Winston's Investment Ideas 05 (May 19 - Dec 24)

Winston's Investment Ideas 05 (May 19 - Dec 24)

Postby winston » Sun May 12, 2019 9:04 am

TOL @ May 12, 2019

Trade War.jpg


Irrational Fear Of The Trade War?

The markets plunged on Monday after Trump twitted that he will be increasing the tariffs on US$200b of Chinese goods, from 10% to 25%.

In addition, he would supposedly be imposing the 25% tariffs on another US$350b of Chinese goods.

So were you one of those who panicked and sold this week, thinking that there's a hard deadline of Friday Noon (China Time)?

And when you sold this week, were you aware that the 25% tariffs only applies to goods that will leave China on Friday Noon (China Time) and not on goods entering the US on Friday Noon (China Time)?

That's a big difference in timing, as it takes about 2-4 weeks to ship something from China to the US. And in the world of short-term trading, two weeks is really eternity.

Anyway, most people were not aware of this issue and it shows how a little knowledge is very dangerous (ignorance).

And even if the 25% tariff is really imposed in a few weeks time (a very big if), will it be really the end of the world?

Intuitively, I dont think that it will be the end of the world yet and there would be plenty of things that China can do to mitigate the issue including:-
1. Weakening their RMB; Probably 2.5% initially with another 2.5% next year
2. Reducing taxes; Probably 10% initially
3. Increasing Liquidity: RRR cuts; Soft Loans etc
4. Subsidies
5. Removing Housing Curbs
6. Infrastructure projects
7. Lowering taxes on imported luxury goods so that the Chinese shoppers will spend their money inside China
etc.

In addition, China's "counter-measures" may include:-
1. Additional Bureaucracy eg. fire checks, custom checks, tax audits etc
2. Trying to crash the US bond markets by selling some US Treasuries very quickly
3. Discouraging Chinese Tourists to the US
4. Discouraging Chinese Students to the US
5. Discouraging Chinese Businesses from investing in the US
6. Discouraging Chinese from consuming US Goods and Services in China
7. Cybersecurity issues
8. Limiting the export of essential parts
etc.

It's also debatable who would be really paying for the 25% tariffs and how long it will last. Intuitively, I think that it would be shared between the US & China and may last a few months, with trading volumes between the two nations probably decreasing by half.

In addition, the tariffs could also lead to some inflation and may even contribute to a rise in interest rates in two years time.

In view of the above, my strategy over the next two weeks would be:-
1. Buy only when there's a convincing story
2. Take quick windfall profits
3. Beware of irrational fear. (This is a slow motion train-wreck not a sudden end of the world with a hard deadline)
4. Monitor exposure to Equities and Position Size.
5. Beware of Currency Risk
6. Monitor Cash Levels for quick deployment
7. Be aware that the tariffs on US$550b of goods could actually kick in but will probably last for a short time only.
8. In two weeks time, if I have a sizable Equities position, I may have to hedge it by buying some Put Warrants or Inverse ETFs

Finally, irrespective of whether they sign a deal in a few weeks or not, the damage has been done. Corporations are no longer investing for the future and Individuals will also be tightening their belts. And this could go on until after the US Presidential Election. The world economy will definitely slow down. And it's very likely that the Central Banksters will have to embark on their "helicopter-money" programs again.

As for next week, I'm watching the following:-
1. Mueller's testimony in Congress
2. Iran
3. Venezeula


Weekly Risk Management Progress Report:-
1. To Monitor Exposure To Equities: Neutral (24% from 13% last week, of Liquid Assets);
Goal: Zero Equities before the next recession (2020-2021?); Maximum 40%;
2. To Diversify From Asian Equities: Worse (76% from 58% last week)
Goal: To reduce percentage of Asian Equities to around 50%
3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession
4. To Increase "USD/HKD/Gold" - Progress ( 31% from 28%)
Goal: To be in the safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters to 10: Worse (20 from 15 last week).
Goal: To focus on only about 10 counters that have convincing stories


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 7 (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: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 52 out of 70 (74%); (Safe: 50%; Danger: 80%)


Commodities: Risk Off (Data from Commodities Live on May 10 @ 7.30 pm)

1. WTI Oil - Higher. US$61.95 from US$61.76 last week from US$63.99 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut in supply)
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd; Russia -500k;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -2.3m bpd ?
m. US Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline
p. EV: -350k bpd?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1287 from US$1272 from US$1286
Support: $1240; $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of only US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.78 from US$14.66 from US$15.02
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
d. Supply: 0.9b ounces
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$861 from US$855 from US$895; Vested in PPLT;
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. 70% of supply is from South Africa

6. Palladium - Lower; US$1299 from US$1350 from US$1426;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2626 from US$2756 from US$2780
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.77 from US$2.79 from US$2.88
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

9. Uranium - Flat; US$24.95 from US$25.25 from US$25.40
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Flat; 15.76 ($34,750/t) from $15.76 ($34,750/t) from $15.76 ($34,750/t); Low $10; High US$43
InvestIdeas • View topic - Uranium (Nuclear Energy)


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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Lower. 2881 from 2946 last week from 2940 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. Traded Electronic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 28597 from 30082 from 29605
a. Support: 24500, 23500; Resistance: 31200; 31600;
b. Bought HKEX
c. Bought WH Group
d. Bought Galaxy
e. Bought SJM
f. Bought CICC
g. Bought Petrochina
h. Bought Fosun
i. Added to Xiomi
j. Traded China Merchant Bank
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2939 from 3078 from 3086
a. Support: 2450; Resistance 3300; 3600
b. Bought A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3268 from 3392 from 3357
a. Resistance 3850
b. Bought Capitaland
c. Bought DBS
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21345 from 22259 from 22201
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1610 from 1627 from 1638
a. Added to Genting Berhad
b. Added to Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on May 10 @ 7.45pm)

1. USD to JPY - JPY Stronger; 109.77 from 111.49 last week from 111.59 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0523 from 3.0379 from 3.0344
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Flat; 0.6994 from 0.6997 from 0.7039
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9534 from 0.9543 from 0.9588
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. 2.9098 from 2.8993 from 2.9093
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1233 from 1.1157 from 1.1161
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8481 from 7.8447 from 7.8443
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1603 from 4.1435 from 4.1332
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3630 from 1.3639 from 1.3621
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8254 from 6.7347 from 6.7288
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; 1.3013 from 1.3001 from 1.2916
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.4145 from 5.3870 from 5.3384

13. Dollar Index - USD Weaker; 97.35 from 97.97 from 98.01
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


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
i. US Household Net Worth (US$90t)
j. EM Consumption
k. 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
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d.

