Five (5) news signal the rally’s end is near.
By Daniel at 6 December, 2009, 10:17 pm
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China is in danger of distorting economy, experts say
Economists warned that China has put too much emphasis on stimulating GDP growth and risks distorting its economic structure. “Heavy government-driven investment will probably create excessive capacity and bad loans as witnessed in the 1990s,” said Liu Jinhe, chief researcher at the Samsung Economic Research Institute. The State Information Center said the government should not expand its stimulus efforts. “Inflation is not an issue in the short term, but the government should not further its progressive monetary and fiscal policies,” the think tank said. China Daily (Beijing) (04 Dec.)
Bernanke: Financial crisis would have been worse without Fed
Federal Reserve Chairman Ben Bernanke was met with a mix of harsh criticism and low-key support as he defended his record at the central bank before the Senate banking committee. “We played a central role in efforts to quell financial turmoil,” Bernanke said. “The outcome could have been markedly worse.” Committee Chairman Christopher Dodd, D-Conn., said he expects a majority of the committee to vote in favor of Bernanke’s confirmation for another term. Reuters (03 Dec.)
Analysis: Eurozone deficit threatens global recovery
Although the shock of Dubai World’s debt restructuring is waning, the global financial industry needs to consider lessons to be learned from the situation. The economic recovery remains fragile, and excessive deficit in eurozone economies, such as Greece, Belgium and Italy, are a threat to that recovery. The Wall Street Journal (03 Dec.)
SEC to consider mutual fund fees, disclosure on securities
Next year, the U.S. Securities and Exchange Commission will look into banning some mutual fund fees, originally intended to cover distribution costs, and requiring point-of-sale disclosure on securities to investors who are in the process of evaluating investment. SEC Chairman Mary Schapiro said she has doubts about whether the fees, called 12(b)-1 in the mutual fund industry, are justified. Schapiro said she anticipates “significant push-back” from financial advisers on expanded disclosure because of the inconvenience and expense. InvestmentNews (03 Dec.)
Citi: Cost Cutting Is Over, Now Leverage Will Drive Earnings
Citi: While deep employment cuts clearly helped sustain corporate operating margins during the downturn, a reluctance to add people quickly and a turn in industrial production should keep the profitability machine running over the next several quarters. If history is any guide, analysts will under-estimate the potential for incremental returns given management guidance on fixed overhead cost structures that miss some key factors such as S,G&A and R&D expense that do not change much at cyclical turning points.
The 2010 challenge though will be in terms of expectations. Beating expectations isn’t getting any easier after the 80% beat rate we just had. (Dec. 06)
- dlsy
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