When Will the Bull Return?

The stock market is crashing—slowly, and in plain view of the people who count on it most. The 53% plunge in the Dow Jones industrials since October 2007 has wrecked the college- and retirement-savings plans of millions of investors. It has permanently lowered the long-term investment projections of private endowments and pension funds. It has sent corporate compensation experts scrambling to figure out how to reward top employees. All told, more than $10 trillion of stock market wealth has vanished, and with it the confidence that springs from financial security.

While 17 months may feel like an eternity, it could turn out merely to be a prequel. The questions on the minds of investors, money managers, and corporate executives are threefold: How much longer will the bear market last? How low will the averages go? And when might investors get their money back?

As Warren E. Buffett has said: "Beware of geeks bearing formulas." It's especially difficult to predict the direction of the markets these days because the most popular gauges, from price-earnings ratios to measures of investor "capitulation," have stopped working. The peculiar nature of this bear market limits the kit of useful tools to just a handful of bond market and business confidence indicators.

Those signals, along with interviews with financial historians, market strategists, and economists, point mostly to painful scenarios. Stocks don't seem likely to fall much more from here—but market turmoil could continue for months or even years. Worse, by the time the market revisits its highs, so many years are likely to have passed that many older people will have gotten out of stocks, missing out on the rebound. The flip side is that new money put into the stock market now will likely do comparatively well over the long term. That's welcome news for twentysomethings and executive compensation consultants, but perhaps not for soon-to-be retirees.

SEARCHING FOR PRECEDENTS
History can't provide as many clues to the market's direction as usual. That's because while most bear markets more or less track the business cycle, this one began with a broken financial system. That makes the current bear more like the one that snarled from 1929-32 than others of the past 100 years. But that analogy doesn't fit perfectly, either. "We have no good precedents to help us," says Peter L. Bernstein, a 90-year-old market essayist and financial historian who was a teenager during the Great Depression. "What's breathtaking is the rapidity of the decline and its breadth."

The market anxiety is especially high now because of the raging fire in the economy. "The next six to nine months are going to be awful," says Desmond Lachman of the American Enterprise Institute. Waves of corporate defaults, home foreclosures, bank failures, and job losses are still to come.

Of course, the stock market already knows that for the rest of 2009 the economy will be a "shambles," to use Buffett's recent description. Today's low share prices may well reflect that. The Dow Jones industrial average has already fallen through the 7,000 level predicted earlier this year by Nouriel Roubini, the New York University economist nicknamed Dr. Doom for daring in 2006 to foretell the credit calamity. That's right, even Dr. Doom was too optimistic.

If recent history were a reliable guide, it would be just about time for the bear to retreat to his den, which nowadays might include a flat-panel TV and leather chair bought at a foreclosure sale. The market's average decline during bear markets since the 1929 market crash is just 30%. What's more, those past bears lasted an average of 13 months, making this one look not just mean but old.

But this is no ordinary slump. Even the most basic market gauge, the price-earnings ratio, which measures a company's share price relative to the earnings it generates, is unreliable. Historically, the overall market has traded at prices that average 15 times earnings, ranging from roughly 8 during the worst bear markets to 25 or greater during bull runs

'Slumdog' becomes millionaire 200 times over

LOS ANGELES, March 6 - The milestones just keep coming for "Slumdog Millionaire": After winning eight Academy Awards, including best picture, the feel-good indie has now crossed the US$200 million (RM720 million) mark in worldwide box office.

As of yesterday afternoon, "Slumdog" had grossed nearly US$217 million from theatres around the globe. It made US$12 million the weekend after it dominated the Feb. 22 Academy Awards, a healthy 43 percent improvement over the previous weekend, and came in at No. 3 behind two movies with strong built-in audiences, "Tyler Perry's Madea Goes to Jail" and "Jonas Brothers: The 3D Concert Experience."

By contrast, previous best-picture winner "No Country for Old Men" had a worldwide gross of just more than US$162 million, while Martin Scorsese's star-studded "The Departed" from 2006 made nearly US$290 million worldwide.

"Slumdog Millionaire" tells the story of an 18-year-old orphan who rises from the streets of Mumbai to become the biggest winner ever on India's version of "Who Wants to Be a Millionaire." Director Danny Boyle's film had a budget of about US$15 million, featured no well-known stars and is partly in subtitled Hindi, but it's wowed audiences and critics alike.