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.44% from 2.56% last week from 2.50% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.25% from 2.35% from 2.28%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$9t or about 23% of the world’s bonds have negative yields
c. US Rate Hike: None in 2019?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
g. NZ and Malaysia reduced interest rates
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - 107.50

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.99 from 86.35 from 86.75

Baltic Dry Index - Lower; 974 from 1032 from 869; 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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winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun May 19, 2019 2:56 pm

TOL @ May 19, 2019

Melt.jpg


Melt Up or Melt Down?

It has been an uneventful week. Maybe no news is good news as you dont want another stupid tweet to crash the markets again.

The "optimists" have been talking of the markets melting up when they eventually sign a deal to end the trade war. And if they dont get a deal signed, the US Feds will have no choice but to reduce interest rates. Either way, the "optimists" win.

As for the "pessimists", they are saying that this Trade War dispute will continue for another 2 years, till the Presidential Election. According to them, the world economy has already slowed and any rebound is a chance to sell.

As for myself, I think that the right path could be somewhere in the middle. There's no to need to be too fearful but at the same time, one should not be too greedy either, until they have really sorted and signed on the Trade-War.

As for next week, in addition to the Trade War, I'm still watching the following:-
1. Mueller's testimony in Congress
2. Iran
3. Venezeula

Weekly Risk Management Progress Report:-
1. To Monitor Exposure To Equities: Neutral (24% from 24% last week, of Liquid Assets);
Goal: Zero Equities before the next recession (2020-2021?); Maximum 40%;
2. To Diversify From Asian Equities: Progress (73% from 76% last week)
Goal: To reduce percentage of Asian Equities to around 50%
3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession
4. To Increase "USD/HKD/Gold" - Progress ( 31% from 28%)
Goal: To be in the safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters to 10: No Progress (24 from 24 last week).
Goal: To focus on only about 10 counters that have convincing stories


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 7 (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: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 52 out of 70 (74%); (Safe: 50%; Danger: 80%)


Commodities: Risk Off (Data from Commodities Live on May 17 @ 5.30 pm)

1. WTI Oil - Higher. US$63.19 from US$61.95 last week from US$61.76 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut in supply)
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd; Russia -500k;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply?
l. Iran: -2.3m bpd ?
m. US Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline
p. EV: -350k bpd?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Flat. US$1287 from US$1287 from US$1272
Support: $1240; $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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: China +5%; India -8%;
k. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of only US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$14.48 from US$14.78 from US$14.66
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$825 from US$861 from US$855; Vested in PPLT;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1319 from US$1299 from US$1350;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2614 from US$2626 from US$2756
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.73 from US$2.77 from US$2.79
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

9. Uranium - Flat; US$24.65 from US$24.95 from US$25.25
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Flat; $15.76 ($34,750/t) from $15.76 ($34,750/t) from $15.76 ($34,750/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Lower. 2860 from 2881 last week from 2946 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. Sold Electronic Arts (EA)
c. Added to Weibo (WB)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 27946 from 28597 from 30082
a. Support: 24500, 23500; Resistance: 31200; 31600;
b. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2882 from 2939 from 3078
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3205 from 3268 from 3392
a. Resistance 3850
b. No Trade
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21250 from 21345 from 22259
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1605 from 1610 from 1627
a. Sold 1/4 Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on May 17 @ 5.45pm)

1. USD to JPY - JPY Stronger; 109.65 from 109.77 last week from 111.49 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0359 from 3.0523 from 3.0379
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.6875 from 0.6994 from 0.6997
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9460 from 0.9534 from 0.9543
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. 2.8718 from 2.9098 from 2.8993
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1161 from 1.1233 from 1.1157
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8491 from 7.8481 from 7.8447
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1775 from 4.1603 from 4.1435
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3759 from 1.3630 from 1.3639
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9155 from 6.8254 from 6.7347
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; 1.2761 from 1.3013 from 1.3001
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3299 from 5.4145 from 5.3870

13. Dollar Index - USD Stronger; 97.92 from 97.35 from 97.97
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


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
i. US Household Net Worth (US$90t)
j. EM Consumption
k. 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
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d.

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.39% from 2.44% last week from 2.56% two weeks ago
a. Resistance 3.3%
b. Support: 2.4%

Yield on 2 Year Treasuries - Lower; 2.18% from 2.25% from 2.35%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$9t or about 23% of the world’s bonds have negative yields
c. US Rate Hike: One 25 bps cut by end 2019?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
g. German 10-year yield hit the lowest level since 2016--negative 10 basis points.
h. Japanese 10-year yield traded down to negative 5 basis points today.
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower: 107.43 from 107.50

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.97 from 85.99 from 86.35

Baltic Dry Index - Higher; 1032 from 974 from 1032; 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


Please Note:-

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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
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun May 26, 2019 9:18 am

TOL @ May 26, 2019

Long March.jpg



The Long March?

The markets have been weak over the past few weeks.

Many people are starting to accept that this Trade-War episode can go on for a while more.

The next stop will be the G20 meeting in Tokyo on June 28th. However, that's still a month away and that's almost eternity in a tweeter world.

And if they are not able to improve things at the G20, the big deadline will be the US Presidential election on Nov 3, 2020, which is about 18 months away.

Intuitively, I think that this Trade War dispute could be settled by the end of 2019.

In view of the above, I'm reminding myself to stagger my buying, as well as be not too aggressive in my purchases.

Cash is still king and "cheap" can become "much cheaper".

I'm still not expecting a crash yet so any major dip could still be a buying opportunity.

At the same time, I'm also starting to watch the Inverse ETFs and Put Warrants, in case I need to hedge my portfolio.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Neutral
Goal: Zero Equities before the next recession (2020-2021?); Maximum 35%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: No Progress
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk
Goal: To diversify across various sectors and industries


Market Risk Indicators

1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

5. Inverted Yield: 7 (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: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk Off (Data from Commodities Live on May 25 @ 9.00 am)

1. WTI Oil - Lower. US$59.00 from US$63.19 last week from US$61.95 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 800k bpd; Max Production: 2.2m bpd
l. Iran: 2.6m bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Permian Break-Even: US$35 to US$50 per barrel
s. Opec: June Meeting; +500k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1284 from US$1287 from US$1287
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.55 from US$14.48 from US$14.78
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$806 from US$825 from US$861;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1328 from US$1319 from US$1299;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2556 from US$2614 from US$2626
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.70 from US$2.73 from US$2.77
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

