1930s.
Confidence among U.S. consumers unexpectedly fell in August for a second consecutive month as concern over jobs and wages grew, according to the Reuters/University of Michigan preliminary index of consumer sentiment today. The U.S. has lost 6.7 million jobs in the recession that began in December 2007.

The New Normal theory predicts that the recession will leave unemployment, forecast to reach 10 percent for the first time since 1983 early next year, higher for years. Glassman and Meyer dispute that. “The thing I object to most about the New Normal idea is that we are stuck and have to accept higher unemployment -- if you look at the Fed, they are doing everything they can to fight it,” said Glassman, who formerly worked as a Fed economist in Washington.

Meyer’s Projections
Meyer, who served as a central bank governor from 1996 until 2002, said he and his colleagues “don’t find any evidence” that the unemployment rate consistent with stable inflation is now higher. Meyer is now vice chairman of St. Louis-based Macroeconomic Advisers LLC, whose economic estimates are monitored by the National Bureau of Economic Research panel charged with dating U.S. recessions. Meyer expects GDP to jump by 3.6 percent in 2010 and 3.9 percent in 2011. Annual growth surpassed 3 percent only once so far this decade, in 2004, and has averaged just 2.2 percent. “The big driver of that is home prices,” said Meyer, referring to his recovery forecast. “If home prices stabilize, that is a tremendous boost to housing that dominates every other variable in our equation. There is a lot of pent-up demand in that particular area.”

Home construction has subtracted from GDP growth for a record 14 straight quarters through June 2009. Consumer spending has also dropped in four of the past six quarters, and is down 2 percent from its peak in July-to-September 2007, the biggest retrenchment since 1980.

‘Very Depressed’
Housing and automobile sales are at “very depressed levels” and are likely to contribute to growth even if they don’t reach prior peaks, said Stanley, chief economist at RBS Securities in Greenwich, Connecticut, who used to work at the Richmond Fed. “Consumers are holding off on practically all of their discretionary purchases,” said Stanley, who sees the expansion picking up from 2.9 percent next year to 4.4 percent in 2011 and “about” 3.5 percent in 2012. “There is a lot of pent-up demand.”

Recoveries from the past two recessions were weaker than in previous decades. After the 2001 recession, the economy expanded just 1.6 percent in 2002, picking up to 2.5 percent the next year. The 1990-91 recession was followed by 3.3 percent growth in 1992 and a 2.7 percent gain in 1993.

U.S. Roared
By contrast, the U.S. roared out of the 1981-82 recession. In 1983, GDP rose 4.5 percent, accelerating to a 7.2 percent pace in 1984, when Ronald Reagan won re-election with victories in 49 of 50 states. Alan Blinder, the former Fed vice chairman who is now an economics professor at Princeton University in New Jersey, has described himself as “skeptical” of the New Normal scenario.

“To accept a 2 percent trend, you have to believe in about a 1.2 or 1.3 percent productivity trend -- I don’t,” Blinder said in an e-mailed response to questions. He added that he sees growth sustained at “closer, but not quite, to 3 percent” in coming years. Fed policy makers in their latest projections submitted in June anticipated an expansion of 2.1 percent to 3.3percent from this year’s fourth quarter to the same period next year and 3.8 percent to 4.6 percent in 2011.