Market Outlook: 01-23-08

Robert Hsu, January 23, 2008

We certainly know that it's been a horrible week for the major U.S. markets, but stock markets elsewhere also took big hits this past week. Major global market indices such as Japan's Nikkei 225 Index, Hong Kong's Hang Seng Index, and U.K.'s FTSE 100 Index are all now sitting on double-digit losses for the year. Most of the pressure is coming from concerns of a U.S. recession.

Want to know the best ways to protect yourself and even profit from a recession in the U.S.? Join Asia Edge, and I will guide you thorough the uncertain times in the market.

I've been asked many times in the last few months if we're heading for a recession and I believe that there will likely be a major slowdown, but it remains to be seen whether there will actually be a recession. In fact, recent economic and earnings data confirm that the U.S. economy is slowing down significantly. On Thursday, the Commerce Department announced that housing starts plunged 14% in December to a seasonally adjusted rate of only 1.01 million, the worst in 16 years. Housing and financial service industry woes are spreading to the retail sector and other portions of the economy. This certainly adds to the probability of a recession, but isn't the final nail in the coffin.

There have been a few attempts to avoid a recession in 2008. President Bush on Friday proposed a growth package of as much as $150 billion to counter escalating risks to the economic expansion now in its seventh year, saying the U.S. needs a "shot in the arm" to keep housing woes from spreading. The plan, about 1% of the U.S. GDP, included tax incentives for businesses and direct and rapid income tax relief for the individuals. Given that the global markets were apparently unimpressed and sold off sharply over the holiday weekend, I don't think Bush's effort will help the situation.

To avert a stock market crash, on Tuesday morning, the Federal Reserve announced cut of the interest rate by 75 basis points to 3.5% from 4.25%. It marks its first emergency reduction since the September 11 Terrorist Attacks in 2001. Despite the aggressive rate cut, U.S. stocks still sold off yesterday, and investors had to adjust to the action.

To get the latest updates on the market and which stocks Robert Hsu is recommending now, join Asia Edge.

Sponsored Links

What's happening in the world's major foreign markets right now? Will current events affect the stocks in your portfolio? Read InvestorPlace Asia's Top Stories to find out everything you need to know in order to stay on top of global economic news.

more...

Every country has its own special customs and traditions. Being familiar with a country's culture can often make a difference in whether you gain or lose from investing in its stock market. Check out our culture section to learn more about the societies of the world's fastest-growing emerging economies.

more...

There's a lot happening around the world today, and it's important to know how it's affecting your investments. Watch the latest videos covering important Asia topics!

more...