9. Uranium - Flat; US$24.30 from US$24.65 from US$24.95
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Lower; $15.65 ($34,500) from $15.76 ($34,750/t) from $15.76 ($34,750/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Lower. 2826 from 2860 last week from 2881 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. Added to Weibo (WB)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 27354 from 27946 from 28597
a. Support: 27400, 27000, 24500, 23500;
b. Resistance: 27950, 28200, 31200, 31600;
c. Bought Tencent
d. Bought CNOOC
e. Sold Petrochina
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2853 from 2882 from 2939
a. Support: 2450; Resistance 3300; 3600
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3170 from 3205 from 3268
a. Resistance 3850
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21117 from 21250 from 21345
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1598 from 1605 from 1610
a. Traded Dayang
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on May 25 @ 7.30 am)

1. USD to JPY - JPY Stronger; 109.28 from 109.65 last week from 109.77 two weeks ago;
Not vested in JPY
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0451 from 3.0359 from 3.0523
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.6925 from 0.6875 from 0.6994
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9527 from 0.9460 from 0.9534
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. 2.9010 from 2.8718 from 2.9098
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1207 from 1.1161 from 1.1233
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8488 from 7.8491 from 7.8481
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1889 from 4.1775 from 4.1603
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
c. Converted some USD to MYR
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Flat; 1.3756 from 1.3759 from 1.3630
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9001 from 6.9155 from 6.8254
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; 1.2707 from 1.2761 from 1.3013
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3277 from 5.3299 from 5.4145

13. Dollar Index - USD Weaker; 97.61 from 97.92 from 97.35
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


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
i. US Household Net Worth (US$90t)
j. EM Consumption
k. 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
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d.

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.32% from 2.39% last week from 2.44% two weeks ago
a. Resistance 3.3%
b. Support: 2.4%

Yield on 2 Year Treasuries - Lower; 2.16% from 2.18% from 2.25%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$9t or about 23% of the world’s bonds have negative yields
c. US Rate Hike: One 25 bps cut by end 2019?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
g. German 10-year yield hit the lowest level since 2016--negative 10 basis points.
h. Japanese 10-year yield traded down to negative 5 basis points today.
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower: 107.06 from 107.43 from 107.50

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.65 from 85.97 from 85.99

Baltic Dry Index - Higher; 1066 from 1032 from 974; 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


Please Note:-

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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 - Jun 19)

Postby winston » Sun Jun 02, 2019 7:40 am

TOL @ June 02, 2019

June.jpg


New Money From The New Month?

It's a new month again so new money should be flowing into the markets again.

However, sentiment is very weak, with the potential tariffs on Mexico and the ongoing skirmishes with China.

Therefore, we may not see that spike in the markets so soon unless sentiments improve or if there's a big plunge in the markets.

The markets have now been weak for almost a month and "cheap" gets getting "cheaper". Cash is probably King now.

I will not be buying anything unless there's a very convincing story. Even then, I should try to preserve my Cash.

I'm not sure about buying Inverse ETFs or Put Warrants yet, as there's so much Cash on the sidelines.

There's now about US$13t of Negative Yield bonds. In comparison, over the past 10 years, only US$17t was printed by the US, ECB, BoJ and PBOC combined.

Why would anyone wants to sit on negative yield bonds? If they see a half convincing story, those money will flow very quickly into that story.

Very soon, I think people will stop listening to the idiot. And it's only 18 months away before they have a chance to kick him out.

Business people and Individuals are probably no longer committing to heavy investments or big ticket spending. This will certainly slow the global economy over the next 18 months.

Maybe it's time to hunker down and wait for the storm to pass. Or is this the calm before the real storm because a mad-man does not really know how to back down?

We now have tensions with Mexico, Venezeula, Iran, Russia, North Korea and China, not to mentioned the postponed Auto Tariffs with the EU and Japan. Which one will explode first?


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Neutral
Goal: Zero Equities before the next recession (2020-2021?); Maximum 35%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Worse
Goal: To focus only on a handful counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

5. Inverted Yield: 7 (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: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk Off (Data from Commodities Live on May 31 @ 9.20 pm)

1. WTI Oil - Lower. US$55.17 from US$59.00 last week from US$63.19 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 800k bpd; Max Production: 2.2m bpd
l. Iran: 2.6m bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Permian Break-Even: US$35 to US$50 per barrel
s. Opec: June Meeting; +300k bpd to 800k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1298 from US$1284 from US$1287
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$14.51 from US$14.55 from US$14.48
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$794 from US$806 from US$825;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1328 from US$1319 from US$1299;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2523 from US$2556 from US$2614
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.63 from US$2.70 from US$2.73
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

9. Uranium - Flat; US$24.10 from US$24.30 from US$24.65
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Lower; $15.42 ($34,000/t) from $15.65 ($34,500) from $15.76 ($34,750/t) from $15.76 ($34,750/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Lower. 2752 from 2826 last week from 2860 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. Bought Electronic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 26901 from 27354 from 27946
a. Support: 26700; 26000; 25700; 24500, 23500;
b. Resistance: 27950, 28200, 31200, 31600;
c. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2899 from 2853 from 2882
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3118 from 3170 from 3205
a. Resistance 3850
b. Bought Riverstone
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 20601 from 21117 from 21250
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1651 from 1598 from 1605
a. Bought MAA
b. Traded MNRB
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on May 31 @ 8.45 pm)

1. USD to JPY - JPY Stronger; 108.85 from 109.28 last week from 109.65 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0410 from 3.0451 from 3.0359;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.6916 from 0.6925 from 0.6875;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9534 from 0.9527 from 0.9460;
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. 2.8991 from 2.9010 from 2.8718
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1207 from 1.1161 from 1.1233
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8428 from 7.8488 from 7.8491
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1919 from 4.1889 from 4.1775
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3786 from 1.3756 from 1.3759
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9095 from 6.9001 from 6.9155
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; 1.2588 from 1.2707 from 1.2761
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2759 from 5.3277 from 5.3299

13. Dollar Index - USD Stronger; 97.95 from 97.92 from 97.35
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)


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$13t as of May 30, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. 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
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.17% from 2.32% last week from 2.39% two weeks ago

Yield on 2 Year Treasuries - Lower; 1.99% from 2.16% from 2.18%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower: 106.92 from 107.06 from 107.43

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.52 from 85.65 from 85.97

Baltic Dry Index - Higher; 1097 from 1066 from 1032; 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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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jun 09, 2019 1:48 pm

TOL @ June 02, 2019

fear-greed.png


"Market Timing" VS "Time In The Market"?

We have had about a 1000 points increase in the Dow in 4 days. And on the S&P, it was a 4.5% rise.

If one was not invested in the US markets, one would have missed one of the strongest rally in years.

It looks like "Time In The Market" may be the right strategy, especially, after a two months decline.

