TOL as of Sep 11, 2016
Is This The Big One ?
The US markets dropped about 400 points on Friday. This was a significant move as it has not dropped more than a 100 points per day, over the past two months. So is this the big one ?
Intuitively, I think that this is not the big one yet due to the following:-
1. The Central Banksters just met in HZ and they will be having their coordinated announcements over the next two weeks
2. It's Window Dressing time
3. Normally, the big one will only come after a "M" or "Triple Top" on the charts
Having said that, the U.S. 10–year yield has broken out higher, after whipsawing in recent days. Very importantly, German 10–year yields have sharply reversed from negative territory and have crossed and closed above zero, for the first time since March. And Japanese 10–year yields have spiked from negative 29 basis points just last month, to nearing the threshold of turning positive again. Hence, the tailwind provided by the US$13t of negative yield bonds, could now be affected.
Anyway, if the markets do not stabilize over the next week, then we could be in for a wild ride. The S&P 500 is still up about 13.5% since February while HK has risen about 28%. The temptation to take some profits is very strong. Hence, it may be time to raise some cash and to hedge any long positions with some Inverse ETFs or Put Warrants.
I may also start shorting the markets if I see a "M" or 'Triple Top" forming on the charts. However, I need to remind myself to see the set-up first before shorting aggressively.
Finally, I'm still quite worried about my Currency Risk as I have only 25% of my Assets in the USD, HKD and Gold. More specifically, I need to convert some of my SGD assets ASAP, due to the following:-
a) Zika is spreading now in Singapore and will probably affect tourism, retail business etc.
b) Foreigners are no longer that interested in S'pore properties
c) The tax amnesty by Indonesia may see some repatriation of funds
d) My SGD assets are too high when viewed on a global context (home base bias)
e) Singapore's Oil & Gas Industry has been affected by the low oil prices
f) Singapore Financial Industry will probably be affected by increasing NPLs, slower growth, stricter rules etc
g) Singapore's GDP growth over the next two years would be quite slow
h) The SGD is relatively expensive against it's neighbours including the AUD and NZD
i) The MAS will be meeting in October to set rates
Over the past 10 years, the SGD vs USD, has been trading between 1.70 in 2004 and 1.20 in 2011. More recently, it has been between 1.43 and 1.32. Therefore, exchanging the SGD now at around 1.36, is not too bad a deal.
In view of the above, I have converted some of my SGD into the USD this week and will probably convert some more when the opportunity presents itself. As mentioned, I'm not a currency speculator. I only allocate my currency exposure strictly from a Risk Management basis.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$45.71 from US$44.20 last week from US$47.29 two weeks ago. Eexpecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd is being rebalanced ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; 40m barrels in storage
e. Demand to grow by around 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption - around 500,000 bpd ?
j. China (4th largest producer ) - Reserve life has fallen from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintenance: 1.5m bpd for a few months
m. US Summer Driving is almost over
2. Gold - Higher. US$1332 from US$1329 from US$1324. Record US$1920. Vested.
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when those paper contracts suddenly wants some physical gold at the same time?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.13 from US$19.52 from US$18.63. Range High: 49. Not vested.
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Flat. US$2.09 from US$2.08 from US$2.08. Not vested. Over-supply?
5. Coffee - Flat. US$149.95 from US$150.10 from US$143.90. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 50m bags of coffee in the next decade. That’s more than the entire current crop of Brazil and 1/3 current global supply of 145m bags
d. In 2030, demand expected to be around 200m bags
e. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What price would be the breaking point for coffee ? Around 2012, it touched US$300
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Lower. 2128 from 2180 last week from 2169 two weeks ago. Sold Orasure Tech (OSUR)
2. HK Equities - Higher. 24100 from 23267 from 22910. Resistance 25000 ? Sold 1/2 NagaCorp (3918)
3. Shanghai Equities - Higher. 3079 from 3067 from 3070; Support at 2450; No Trade
4. Spore Equities - Higher. 2873 from 2804 from 2858. Sold Silverlake Axis
5. Japan Equities - Higher. 16966 from 16926 from 16361. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1686 from 1672 from 1683. Sold MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 102.67 from 103.98 last week from 101.81 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 3.0166 from 3.0011 from 2.9671. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7545 from 0.7583 from 0.7572. Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Weaker. 1.0245 from 1.0309 from 1.0284. The 52 week range is 0.98 to 1.36. Expecting the AUD to rise against the SGD. The high was abround 1.35 in 2012.
5. AUD to MYR - AUD Weaker. 3.0904 from 3.0940 from 3.0514. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.1231 from 1.1158 from 1.1201. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7555 from 7.7560 from 7.7555. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.096 from 4.080 from 4.030; 52 Week Range is 3.27 to 4.47. Expecting the USD to rise against the MYR
9. USD to SGD:- SGD Stronger; 1.3578 from 1.3595; Waiting to convert some more SGD to USD. High 1.70 (2004); Low 1.20 (2011)
10. GBP to USD:- GBP Weaker. 1.3275 from 1.3295 from 1.3137. Will not be investing in the GBP as I think that it's in a multi-year decline
711. CAD to USD:- CAD Weaker; 0.7670 from 0.7700 from 0.7701. Expecting the USD to rise aginst the CAD as Oil is weak and the Bank of Canada is reducing interest rates
12. Dollar Index - USD Weaker. 95.33 from 95.84 from 95.57; If not the USD, then what currency ?
Others
1. Sentiment - Confused?
2. Headwinds - Global Debts (US$200t); Global Corporate Debt (US$51t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Debts (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash on Sidelines (US$55t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$13t); US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t); Cash in US Corps (US$1.4t); Buybacks, EM Consumption,
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme, housing loans etc. This tells you that things are not that good.
iii) NAPIC: About 23% (19,000 of the 82,000 units) of residential and commercial properties launched in 1Q 2016 are not sold yet
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Shenzhen is up 41% yoy
iv) Shanghai is up 27% yoy
iv) Beijing is up 20% yoy
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
iv) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vi) About 19,000 people left HK last year
vii) Daiwa: Prices to go up 1% in 2016; +5% for 2017
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Higher. 1.67% from 1.60% last week from 1.63% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than 1/4 of the world’s bonds now have negative yields. These money are constantly looking for a place to go.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.15 from 36.63 last week from 36.54 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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's Investment Ideas 04 (Oct 15 - May 19)
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Sep 11, 2016 7:16 am
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Sep 18, 2016 8:53 am
TOL as of Sep 18, 2016
Currency Risk
As mentioned, I'm very concerned about my Currency Risk as I have only about 25% of my portfolio in the USD (including HKD and Gold). And if there's another AFC, I would be in a very bad position.
