Last week, several reports generated by analysts are proven to be relevant interest to stockmarket investors.
The first was by Morgan Stanley, which was released on 18 December 2008. It was about Singapore property sector entitled “Too Early To Turn Positive”. Coincidentally that same day, Macquarie Research released a report entitled “Not Yet”. The difference, this latter report discussed the same idea with Hong Kong Land.
As both reports discussed different areas and topics, the message was in a way, still the same. Both mentioned that there are still no signs of recovery and that the economy is all in fact, in a steady slump.
Analysts foresee that for the next 3–6 months, the world will see companies report losses and even more worsening earnings. On the other hand, they seem to point to the massive deflation efforts of the US.
In another report on that same day, as the previously two appeared, Merrill Lynch (ML) Economics paper entitled “There is no such thing as a free lunch”, said that if the nation is currently experiencing an economic financial crisis worse than the Great Depression, then all central banks should cut interest rates to zero and that governments must provide cheques for a million dollars.
According to the report, there are side-effects and limits to stimulus, such as the one made by the US. “These limits come in three forms, in our view. If you stimulate too much a) bond yields rise, or b) the currency plunges, or c) inflation rises.”
The US investment house admits that policymakers and markets in 2009 will encounter these side-effects and limits, and whether they like it or not, there will be global rebalancing to compete with.
However, we cannot say outright that there will not be any money-making opportunities.
Finally, it’s interesting to read New York University professor Nouriel Roubini’s prediction for 2009, who a year ago predicted today’s sub-prime crisis.