Anyway, the "optimists" are now talking about the following:-
1. A coordinated Central Banksters move. They are now meeting at the G20. The ECB has already delayed their interest rates rise to 2H 2020.
2. A possible Xi-Trump Meeting at the G20 around June 28
3. A possible delay of the Mexican tariffs
4. A possible delay on the 25% tariffs on another US$300b of goods from China
5. Interest rate cuts in the US
6. Possible QE in the US if the market crashes

And the "pessimists" are still clinging to the following:-
1. Trade Wars issue will continue for the next 18 months, until the Presidential Election in Nov 2020
2. Slowdown in global economic activities
3. Record debts
4. Hotspots in Iran, Venezuela, South China Sea, Ukraine etc.
5. Interest rates cut may not be adequate to arrest the global slowdown
6. USD Currency Risk in the Emerging Markets

Intutitively, I think that the markets may be strong until the end of June for the following reasons:-
1. There's a lot of money on the sidelines. There's US$13t of Negative Yield Bonds.
2. FOMO: The fund managers will need to catch up on their performances as many were underweighted Equities.
3. 1H Window Dressing activities will be surfacing soon.

Therefore, it's probably safe to be buying any Convincing Story over the next few weeks.

At the same time, it does not hurt to be taking some good profits. One does not go broke taking profits.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Neutral
Goal: Zero Equities before the next recession (2020-2021?); Maximum 35%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Worse
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Risk Off (Data from Commodities Live on Jun 7 @ 4.30pm)

1. WTI Oil - Lower. US$53.50 from US$55.17 last week from US$59.00 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd; Sanctions
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Permian Break-Even: US$35 to US$50 per barrel
s. Opec: June Meeting; +300k bpd to 800k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd; Ok with US$60-US$65
u. US: Stockpiles +22m barrels in a week, largest since 1990; Record Production;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1340 from US$1298 from US$1284
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.92 from US$14.51 from US$14.55
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$804 from US$794 from US$806;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1346 from US$1328 from US$1319;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2498 from US$2523 from US$2556;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.65 from US$2.63 from US$2.70
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

9. Uranium - Flat; US$24.10 from US$24.10 from US$24.30
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Lower; $14.74 ($32,500/t) from $15.42 ($34,000/t) from $15.65 ($34,500); 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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Higher. 2873 from 2752 last week from 2826 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. Sold Electronic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26965 from 26901 from 27354
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 27950, 28200, 31200, 31600;
c. Traded 7500 (Inverse HS1 2x)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2823 from 2899 from 2853
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3160 from 3118 from 3170
a. Resistance 3850
b. Added to Genting Singapore
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20885 from 20601 from 21117
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1649 from 1651 from 1598
a. No Trade
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Jun 7 @ 5.00pm)

1. USD to JPY - JPY Stronger; 108.50 from 108.85 last week from 109.28 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0436 from 3.0410 from 3.0451;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.6972 from 0.6916 from 0.6925;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9528 from 0.9534 from 0.9527;
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. 2.8998 from 2.8991 from 2.9010
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1268 from 1.1207 from 1.1161
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8415 from 7.8428 from 7.8488
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1591 from 4.1919 from 4.1889
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3667 from 1.3786 from 1.3756
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9095 from 6.9001 from 6.9155
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; 1.2717 from 1.2588 from 1.2707
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.2891 from 5.2759 from 5.3277

13. Dollar Index - USD Weaker; 97.07 from 97.95 from 97.92
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)


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$13t as of May 30, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. 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
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. 24,000 Vacant Apartments
c. 44,000 Being Built

Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 1.85% from 2.08% last week from 2.17% two weeks ago

Yield on 2 Year Treasuries - Lower; 1.99% from 2.16% from 2.18%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
h. India cut it's interest by 25bps to 5.75%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher: 107.61 from 106.92 from 107.06

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 86.10 from 85.52 from 85.65

Baltic Dry Index - Higher; 1138 from 1097 from 1066; 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


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
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jun 16, 2019 8:40 am

TOL @ June 16, 2019

Window Dressing.jpg


2H Window Dressing?

We are about to touch the 2H Window Dressing time. Therefore, the markets would normally be strong around this time, until at least June 30.

However, in a tweeter world with issues like the Trade War, Iran etc, this time may be different.

Therefore, I may need to a bit prudent in case any of these issues explode. And when it does, I know that I will not be able to run to the emergency exit in time. Somehow, I'm always quite hopeful and do have an inbuilt tolerance for pain, two very bad traits for a trader.

I would like to also remind myself of a recent article, why this rally may melt down:-
1. Defensive stocks are leading the market's rise
2. Fed dovishness is feeding a complacent herd mentality
3. Volatility “fear gauge"on the rise
4. Forecasts of weaker earnings growth in 2020

In view of the above, I have used the recent rally, to lower my exposure to Equities.

IMHO, the markets will probably be volatile for the next 18 months, until the Presidential Election in Nov 2020. Therefore, we will have plenty of opportunity to trade.

So there's no need to chase things and that patience will probably be rewarded in this type of market.

In the words of Jim Rogers, "we should wait for the money to be in the corner first and then all we need to do, is just go over there to pick it up".


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Neutral
Goal: Zero Equities before the next recession (2020-2021?); Maximum 30%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Progress
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Risk Off (Data from Commodities Live on Jun 14 @ 4.45pm)

1. WTI Oil - Lower. US$52.02 from US$53.50 last week from US$55.17 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Break-Even; Permian: US$35 to US$50; Shale: US$50
s. Opec: June Meeting; +300k bpd to 800k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd; Ok with US$60-US$65
u. US: Stockpiles +22m barrels in a week, largest since 1990; Record Production;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1358 from US$1340 from US$1298
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
o. China: PBOC bought gold over last 6 months
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.02 from US$14.92 from US$14.51
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$818 from US$804 from US$794;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1457 from US$1346 from US$1328;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2465 from US$2498 from US$2523;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Flat; US$2.65 from US$2.65 from US$2.63;
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

9. Uranium - Flat; US$24.80 from US$24.10 from US$24.10
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Lower; $12.70 ($28,000/t) from $14.74 ($32,500/t) from $15.42 ($34,000/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Higher. 2887 from 2873 last week from 2752 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 27118 from 26965 from 26901
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 27950, 28200, 31200, 31600;
c. Sold HKEX
d. Traded Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2882 from 2823 from 2899
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3216 from 3160 from 3118
a. Resistance 3850
b. Sold Capitaland
c. Sold Venture
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21117 from 20885 from 20601
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1637 from 1649 from 1651
a. Sold MAA
b. Sold MNRB
c. Sold 1/3 Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com on Jun 14 @ 4.30pm)

1. USD to JPY - JPY Stronger; 108.21 from 108.50 last week from 108.85 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0489 from 3.0436 from 3.0410;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.6896 from 0.6972 from 0.6916;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9429 from 0.9528 from 0.9534;
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. 2.8748 from 2.8998 from 2.8991
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1279 from 1.1268 from 1.1207
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8246 from 7.8415 from 7.8428
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1687 from 4.1591 from 4.1919
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9