Last week, I analysed my exposure to the SGD. This week, I will look at my exposure to the MYR:-
a) At the height of the AFC in 1998, the USD to the MYR was around 4.60 to the USD.
b) Last year, it touched 4.42 eventhough things were relatively stable and peaceful.
c) So how much will the MYR depreciates, if things become really unstable and disorderly? A 25% depreciation means 5.20 to the USD, while a 50% depreciation would bring it down to 6.00. Are you able to stomach a 25% to 50% depreciation of your MYR Cash ?
d) There would be elections soon in Malaysia and there could be some outflows. At the same time, there may not be much inflows before the election.
e) If Zika spreads in Malaysia, tourism and retail business will be hit.
f) One of the ways to hedge against a drop in the MYR (besides an outright conversion), is to have some MYR debts while putting any extra MYR into foreign currencies. If the MYR collapses, then you would be able to pay off those "deflated" MYR debts with your "inflated" foreign currencies.
g) If the MYR does collapse, it could be a "V" recovery. This is because of the huge amount of Mainland Chinese money waiting to invest in Malaysia. They are already huge investors in Malaysia and will probably double down, if the MYR does collapse. This is assuming that the Chinese economy is still intact at that time.
h) One of the currencies that has depreciated as much as the MYR, is the AUD. So converting some more MYR to AUD may be a possibility, if the opportunity presents itself again. However, it's now about 3.1 vs 2.93 not too long ago. During the AFC, it was at around 2.20 ( a 40% appreciation from current levels but it could be due to the peg of the MYR to the USD ).
i) As the MYR has been weak to the USD, it's probably not the right time to convert more MYR to the USD. However, weak can always become much weaker.
In conclusion, I'm still monitoring things and waiting for the right time to convert some more of my MYR to other currencies, especially the USD.
As for next week, the focus would still be on the Central Banksters:-
1. Sep 20: BoE
2. Sep 21: BoJ: Will they be selling the longer duration bonds ?
3. Sep 21: US Feds; Not expecting them to raise rates
It's also 2Q Window Dressing time so there's an incentive for the fund managers to sell the losers and buy the winners, over the next two weeks.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Lower. US$43.19 from US$45.71 last week from US$44.20 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd will only be rebalanced in 2018 ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd, currently, 2m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd pa, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption - around 500,000 bpd ?
j. China (4th largest producer ) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. US Summer Driving is almost over
2. Natural Gas - US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Long Term; Switching from Coal to Natural Gas
2. Gold - Lower. US$1313 from US$1332 from US$1329. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when those paper contracts suddenly wants some physical gold at the same time?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$18.84 from US$19.13 from US$19.52. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Higher. US$2.16 from US$2.09 from US$2.08. Over-supply?
5. Coffee - Lower. US$147.10 from US$149.95 from US$150.10. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 50m bags of coffee in the next decade. That’s more than the entire current crop of Brazil and 1/3 current global supply of 145m bags
d. In 2030, demand expected to be around 200m bags
e. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What price would be the breaking point for coffee ? Around 2012, it touched US$300
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2139 from 2128 last week from 2180 two weeks ago. Traded SQQQ ( Inverse Nasdaq100 3x ) and SOXS (Inverse Semiconductor 3x)
2. HK Equities - Lower. 23355 from 24100 from 23267. Resistance 25000 ? No Trade.
3. Shanghai Equities - Lower. 3003 from 3079 from 3067; Support at 2450; No Trade
4. Spore Equities - Lower. 2827 from 2873 from 2804. No Trade
5. Japan Equities - Lower. 16519 from 16966 from 16926. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1653 from 1686 from 1672. No Trade
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 102.27 from 102.67 last week from 103.98 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Stronger. 3.0354 from 3.0166 from 3.0011. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7501 from 0.7545 from 0.7583. Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0255 from 1.0245 from 1.0309. The 52 week range is 0.98 to 1.36. Expecting the AUD to rise against the SGD. The high was abround 1.35 in 2012.
5. AUD to MYR - AUD Stronger. 3.1128 from 3.0904 from 3.0940. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1161 from 1.1231 from 1.1158. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7585 from 7.7555 from 7.7560. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Weaker. 4.150 from 4.096 from 4.080; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Weaker; 1.3672 from 1.3578 from 1.3595; Expecting the SGD to drop against the USD; Converted more SGD into USD. High 1.70 (2004); Low 1.20 (2011)
10. CNY to USD:- 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Weaker. 1.3002 from 1.3275 from 1.3295. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Weaker; 0.7571 from 0.7670 from 0.7700. Expecting the CAD to srop against the USD as Oil is weak and the Bank of Canada is reducing interest rates
13. Dollar Index - USD Stronger. 96.11 from 95.33 from 95.84; If not the USD, then what currency ? If the Financial System collapses, it's better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Gold, Silver etc.
Others
1. Sentiment - Confused?
2. Headwinds - Global Debts (US$200t); Global Corporate Debt (US$51t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Debts (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$11t); US Foreign Funds Repatriation (US$2.1t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89.1t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: About 23% (19000/ 82,000) of residential and commercial properties launched in the 1Q 2016 have yet to be sold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Shenzhen is up 41% yoy
iv) Shanghai is up 27% yoy
v) Beijing is up 20% yoy
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from 2003 to Sep 2015
iii) Knight Frank: Luxury to decline 5-10%; Mass Market: 10% decline
iv) S&P: Prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vi) About 19,000 people left HK last year
vii) Daiwa: Prices to go up 1% in 2016; +5% for 2017
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Higher. 1.69% from 1.67% last week from 1.60% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than 1/4 of the world’s bonds now have negative yields. These money are constantly looking for a place to go.
d. Russia's central bank lowered its key interest rate by 50 basis points to 10% from 10.50%
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.14 from 36.15 last week from 36.63 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Currency Risk
As mentioned, I'm very concerned about my Currency Risk as I have only about 25% of my portfolio in the USD (including HKD and Gold). And if there's another AFC, I would be in a very bad position.