Steve Gilula, co-chief operating officer for Fox Searchlight, which released "Slumdog," said he expects the movie will go past US$250 million globally.

"It's extraordinary," Gilula said. "Very, very few films get past US$200 million worldwide."

Comparatively, another small Searchlight movie that made it big, 2007's "Juno," made US$230 million worldwide.

Gilula attributes the global success of "Slumdog Millionaire" to a couple of factors. One is the international nature of the setting, the cast and the Oscar-winning filmmakers - Boyle and screenwriter Simon Beaufoy are British, for example, and composer A.R. Rahman is from India.

The other is the attention it got from winning top honors at the Golden Globe Awards, given by the Hollywood Foreign Press Association, and Britain's BAFTAs.

"All of that comes together to create a phenomenon," he said. - AP

Kepler telescope to hunt for Earth-like planets

WASHINGTON (AFP) - - NASA is preparing to launch the Kepler space telescope Friday to help answer a question that has boggled the minds of astronomers for centuries: is Earth the only habitable planet in the galaxy?


"This mission attempts to answer a question that is as old as time itself -- are other planets like ours out there?" said Ed Weiler, associate administrator for NASA's Science Mission Directorate.

"It's not just a science mission, it's an historical mission."

Kepler will stare at the same spot in space for three and a half years, taking in about 100,000 stars around the Cygnus and Lyra constellations of the Milky Way.

The massive telescope is scheduled to launch atop a Delta II rocket from Cape Canaveral Air Force Station, Florida, on Friday at 10:48 pm (0348 GMT Saturday).

At a cost of nearly 600 million dollars, it will be the National Aeronautics and Space Administration's first mission in search of Earth-like planets orbiting suns similar to ours, at just the right distance and temperature for life-sustaining water to exist.

The telescope will be hunting for relatively small planets that are neither too hot nor too cold, are rocky and have liquid water -- essential life-sustaining conditions -- explained William Borucki, Kepler's principal investigator based at NASA's Ames Research Center in California.

"If we find that many, it certainly will mean that life may well be common throughout our galaxy, that there is an opportunity for life to have a place to evolve," Borucki said.

"If none or only a few of these planets are found, it might suggest that habitable planets like Earth are very rare and Earth may be a lonely outpost for life."

Equipped with the largest camera ever launched into space -- a 95-megapixel array of charge-coupled devices (CCDs) -- the Kepler telescope is able to detect the faint, periodic dimming of stars that planets cause as they pass by.

"If Kepler were to look down at a small town on Earth at night from space, it would be able to detect the dimming of a porch light as somebody passed in front," according to Kepler project manager James Fanson.

This is no small feat.

"Trying to detect Jupiter-size planets crossing in front of their stars is like trying to measure the effect of a mosquito flying by a car's headlight," Fanson said.

"Finding Earth-sized planets is like trying to detect a very tiny flea in that same headlight."

Kepler's discoveries "may fundamentally alter humanity's view of itself," Jon Morse, astrophysics division director at the US space agency's Washington headquarters, told a press conference last month.

"The planetary census Kepler takes will be very important for understanding the frequency of Earth-size planets in our galaxy and planning future missions that directly detect and characterize such worlds around nearby stars."

Ever since astronomers first turned their telescopes to the sky, humans have been searching for other planets. But the small size of planets compared to stars has complicated the task. Only eight planets have been found in our solar system -- Pluto is now considered a mere planetoid.

Since 1995, some 337 planets have been found orbiting around stars outside our solar system, but they are all bigger than Earth and do not have Earth-like conditions that make life possible.

The French-led COROT satellite, which has been in orbit since 2006, has already discovered the smallest extraterrestrial planet so far. At a little over twice the Earth's diameter, the planet is very close to its star and very hot, astronomers reported earlier this month.

Astronomer Debra Fischer at San Francisco State University said that NASA's mission is a cornerstone in understanding what types of planets are formed around other stars.

Information that Kepler will help compile, she said, "will help us chart a course toward one day imaging a pale blue dot like our planet, orbiting another star in our galaxy."

Did Obama Cause the Stock Slide?