9. USD to SGD:- SGD Weaker; 1.3673 from 1.3667 from 1.3786
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9229 from 6.9095 from 6.9001
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; 1.2663 from 1.2717 from 1.2588
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2790 from 5.2891 from 5.2759

13. Dollar Index - USD Weaker; 97.00 from 97.07 from 97.95
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Japanese government’s debt highest in the world: 1.1 QUADRILLION yen (about USD $10 trillion), twice the size of its entire economy.
viewtopic.php?f=16&t=8930&start=140


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$13t as of May 30, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash
viewtopic.php?f=16&t=8940&start=30


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
viewtopic.php?f=16&t=7547&start=120


HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets
viewtopic.php?f=10&t=7785&start=130


Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. 24,000 Vacant Apartments
c. 44,000 Being Built
viewtopic.php?f=10&t=7750&start=190


Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d. As at Dec 31, 2018, unsold completed residential units including serviced apartment and Soho totaled 45,027 units, valued at RM29.69bil.
viewtopic.php?f=10&t=4220&p=227635#p227635


China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%
viewtopic.php?f=10&t=8150&start=130


Yield on 10 Year US Treasuries - Lower; 2.06% from 2.08% last week from 2.17% two weeks ago

Yield on 2 Year Treasuries - Lower; 1.80% from 1.99% from 2.16%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
h. India cut it's interest by 25bps to 5.75%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher: 107.88 from 107.61 from 106.92

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 86.35 from 86.10 from 85.52

Baltic Dry Index - Lower; 1062 from 1138 from 1097; 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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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sat Jun 22, 2019 7:54 am

TOL @ June 22, 2019

Storm.jpg


Calm Before The Storm?

The markets have been strong since Trump tweeted that he will be meeting Xi at the G20, as if it's something not expected.

And the Fund Managers have no choice but to play catch-up, as they have been underweighted Equities going into the 2H Window Dressing season.

The question now is whether this is an opportunity to sell or to average up (assuming that you were smart enough to buy over the past two months).

Intuitively, I think that this is a chance to sell, to raise some cash and to lower exposure to Equities.

The global economic picture is not great. Businesses are no longer willing to invest for the future. Individuals are also putting off buying big ticket items.

And over the next 16 months, there would be plenty of rhetoric from Trump who will be on his reelection trail and that can affect the current fragile sentiments.

I now think that would be a slowdown after the November 2020 US Presidential Election. In the meantime, Trump will do whatever it takes and use whatever weapon he has, to try to prevent a slowdown before November 2020.

And if things do go downhill despite the efforts of Trump, the Central Banksters will probably reduce interest rates or start printing money again.

However, there's only so much that Trump or the Central banksters can do. And when the storm does come in, it will be coming in with record debts, trade wars, various geopolitical issues etc.

Under such cirmcumstances, I know that I will not be able to run in time. Therefore, I will need to use the next few months to start preparing for the storm eg. raising cash, reducing exposure to Equities, monitoring Currency Risk, monitoring Counter-Party Risk, watching the Inverse ETFs and Leveraged Put Warrant etc.

In the meantime, on the horizon, we have the following:-
1. June 28: G20 Meeting; Non-event unless Trump starts thumping his hand on the table
2. June 30: 1H Window Dressing
3. July 1: Opec Meeting

I expect the markets to be quite strong next week due to 2H Window Dressing activities and I will be trying to use the opportunity to reduce my exposure to Equities further.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Safe
Goal: Zero Equities before the next recession (2020-2021?); Maximum 25%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Progress
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Risk On (Data from Commodities Live on Jun 21 @ 6.30pm)

1. WTI Oil - Higher. US$57.58 from US$52.02 last week from US$53.50 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Break-Even; Permian: US$35 to US$50; Shale: US$50
s. Opec: June Meeting; +300k bpd to 800k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd; Ok with US$60-US$65
u. US: Stockpiles +22m barrels in a week, largest since 1990; Record Production;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1396 from US$1358 from US$1340
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
o. China: PBOC bought gold over last 6 months
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.30 from US$15.02 from US$14.92
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$807 from US$818 from US$804;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1481 from US$1457 from US$1346;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2436 from US$2465 from US$2498;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.70 from US$2.65 from US$2.65;
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

9. Uranium - Flat; US$24.55 from US$24.80 from US$24.10;
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Flat; $12.70 ($28,000/t) from $12.70 ($28,000/t) from $14.74 ($32,500/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


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

1. US Equities - Higher. 2950 from 2887 last week from 2873 two weeks ago
a. Support: 2320; Resistance: 2940; 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28474 from 27118 from 26965
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 31200, 31600;
c. Sold CICC
d. Sold Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 3002 from 2882 from 2823
a. Support: 2450; Resistance 3300; 3600
b. Sold A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3321 from 3216 from 3160
a. Resistance 3850
b. Sold 1/5 Genting Singapore
c. Sold HPL
d. Sold Riverstone
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21259 from 21117 from 20885
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1682 from 1637 from 1649
a. Sold Genting Malaysia
b. Sold 3/5 Genting Berhad
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Jun 21 @ 9.30pm)

1. USD to JPY - JPY Stronger; 107.49 from 108.21 last week from 108.50 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0577 from 3.0489 from 3.0436;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.6911 from 0.6896 from 0.6972;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9379 from 0.9429 from 0.9528;
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. 2.8678 from 2.8748 from 2.8998
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1323 from 1.1279 from 1.1268
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8148 from 7.8246 from 7.8415
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1501 from 4.1687 from 4.1591
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9

9. USD to SGD:- SGD Stronger; 1.3572 from 1.3673 from 1.3667
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8730 from 6.9229 from 6.9095
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; 1.2678 from 1.2663 from 1.2717
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2613 from 5.2790 from 5.2891

13. Dollar Index - USD Weaker; 96.53 from 97.00 from 97.07
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Japanese government’s debt highest in the world: 1.1 QUADRILLION yen (about USD $10 trillion), twice the size of its entire economy.
viewtopic.php?f=16&t=8930&start=140


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$12t as of June 20, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash
viewtopic.php?f=16&t=8940&start=30


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
viewtopic.php?f=16&t=7547&start=120


HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets
viewtopic.php?f=10&t=7785&start=130


Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. 24,000 Vacant Apartments
c. 44,000 Being Built
viewtopic.php?f=10&t=7750&start=190


Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d. As at Dec 31, 2018, unsold completed residential units including serviced apartment and Soho totaled 45,027 units, valued at RM29.69bil.
viewtopic.php?f=10&t=4220&p=227635#p227635


China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%
viewtopic.php?f=10&t=8150&start=130


Yield on 10 Year US Treasuries - Lower; 2.03% from 2.06% last week from 2.08% two weeks ago

Yield on 2 Year Treasuries - Lower; 1.77% from 1.80% from 1.99%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
h. India cut it's interest by 25bps to 5.75%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher: 109.46 from 107.88 from 107.61

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 87.61 from 86.35 from 86.10

Baltic Dry Index - Higher; 1194 from 1062 from 1138; 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=14&t=2823&start=40


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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jun 30, 2019 12:28 pm

TOL @ June 30, 2019

July.jpg


New Money From The New Month

It's going to be a new month again and new money would be flowing into the markets again. Therefore, there should be a spike in the markets next week.

