End of Greenspan Era

Some shoes are hard to fill...

On Monday, October 24th, George Bush nominated Ben Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve.

The most worrying of these is America’s housing bubble. Soaring house prices have been crucial in underpinning consumer spending since 2001 as Americans have blithely ridden out slowing income growth by releasing large sums of home equity. A related problem, the gaping (and growing) current-account deficit, has many observers worried about a sudden dollar devaluation triggering a “hard landing” for America’s economy—and thus the world economy. And rising oil prices have once again raised the spectre of the devastating combination of high consumer prices and slow growth that haunted the 1970s. There are no clear answers to any of these problems, and Mr Bernanke will have to feel his way with the eyes of the world upon him. - The Economist

VIEW: Given Mr.Bernanke's past stance on interest rates and monetary expansion, I do expect him to halt rate increases when Mr.Greenspan retires next year - thus triggering a hard landing mentioned above (I see a recession coming). BUT things should continue to be rosy as any signs of trouble would be combated with money supply atleast until Bush's term is over.

However, if this should be the case, then things would be wonderful for Hong Kong. Given our economy's health (unemployment rate falling, tourism booming, wages increasing, consumers spending, exports surging...) lower rates would revive our property market further and boost investor sentiment!

Plus, a weaker US dollar would see money flowing into the region for better investment alternatives. As our dollar does not have much room to maneuver, I do see assets going up in prices

CONCLUSION: Go BUY property counters now that they have consolidated!!!

BEWARE OF BIRDFLU THOUGH