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** We're Not the Only Ones -- by George Leong, B. Comm. -- Profit ConfidentialTake a look at some of the headlines over the wires: "Rio Tinto to cut 14,000 jobs to cope with slump" "Eastman Kodak withdraws full-year 2008 forecast" "Toyota to further cut production in N. America" "China urges airlines to cancel, delay plane orders" "AutoZone posts lower fiscal 1st-quarter profit" On a positive note, the White House and Congress appear to be set to announce a bailout for the U.S. auto sector that would initially include $15.0 billion in emergency loans and more to come. While it will use taxpayers' dollars, it is necessary to save the auto industry and the hundreds of thousands of auto jobs. Yet, with the bailouts of banks and insurance companies, and now the auto sector, you've got to wonder how this would open up more sectors to bailout relief. A precedent has been set and now the government will likely have little choice to ignore other companies, especially if there are major jobs involved. How about the retail industry that could be facing a nasty holiday shopping season and will need to cut jobs and close storefronts? The reality is that the hurt is not only confined to the U.S. border but is worldwide, which is making the situation difficult to control. Canada is the latest country to announce that it is in a recession. In response, the Bank of Canada slashed short-term interest rates by 75 basis points to a 50-year low of 1.50%. The country's stock markets have been hammered by declining commodities prices, specifically in gold and oil. A recession in Canada, a key market for U.S. goods and services, will likely hurt U.S. companies to some degree, specifically the multinational companies. Across the Pacific Ocean in China, there are more troubles brewing. China is struggling as the country's GDP growth continues to be revised lower over the past several months, as the country faces a slowdown domestically and from foreign markets. The World Bank cut China's GDP growth in 2009 to 7.5%, compared to the previous eight percent to nine percent. While relatively stronger versus the world's major economies, the Chinese economy will grow at its slowest clip in nearly 20 years. To halt the decline, speculation is that China will add to its recently announced $586-billion stimulus plan, which Moody Investors Service believes will not be enough to offset the decline in the export market. And similar to many countries, The People's Bank of China (PBOC) made a major 108-basis point cut in the country's key interest rate to 5.58% for loans and 2.52% for deposits, the biggest cut in a decade. The PBOC will also make it easier for small and mid-sized banks to lend capital after cutting the bank's required reserve requirements To aid exports, China has also devalued the renminbi on two occasions. The current exchange ratio to the U.S. dollar is RMB6.8842 to one U.S. dollar, well below the RMB7.4 to 1 ratio at the start of the year. Yet with global demand down, even this adjustment will not be enough. So, sit back and ride out the current negative climate for stocks. As I have said, capital preservation is key in this market, and will allow you to trade when opportunities arise. Profit Confidential --- http://www.profitconfidential.com/ LOMBARDI PUBLISHING CORPORATION News, Analysis, and Information Services Since 1986. One Million Customers in 141 Countries. Lombardi Publishing Corporation Financial Publications Division 350 Fifth Avenue, Suite 3304 New York, NY 10118-3304 --- Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever ,without written permission from the copyright holder. Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHORGeorge Leong, B. Comm., Senior Editor at Lombardi Financial, has been a technical analyst for 12 years and a financial analyst for seven years. His overall market timing and trading knowledge is extensive. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical columns for stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as an analyst with Globe Information Services.
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