In addition, Trump has been behaving properly at the G20 and that would be an additional catalyst for the markets to rise a bit.

The Opec Meeting on July 1st will probably be a non-event and they would probably agree to keep the current quota in place.

Towards the end of July, the traders will be waiting for a 25bps rates cut.

Intuitively, I think that next week would be a good time to lighten on my exposure to Equities.

Unfortunately, HK is closed on Monday and by the time it opens on Tuesday, the effect from the positive G20 meeting, may have been diluted.

My exposure to Equities is now about 18% and I hope to bring it down further, especially before the debates at the US Presidential Election.

I'm still struggling with what the do with my AUD. Hopefully, the AUD may spike ove the next few months and I can convert some of them to either the USD or MYR.

I may also convert some MYR to USD since the MYR has been strong lately and I need to have more USD assets in my portfolio.

I should also think about converting some HKD into the MYR or USD. If the HK protests spiralled out of control, the HK economy will certainly be hit.

I have reduced my number of counters from about 25 to 17. I intend to bring it down further to about 10.

If the markets are very strong over the next few weeks, I may also buy some Inverse ETFs eg 7500 (Hang Seng Inverse 2x), SOXS (Semiconductor Inverse 3x), LABD (Biotech Inverse 3x), UVXY (VIX 2x), EDZ (EM Inverse 3x), EPV (Europe Inverse 2x).

I hoped that for this round, I would be smart enough to have a big short position when the market plunges. However, I dont want to be too early to the party as it would not be a very pleasant situation, to be holding leveraged Inverse ETFs when the market melts up, before it eventually melts down.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Safe
Goal: Zero Equities before the next recession (2020-2021?); Maximum 25%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Progress
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Risk On (Data from Commodities Live on Jun 28 @ 9.00pm)

1. WTI Oil - Higher. US$59.52 from US$57.58 last week from US$52.02 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Break-Even; Permian: US$35 to US$50; Shale: US$50
s. Opec: June Meeting; +300k bpd to 800k bpd? Cut 2.3m bpd since Nov 2018
t. Russia: Oil Contamination; -500k bpd; Prefer US$60-US$65
u. US: Stockpiles +22m barrels in a week, largest since 1990; Record Production;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1416 from US$1396 from US$1358
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
o. China: PBOC bought gold over last 6 months
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Flat. US$15.30 from US$15.30 from US$15.02
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$823 from US$807 from US$818;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1524 from US$1481 from US$1457;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Higher; US$2491 from US$2436 from US$2465;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.71 from US$2.70 from US$2.65;
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

9. Uranium - Flat; US$24.70 from US$24.55 from US$24.80;
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Flat; $12.70 ($28,000/t) from $12.70 ($28,000/t) from $12.70 ($28,000/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


Equities - Mixed (Data as of Saturday every week)

1. US Equities - Lower. 2942 from 2950 last week from 2887 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28543 from 28474 from 27118
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 31200, 31600;
c. Bought China Merchants Bank 3968
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2979 from 3002 from 2882
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Flat; 3322 from 3321 from 3216
a. Resistance 3850
b. Bought Venture
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21276 from 21259 from 21117
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1672 from 1682 from 1637
a. Traded MNRB
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Jun 28 @ 7.30pm)

1. USD to JPY - JPY Weaker; 107.66 from 107.49 last week from 108.21 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0551 from 3.0577 from 3.0489;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7007 from 0.6911 from 0.6896;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9480 from 0.9379 from 0.9429;
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. 2.8960 from 2.8678 from 2.8748;
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1381 from 1.1323 from 1.1279
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8087 from 7.8148 from 7.8246
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1346 from 4.1501 from 4.1687
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9

9. USD to SGD:- SGD Stronger; 1.3530 from 1.3572 from 1.3673
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8691 from 6.8730 from 6.9229
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; 1.2680 from 1.2678 from 1.2663;
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2418 from 5.2613 from 5.2790;

13. Dollar Index - USD Weaker; 96.12 from 96.53 from 97.00
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Japanese government’s debt highest in the world: 1.1 QUADRILLION yen (about USD $10 trillion), twice the size of its entire economy.
viewtopic.php?f=16&t=8930&start=140


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$12t as of June 20, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash
viewtopic.php?f=16&t=8940&start=30


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
viewtopic.php?f=16&t=7547&start=120


HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets
viewtopic.php?f=10&t=7785&start=130


Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. 24,000 Vacant Apartments
c. 44,000 Being Built
viewtopic.php?f=10&t=7750&start=190


Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d. As at Dec 31, 2018, unsold completed residential units including serviced apartment and Soho totaled 45,027 units, valued at RM29.69bil.
e. There is a further 123,234 residential and commercial unsold units under construction as at the end of 2018
viewtopic.php?f=10&t=4220&p=227635#p227635


China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%
viewtopic.php?f=10&t=8150&start=130


Yield on 10 Year US Treasuries - Lower; 2.02% from 2.03% last week from 2.06% two weeks ago

Yield on 2 Year Treasuries - Lower; 1.74% from 1.77% from 1.80%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower: 108.87 from 109.46 from 107.88

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 87.15 from 87.61 from 86.35

Baltic Dry Index - Higher; 1340 from 1194 from 1062; 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


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.
viewtopic.php?f=14&t=2823&start=40


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
search.php?search_id=active_topics
You do not have the required permissions to view the files attached to this post.
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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Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jul 07, 2019 9:03 am

TOL @ July 07, 2019

train_wreck.jpg


Slow Motion Train Wreck?

The US Markets have been grinding higher while the Asian markets have not really gone anywhere over the past week.

So where do we go from here?

The Optimists are now talking about the coming US Earnings season for the markets to move higher. This is because expectations are very low for this coming US Earings season.

Thereafter, they are expecting the Feds to reduce interest rates at the end of the month. And if things do get bad, the Central Banksters can start printing money again.

The Pessimists are continuing with their slow-motion train wreck story. They are saying that the entire global economy is slowing due to the sanctions and various geopolitical issues.