Last week, I analysed my exposure to the SGD. This week, I will look at my exposure to the MYR:-
a) At the height of the AFC in 1998, the USD to the MYR was around 4.60 to the USD.
b) Last year, it touched 4.42 eventhough things were relatively stable and peaceful.
c) So how much will the MYR depreciates, if things become really unstable and disorderly? A 25% depreciation means 5.20 to the USD, while a 50% depreciation would bring it down to 6.00. Are you able to stomach a 25% to 50% depreciation of your MYR Cash ?
d) There would be elections soon in Malaysia and there could be some outflows. At the same time, there may not be much inflows before the election.
e) If Zika spreads in Malaysia, tourism and retail business will be hit.
f) One of the ways to hedge against a drop in the MYR (besides an outright conversion), is to have some MYR debts while putting any extra MYR into foreign currencies. If the MYR collapses, then you would be able to pay off those "deflated" MYR debts with your "inflated" foreign currencies.
g) If the MYR does collapse, it could be a "V" recovery. This is because of the huge amount of Mainland Chinese money waiting to invest in Malaysia. They are already huge investors in Malaysia and will probably double down, if the MYR does collapse. This is assuming that the Chinese economy is still intact at that time.
h) One of the currencies that has depreciated as much as the MYR, is the AUD. So converting some more MYR to AUD may be a possibility, if the opportunity presents itself again. However, it's now about 3.1 vs 2.93 not too long ago. During the AFC, it was at around 2.20 ( a 40% appreciation from current levels but it could be due to the peg of the MYR to the USD ).
i) As the MYR has been weak to the USD, it's probably not the right time to convert more MYR to the USD. However, weak can always become much weaker.
In conclusion, I'm still monitoring things and waiting for the right time to convert some more of my MYR to other currencies, especially the USD.
As for next week, the focus would still be on the Central Banksters:-
1. Sep 20: BoE
2. Sep 21: BoJ: Will they be selling the longer duration bonds ?
3. Sep 21: US Feds; Not expecting them to raise rates
It's also 2Q Window Dressing time so there's an incentive for the fund managers to sell the losers and buy the winners, over the next two weeks.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Lower. US$43.19 from US$45.71 last week from US$44.20 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd will only be rebalanced in 2018 ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd, currently, 2m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd pa, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption - around 500,000 bpd ?
j. China (4th largest producer ) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. US Summer Driving is almost over
2. Natural Gas - US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Long Term; Switching from Coal to Natural Gas
2. Gold - Lower. US$1313 from US$1332 from US$1329. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when those paper contracts suddenly wants some physical gold at the same time?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$18.84 from US$19.13 from US$19.52. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Higher. US$2.16 from US$2.09 from US$2.08. Over-supply?
5. Coffee - Lower. US$147.10 from US$149.95 from US$150.10. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 50m bags of coffee in the next decade. That’s more than the entire current crop of Brazil and 1/3 current global supply of 145m bags
d. In 2030, demand expected to be around 200m bags
e. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What price would be the breaking point for coffee ? Around 2012, it touched US$300
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2139 from 2128 last week from 2180 two weeks ago. Traded SQQQ ( Inverse Nasdaq100 3x ) and SOXS (Inverse Semiconductor 3x)
2. HK Equities - Lower. 23355 from 24100 from 23267. Resistance 25000 ? No Trade.
3. Shanghai Equities - Lower. 3003 from 3079 from 3067; Support at 2450; No Trade
4. Spore Equities - Lower. 2827 from 2873 from 2804. No Trade
5. Japan Equities - Lower. 16519 from 16966 from 16926. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1653 from 1686 from 1672. No Trade
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 102.27 from 102.67 last week from 103.98 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Stronger. 3.0354 from 3.0166 from 3.0011. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7501 from 0.7545 from 0.7583. Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0255 from 1.0245 from 1.0309. The 52 week range is 0.98 to 1.36. Expecting the AUD to rise against the SGD. The high was abround 1.35 in 2012.
5. AUD to MYR - AUD Stronger. 3.1128 from 3.0904 from 3.0940. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1161 from 1.1231 from 1.1158. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7585 from 7.7555 from 7.7560. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Weaker. 4.150 from 4.096 from 4.080; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Weaker; 1.3672 from 1.3578 from 1.3595; Expecting the SGD to drop against the USD; Converted more SGD into USD. High 1.70 (2004); Low 1.20 (2011)
10. CNY to USD:- 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Weaker. 1.3002 from 1.3275 from 1.3295. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Weaker; 0.7571 from 0.7670 from 0.7700. Expecting the CAD to srop against the USD as Oil is weak and the Bank of Canada is reducing interest rates
13. Dollar Index - USD Stronger. 96.11 from 95.33 from 95.84; If not the USD, then what currency ? If the Financial System collapses, it's better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Gold, Silver etc.
Others
1. Sentiment - Confused?
2. Headwinds - Global Debts (US$200t); Global Corporate Debt (US$51t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Debts (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$11t); US Foreign Funds Repatriation (US$2.1t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89.1t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: About 23% (19000/ 82,000) of residential and commercial properties launched in the 1Q 2016 have yet to be sold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Shenzhen is up 41% yoy
iv) Shanghai is up 27% yoy
v) Beijing is up 20% yoy
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from 2003 to Sep 2015
iii) Knight Frank: Luxury to decline 5-10%; Mass Market: 10% decline
iv) S&P: Prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vi) About 19,000 people left HK last year
vii) Daiwa: Prices to go up 1% in 2016; +5% for 2017
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Higher. 1.69% from 1.67% last week from 1.60% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than 1/4 of the world’s bonds now have negative yields. These money are constantly looking for a place to go.
d. Russia's central bank lowered its key interest rate by 50 basis points to 10% from 10.50%
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.14 from 36.15 last week from 36.63 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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 - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Sep 25, 2016 12:41 pm
TOL as of Sep 25, 2016
Window Dressing ?
