Choppy, choppy, chop, chop.

Global stock markets weakened today after strengthening the session before on news that the debt ceiling in the USA would most likely be raised successfully. Why?

Fundamentally, raising the debt ceiling means that the USA would not default and they will be able to continue paying their bills. Sounds like a good thing. However, closer at hand are still many problems which are worrying Mr. Market.

1. US credit rating could still suffer a downgrade. This could make borrowings more expensive.

2. Manufacturing has weakened in global economies. This could make debt problems worse.

Read full article here.

3. With all eyes on China as the bastion of economic prowess, news that its manufacturing growth slowed in July tempered sentiments.

Read full article here.

In response to a reader who said that the USA is the strongest country in the world since the day he was born, I put forth the question as to whether it still is the strongest country in the world today.

It is clear to me that USA's strength is an illusion built on borrowed funds and borrowed time. In fact, Putin calls USA a parasite which is unable to live within its means.

"Putin was insistent Monday that the world should be seeking new reserve currencies for trade and savings." Read full article here.

What about the Chinese? They are the largest holder of US Treasuries worth some US$1.16 trillion (more than a third of its US$3.2 trillion reserves).

A declining US$ is most damaging for the Chinese and they are not impressed by efforts in the USA which it says "was hiding "risks and troubles" for the world economy" and that "its sovereign debt problems remain unresolved". Read full article here.

If anything, global stock markets are likely to continue seeing choppy action. It is important for us to remain calm and collected in the midst of this.

I am ready to add to my long positions if I see value. If there should be some crazy run up in price, I am ready to reduce my long positions.

Anything else? I think that's about it for retail investors like us.

Sheng Siong's IPO and the American debt ceiling.

I received two emails today from readers. The first asked me about Sheng Siong's IPO and the second commented on how the Americans have come to a compromise on raising the debt ceiling.

To the first reader, I said that it has been a long time since I took part in any IPO, believing that they do not offer good deals for investors most of the time. I rather wait and see if I could get the shares when they provide better value for money.

Many believe Sheng Siong's business to be recession proof and that is probably correct. However, the business might be recession proof but the share price could be less so.

The business could be quite robust but negative sentiments in the broader market could drive prices down all the same during hard times. Mr. Market is given to extreme emotions, after all. I would buy if the shares become undervalued.

To the second reader, I said that I would not be too sure about the Americans raising their debt ceiling successfully until President Obama signs on the dotted line. After all, remember how "rebels" within the Republican ranks were unhappy with the compromises made?

Now, how will the Democrats react to some concessions made by President Obama to the Republicans? Apparently, he gave in and agreed not to increase taxes on the rich.

Of course, I am playing the Devil's advocate here but, like I always say, never say never. We can only hope for the best.

Read article here.

Tea with AK71: Tartlets and a view of the city.

Life is unpredictable. Sometimes, we get nice surprises and, sometimes, we get nasty ones. Today, I had a surprise which resulted in me being quite free of work. So, I suppose this is a nice surprise. However, I found myself wondering what to do today.

I did the laundry in the morning, had breakfast with a friend in town and came back home. After washing up, I checked my blog, replied to comments and emails. Hmm... What to do next on a restive Sunday?

I took a couple of photos with my trusty IXUS and here they are:

I like these tartlets from Arnotts's but they are pretty expensive. So, I hardly buy them. However, a budget store that I visit regularly at Redhill Market was selling these at $1.05 per packet (150 gm). Irresistible!

Three flavors available: Blueberry, Raspberry and Strawberry. Er.. you don't see the strawberry flavored ones in the photo because those tartlets already found their way into my stomach.

This photo was taken from my balcony. I like being near the city but not in the city, if you know what I mean.

It is a nice view of the city, isn't it? I will miss this view as I have sold my place and moved back to stay with my parents in the western part of Singapore.

Not going to think of investments and finance for the rest of the day. Maybe, I will take a nap. Have a good Sunday, everyone. :)

U.S. Senate scuttled emergency legislation!

So many want to have a two party government in Singapore. Personally, I always say that if something is not broken, don't fix it. Seeing how the two parties in the US government are acting, I am thankful Singapore is not on the same boat.

With National Day just round the corner, a week after the 2 August deadline for the US to raise its debt ceiling, I am counting our blessings. We never know we have a good thing until we have lost it. Let's not lose it.

Latest update on the US situation:

In an unforgiving display of partisanship, the Republican-controlled House approved emergency legislation Friday night to avoid an unprecedented government default and Senate Democrats scuttled it less than two hours later in hopes of a better deal.

"We are almost out of time" for a compromise, warned President Barack Obama as U.S. financial markets trembled at the prospect of economic chaos next week. The Dow Jones average fell for a sixth straight session.

Lawmakers in both parties said they were determined to avoid a default, yet there was little evidence of progress -- or even significant negotiations -- on a compromise during a long day of intense political maneuvering...


...Administration officials say that without legislation in place by Tuesday, the Treasury will no longer be able to pay all its bills. The result could inflict significant damage on the economy, they add, causing interest rates to rise and financial markets to sink.

Executives from the country's biggest banks met with U.S. Treasury officials to discuss how debt auctions will be handled if Congress fails to raise the borrowing limit before Tuesday's deadline.

But Carney said the administration did not plan to provide the public with details Friday on how the government will prioritize payments...

Read full article here.