At least on Wall Street, the honeymoon is over for President Barack Obama.

Polls still show the President has strong popularity among the general U.S. population, and Obama continues to command power in Congress. But among investors, fairly or unfairly, there is griping that the new Obama Administration is at least partly to blame for the recent slide in stocks. Since Nov. 4, Election Day, the broad Standard & Poor's 500-stock index is off about 25%, and since Jan. 20, when Obama took office, the "500" is down 15%.

It's never easy to determine exactly why the stock market moves in a particular direction. Plenty of other factors have influenced stock prices since November. For example, the global economy has slowed further and the outlook for corporate profits has worsened.

But BusinessWeek interviewed a wide array of investment professionals, and many said the first six weeks of the Obama Administration have soured their outlook on the stock market.

Bar Was Too High
It wasn't always so. On Nov. 21, word arrived that Timothy Geithner would be tapped as Obama's Treasury Secretary and markets rallied immediately. The S&P 500 rocketed 15% higher that day and the following trading session.

Stocks continued to climb into January, and even rallied in the week after the inauguration. "Hopes were too high," says independent market strategist Doug Peta. Too many were hoping the new Administration would have "this magic potion to solve our problems," he says. "That was unrealistic."

Proposals for a stimulus bill pushed infrastructure stocks to unsustainable heights. Caterpillar (CAT) surged 39% from the market lows in November to early January. Since then, shares in the maker of construction equipment have tumbled back down again, falling 43%.

Charges of Bungling
Many investors hoped Obama could start to solve the stock market's—and the economy's—biggest problem: the credit crisis. "It was a false hope," says Brian Reynolds, chief market strategist at WJB Capital Group, who believes there is "nothing the government can do to stop the crisis."

Others are more hopeful the government can ease credit conditions, but say the Obama Administration has bungled the operation so far. A Feb. 10 presentation of a financial-sector relief plan by Geithner was widely criticized. Stocks fell almost 5% that day.

Geithner was a "particularly poor salesperson back on Feb. 10," says Marc Chandler of Brown Brothers Harriman, who says he voted for Obama. "The Obama Administration has failed to get ahead of the curve."

Uncertainty Leaves Room for Rumors
A lack of details from Geithner disturbed investors, says Quincy Krosby, chief investment strategist at the Hartford (HIG). "Markets need certainty," she says. "The market has been sitting here waiting, waiting, waiting. That allows rumors and conspiracy theories to dominate."

Jerry Webman, chief economist at OppenheimerFunds (OPY), defends the Administration. "I would like to see Administration people more visible" on the issue, he says. But, "the problem is: What do we expect them to say? 'This is a big complicated problem and we don't know where we're going to get the money to solve it'? That would be the truth," Webman says, but it wouldn't make market participants very happy.

Credit issues may be the chief complaint about Obama among investors. But they're hardly the only gripe. In recent weeks, Obama has made clear he intends to keep campaign promises on health-care reform, climate change regulation, and higher taxes for Americans who earn more than $250,000.

Indonesians face jail under tighter polygamy rules

JAKARTA (AFP) - - Indonesian Muslims contemplating an illicit second, third or fourth marriage could face jail under a proposed bill aimed at tightening the rules for polygamy, an official said Monday.

The draft rules being mulled by the country's religion ministry would force Muslim men wanting to take extra wives to get written consent from their existing spouse or spouses, and prove they have the financial means to support them, ministry official Muctar Ilyas told AFP.

"The present wives must sign the letter of consent in front of an official so we know they've not been forced by the husband. We will report men who marry without their wives' consent to the police on fraud charges," Ilyas said.

"Couples must register their marriages in the presence of an authorised religious official. If not, they can be jailed up to three months and fined up to five million rupiah (415 dollars)," he said.

"Women are usually the ones to suffer in illegal marriages, especially if they have children. Without proper marriage documents, they cannot make claims to their husbands' assets for instance," he said.

Opinions are strongly divided on the virtues of polygamy in Muslim-majority of Indonesia. Islam allows for men to take up to four wives.

Asian stock markets tumble on worsening US slump

HONG KONG, March 2 — Asian stocks tumbled today after the US economy withered at its fastest pace in more than a quarter century, heightening doubts that the global economy can recover later this year. Japan’s benchmark fell 4 per cent.

