Winston's Investment Ideas 04 (Oct 15 - May 19)

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jun 17, 2018 1:05 pm

TOL @ June 17, 2018

Window D.jpg


Window Dressing?

We are about 2 weeks away from the end of the first half and Window Dressing activities would normally surface at this time.

However, the rout in Emerging Markets, the US-China Trade War and the recent actions by the US Feds and ECB, may have dampened sentiments a bit.

In view of the above, maybe it's time to sell into any rallies and refrain from buying on any more dips, unless you have such a convincing story that can go against Market Direction.

On the horizon, we have the OPEC Meeting but I think that it will probably
be a non-event.


Market Risk Indicators

1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$64.32 from US$65.71 last week from US$67.58 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years. Released 1m;
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO: 2019?; Incentive to push prices up;
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -200k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria +225k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019)
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1282 from US$1303 last week from US$1301 two weeks ago; Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$16.57 from US$16.80 from US$16.52
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$888 from US$908 from US$900
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$3085 from US$3178 from US$3058
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$3.14 from US$3.30 from US$3.08
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2213 from US$2301 from US$2261
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$23.40 from US$23.35 from US$22.65
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 13 lbs pa; Starting 21/54 reactors? Currently, only 5
g. Number of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-2025;
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Some buyers are locking in long term contracts at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. Nuclear: 20% electricity generated in U.S; 100 Plants; 25% drop by 2025
r. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
s. 1b pounds has to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. New technology to mine Uranium from sea water? Cost and How Soon?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco, world's largest, mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 years
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-Off ( Data as of Saturday every week )

1. US Equities - Flat. 2780 from 2776 last week from 2721 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 30309 from 30958 from 30588
a. Support: 29500; 28200; 27000; Resistance: 31600; 38,000; 43,000
b. Sold 2/3 Rusal
c. Traded ZTE
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3022 from 3067 from 3141
a. Support: 2950; 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3357 from 3426 from 3513;
Resistance 3850
a. Sold 1/5 HK Land
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22852 from 22695 from 22451
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1762 from 1778 from 1797
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Weaker. 110.71 from 109.55 last week from 109.43 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio;
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 2.9488 from 2.9696 from 2.9565
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7439 from 0.7603 from 0.7567
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0054 from 1.0152 from 1.0142
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9647 from 3.0324 from 3.0119
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1606 from 1.1779 from 1.1674
viewtopic.php?f=32&t=5523&start=100

7. EUR to MYR - EUR Weaker; 4.6254 from 4.6961 from 4.6471

8. USD to HKD - HKD Weaker. 7.8524 from 7.8469 from 7.8448
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

9. USD to MYR:- MYR Stronger. 3.9855 from 3.9886 from 3.9805
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
c. Macquarie: 4.90 (Dec 31, 2017)
d. UOB: 4.35 (July 2017)
e. When is the right time to diversify from the MYR?
viewtopic.php?f=32&t=397&start=60

10. USD to SGD:- SGD Weaker; 1.3516 from 1.3353 from 1.3403
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

11. USD to CNY:- CNY Weaker; 6.4352 from 6.4019 from 6.3899
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

12. GBP to USD:- GBP Weaker. 1.3275 from 1.3394 from 1.3346
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

13. GBP to MYR:- GBP Weaker. 5.2908 from 5.3406 from 5.3130
a. Which is worst - Brexit or Malaysian Election?

14. Dollar Index - USD Stronger. 94.79 from 93.54 from 94.07
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds (Global)
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Yield on 10 Year US Treasuries - Flat. 2.92% from 2.95% last week from 2.93% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.55% from 2.50% from 2.48%
Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.95 from 35.75 from 35.70

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 86.12 from 85.66 from 85.56

Baltic Dry Index - Higher; 1445 from 1395 from 1109; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

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winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jun 24, 2018 7:30 am

TOL @ June 24, 2018

Selling Opportunity.jpg


Selling Opportunity?

We are now heading into the traditional Window Dressing period. So do not be really surprised, if you suddenly see some strong buying activities for no apparent reason.

When that actually happens, would it be a good selling opportunity or should you ride that momentum?

Intuitively, I think that it does not hurt to be taking some profits in this type of market.

There are lot of headwinds out there including:-
1. Fed's Quantitative Tightening
2. Rising Interest Rates
3. Outflows from Emerging Markets
4. Geopolitical Issues eg. Yemen, Syria, Iran, South China Sea etc.
5. Trade Frictions eg. China, Europe, NAFTA etc.

At the same time, I'm also expecting the markets to surge when the end to the US-China trade friction is announced. And if the market does really surge a lot, that would probably be the time to do some serious selling.

Anyway, I have gone shopping this week and bought Bank of China, ICBC, Rusal, Cosco Shipping in HK, as well as added to Hotel Properties and HK Land in Singapore. Still no convincing trading idea for Malaysia and the US.