It's the end of the quarter so it's Window Dressing time again. Would the Fund Managers be "Selling the Losers" and "Buying the Winners" again ?
Intuitively, I think that the Window Dressing this quarter may be quite muted, as the markets have been quite strong.
However, we would soon have some new money flowing from the new month of October as well as some catalysts from the Earnings Season again. Therefore, the markets should be quite stable over the next few weeks.
Anyway, I'm more concerned about my Currency Risk than any Market Risk.
Over the past two weeks, I have analysed my exposure to the MYR and SGD. This week, I would analyse my exposure to the AUD and the following are my random thoughts:-
a) Commodities have rebounded. So would they be heading higher or lower from here ? If they are heading lower, then it may not be so good for the Commodity Currencies like the AUD.
b) The RBA would be reducing interest rates against the Fed's increase. That means that the AUD would be relatively weak compared to the USD.
c) A strong USD would also lower demand for Commodities and the Commodity currencies.
d) The Chinese crackdown has slowed down the flow of Chinese money into properties in Australia
e) In 2011, the AUD touched 1.10 to the USD and recently, it was weakest around 0.70. Therefore, it may not be the time to convert any AUD to the USD, as it's only around 76 now, at the lower range. Over the next few years, I would choose the USD over the AUD
f) As for the AUD against the SGD, it did touched 1.35 in 2011. Therefore, it's also not the time to convert any AUD to the SGD, as it's around 1.03 now. However, I have been converting some SGD into the AUD over the past two years as the SGD was relatively strong. Over the next few years, I would choose the AUD over the SGD.
g) Against the MYR, the AUD touched 2.25 in 2008. The recent range is around 2.78 (2016) to 3.31 (2012). Over the past two years, I have also converted some MYR into the AUD. At this point in time, I will probably not be converting any AUD back to the MYR. I will revisit my position after the Malaysian election, expected in 2017.
Commodities:- Higher (Data as of Saturday)
1. Oil - Higher. US$44.72 from US$43.19 last week from US$45.71 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd - rebalanced in 2018?; Supply 94m bpd; Demand 93.5m bpd
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018 - 2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption ending (400,000 bpd) ?
j. China (4th largest producer) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming (300,000 bpd) ?
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
2. Natural Gas - Higher: US$2.97 from US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
2. Gold - Higher. US$1342 from US$1313 from US$1332. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when those paper contracts suddenly wants some physical gold at the same time?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$19.78 from US$18.84 from US$19.13. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Higher. US$2.20 from US$2.16 from US$2.09. Over-supply?
5. Coffee - Higher. US$151.40 from US$147.10 from US$149.95. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
6. If there's a crash, it's likely that Commodities would not be spared. However, that could be a good time to pick up some Commodities eg. Lithium and Natural Gas.
Equities - Higher ( Data as of Saturday every week )
1. US Equities - Higher. 2139 from 2128 last week from 2180 two weeks ago. Bought Gilead Sciences (GILD) and Exponential Tech ETF (XT)
2. HK Equities - Higher. 23686 from 23355 from 24100. Resistance 25000 ? Traded HKEX
3. Shanghai Equities - Higher. 3034 from 3003 from 3079; Support at 2450; Bought CSI 300 (3188) traded in HK
4. Spore Equities - Higher. 2857 from 2827 from 2873. Bought Silverlake Axis; Traded HK Land. Sold IX Biopharma
5. Japan Equities - Higher. 16754 from 16519 from 16966. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1671 from 1653 from 1686. No Trade
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.05 from 102.27 last week from 102.67 two weeks ago. 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Weaker. 3.0277 from 3.0354 from 3.0166. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7637 from 0.7501 from 0.7545. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0371 from 1.0255 from 1.0245. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD.
5. AUD to MYR - AUD Stronger. 3.1401 from 3.1128 from 3.0904. the range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.1232 from 1.1161 from 1.1231. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7554 from 7.7585 from 7.7555. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Stronger. 4.112 from 4.150 from 4.096; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Stronger; 1.3581 from 1.3672 from 1.3578; Expecting the SGD to drop against the USD; Converted more SGD into USD. High 1.70 (2004); Low 1.20 (2011)
10. USD to CNY:- CNY Stronger; 6.6688 from 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Weaker. 1.2965 from 1.3002 from 1.3275. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Stronger; 0.7598 from 0.7571 from 0.7670. Expecting the CAD to srop against the USD as Oil is weak and the Bank of Canada is reducing interest rates
13. Dollar Index - USD Weaker. 95.48 from 96.11 from 95.33; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD eg. Farmland, Real Estate, Gold, Silver etc.
Others
1. Sentiment - Euphoric ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$200t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US Debts (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
iv) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from 2003 to Sep 2015
iii) Knight Frank: Luxury to decline 5-10%; Mass Market: 10% decline
iv) S&P: Prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 units expected in the next three to four years.
vi) About 19,000 people left HK last year
vii) Daiwa: Prices to go up 1% in 2016; +5% for 2017
viii) In Sep 2016, about 3,100 new flats sold, mostly mass-residential
ix) The number of deals > HK$10 million, jumped 38% to 199 in the first 11 days of Sep 2016 compared to the same period in July
x) Henderson focussing on building tiny flats
xi) Margins have decreased to 25% from 40%
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not grow until 2019
6. Yield on 10 Year US Treasuries - Lower. 1.62% from 1.69% last week from 1.67% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. US$10t or about 1/4 of the world’s bonds now have negative yields.
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.51 from 36.14 last week from 36.15 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Window Dressing ?
It's the end of the quarter so it's Window Dressing time again. Would the Fund Managers be "Selling the Losers" and "Buying the Winners" again ?
Intuitively, I think that the Window Dressing this quarter may be quite muted, as the markets have been quite strong.