Debt is at a record high and the Central Banksters will not be able to save the world this time, despite their rates reduction and printing of money.

Intuitively, I think that Optimists may be right in the short term (over the next 18 months till the US Federal Election). Thereafter, the Pessimists will probably take over.

Therefore, it's probably still safe to trade any convincing story over the next few months. However, this is assuming that there are no stupid tweets or sudden reversal of the current US-China Trade truce.

The Middle Path is probably still the right path to take at this point in time. There's no need to be shackled down by fear and at the same time, one should not be too greedy in this challenging time.

It's probably a "Trading Market" so one should behave accordingly ie. take windfall profits and buy on extreme fear.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Safe
Goal: Zero Equities before the next recession (2020-2021?); Maximum 25%;

2. To Diversify From Asian Equities: Progress
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Bought 7500 (Inverse Hang Seng 2x)
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Progress
Goal: To focus only on counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Risk On (Data from Commodities Live on Jul 5 @ 7.15pm)

1. WTI Oil - Lower. US$56.82 from US$59.52 last week from US$57.58 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal BreakEven US$85 per barrel
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd; -400k bpd
m. Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Break-Even; Permian: US$35 to US$50; Shale: US$50
s. Opec: Cut 2.3m bpd since Nov 2018; 9 months extension (April 2020)
t. Russia: Oil Contamination; -500k bpd; Prefers US$60-US$65 Oil
u. US: Stockpiles +22m barrels / week, largest since 1990; Record
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1418 from US$1416 from US$1396
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
o. China: PBOC bought gold over last 6 months
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.26 from US$15.30 from US$15.30
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$835 from US$823 from US$807;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1555 from US$1524 from US$1481;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Lower; US$2399 from US$2491 from US$2436;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.66 from US$2.71 from US$2.70;
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

9. Uranium - Flat; US$24.70 from US$24.70 from US$24.55;
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Higher; $13.38 ($29,500/t) from $12.70 ($28,000/t) from $12.70 ($28,000/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: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


Equities - Mixed (Data as of Saturday every week)

1. US Equities - Higher. 2990 from 2942 last week from 2950 two weeks ago
a. Support: 2320; Resistance: 3000; 3260; Fwd PE 16
b. Sold 1/2 Weibo
c. Bought Electonic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28775 from 28543 from 28474
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 31200, 31600;
c. Sold China Merchants Bank 3968
d. Sold CNOOC 0883
e. Bought Future Land 1030
f. Bought 7500 (Inverse HSI 2x)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 3011 from 2979 from 3002
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3367 from 3322 from 3321
a. Resistance 3850
b. Traded Venture
c. Traded DBS
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21746 from 21276 from 21259
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1683 from 1672 from 1682
a. Traded MNRB
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on Jul 5 @ 6.45pm)

1. USD to JPY - JPY Weaker; 108.04 from 107.66 last week from 107.49 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0463 from 3.0551 from 3.0577;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7016 from 0.7007 from 0.6911;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9521 from 0.9480 from 0.9379;
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. 2.9003 from 2.8960 from 2.8678;
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1262 from 1.1381 from 1.1323
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.7930 from 7.8087 from 7.8148
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1340 from 4.1346 from 4.1501
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9

9. USD to SGD:- SGD Weaker; 1.3569 from 1.3530 from 1.3572
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8755 from 6.8691 from 6.8730
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; 1.2542 from 1.2680 from 1.2678;
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.1853 from 5.2418 from 5.2613;

13. Dollar Index - USD Stronger; 96.94 from 96.12 from 96.53
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Japanese government’s debt highest in the world: 1.1 QUADRILLION yen (about USD $10 trillion), twice the size of its entire economy.
viewtopic.php?f=16&t=8930&start=140


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$12t as of June 20, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash
viewtopic.php?f=16&t=8940&start=30


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
viewtopic.php?f=16&t=7547&start=120


HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets
viewtopic.php?f=10&t=7785&start=130


Spore Properties
a. 24,000 Vacant Apartments
b. 52,000 Being Built (2018-2022)
c. 37,800 Unsold Residential Properties @ 1Q, 2019
viewtopic.php?f=10&t=7750&start=190


Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d. As at Dec 31, 2018, unsold completed residential units including serviced apartment and Soho totaled 45,027 units, valued at RM29.69bil.
e. There is a further 123,234 residential and commercial unsold units under construction as at the end of 2018
viewtopic.php?f=10&t=4220&p=227635#p227635


China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%
viewtopic.php?f=10&t=8150&start=130


Yield on 10 Year US Treasuries - Lower; 1.96% from 2.02% last week from 2.03% two weeks ago

Yield on 2 Year Treasuries - Higher; 1.78% from 1.74% from 1.77%

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher: 109.01 from 108.87 from 109.46

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 87.34 from 87.15 from 87.61

Baltic Dry Index - Higher; 1700 from 1340 from 1194; 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


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.
viewtopic.php?f=14&t=2823&start=40


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
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winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jul 19)

Postby winston » Sun Jul 14, 2019 12:57 pm

TOL @ July 14, 2019

Earnings.jpg


US Earnings Season

It's US Earnings Season next week and the "optimists" are saying that the US markets can continue to grind higher due to the low expectations.

Thereafter, the "optimists" feels that we will get at least a 25 bps rates cut on July 31, if not 50 bps.

And if there's a Trade War Truce as well as the passage of the US$2t Infrastructure program, the "optimists" believe that the US markets can go very much higher.

Intuitively, I think that it's a good time to slowly sell into any strength and to raise some Cash.

I'm more careful this time as the macroecomics and geopolitics are not that great. I also do not know when a stupid tweet can derail the rally.

It's probably too early to short the US market. However, it's probably time to monitor things for signs to short it. A "M" appearing on the charts would be a good sign to short it.

As for the HK markets, I'm trading the 7500 (Inverse Hang Seng 2x) to hedge against my HK positions. I feel that the 2000 points rise in HK since Trump tweeted about the G20, is a bit excessive.

In addition, the HK markets have not really gone anywhere while the US markets have been grinding higher. It's not a good sign and I'm waiting for the right price to exit some of my HK positions.