Market Risk Indicators

1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Higher. US$69.36 from US$64.32 last week from US$65.71 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO: 2019?; Incentive to push prices up;
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -400k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019)
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1272 from US$1282 last week from US$1303 two weeks ago; Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$16.44 from US$16.57 from US$16.80
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$878 from US$888 from US$908
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2935 from US$3085 from US$3178
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$3.03 from US$3.14 from US$3.30
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2179 from US$2213 from US$2301
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$23.10 from US$23.40 from US$23.35
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 100 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. New technology to mine Uranium from sea water? Cost and Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-Off ( Data as of Saturday every week )

1. US Equities - Lower. 2755 from 2780 last week from 2776 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 29339 from 30958 from 30588
a. Support: 28200; 27000; Resistance: 31600; 38,000; 43,000
b. Added to Rusal
c. Traded Beijing Airport
d. Bought ICBC
e. Bought Bank of China
f. Bought Cosco Shipping
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2890 from 3022 from 3067
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3287 from 3357 from 3426
Resistance 3850
a. Added to HK Land
b. Added to Hotel Properties
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22517 from 22852 from 22695
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1694 from 1762 from 1778
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger. 110.11 from 110.71 last week from 109.55 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio;
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 2.9472 from 2.9488 from 2.9696
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7428 from 0.7439 from 0.7603 from 0.7567
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0092 from 1.0054 from 1.0152
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9751 from 2.9647 from 3.0324
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1650 from 1.1606 from 1.1779
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8459 from 7.8524 from 7.8469
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0034 from 3.9855 from 3.9886
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
c. Macquarie: 4.90 (Dec 31, 2017)
d. UOB: 4.35 (July 2017)
e. When is the right time to diversify from the MYR?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3583 from 1.3516 from 1.3353
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.4976 from 6.4352 from 6.4019
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger. 1.3289 from 1.3275 from 1.3394
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger. 5.3207 from 5.2908 from 5.3406
a. Which is worst - Brexit or Malaysian Election?

13. Dollar Index - USD Weaker. 94.54 from 94.79 from 93.54
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds (Global)
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Yield on 10 Year US Treasuries - Lower. 2.89% from 2.92% last week from 2.95% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.54% from 2.55% from 2.50%
Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Lower; 35.86 from 35.95 from 35.75

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.91 from 86.12 from 85.66

Baltic Dry Index - Higher; 1347 from 1445 from 1395; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jul 01, 2018 9:48 am

TOL @ July 01, 2018

July.jpg


New Money From The New Month

It's a new month again and new money would be flowing into the markets again. Therefore, we should have at least one spike in the markets next week, unless the Fund Managers have already spent their Cash in advance on Friday, for 1H Window Dressing purposes.

As mentioned last week, I'm waiting for a good Selling Opportunity and I think that it may come in the form of an announcement that the US-China Trade Friction is over. Hopefully, they would announce it before July 6, 2018, the first day of sanctions on the Chinese goods.

Having said the above, Trump does have a habit of wanting to be unpredictable, so he may just impose the sanctions on July 6, only to remove it very quickly thereafter.

Trump's U-Turn on his cancellation of his meeting with Kim Jong Un, is so predictable.

And if you have been selling your Equities because you are afraid of a prolonged US-China Trade War, I think that you will need a better excuse than that.

Maybe a better excuse to sell your Equities, would be the removal of Liquidity from the markets over the next two years ie. US$450b in 2018 and about US$600b in 2019 and anoher US$600b in 2020.


Market Risk Indicators 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Higher. US$73.86 from US$69.36 last week from US$64.32 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO: 2019?; Incentive to push prices up;
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -400k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019)
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1254 from US$1272 last week from US$1282 two weeks ago; Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$16.08 from US$16.44 last week from US$16.57 two weeks ago.
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$857 from US$878 from US$888
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2862 from US$2935 from US$3085
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.97 from US$3.03 from US$3.14
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2131 from US$2179 from US$2213
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$22.55 from US$23.10 from US$23.40
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 100 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-Off ( Data as of Saturday every week )

1. US Equities - Lower. 2718 from 2755 last week from 2780 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 28955 from 29339 from 30958
a. Support: 28200; 27000; Resistance: 31600; 38,000; 43,000
b. Added to Rusal
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2847 from 2890 from 3022
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3275 from 3287 from 3357;
a. Resistance 3850
b. Added to Hotel Properties
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22305 from 22517 from 22852
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1692 from 1694 from 1762
a. Bought Ann Joo
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Weaker. 110.72 from 110.11 last week from 110.71 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 2.9472 from 2.9488 from 2.9696
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7390 from 0.7428 from 0.7439
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0072 from 1.0092 from 1.0054
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9843 from 2.9751 from 2.9647
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Flat. 1.1650 from 1.1650 from 1.1606
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8471 from 7.8459 from 7.8524
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0379 from 4.0034 from 3.9855
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3628 from 1.3583 from 1.3516
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.6158 from 6.4976 from 6.4352
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.3160 from 1.3289 from 1.3275
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker. 5.3149 from 5.3207 from 5.2908
a. Which is worst - Brexit or Malaysian Election?