As in the US and Europe, investors across the region were shaken after figures Friday showed gross domestic product in the world’s largest economy shrank at a 6.2 per cent annual pace at the end of last year.

The decline, worse than most economists had expected, was the country’s sharpest since 1982.

Adding to fears that the world economic crisis won’t end anytime soon were more troubling signs that banks may need still more capital to cope with crippling losses.

On Friday, Citigroup Inc. agreed to turn over a huge stake to the US government. And European banking giant HSBC PLC is expected to unveil plans to raise £12 billion (RM61 billion) in a new rights issue when it reports results later today.

Meanwhile, faltering insurer American International Group is expected to get another massive bailout.

“You’re seeing the US is sinking lower and lower, and we’re still desperately searching for a bottom,” said John Mar, co-head of sales trading at Daiwa Securities SMBC Co. in Hong Kong. “It’s death by a thousand cuts, a slow death right now.”

Every major market in Asia convulsed with selling.

In Japan, the Nikkei 225 stock average dropped 300.99, or 4 per cent, to 7,267.43.

Hong Kong’s Hang Seng lost 490.53 points, or 3.8 per cent, to 12,321.04, and South Korea’s Kospi plummeted 4.1 per cent to 1,019.74. Markets in Australia, Taiwan and Singapore shed about 3 per cent or more.

Equities markets in the U.S. and Europe suffered a similar route on Friday.

In New York, the Dow fell 119.15, or 1.7 per cent, to 7,062.93 — its lowest close since May 1, 1997.

The S&P 500 index fell 17.74, or 2.4 per cent, to 735.09, and the Nasdaq composite index fell 13.63, or 1 per cent, to 1,377.84.

With US futures down, Wall Street was poised for more losses. Dow futures were down 89 points, or 1.3 per cent, at 6,963 and S&P500 futures lost 10.7, or 1.5 per cent, to 723.50.

Asian financial stocks were among the hardest hit. Leading Japanese bank Mitsubishi UFJ Financial Group dived over 5 per cent. In Hong Kong, shares of HSBC were suspended ahead of Monday's results and expected announcements.

Oil prices weakened in early trade, with benchmark crude for April delivery down US$1.14 at US$43.62. Last week in the US, the contract fell 46 cents to settle at US$44.76 a barrel on the New York Mercantile Exchange.

In currencies, the dollar was little changed at 97.52 yen, while the euro dropped to US$1.2563 from US$1.2668. — AP

Nik Aziz says ‘bumiputera’ term is racist

MARCH 1 – In extraordinary remarks today, Pas spiritual leader Datuk Nik Aziz Nik Mat said the use of the term “bumiputera” smacks of racism and deprived other races of government aid.

His comments, made in Kota Baru today, will certainly spark debate, especially since it comes from a Malay leader who is widely respected even by his foes in Barisan Nasional and Umno.

In calling the term bumiputera racist, he appears to be drawing a clear line between his Pas party and the Pakatan Rakyat (PR) from that of Umno, which has been championing the special rights of Malays.

Nik Aziz’s remarks was made in response over growing criticism from the conservative spine of Umno against comments made by DAP’s Dr Boo Cheng Hau, the opposition leader in Johor.

Dr Boo was reported to have compared “bumiputeraism” with apartheid.

Umno leaders have demanded an apology from Boo, and say his comments were a challenge to Malay rights and the constitution.

Umno’s Utusan Malaysia also described Boo’s remarks as a part of DAP’s agenda to form a republic.

But Nik Aziz was reported by Bernama as saying today that not only did the term smack of racism but deprived other races sharing similar rights and having the same identity cards of government assistance.

“In an election, other races are allowed to cast one vote, so are the bumiputera," he said.

Nik Abdul Aziz said the government should form a body to manage aid for the poor in the country and not cater only for a single group known as the bumiputera.

“I don’t like the (use of the) word bumiputera. What I like is (use of the word) poor, for all races,” he added.

He said the poor, regardless of their race, should be given assistance.

His statement appears to be also in line with Anwar Ibrahim’s concept of “Ketuanan Rakyat,” or supremacy of the people, which has been used to diffentiate PR parties from Umno’s “Ketuanan Melayu,” or Malay supremacy.