However, we would soon have some new money flowing from the new month of October as well as some catalysts from the Earnings Season again. Therefore, the markets should be quite stable over the next few weeks.
Anyway, I'm more concerned about my Currency Risk than any Market Risk.
Over the past two weeks, I have analysed my exposure to the MYR and SGD. This week, I would analyse my exposure to the AUD and the following are my random thoughts:-
a) Commodities have rebounded. So would they be heading higher or lower from here ? If they are heading lower, then it may not be so good for the Commodity Currencies like the AUD.
b) The RBA would be reducing interest rates against the Fed's increase. That means that the AUD would be relatively weak compared to the USD.
c) A strong USD would also lower demand for Commodities and the Commodity currencies.
d) The Chinese crackdown has slowed down the flow of Chinese money into properties in Australia
e) In 2011, the AUD touched 1.10 to the USD and recently, it was weakest around 0.70. Therefore, it may not be the time to convert any AUD to the USD, as it's only around 76 now, at the lower range. Over the next few years, I would choose the USD over the AUD
f) As for the AUD against the SGD, it did touched 1.35 in 2011. Therefore, it's also not the time to convert any AUD to the SGD, as it's around 1.03 now. However, I have been converting some SGD into the AUD over the past two years as the SGD was relatively strong. Over the next few years, I would choose the AUD over the SGD.
g) Against the MYR, the AUD touched 2.25 in 2008. The recent range is around 2.78 (2016) to 3.31 (2012). Over the past two years, I have also converted some MYR into the AUD. At this point in time, I will probably not be converting any AUD back to the MYR. I will revisit my position after the Malaysian election, expected in 2017.
Commodities:- Higher (Data as of Saturday)
1. Oil - Higher. US$44.72 from US$43.19 last week from US$45.71 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd - rebalanced in 2018?; Supply 94m bpd; Demand 93.5m bpd
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018 - 2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption ending (400,000 bpd) ?
j. China (4th largest producer) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming (300,000 bpd) ?
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
2. Natural Gas - Higher: US$2.97 from US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
2. Gold - Higher. US$1342 from US$1313 from US$1332. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when those paper contracts suddenly wants some physical gold at the same time?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$19.78 from US$18.84 from US$19.13. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Higher. US$2.20 from US$2.16 from US$2.09. Over-supply?
5. Coffee - Higher. US$151.40 from US$147.10 from US$149.95. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
6. If there's a crash, it's likely that Commodities would not be spared. However, that could be a good time to pick up some Commodities eg. Lithium and Natural Gas.
Equities - Higher ( Data as of Saturday every week )
1. US Equities - Higher. 2139 from 2128 last week from 2180 two weeks ago. Bought Gilead Sciences (GILD) and Exponential Tech ETF (XT)
2. HK Equities - Higher. 23686 from 23355 from 24100. Resistance 25000 ? Traded HKEX
3. Shanghai Equities - Higher. 3034 from 3003 from 3079; Support at 2450; Bought CSI 300 (3188) traded in HK
4. Spore Equities - Higher. 2857 from 2827 from 2873. Bought Silverlake Axis; Traded HK Land. Sold IX Biopharma
5. Japan Equities - Higher. 16754 from 16519 from 16966. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1671 from 1653 from 1686. No Trade
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.05 from 102.27 last week from 102.67 two weeks ago. 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Weaker. 3.0277 from 3.0354 from 3.0166. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7637 from 0.7501 from 0.7545. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0371 from 1.0255 from 1.0245. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD.
5. AUD to MYR - AUD Stronger. 3.1401 from 3.1128 from 3.0904. the range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.1232 from 1.1161 from 1.1231. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7554 from 7.7585 from 7.7555. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Stronger. 4.112 from 4.150 from 4.096; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Stronger; 1.3581 from 1.3672 from 1.3578; Expecting the SGD to drop against the USD; Converted more SGD into USD. High 1.70 (2004); Low 1.20 (2011)
10. USD to CNY:- CNY Stronger; 6.6688 from 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Weaker. 1.2965 from 1.3002 from 1.3275. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Stronger; 0.7598 from 0.7571 from 0.7670. Expecting the CAD to srop against the USD as Oil is weak and the Bank of Canada is reducing interest rates
13. Dollar Index - USD Weaker. 95.48 from 96.11 from 95.33; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD eg. Farmland, Real Estate, Gold, Silver etc.
Others
1. Sentiment - Euphoric ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$200t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US Debts (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
iv) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from 2003 to Sep 2015
iii) Knight Frank: Luxury to decline 5-10%; Mass Market: 10% decline
iv) S&P: Prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 units expected in the next three to four years.
vi) About 19,000 people left HK last year
vii) Daiwa: Prices to go up 1% in 2016; +5% for 2017
viii) In Sep 2016, about 3,100 new flats sold, mostly mass-residential
ix) The number of deals > HK$10 million, jumped 38% to 199 in the first 11 days of Sep 2016 compared to the same period in July
x) Henderson focussing on building tiny flats
xi) Margins have decreased to 25% from 40%
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not grow until 2019
6. Yield on 10 Year US Treasuries - Lower. 1.62% from 1.69% last week from 1.67% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. US$10t or about 1/4 of the world’s bonds now have negative yields.
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.51 from 36.14 last week from 36.15 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Oct 02, 2016 9:46 am
TOL as of Oct 02, 2016
New Money From The New Month
Happy October!
It's a new month so new money would be flowing into the markets again. Therefore, we should have at least one spike in the markets next week.
Thereafter, the markets would probably be weak until the new US earnings season (after Columbus Day on October 12th).
In the meantime, the problems faced by Financial Industry eg. Deutsche Bank and Wells Fargo, could be a strong headwind for the markets over the next few weeks.
To trade this event, I've bought the SEF (Proshares Short Financials), in addition to the following reasons:-
1. Deutsche Bank: This DB episode could spread to the Italian banks (US$400b NPLs) and the other European banks.
2. Wells Fargo: Will probably be facing a heavy fine or class action lawsuit.
3. Cockroach Theory: I'm expecting another US bank or two, to be also caught making the same unauthorized credit cards application and accounts openings, like Wells Fargo
4. Basel III: Another US$400b in capital is required
5. No Growth: I cant see how loans volume ( and profits ) of the banks can grow from here
6. NPLs: I think that NPLs will be growing especially in the Oil & Gas sector (US$0.2t/US$2.5t), in addition to the emerging problems in the Subpime Auto (US$1t) and Student's Loan (US$1.4t) sector.