13. Dollar Index - USD Weaker. 94.54 from 94.79 from 93.54
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Yield on 10 Year US Treasuries - Lower. 2.86% from 2.89% last week from 2.92% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Flat; 2.53% from 2.54% from 2.55%
Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Lower; 35.48 from 35.86 from 35.95

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.08 from 85.91 from 86.12

Baltic Dry Index - Lower; 1329 from 1347 from 1445; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jul 08, 2018 12:25 pm

TOL @ July 08, 2018

Contrarian.jpg


Trading Against One's Emotion

It has been said that one should always trade against one's emotion.

This is actually a contrarian strategy and motivates one to "Buy When There's Panic" and "Sell Into Euphoria".

And since everyone around me is afraid of the US-China Trade Friction, it may be time to go a little shopping.

Anyway, the HK & China markets have already dropped a lot. And a lot of people did go shopping on Friday.

As for Singapore, the Property Developers and the Banks, were pummelled due to the new property curbs. So I have picked up some City Development ( down 17%) and added to my position in Wheelock Singapore. (Wheelock Singapore is basically a Cash Company, so why should it drop 6%?).

As for the US, it was also strong on Friday. Maybe the people can calculate that even if there's a 25% tariff on US$500b worth of Chinese goods, amounting to US$125b for each side (total US$250b), it's not likely that the global economy will collapse.

However, if this Trade Friction does drag on for another year and encompasses NAFTA and EU, then we can probably start worrying at that point in time.

Fortunately, you have the mid-term elections coming up and it would not surprised me if the Republicans gets booted out. Anyway, history is not really on their side.


Market Risk Indicators 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Higher. US$73.91 from US$73.86 last week from US$69.36 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -800k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1256 from US$1254 from US$1272;
Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$16.07 from US$16.08 from US$16.44.
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$847 from US$857 from US$878
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2749 from US$2862 from US$2935
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.82 from US$2.97 from US$3.03
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2088 from US$2131 from US$2179
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$22.75 from US$22.55 from US$23.10
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 100 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-Off ( Data as of Saturday every week )

1. US Equities - Higher. 2760 from 2718 last week from 2755 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 28316 from 28955 from 29339
a. Support: 28000; 27000; Resistance: 31600; 38,000; 43,000
b. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2747 from 2847 from 2890
a. Support: 2450; Resistance 3300; 3600
b. Traded A 50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3192 from 3275 from 3287
a. Resistance 3850
b. Bought City Development
c. Added to Wheelock Properties Singapore
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21788 from 22305 from 22517
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1692 from 1694 from 1762
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger; 110.50 from 110.72 last week from 110.11 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 2.9760 from 2.9472 from 2.9488
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7428 from 0.7390 from 0.7428
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0094 from 1.0072 from 1.0092
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0033 from 2.9843 from 2.9751
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Flat. 1.1650 from 1.1650 from 1.1606
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8480 from 7.8471 from 7.8459
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0425 from 4.0379 from 4.0034
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.3583 from 1.3628 from 1.3583
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.6413 from 6.6158 from 6.4976
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger. 1.3249 from 1.3160 from 1.3289
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger. 5.3591 from 5.3149 from 5.3207
a. Which is worst - Brexit or Malaysian Election?

13. Dollar Index - USD Weaker. 94.07 from 94.54 from 94.79
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Yield on 10 Year US Treasuries - Lower. 2.82% from 2.86% last week from 2.89% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Flat; 2.54% from 2.53% from 2.54%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.56 from 35.48 from 35.86

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.33 from 85.08 from 85.91

Baltic Dry Index - Higher; 1622 from 1329 from 1347; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

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User avatar
winston
Billionaire Boss
 
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Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jul 15, 2018 9:08 am

TOL @ July 15, 2018

Earnings.jpg


Strong US 2Q Earnings?

We are touching US earnings season. They are expected to grow about 20%. However, the energy sector is expected to grow about 140%!

In view of the above, all the "experts" are expecting 2Q Earnings to propel the US markets higher. Some of them have also been buying ahead of the 2Q earnings, which started late this week.

As for myself, I'm more concerned about the US-China Trade Friction now. It looks like an extended one and I'm worried about the unintended consequences and the collateral damage.

Example:- I was surprised to find out that the American owned Casinos in Macau could be hit. Or that the US Semiconductors could also suffer if their supply chain is disrupted. There are other sectors that I've not thought of, that are probably on the hit-list.

In view of the above, it may be time to raise some Cash again. It looks like an extended situation and it could last till the Mid-Term elections.

On the horizon, we have the Trump-Putin Meeting on Monday. I was hoping that Rusal 0486 would be taken off the sanction list before that meeting. Anyway, the "speculators" were buying Rusal the last few days and it has jumped from about HK$1.95 to HK$2.25.


