Thursday, July 15, 2010

Fed's assessments, Ringgit Strength and market implications

At current price of Dow 10,000, I would think the market already discounted this information. The risk will rise significantly if its rises further to 12,500.

(The Blommberg)Federal Reserve officials saw no need to boost stimulus to the economy while trimming their forecasts for growth and noting that risks to the recovery had increased, minutes of their June meeting showed.

“The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside,” minutes released today in Washington said. “The changes to the outlook were viewed as relatively modest and as not warranting policy accommodation beyond that already in place.”

Slowing inflation, constrained household spending and contracting credit prompted Fed policy makers last month to restate a pledge to keep the benchmark lending rate at around zero for “an extended period,” the Fed’s statement showed.

The minutes indicated that U.S. central bankers were concerned about lingering high unemployment and risks that inflation could decelerate further. If the outlook worsened, the committee would need to consider whether additional stimulus was appropriate, the minutes said.

On Malaysia front, anticipation for one more OPR rate increase plus relatively strong earning season will continue to push the market higher.

(TheEdgeMalaysia)KUALA LUMPUR: TENAGA NASIONAL BHD [] posted net profit of RM1.11 billion in the third quarter ended May 31, 2010 versus RM1.02 billion a year ago.

It said on Wednesday, July 14 revenue was RM7.72 billion versus RM7 billion a year ago. Earnings per share were 25.51 sen versus 23.6 sen.

Tenaga reported foreign exchange translation gain of of RM569.1 million in the third quarter. It added that the ringgit strengthened agains the yen and the US dollar.

Of its RM21.57 billion in borrowings, the power giant said RM5.1 billion were in yen and RM4.78 billion in US dollar.

The market is pricing in Ringgit strength now, if you look at some of heavy beneficiaries of Ringgit strength like Nestle, F&N, Dutch Lady, Star and etc. They have been showing up as top gainers or bouncing off lows for the last few sessions.

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