China with a 4 trillion Yuan stimulus package

BEIJING – China's massive stimulus package will help contribute to global stability by boosting investment in the world's fourth-largest economy and consumer spending, the nation's top economic official said Monday.

Faced with the prospect of zero export growth, closing factories and mass layoffs, China joined moves by governments around the world to cushion the blow of the global slowdown with the announcement of the $586 billion package.

The plan calls for higher spending on roads, airports and other infrastructure, tax deductions for exporters and more aid to the poor and farmers. Spending on health and education will increase, as well as on environmental protection and high technology.

"We must implement the measures to ensure a fast and stable economic development," Premier Wen Jiabao said at a meeting of government leaders, according to a report read out on the state television. "They are not only the needs of the development of ourselves, but also our biggest contribution to the world."

The government's stimulus announcement appears to exaggerate the size of its plan by including projects already under way, including reconstruction from the devastating May earthquake in China's southwest, said Sherman Chan, an economist for Moody's Economy.com.

"The exaggeration highlights the government's desperation to revive sentiment, which is perhaps the key factor to sustaining growth amid global turmoil," Chan said in a report.

Source: Yahoo news

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Questions that remain and will be answered in a few weeks:

Will this revive the commodities again as it is focussed on infrastructure buildout ?
They are planning to spend $14 billion before the end of this year. Will this help kick start the markets for a Santa Rally?
Will this massive spending help the world economy esp US ?

Circuit breakers for US Markets- NYSE

On October 1, 2008, the average value for the DJIA for the preceding month (September 2008) was used to calculate point levels (rounded to the nearest 50 points).
This resulted in the
Level One (10%) circuit breaker set at 1,100 points,
Level Two (20%) circuit breaker set at 2,200 points, and the
Level Three (30%) circuit breaker set at 3,350 points.

Information on SEC page

Pictorial representation on NYSE page:

http://www.nyse.com/press/circuit_breakers.html

Nouriel Roubini on CNBC- Recession to last two years

Buffett Says Now Is the Time to Buy U.S. Equities

Warren Buffett said he's buying U.S. stocks and, if prices stay attractive, his personal investments, as distinct from his stake in Berkshire Hathaway Inc., will soon be wholly in American equities.

Exaggerated concern about the long-term prosperity of financially secure U.S. companies is foolish, and most probably will be setting profit records in years to come, Buffett said.

While short-term stock movements can't be foretold, the likelihood is that the market will recover before the economy or general investor sentiment rebound, and ``if you wait for the robins, spring will be over,'' he said.

Referring to the 1930s Depression, Buffett pointed out that the Dow Jones Industrial Average reached its nadir on July 8, 1932; economic conditions continued to deteriorate until Franklin D. Roosevelt became president in March 1933, and by that time the market had climbed 30 percent.

Source:Bloomberg
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If Buffett is buying it doesn't mean it is the bottom. Be careful out there. Buffett has the capacity to wait multiple years for his investments to turn positive.

US markets direction not clear

Still stuck in this channel. No need to hurry. Watch how this plays out. If it breaks above the BLUE line, go long with ULTRA-LONG ETFs. Vice-versa if it breaks down.

Nobel Laureate Krugman Sees a `Nasty' U.S. Recession

October 17 (Bloomberg) -- Princeton University Professor Paul Krugman, winner of the 2008 Nobel Prize for economics, talks with Bloomberg's Mike Schneider in New York about the U.S. economy and global financial crisis. Krugman's new book is called "The Conscience of a Liberal." (Source: Bloomberg)

Watch Video

Dollar Libor Logs First Weekly Drop

Oct. 17 (Bloomberg) -- The cost of borrowing dollars in London fell, rounding off the first weekly decline since July, after central banks around the world pumped unprecedented amounts of cash into money markets and governments backed loans.

The London interbank offered rate, or Libor, for three-month loans in dollars dropped for a fifth day, sliding 8 basis points, or 0.08 percentage point, to 4.42 percent, the British Bankers' Association said. It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell.

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This comes in as a huge relief for the credit markets. The gyrations in credit markets have a profound effect on the stock market. Watch the Libor closely.
Also keep an eye of TED SPREAD $TED.