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANG, ETFs; Margin Debts; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; Trade War - China, NAFTA, EU; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 6 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Higher. US$73.91 from US$73.86 last week from US$69.36 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -700k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1256 from US$1254 from US$1272;
Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$16.07 from US$16.08 from US$16.44.
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$847 from US$857 from US$878
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2749 from US$2862 from US$2935
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.82 from US$2.97 from US$3.03
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2088 from US$2131 from US$2179
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$22.75 from US$22.55 from US$23.10
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 100 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-On ( Data as of Saturday every week )

1. US Equities - Higher. 2801 from 2760 last week from 2718 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. Traded Broadcom (AVGO)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28525 from 28316 from 28955
a. Support: 28000; 27000; Resistance: 31600; 38,000; 43,000
b. Traded Rusal 0486
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2831 from 2747 from 2847
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3260 from 3192 from 3275
a. Resistance 3850
b. Bought UOL
c. Traded HK Land
d. Traded Wheelock Singapore
e. Sold City Development
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22597 from 21788 from 22305
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1722 from 1692 from 1694
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Weaker; 112.50 from 110.50 last week from 110.72 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 2.9601 from 2,9760 from 2.9472
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7388 from 0.7428 from 0.7390
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.010 from 1.0094 from 1.0072
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9898 from 3.0033 from 2.9843
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Flat. 1.1641 from 1.1650 from 1.1650
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8487 from 7.8480 from 7.8471
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0475 from 4.0425 from 4.0379
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3671 from 1.3583 from 1.3628
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.6983 from 6.6413 from 6.6158
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.3151 from 1.3249 from 1.3160
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger. 5.3218 from 5.3591 from 5.3149

13. Dollar Index - USD Weaker. 95.05 from 94.07 from 94.54
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Yield on 10 Year US Treasuries - Lower. 2.82% from 2.86% last week from 2.89% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Flat; 2.54% from 2.53% from 2.54%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.56 from 35.48 from 35.86

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.33 from 85.08 from 85.91

Baltic Dry Index - Lower; 1622 from 1329 from 1347; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jul 22, 2018 3:21 pm

TOL @ July 22, 2018

Contagion.png


Commodities Contagion?

CNBC reported that the current rout in Commodity prices, is affecting the Equity Markets as well as the Currency of Commodity Countries.

The cause of rout is probably due to the high USD, as well as the lower demand for Commodities, as a result of the current US-China Trade Friction.

So will this lead to a Contagion and create the Perfect Storm for the Emerging Markets, especially when their debt has mushroomed over the past few years and are mostly denominated in USD?

Intuitively, I think that the situation can be managed as they can easily call off this spat tomorrow. Now, whether the big egos on both sides will really call off the spat is another question.

In the US, you have a bunch of ignorant guys, who thinks that the Trade War can easily be won, without thinking of the unintended consequences and collateral damage eg. disruption to the global supply chain, slowing US Retail Consumption, Economic Warfare (crash of US bond market) etc.

On the Chinese side, you have a bunch of complacent guys, who thinks that Trump will only stop at his US$500b sanction or may even stop the spat before the upcoming Mid-Term elections.

Anyway, the above reminds me of the old saying that "the operation is successful but the patient died".

In view of the current situation, I will continue to reduce my exposure to Equities (currently at 25% of my liquid assets). However, I will probably still buy on any sharp correction with the intention of selling it quickly into the technical rebound.

For this week, Wheelock has made a Privatisation offer. I have been sitting on those Wheelock shares for 4 months so it was a pleasant surprise. I only had my normal position size in it and regret that I did not backed up the truck on this position when it dropped 6% when the new property curbs were announced.


Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$68.13 from US$73.91 last week from US$73.86 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -700k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1232 from US$1256 from US$1254
Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.56 from US$16.07 from US$16.08
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$829 from US$847 from US$857
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2585 from US$2749 from US$2862
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.75 from US$2.82 from US$2.97
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2046 from US$2088 from US$2131
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Higher; US$23.35 from US$22.75 from US$22.55
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-Off ( Data as of Saturday every week )

1. US Equities - Flat. 2802 from 2801 last week from 2760 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. Traded Netflix (NFLX)
c. Traded Skechers (SKX)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 28224 from 28525 from 28316
a. Support: 28000; 27000; Resistance: 31600; 38,000; 43,000
b. Traded Rusal 0486
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2829 from 2831 from 2747
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3298 from 3260 from 3192
a. Resistance 3850
b. Bought Creative Technology
c, Sold UOL
d. Sold Wheelock Singapore
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22698 from 22597 from 21788
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1755 from 1722 from 1692
a. Sold Ann Joo
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger; 111.75 from 112.50 last week from 110.50 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 2.9785 from 2.9601 from 2,9760
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7410 from 0.7388 from 0.7428
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0108 from 1.0100 from 1.0094
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0107 from 2.9898 from 3.0033
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1705 from 1.1641 from 1.1650
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8491 from 7.8487 from 7.8480
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0640 from 4.0475 from 4.0425
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.3641 from 1.3671 from 1.3583
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.7686 from 6.6983 from 6.6413
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.3101 from 1.3151 from 1.3249
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger. 5.3236 from 5.3218 from 5.3591

13. Dollar Index - USD Weaker. 94.59 from 95.05 from 94.07
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Yield on 10 Year US Treasuries - Higher. 2.89% from 2.82% last week from 2.86% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.59% from 2.54% from 2.53%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.71 from 35.56 from 35.48

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.62 from 85.33 from 85.08

Baltic Dry Index - Higher; 1657 from 1622 from 1329; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
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User avatar
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Jul 29, 2018 8:09 am

TOL @ July 29, 2018

august.jpg


New Money From The New Month

It's going to be a new month, so new money would be flowing into the markets again. Therefore, there should be at least one spike upwards sometime next week.

