Fed would print new money to buy long-term mortgage

Commodity and stock prices turned higher Wednesday afternoon after reports that the Federal Reserve is considering a “sterilized” form of bond buying. The Wall Street Journal reported that under the potential program, “The Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.”

As for the broader equity markets, the S&P 500 Index rallied 0.7% to 1,353.09

Greece is “very close to running out of alternatives” besides leaving the euro zone

Dr. Paul Krugman, the Princeton professor who won the Nobel Prize in economics in 2008, warned Europe that Greece is “very close to running out of alternatives” besides leaving the euro zone.

Krugman’s comments – coming yesterday in Lisbon, Portugal – followed Germany’s approval of a second financial bailout package for Greece.  In addition, Standard & Poor’s downgraded the Greek sovereign debt rating to “Selective Default.”  According to a Bloomberg report, “S&P dropped Greece’s rating from CC, two levels above default, after the government added clauses to its debt designed to mop up investors unwilling to take part in a bond exchange.”

Other highlights from the report included:
Krugman also said that Portugal, which along with Ireland and Greece has received an international bailout, is not at the same stage as Greece and “with luck it never will be.” Still, it’s “hard to believe” the country will return to bond markets in 2013, he said.
It’s a “highly implausible proposition,” Krugman said. “What will have happened in 19 months?  The major events that will certainly have happened are a European recession and an outright undisguised Greek default and possibly a Greek exit from the euro. And none of these are going to make it easier for Portugal.”

Krugman said that euro membership has turned out to be “unfortunate,” exposing peripheral economies to “extreme risk with no easy way out.” The Nobel-prize laureate said tougher budget cuts won’t help these countries as “some austerity is necessary but calls for ever more austerity are very disruptive.”

“It may be that in the end, there might come a decision that the euro was a mistake,” Krugman said. “That’s going to be difficult for anyone to acknowledge” and should come in a time of crisis for Europe but it’s a “very real possibility.”

Asked about Chinese aid for Europe, Krugman said that it’s not needed as the resources to solve the debt turmoil are “all here in Europe.” U.S. Treasury Secretary Timothy F. Geithner said in a Feb. 25 speech in Mexico that the region needs to make its crisis-fighting commitments “credible.”

HLBank In A Good Look

HLBank is a very good counter to invest because this bank is same like PBBank. However if to buy into it still need to wait for the index big dip.

Gold is likely to reach a new all-time record nominal high of $2,000 per ounce by April

The price of gold is likely to reach a new all-time record nominal high of $2,000 per ounce by April of this year, according to Huntington Asset Advisors’ Peter Sorrentino. In a recent Bloomberg interview, Sorrentino – a senior fund manager at Huntington – discussed his bullish short-term outlook for the yellow metal.

“Gold had a very substantial run early last year and has gone through a corrective phase,” he noted.  ”Some of this we think is attributable to the MF Global debacle.  We think that frightened some commodity traders and some investors in commodities and that some institutional money headed for the sidelines after that.  But when we look at the amount of U.S. Treasury debt held by our major export partners, we’re beginning to see significant systematic reductions in their Treasury holdings.  They’re I think uncomfortable with holding that much of their reserves in dollar-denominated assets.”

Sorrentino went on to say that “We’re continuing to see central bank buying of gold by China.  Russia has effectively nationalized all production; all the mines have to sell to the central bank.  Venezuela nationalized their mining industry.  We’re seeing gold being bought again in India as well as Vietnam and other countries.  So there’s a continual growing of demand.”

Fed Minutes Show FOMC Divided on QE3

The latest Fed minutes showed a growing divide among hawkish and dovish members over the prospects for a third round of quantitative easing (QE3).
One of the key sections of the Fed minutes – a recap of the most recent Federal Open Market Committee (FOMC) meeting – indicated that:

A few members observed that, in their judgment, current and prospective economic conditions–including elevated unemployment and inflation at or below the Committee’s objective–could warrant the initiation of additional securities purchases before long. Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run. In contrast, one member judged that maintaining the current degree of policy accommodation beyond the near term would likely be inappropriate; that member anticipated that a preemptive tightening of monetary policy would be necessary before the end of 2014 to keep inflation close to 2 percent.

Maybe the fall of the Euro will be the 2012 catastrophe that the Mayans predicted

“We continue to hold gold and gold mining equities, reflecting our concerns that global fiscal and monetary policies continue to tempt fate.”

The above comment comes from the 2011 year-end investor letter of Greenlight Capital, the investment firm run by hedge fund magnate David Einhorn. As one of the more prominent gold bulls of late, Einhorn has held a considerable stake in the SPDR Gold Trust (GLD) for several years and acquired a large position in the Market Vectors Gold Miners ETF (GDX) last year.

Although the majority of Greenlight’s year-end letter did not focus on the firm’s gold positions, Einhorn did note that the yellow metal itself and the GDX were two of Greenlight’s five largest positions as of December 31, 2011.

The letter also discussed several macroeconomic issues that are likely to have an indirect impact on gold prices in the year ahead. Highlights of those include:

The global environment is very complicated. On the one hand, the Federal Reserve has taken a much-needed break from quantitative easing (at least for the moment).

Asia appears to be in much worse shape than it was at this time last year and could be a drag on the world economy going forward.

The European currency crisis has continued to worsen…The latest solution is a work-in-progress treaty being heavily negotiated that, in its current incarnation, will only need to be ratified by a subset of the Eurozone countries. While the leaders have committed in principle, there is significant risk that once the details emerge (and the necessary electorates are consulted), we will discover that some leaders pledged with their fingers cross and, as with prior efforts, this too will fail to get the job done. 2012 may be the year in which the currency crisis will no longer be kept at bay by politicians buying time with empty promises. Maybe the fall of the Euro will be the 2012 catastrophe that the Mayans predicted.

MayBank Likely Rally Up To RM8.60 Level Soon

Base on Maybank chart, share price likely rally up to RM8.60 level in short term. This level is the old high for 2011.

However, in long term MayBank is hard to hold on this support level.