The risks to the above trade would be:-
1. if the Feds raise interest rates quickly ( leading to more profits for the banks )
2. if the ECB or the German government, quickly rescues Deutsche Bank and the other European banks
However, the probability of the above two events is quite small for the time being, so this could be quite a safe trade for the next few weeks.
As I'm very uncomfortable with this Deutsche Bank issue, I have also raised some cash this week.
I now have only a 3% exposure to Equities with a short position of 6%. Therefore, I should be able to survive any stock market crash. The risk would be if the markets rise strongly and quickly, thus affecting my shorts position.
Again, I'm more concerned about my Currency Risk than Market Risk. My exposure to the MYR, SGD and AUD, is very high (>70%) and I'm still waiting for the right time to convert some more MYR and SGD, into the USD. Luckily, my AUD has been doing well lately.
Finally, I'm watching the current spat between China and Singapore. If it spills into something bigger (and with Zika spreading), it cannot be good for the SGD.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$48.05 from US$44.72 last week from US$43.19 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd ?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand expected to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending (400,000 bpd) ?
j. China (4th largest producer) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming (300,000 bpd) ?
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: are you excited about their agreement to have an agreement ? And if they finally can have an agreement, do you think that they can really enforced it ?
2. Natural Gas - Lower: US$2.90 from US$2.97 from US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
2. Gold - Lower. US$1319 from US$1342 from US$1313. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. Around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when the paper contracts suddenly wants some physical gold ?
c. Output to fall by about 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.24 from US$19.78 from US$18.84. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Flat. US$2.21 from US$2.20 from US$2.16. Over-supply?
5. Coffee - Flat. US$151.55 from US$151.40 from US$147.10. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2168 from 2139 last week from 2128 two weeks ago. Bought FES (Short Financials 1x). Sold Gilead Sciences (GILD) and Exponential Tech ETF (XT)
2. HK Equities - Lower. 23297 from 23686 from 23355. Resistance 25000? No Trade
3. Shanghai Equities - Lower. 3005 from 3034 from 3003; Support at 2450; No Trade
4. Spore Equities - Higher. 2869 from 2857 from 2827. Sold Silverlake Axis
5. Japan Equities - Lower. 16450 from 16754 from 16519. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1653 from 1671 from 1653. Sold Icapital.biz
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 101.32 from 101.05 last week from 102.27 last week from 102.67 two weeks ago. 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Stronger. 3.0364 from 3.0277 from 3.0354. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7668 from 0.7637 from 0.7501. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0443 from 1.0371 from 1.0255. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.1708 from 3.1401 from 3.1128. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.1245 from 1.1232 from 1.1161. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7554 from 7.7585 from 7.7555. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Weaker. 4.135 from 4.112 from 4.150; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Weaker; 1.3618 from 1.3581 from 1.3672; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
10. USD to CNY:- CNY Stronger; 6.6685 from 6.6688 from 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Stronger. 1.2979 from 1.2965 from 1.3002. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Stronger; 0.7619 from 0.7598 from 0.7571. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
13. Dollar Index - USD Flat. 95.46 from 95.48 from 96.11; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$200t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down about 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
iv) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
vii) Various new curbs in the Tier 1 & 2 cities
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not probably rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 45%? (Currency 20%, Decline 15%, Fees 10%) ?
6. Yield on 10 Year US Treasuries - Lower. 1.59% from 1.62% last week from 1.69% two weeks ago. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably decrease the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Mexico raised interest rates by 50 bps to protect their currency. Would other countries be following suit ?
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.72 from 36.51 last week from 36.14 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
New Money From The New Month
Happy October!
It's a new month so new money would be flowing into the markets again. Therefore, we should have at least one spike in the markets next week.
Thereafter, the markets would probably be weak until the new US earnings season (after Columbus Day on October 12th).
In the meantime, the problems faced by Financial Industry eg. Deutsche Bank and Wells Fargo, could be a strong headwind for the markets over the next few weeks.
To trade this event, I've bought the SEF (Proshares Short Financials), in addition to the following reasons:-
1. Deutsche Bank: This DB episode could spread to the Italian banks (US$400b NPLs) and the other European banks.
2. Wells Fargo: Will probably be facing a heavy fine or class action lawsuit.
3. Cockroach Theory: I'm expecting another US bank or two, to be also caught making the same unauthorized credit cards application and accounts openings, like Wells Fargo
4. Basel III: Another US$400b in capital is required
5. No Growth: I cant see how loans volume ( and profits ) of the banks can grow from here
6. NPLs: I think that NPLs will be growing especially in the Oil & Gas sector (US$0.2t/US$2.5t), in addition to the emerging problems in the Subpime Auto (US$1t) and Student's Loan (US$1.4t) sector.
The risks to the above trade would be:-
1. if the Feds raise interest rates quickly ( leading to more profits for the banks )
2. if the ECB or the German government, quickly rescues Deutsche Bank and the other European banks
However, the probability of the above two events is quite small for the time being, so this could be quite a safe trade for the next few weeks.
As I'm very uncomfortable with this Deutsche Bank issue, I have also raised some cash this week.
I now have only a 3% exposure to Equities with a short position of 6%. Therefore, I should be able to survive any stock market crash. The risk would be if the markets rise strongly and quickly, thus affecting my shorts position.
Again, I'm more concerned about my Currency Risk than Market Risk. My exposure to the MYR, SGD and AUD, is very high (>70%) and I'm still waiting for the right time to convert some more MYR and SGD, into the USD. Luckily, my AUD has been doing well lately.
Finally, I'm watching the current spat between China and Singapore. If it spills into something bigger (and with Zika spreading), it cannot be good for the SGD.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$48.05 from US$44.72 last week from US$43.19 two weeks ago. Expecting Oil to be between US$40 to US$50
a. Glut of 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd ?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand expected to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending (400,000 bpd) ?
j. China (4th largest producer) - Reserve life has fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming (300,000 bpd) ?