Thereafter, US Earnings should be able to continue to provide the catalyst, for the markets to be strong over the next week or two.

However, we do need to keep an eye on the Iran Sanctions around Aug 6. It's hard to predict what Iran would do when they are pushed into a corner. Will they be closing the Straits of Hormuz?.

My strategy continues to be:-
1. To sell into strength and
2. To buy on sharp dips whenever there's a very Convincing Story.

BTW, everyone around me is quite afraid of a market crash and are sitting on a lot of Cash. Therefore, it's likely that they wont be a crash anytime soon.

Even if there's a crash (most likely being caused by a Clown's tweet), it would probably be "V" shaped, as the money on the sidelines are waiting to pounce on any good buying opportunity.


Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Mixed (Data from Commodities Live)

1. WTI Oil - Higher. US$69.02 from US$68.13 last week from US$73.91 two weeks ago; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -700k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1222 from US$1232 from US$1256
Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.52 from US$15.56 from US$16.07
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$832 from US$829 from US$847
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Higher; US$2589 from US$2585 from US$2749
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Higher; US$2.80 from US$2.75 from US$2.82
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Higher; US$2061 from US$2046 from US$2088
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Higher; US$23.80 from US$23.35 from US$22.75
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 5
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 55 new reactors being built; 149 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed mine for 10 mths; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Risk-On ( Data as of Saturday every week )

1. US Equities - Higher. 2819 from 2802 last week from 2801 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. Traded Netflix (NFLX)
c. Traded Skechers (SKX)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28804 from 28224 from 28525
a. Support: 28000; 27000; Resistance: 29200; 31600; 38,000; 43,000
b. Bought Tencent (0700)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2874 from 2829 from 2831
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3325 from 3298 from 3260
a. Resistance 3850
b. Sold Creative Technology
c, Sold some HPL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22713 from 22698 from 22597
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1769 from 1755 from 1722
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger; 111.04 from 111.75 last week from 112.50 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Flat; 2.9787 from 2.9785 from 2.9601
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7399 from 0.7410 from 0.7388
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0088 from 1.0108 from 1.0100
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0049 from 3.0107 from 2.9898
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1667 from 1.1705 from 1.1641
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8483 from 7.8491 from 7.8487
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.0616 from 4.0640 from 4.0475
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.3619 from 1.3641 from 1.3671
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8110 from 6.7686 from 6.6983
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Flat. 1.3100 from 1.3101 from 1.3151
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker. 5.3197 from 5.3236 from 5.3218

13. Dollar Index - USD Stronger. 94.67 from 94.59 from 95.05
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Yield on 10 Year US Treasuries - Higher. 2.95% from 2.89% last year from 2.82% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.67% from 2.59% from 2.54%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.84 from 35.71 from 35.56

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.91 from 85.62 from 85.33

Baltic Dry Index - Higher; 1708 from 1657 from 1622; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

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User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Aug 05, 2018 8:05 am

TOL @ August 5, 2018

Tech companies.jpg


Tech Companies That I Bought Recently

Over the past few weeks, a few tech counters have dropped significantly and I have taken the chance to increase my exposure to the tech area.

I'm planning to make them my core holdings unless they spiked up significantly.

The following are some of the tech counters that I have bought recently:-

1. Facebook:
Pros: Fwd PE 18; Revenue Growth 20%; Margins 35%; US$36b Cash; 1.4b Users;
Future: Whatsapp Business; Instagram (500m), Marketplace (700m), Watch Videos and Dating;
Cons: Increased Regulation & Expenses; Inexperienced; Lawsuits;

2. Tencent
Pros: PE 35; Revenue 35% Growth; 1b Users; 1m Miniprograms (Wechat);
Future: Fortnite; Invested in 600 companies; IPOs (Music etc); CDR
Cons: Gaming Revenue Declining; TenPay Revenue Declining; RMB Weak (HK Reporting)

3. Baidu
Pros: PE 25; Revenue 25%; Margins 25%; Cash US$20b; 148m Daily Users; Future: Mini-programs; AI; Autonomous Driving Vehicles; Smart Infrastructure; CDR
Cons: Competition: Qihoo360; Google Censored Search (2019); Increased Expenses (Online to Offline); RMB Weak (US Reporting)

4. Sina
Pros: PE 40; Revenue 60%; Buybacks US$500m; Cash US$2b; Owns 46% Weibo; RNAV Discount: 50%;
Future: Buybacks; Distribution of Weibo shares; Privatisation by Alibaba?; CDR;
Cons: Higher Expenses; Sporting Rights; Weak RMB (US Reporting)

5. Xiomi (1810)
Pros: IPO HK$17; Cheqp Quality Products; Online to Offline; World's 4th largest (9% Market Share); HSI Index; Cornerstones: 6 mths locked up (Jan 9, 2019); Weak RMB (Exports)
Futures: High Growth Emerging Markets; Ecosystem; CDR
Cons: PE 60 ( versus Apple's PE 17); Low Margins 5%; Weak RMB (HKD Reporting)

I have also been watching AAPL, AMZN, MSFT, NVDA, NFLX, BABA, GOOG and JD. However, I'm a bit uncomfortable with their Valuation and Price Run and have decided not to chase them for the time being.

