Wednesday, January 27, 2010

Between politics and doing the right things

Life can be simple but can also be complicated when mixing up with politics. Ben Bernanke, under pressure of not going to be reappointed, is contemplating of bowing down to pressures - not doing what he believes from his studies of the great depression. He knows too early of loose monetary withdrawal will increase the chances of double dips recession. Read, he is going to tell what the market and politicians want to hear to get reappointed. Up to this point, I still believe these are noises to correct.

However, having play long enough in the markets, one will always need to stay flexible when the wind is blowing violently from the other direction. As the KLCI went below 50-d MA, a 10% correction from 1,308 will send us back to 1,175. It is also critical to watch S&P at 980. If the selling momentum is gathering strong strength at 980, just buy a ticket and go holidays.

Jan. 27 (Bloomberg) -- The Federal Reserve may take a chance the housing market can stage a comeback without its support by announcing today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March.

Fed Chairman Ben S. Bernanke and other policy makers meet after the sixth straight monthly gain in home prices in November added to signs housing is stabilizing. With financial markets rebounding, the central bank has said it plans to end emergency aid to bond dealers and money markets by Feb. 1.

The Fed will probably acknowledge growth accelerated last quarter while noting that tight credit and unemployment near a 26-year high still pose risks to the recovery. Officials are likely to maintain a pledge to keep interest rates low for “an extended period” as they look for evidence of a sustained expansion that will create jobs without raising inflation expectations, former Fed governor Lyle Gramley said.

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