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: are you excited about their agreement to have an agreement ? And if they finally can have an agreement, do you think that they can really enforced it ?
2. Natural Gas - Lower: US$2.90 from US$2.97 from US$2.96
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
2. Gold - Lower. US$1319 from US$1342 from US$1313. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. Around 300 oz of paper contract for every oz of gold holdings on Comex. What happens when the paper contracts suddenly wants some physical gold ?
c. Output to fall by about 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.24 from US$19.78 from US$18.84. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Flat. US$2.21 from US$2.20 from US$2.16. Over-supply?
5. Coffee - Flat. US$151.55 from US$151.40 from US$147.10. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2168 from 2139 last week from 2128 two weeks ago. Bought FES (Short Financials 1x). Sold Gilead Sciences (GILD) and Exponential Tech ETF (XT)
2. HK Equities - Lower. 23297 from 23686 from 23355. Resistance 25000? No Trade
3. Shanghai Equities - Lower. 3005 from 3034 from 3003; Support at 2450; No Trade
4. Spore Equities - Higher. 2869 from 2857 from 2827. Sold Silverlake Axis
5. Japan Equities - Lower. 16450 from 16754 from 16519. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1653 from 1671 from 1653. Sold Icapital.biz
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 101.32 from 101.05 last week from 102.27 last week from 102.67 two weeks ago. 52 week range is 76 to 126. Where is the line in the sand for intervention? Expecting the Yen to drop against the USD
2. SGD to MYR - SGD Stronger. 3.0364 from 3.0277 from 3.0354. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7668 from 0.7637 from 0.7501. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0443 from 1.0371 from 1.0255. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.1708 from 3.1401 from 3.1128. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.1245 from 1.1232 from 1.1161. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7554 from 7.7585 from 7.7555. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
8. USD to MYR:- MYR Weaker. 4.135 from 4.112 from 4.150; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
9. USD to SGD:- SGD Weaker; 1.3618 from 1.3581 from 1.3672; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
10. USD to CNY:- CNY Stronger; 6.6685 from 6.6688 from 6.6705; SDR @ October 1st; Expecting the CNY to drop against the USD.
11. GBP to USD:- GBP Stronger. 1.2979 from 1.2965 from 1.3002. Will not be investing in the GBP as I think that it's in a multi-year decline
12. CAD to USD:- CAD Stronger; 0.7619 from 0.7598 from 0.7571. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
13. Dollar Index - USD Flat. 95.46 from 95.48 from 96.11; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$200t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Luxury prices down about 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are vacant
iv) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
vii) Various new curbs in the Tier 1 & 2 cities
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not probably rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 45%? (Currency 20%, Decline 15%, Fees 10%) ?
6. Yield on 10 Year US Treasuries - Lower. 1.59% from 1.62% last week from 1.69% two weeks ago. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably decrease the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Mexico raised interest rates by 50 bps to protect their currency. Would other countries be following suit ?
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.72 from 36.51 last week from 36.14 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Oct 09, 2016 10:25 pm
TOL as of Oct 09, 2016
US Earnings Again
US Earnings is coming up again, after Columbus Day (Oct 12th).
For this quarter, the "expert" analysts are expecting Revenues to decline by 5% and Earnings to drop 2%.
With such numbers, why would anyone believe that Earnings season, would be a strong catalyst for the markets to move higher ?
Perhaps the "expert" analysts have again set the bar so low, that actual earnings would again be above expectations.
Anyway, I have been researching many companies over the past few months and I have not really find any good company that's trading at a "fair valuation".
The Liquidity in the market has distorted the various traditional measures and I'm feeling a bit uncomfortable with the current investing environment.
I have to again remind myself to be disciplined and not to chase after things. If the lemmings want to run towards the edge of the cliff, it does not mean that I have to follow them.
"Return OF Capital" is more important than "Return ON Capital" in this type of environment.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$49.55 from US$48.05 last week from US$44.72 two weeks ago
a. Glut 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.17 from US$2.90 from US$2.97
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Lower. US$1269 from US$1319 from US$1342. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Lower. US$17.58 from US$19.24 from US$19.78. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Lower. US$2.17 from US$2.21 from US$2.20. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Lower. US$148 from US$151.55 from US$151.40
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$22.50 (Oct 3 ) from US$23.75 (Sep 26)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Albemarle, SQM, FMC and Sichuan Tianqi
viewtopic.php?f=33&t=1667&start=20
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Lower. 2154 from 2168 last week from 2139 two weeks ago. Bought FCG (First Trust Natural Gas) and Franco Nevada (FNV); Traded JO (Coffee ETN); Sold FES (Short Financials 1x).
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 23852 from 23297 from 23686. Resistance 25,000? No Trade
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Flat. 3005 from 3005 from 2034; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Higher. 2875 from 2869 from 2857. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Higher. 16860 from 16450 from 16754. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1665 from 1653 from 1671. No Trade
viewtopic.php?f=10&t=6292&start=30
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 102.89 from 101.32 last week from 101.057 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0273 from 3.0364 from 3.0277. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7599 from 0.7668 from 0.7637. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0427 from 1.0443 from 1.0371. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Weaker. 3.1565 from 3.1708 from 3.1401. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1206 from 1.1245 from 1.1232. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7575 from 7.7554 from 7.7585. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.154 from 4.135 from 4.112; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3722 from 1.3618 from 1.3581; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.6684 from 6.6685 from 6.6688; SDR @ October 1st; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2438 from 1.2979 from 1.2965. Will not be investing in the GBP as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- 5.1669; Am monitoring this as the GBP has dropped about 20% to the MYR. However, cheap can always become cheaper especially when Aricle 50 has to be sorted out by March 2017.