I'm still not expecting a Market Crash. And if one does occur because of a clown's stupid tweet, it would probably be "V" shaped, as there's still a lot of Cash on the sidelines.

On the horizon, the Iran issue is a bit of a concern. The deadline is tomorrow and thereafter, sanctions will be kicking in on November 4th. So how would Iran be retaliating? Will they be closing the Straits of Hormuz? And how would the US and Saudi be reacting after that? And would China and Russia be also dragged into this issue? China has already said that they will continue to buy oil from Iran but they will not be increasing their purchase.

As for the current Trade Frictions, I still believe that Trump will be looking for a face-saving way out of it, by September. The mid-term elections are coming up and he knows that he will be losing valuable votes if he continues to destabilise the global economy.


Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Mixed (Data from Commodities Live)

1. WTI Oil - Lower. US$68.59 from US$69.02 last week from US$68.13; Support: US$58; Resistance: US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -700k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
viewtopic.php?f=33&t=7550&start=210

2. Gold - Flat. US$1222 from US$1222 from US$1232
Support: 1260; $1050; Resistance: 1390; 1700; 920.
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
o. Resistance: 1350
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.43 from US$15.52 from US$15.56
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Flat; US$833 from US$832 from US$829
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Higher; US$2607 from US$2589 from US$2585
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.75 from US$2.80 from US$2.75
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2028 from US$2061 from US$2046
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Higher; US$25.70 from US$23.80 from US$23.35
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed MacArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Mixed ( Data as of Saturday every week )

1. US Equities - Higher. 2840 from 2819 last week from 2802 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. Bought Baidu
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 27676 from 28804 from 28224
a. Support: 28000; 27000; Resistance: 29200; 31600; 38,000; 43,000
b. Added to Rusal (0486)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2740 from 2874 from 2829
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3266 from 3325 from 3298
a. Resistance 3850
b. No Trade
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 22525 from 22713 from 22698
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1780 from 1769 from 1755
a. No Trade
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Weaker; 111.18 from 111.04 last week from 111.75 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 2.9834 from 2.9787 from 2.9785
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Flat; 0.7400 from 0.7399 from 0.7410
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0109 from 1.0088 from 1.0108
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0106 from 3.0049 from 3.0107
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1572 from 1.1667 from 1.1705
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8485 from 7.8483 from 7.8491
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.077 from 4.0616 from 4.0640
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3662 from 1.3619 from 1.3641
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8307 from 6.8110 from 6.7686
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.3002 from 1.3100 from 1.3101
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker. 5.3004 from 5.3197 from 5.3236

13. Dollar Index - USD Stronger. 95.16 from 94.67 from 94.59
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Yield on 10 Year US Treasuries - Flat. 2.95% from 2.95% last week from 2.89% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.64% from 2.67% from 2.59%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.87 from 35.84 from 35.71

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.95 from 85.91 from 85.62

Baltic Dry Index - Higher; 1756 from 1708 from 1657; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


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viewtopic.php?f=26&t=3168

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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Aug 12, 2018 3:51 pm

TOL @ August 12, 2018

Rusal.jpg


Time To Buy Rusal Again?

Rusal has corrected from a recent high of around HK2.65 two weeks ago, to about HK$2.14 now. That's about a 20% decline in 2 weeks!

When Rusal was at HK$2.65, one of my friends refused to sell. He was waiting for HK$2.95. Now at HK$2.12, he's afraid to buy.

Such is human nature. When it's euphoric, people will chase. When it's being sold down, nobody dares to buy.

In instances like this, it's important to have a feel of the Value of the counter.

Before the sanctions, Rusal was trading around HK$4.80, with a Target Prices of HK$6.50. So if sanctions is taken off tomorrow, shouldn't it grind back to around HK$4.80 over time?

At today's price of HK$2.14, that's an increase of 125% over time.

If sanctions is really lifted, Rusal would probably gap up by 30% to 50%, using ZTE as a guide. That's probably the time to take the windfall profit.

Thereafter, when profit-taking kicks in, it would probably be time to buy back, with a longer term target of around HK$3.50 to HK$4.00.

In April, when Rusal was put on the sanction's list, Aluminium prices spiked up 30%, as Rusal supplies 7% of the world's Aluminium.

Now, with the current strike at the Alcoa Refinery (8% global alumina) in Western Australia, shouldn't Aluminium prices be spiking more, if Rusal does not receive an extension at the end of August? (They need at least 2.5 months to deliver the finished aluminium product).

