Central Banks

• China, for the 4^th time in two weeks, has tightened its credit policy in order to head off inflation and cool asset bubbles. This time they have said that they will ‘punish’ banks who do not curtail lending.
• German Chancellor, Angela Merkel, has indicated that she thinks that the worst of the recession will arrive in Germany in 2010 not 2009.
• The Bank of Canada cautioned that “the recovery continues to depend on exceptional monetary and fiscal stimulus.” 

Inflation

• US Residential Rents have deflated fractionally for the 5^th month in a row; there are a record 4.6 million rental units nationwide sitting empty, and an unprecedented 11% apartment vacancy rate.
• Property in Hong Kong and Shanghai are bubbles, according to Jim Rogers.

US Governments

• President Obama introduced a campaign to restrain the size and scope of US Banks and would force them to choose between commercial banking and proprietary trading. Analysts are questioning the practicality of the proposal and what else it might lead to.
 
• The State of New York is wrestling with slashing services and hiking taxes in order to close an estimated $21.9 billion collective budget gap.
• The election of a Republican Senator by Massachusetts yesterday means that the Obama administration has lost their supermajority in the Senate. It remains to be seen whether President Obama moves toward centre (as Clinton did) or whether he continues to govern from the left and runs the risk of being a one term president.

For a review to ensure that your portfolio is positioned appropriately for 2010, please Click Here

Angus Watt

Managing Director, Individual Investor Services