Weekly Risk Management Progress Report:-

1. To Monitor Exposure To Equities: Safe; Currently at 16% of Liquid Assets
Goal: Zero Equities before the next recession (2020-2021?); Maximum 25%;

2. To Diversify From Asian Equities: Progress; Currently at 34%
Goal: To reduce percentage of Asian Equities to around 50%

3. To Buy Inverse ETFs and Puts - Bought 7500 (Hang Seng Inverse 2x)
Goal: To have a sizable short position going into the next recession

4. To Increase "USD/HKD/Gold" - Progress
Goal: To be in the safe havens before next recession; (HKD may be repegged)

5. To Reduce Number Of Counters: Progress; Currently at 15 counters
Goal: To focus only on only about 10 counters that have convincing stories

6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Gaming
b. Heavy exposure to Asian Based Equities
Goal: To diversify across various sectors and countries


Market Risk Indicators

1. Euphoria: 8 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;

2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;

3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;

4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;

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) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation

7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia

Total: 55 out of 70 (78%); (Safe: 50%; Danger: 85%)


Commodities: Mixed (Data from Commodities Live on Jul 12 @ 9.15pm)

1. WTI Oil - Higher. US$60.35 from US$56.82 last week from US$59.52 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
a. Trade Wars will reduce demand for Oil; -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m barrels over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: Dropped from 10 to 6 years
f. China: Ban on Petrochemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -1.3m bpd (35% cut); Fiscal Break-Even US$85;
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd;
k. Venezeula: -400k bpd to 875k bpd, -17%; Max Production: 2.2m bpd
l. Iran: 2.6m bpd; -400k bpd
m. US Summer Driving season
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline; +1m bpd
p. EV: -350k bpd?
q. Libya: -850k out of 1.65m bpd?
r. US Break-Even; Permian: US$35 to US$50; Shale: US$50
s. Opec: Cut 2.3m bpd since Nov 2018; 9 months extension (April 2020)
t. Russia: Oil Contamination; -500k bpd; Wants US$60-US$65 Oil
u. US: Stockpiles +22m barrels / week, largest since 1990; Record
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1410 from US$1418 from US$1416
Support: $1240; $1150; $1050; Resistance: $1400;
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
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 from Muslim countries as Gold is now a halal investment
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. China: Jewelry: +3% yoy; Industrials -10% yoy; PBOC: 2.4% forex reserves vs US 74%; Retail; Safe Haven: RMB lost 1/3 vs Gold since Jun 2007;
k. Global Demand: China +5%; India -8%;
l. Central Banks: +70% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
m. U.S. government holds 260m ounces at book value of only US$42m
n. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
o. China: PBOC bought gold over last 6 months
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.16 from US$15.26 from US$15.30
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
d. Supply: 0.9b ounces
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
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$822 from US$835 from US$823;
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. 70% of supply is from South Africa

6. Palladium - Higher; US$1557 from US$1555 from US$1524;
a. Support: US$940; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Higher; US$2410 from US$2399 from US$2491;
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); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.68 from US$2.66 from US$2.71;
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

9. Uranium - Flat; US$24.80 from US$24.70 from US$24.70;
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
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: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring 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. Apr 14, 2019: US requires 25% local production; Higher electricity cost
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 around 650,000 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?
InvestIdeas • View topic - Uranium (Nuclear Energy)

11. Cobalt - Lower; $12.47 ($27,500/t) from $13.38 ($29,500/t) from $12.70 ($28,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
c. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
d. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
e. Target: 2018 - US$62,000/t; 2022 - US$44.000/t
viewtopic.php?f=33&t=8547&start=10


Equities - Mixed (Data as of Saturday every week)

1. US Equities - Higher. 2990 from 2942 last week from 2950 two weeks ago
a. Support: 2320; Resistance: 3000; 3260; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 28472 from 28775 from 28543
a. Support: 26700; 26000; 25700; 25000, 24500, 23500;
b. Resistance: 31200, 31600;
c. Sold Future Land 1030
d. Traded 7500 (Inverse HSI 2x)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2931 from 3011 from 2979
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3357 from 3367 from 3322
a. Resistance 3850
b. Sold DBS
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21686 from 21746 from 21276
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > Half government bonds and 75% of ETFs
d. No Trade; No Convincing Story
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1669 from 1683 from 1672
a. Sold MNRB
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed (Data from XE.com on Jul 12 @ 4.30pm)

1. USD to JPY - JPY Weaker; 108.31 from 108.04 last week from 107.66 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 ?
e. QE Infinity?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0266 from 3.0463 from 3.0551;
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7001 from 0.7016 from 0.7007;
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9510 from 0.9521 from 0.9480;
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. 2.8784 from 2.9003 from 2.8960;
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Flat. 1.1264 from 1.1262 from 1.1381;
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8224 from 7.7930 from 7.8087
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1105 from 4.1340 from 4.1346
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9

9. USD to SGD:- SGD Weaker; 1.3584 from 1.3569 from 1.3530
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8787 from 6.8755 from 6.8691
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; 1.2537 from 1.2542 from 1.2680;
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.1539 from 5.1853 from 5.2418;

13. Dollar Index - USD Flat; 96.93 from 96.94 from 96.12;
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Japanese government’s debt highest in the world: 1.1 QUADRILLION yen (about USD $10 trillion), twice the size of its entire economy.
viewtopic.php?f=16&t=8930&start=140


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$12t as of June 20, 2019)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash
viewtopic.php?f=16&t=8940&start=30


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
viewtopic.php?f=16&t=7547&start=120


HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Slowing Economy / Trade War
e. Depreciating Yuan
f. Weak Stock Markets
g. Ongoing protests will hurt sentiments
viewtopic.php?f=10&t=7785&start=130


Spore Properties
a. 24,000 Vacant Apartments
b. 52,000 Being Built (2018-2022)
c. 37,800 Unsold Residential Properties @ 1Q, 2019
viewtopic.php?f=10&t=7750&start=190


Malaysian Properties
a. JPPH: Overhang - 32,313 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included
c. 2018 Residential Housing overhang: +31%
d. As at Dec 31, 2018, unsold completed residential units including serviced apartment and Soho totaled 45,027 units, valued at RM29.69bil.
e. There is a further 123,234 residential and commercial unsold units under construction as at the end of 2018
viewtopic.php?f=10&t=4220&p=227635#p227635


China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%
viewtopic.php?f=10&t=8150&start=130


Yield on 10 Year US Treasuries - Higher; 2.13% from 1.96% last week from 2.02% two weeks ago

Yield on 2 Year Treasuries - Higher; 1.86% from 1.78% from 1.74%;

Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
b. US Rate Hike: One 25 bps cut by end 2019?
c. Argentina's Intertest Rate: 60%
d. Turkey's Interest Rate: 24%
e. Ukraine's Interest rate: 18%
f. German 10-year bunds at -0.167% as of May 30, 2019
g. Japanese 10-year JGB at -0.1% as of May 30, 2019
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower: 108.31 from 109.01 from 108.87;

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 86.79 from 87.34 from 87.15

Baltic Dry Index - Higher; 1816 from 1700 from 1340; 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


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.
viewtopic.php?f=14&t=2823&start=40


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
search.php?search_id=active_topics
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

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