Can the US really afford not to extend the deadline of Rusal at the end of August? (That would also tie in with deadline of Oct 23rd for the restructuring of EN+).

And if the deadline is not extended, wouldn't Ford, GM, Boeing, the EU etc., be knocking on the doors of the White House? Does the White House really wants another controversy just before their mid-term elections ( as if they dont have enough already)? However, the Democrats are watching the White House closely on what the White House would be doing with respect to Rusal.

These sanctions on Rusal was not well thought off and was done in a haphazard way. The White House has to now look for a face-saving way out of it. Asking Deripaksa to cede control is their face-saving way to do it as if after Deripaksa has ceded control, Rusal is no longer under his influence.

And if there's a stock-market crash over the next two weeks (low probability), having to sit on Rusal for two weeks would not be so nice an experience.

For more info on Rusal, you can read my notes here:-
viewtopic.php?f=40&t=5354&start=80

Looking at the Risk vs Reward for Rusal, I'm still willing to take a calculated bet on it.

On another subject, Tencent will be reporting on August 15. All the "experts" are warning of lower Gaming Revenue of around 8%. So if Tencent can beat those expectations, it may gap up.

However, it's a risk that I'm not willing to take in view of the current sentiment. And I did take the opportunity to sell my Tencent, when it rose about 8% over the last few days.

Finally, even though sentiment is weak, I'm still not expecting a Market Crash. And if one does really occur, it would probably be "V" shaped as there's still a lot of Cash on the sidelines.


Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Mixed (Data from Commodities Live)

1. WTI Oil - Lower. US$67.78 from US$68.59 last week from US$69.02 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells;
f. US: Active rigs currently at 1050 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi +500k
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -700k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -250k to -700k; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. How will sanctions on Iran affect Oil prices? -500,000 bpd?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1219 from US$1222 from US$1222
Support: $1150; $1050; Resistance: $1400
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.31 from US$15.43 from US$15.52
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$829 from US$833 from US$832
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2540 from US$2607 from US$2589
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Flat; US$2.75 from US$2.75 from US$2.80
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Higher; US$2093 from US$2028 from US$2061
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Higher; US$26.00 from US$25.70 from US$23.80
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. If there's a crash, Commodities would not be spared
9. The High USD is not good for Commodities


Equities - Mixed ( Data as of Saturday every week )

1. US Equities - Higher. 2833 from 2840 last week from 2819 two weeks ago
a. Support 2740; 2560; Resistance: 2785; 2825; Fwd PE 16
b. Sold Facebook (FB)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28356 from 27676 from 28804
a. Support: 28000; 27000; Resistance: 29200; 31600; 38,000; 43,000
b. Sold Tencent
c. Traded CNOOC
d. Traded Rusal (0486)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2795 from 2740 from 2874
a. Support: 2600; 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3285 from 3266 from 3325
a. Resistance 3850
b. No Trade
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 22298 from 22525 from 22713
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1806 from 1780 from 1769
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger; 110.86 from 111.18 last week from 111.04 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 2.9788 from 2.9834 from 2.9787
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7303 from 0.7400 from 0.7399
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0016 from 1.0109 from 1.0088
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9837 from 3.0106 from 3.0049
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1448 from 1.1572 from 1.1667
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8494 from 7.8485 from 7.8483
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0844 from 4.077 from 4.0616
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3715 from 1.3662 from 1.3619
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8505 from 6.8307 from 6.8110
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2767 from 1.3002 from 1.3100
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker. 5.2160 from 5.3004 from 5.3197

13. Dollar Index - USD Stronger. 95.16 from 94.67 from 94.59
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Yield on 10 Year US Treasuries - Lower; 2,87% from 2.95% last week from 2.95% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.60% from 2.64% from 2.67%

Interest Rates:-
a. Expecting interest rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Lower; 35.81 from 35.87 from 35.84

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.89 from 85.95 from 85.91

Baltic Dry Index - Higher; 1691 from 1756 from 1708; Low 290; High 2330 (2013)


The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Aug 19, 2018 8:20 pm

TOL @ August 19, 2018

Sunny.jpg


Time To Buy Sunny Optical (2382,HK)?

Sunny Optical plunged >25% this week on poor results. At it's high in mid-June 2018, it's share price was about HK$175.

Now, it's at HK$89. That represents a correction of about 50% in just 2 months!

Are things really that bad at Sunny Optical? They do have a huge market share in the smartphones segment and do supply to Apple, Huawei, Oppo, Vivo and Xiomi.

In addition, the newer smart phones now have triple cameras, miniature modules as well as 3D Sensing, adding to higher revenue and margins to Sunny.

They are also growing their Vehicle Lens Set by 25% pa.

Sunny's Revenue and EPS, are expected to grow 20% pa. The margins are at 10%. The PE is now at 28. Mr. Wang, owns about 48% of the shares.

In the latest results, there was also a one-time charge of RMB 200m for forex losses due to the USD600m bond.

This is a mid to long term play on everyone in the world aspiring to own a smart-phone, as well as upgrading their existing smart-phones every few years.

I did buy Sunny Optical this week and you can read my notes at:-
viewtopic.php?f=41&t=7777&hilit=sunny&start=100

On the horizon, we have the following:-

1. The visit to the US by the Chinese delegation to discuss the Trade War. This Trade War episode has now becomed very bitter and I'm not expecting much from the coming meeting. Instead, I now feel that China would like to drag this issue till after the Mid-Term elections, to ensure that the Republicans lose some of their seats.

2. By end of August, Mnuchin would need to make a decision on Rusal. I'm expecting him to extend the deadline for Rusal by another few months. If Mnuchin does remove Rusal from the sanctions list, it would be a bonus.

Finally, eventhough sentiment is weak, I'm still not expecting a Market Crash. And if one does really occur, it would probably be "V" shaped as there's still a lot of Cash on the sidelines.


Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 7 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$65.89 from US$67.78 ;ast week from US$68.59 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Rebalancing in 3Q 2018?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US: Capex: US$1t; > 4000 "Drilled but Uncompleted" (DUC) Wells?
f. US: Active rigs currently at 1057 vs 316 in May 2016
g. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
h. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
i. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
j. Saudi Aramco's IPO 2019?; Incentive to push prices up; Saudi -200k bpd
k. China: SPR reached 51/90 days; 2018 Imports to decrease?
l. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +1m bpd (2019); Russia +200k
m. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +1m bpd 2018
n. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
o. Trade Wars will reduce demand for Oil?
p. Iran: -1m bpd on sanctions?
q. IEA expects oil prices to dip in 2H as Shale Supply increases
r. OPEC cut 1.8m bpd; Increasing 1m bpd in 2H 2018? +0.5m in 2019?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1191 from US$1219 from US$1222
Support: $1150; $1050; Resistance: $1400
a. Global 33,000 tons; US 8000t; China 5000t; IMF 3000t; Germany 3000t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 1Q 2018: -7%; US & European ETFs buyers; China weak
k. Central Banks: +20% yoy; Strong Russian buying
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 160m oz; 400m oz ground; Output decreased 6% yoy
n. US: Reserve 260m oz
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$14.78 from US$15.31 from US$15.43
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$789 from US$829 from US$833
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)

5. Zinc - Lower; US$2380 from US$2540 from US$2607
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper)
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.66 from US$2.75 from US$2.75
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$2034 from US$2093 from US$2028
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$26.00 from US$26.00 from US$25.70
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 25% long-term contracts expiring in 2017-18; 75% between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Long term contracts being locked at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. Cobalt; 29.26 ($64500/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Cobalt in Tesla heading to 0;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)

9. If there's a crash, Commodities would not be spared
10. The High USD is not good for Commodities


Equities - Mixed ( Data as of Saturday every week )

1. US Equities - Higher. 2850 from 2833 last week from 2840 two weeks ago
a. Support 2740; 2560; Resistance: 2880; Fwd PE 16
b. Sold Walmart (WMT)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 27213 from 28356 from 27676
a. Support: 26900; 25400; Resistance: 29200; 31600; 38,000; 43,000
b. Traded Tencent (0700)
c. Bought CNOOC (0883)
d. Traded Rusal (0486)
e. Bought CMOC (3993)
f. Bought Sunny Optical (2382)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2669 from 2795 from 2740
a. Support: 2600; 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3211 from 3285 from 3266
a. Resistance 3850
b. No Trade
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 22270 from 22298 from 22525
a. Forward PE 13
b. Resistance 24,000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1783 from 1806 from 1780
a. No Trade
viewtopic.php?f=10&t=6292&start=30



Currencies- Risk-Off (Data from XE.com)

1. USD to JPY - JPY Stronger; 110.47 from 110.86 last week from 111.18 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 2.9899 from 2.9788 from 2.9834
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7282 from 0.7303 from 0.7400
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9997 from 1.0016 from 1.0109
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9891 from 2.9837 from 3.0106
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1410 from 1.1448 from 1.1572
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8497 from 7.8494 from 7.8485
a. 52 week range is 7.7452 - 7.8530
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1046 from 4.0844 from 4.077
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998);
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.3728 from 1.3715 from 1.3662
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8777 from 6.8505 from 6.8307
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2731 from 1.2767 from 1.3002
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.2249 from 5.2160 from 5.3004

13. Dollar Index - USD Stronger. 96.29 from 95.16 from 94.67
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Yield on 10 Year US Treasuries - Lower; 2.86% from 2.87% last week from 2.95% two weeks ago
a. Low 1.32%; High 3.12%
b. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.61% from 2.60% from 2.64%

Interest Rates:-
a. Expecting US Interest Rates to remain low and will only rise slowly over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. Two more US rate hikes in 2018? Two in 2019?
viewtopic.php?f=16&t=7319&start=70

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.86 from 35.81 from 35.87

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.94 from 85.89 from 85.95

Baltic Dry Index - Higher; 1720 from 1691 from 1756; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


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viewtopic.php?f=26&t=3168

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