13. CAD to USD:- CAD Weaker; 0.7523 from 0.7619 from 0.7598. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 96.63 from 95.46 from 95.48; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Home values dropped 10.8% from the peak in 2013; Sales have declined to about half the level in 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
vii) Various new curbs in the Tier 1 & 2 cities
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to Flat for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 50%? (Currency 20%, Decline 20%, Fees 10%)? And how low can it go ? 65% ?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.72% from 1.59% last week from 1.62% two weeks ago. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Reserve Bank of India cut interest rates unexpectedly to 6.25% from 6.50%
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.68 from 36.72 last week from 36.51 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
US Earnings Again
US Earnings is coming up again, after Columbus Day (Oct 12th).
For this quarter, the "expert" analysts are expecting Revenues to decline by 5% and Earnings to drop 2%.
With such numbers, why would anyone believe that Earnings season, would be a strong catalyst for the markets to move higher ?
Perhaps the "expert" analysts have again set the bar so low, that actual earnings would again be above expectations.
Anyway, I have been researching many companies over the past few months and I have not really find any good company that's trading at a "fair valuation".
The Liquidity in the market has distorted the various traditional measures and I'm feeling a bit uncomfortable with the current investing environment.
I have to again remind myself to be disciplined and not to chase after things. If the lemmings want to run towards the edge of the cliff, it does not mean that I have to follow them.
"Return OF Capital" is more important than "Return ON Capital" in this type of environment.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$49.55 from US$48.05 last week from US$44.72 two weeks ago
a. Glut 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2017. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.17 from US$2.90 from US$2.97
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Lower. US$1269 from US$1319 from US$1342. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Lower. US$17.58 from US$19.24 from US$19.78. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Lower. US$2.17 from US$2.21 from US$2.20. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Lower. US$148 from US$151.55 from US$151.40
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$22.50 (Oct 3 ) from US$23.75 (Sep 26)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Albemarle, SQM, FMC and Sichuan Tianqi
viewtopic.php?f=33&t=1667&start=20
6. If there's a crash, Commodities would not be spared. However, that could be a good time to pick up some Lithium and Natural Gas.
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Lower. 2154 from 2168 last week from 2139 two weeks ago. Bought FCG (First Trust Natural Gas) and Franco Nevada (FNV); Traded JO (Coffee ETN); Sold FES (Short Financials 1x).
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 23852 from 23297 from 23686. Resistance 25,000? No Trade
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Flat. 3005 from 3005 from 2034; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Higher. 2875 from 2869 from 2857. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Higher. 16860 from 16450 from 16754. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1665 from 1653 from 1671. No Trade
viewtopic.php?f=10&t=6292&start=30
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 102.89 from 101.32 last week from 101.057 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0273 from 3.0364 from 3.0277. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7599 from 0.7668 from 0.7637. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0427 from 1.0443 from 1.0371. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Weaker. 3.1565 from 3.1708 from 3.1401. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1206 from 1.1245 from 1.1232. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7575 from 7.7554 from 7.7585. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.154 from 4.135 from 4.112; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3722 from 1.3618 from 1.3581; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.6684 from 6.6685 from 6.6688; SDR @ October 1st; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2438 from 1.2979 from 1.2965. Will not be investing in the GBP as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- 5.1669; Am monitoring this as the GBP has dropped about 20% to the MYR. However, cheap can always become cheaper especially when Aricle 50 has to be sorted out by March 2017.
13. CAD to USD:- CAD Weaker; 0.7523 from 0.7619 from 0.7598. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 96.63 from 95.46 from 95.48; If not the USD, then what currency ? If the Financial System collapses, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Home values dropped 10.8% from the peak in 2013; Sales have declined to about half the level in 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
vii) Various new curbs in the Tier 1 & 2 cities
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to Flat for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 50%? (Currency 20%, Decline 20%, Fees 10%)? And how low can it go ? 65% ?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.72% from 1.59% last week from 1.62% two weeks ago. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Reserve Bank of India cut interest rates unexpectedly to 6.25% from 6.50%
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.68 from 36.72 last week from 36.51 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Oct 16, 2016 9:34 am
TOL as of Oct 16, 2016
Is The Storm Just Around The Corner ?
The markets have been quite weak the past week.
The US markets have been down every other day for the past 6 trading sessions.
HK is even worst. It has been down 5 out of the last 6 trading days.
So is the storm just around the corner ?
Intuitively, I think that it may be time to raise some more Cash. However, I'm not too sure that it's time to aggresively short the market yet.
Perhaps all you need now, is for the Indices to drop below the Support Level and thereafter, the algos will kick in, to drive the markets much lower.
Do you remember "Black Monday", October 19, 1987, where the Dow dropped 23% in a day on program trading ?
However, the "optimists" are saying that a crash will not occur due to :-
a. Low Interest Rates: The US$60b on the sidelines is looking for a place to go
b. Market Sentiment: Market is not Euphoric, which is an ingredient for a crash
c. Buybacks by Corporations
d. Valuation: PE 17 on S&P 500 is high but not "excessive"
e. The Plunge Protection Team will ensure that the market will not dive
Although I can agree with the "optimists" on some of the above, accidents do happen (as in the case of the 6% plunge in the GBP recently).
And it would not be fun if you are caught in an "accident", especially if it last for a few days. (For Brexit, the UK Financial companies were free-falling for two days ).
Peter Lynch has mentioned that there could be a 10% correction every two years and a 25% plunge every 4 years or so. Therefore, we are quite overdue for one already.
Anyway, I do not think that the market will suddenly plunge yet. Instead, it may go through a "Chinese Water Torture" ie. dripping slowly downwards. If this scenario occurs, it would then be a "wait and see" situation as it's still "too high to buy".
As for my Currency Risk, I've converted some MYR to GBP recently, as the GBP has dropped about 20% against the MYR (weak currency):-
i. Deadline: March 2017 for Article 50
ii. Risk: If "Hard Brexit", the GBP could be in for a multi-year decline
iii. Malaysian Election: Probably early 2017
iv. Bersih Rally: November 9, 2016
My other currency positions are doing quite well now:-
a. AUD vs SGD
b. AUD vs MYR
c. USD vs MYR
d. USD vs SGD
However, I still have about 70% of my portfolio being exposed to the MYR, SGD and AUD. If another storm does hit, all the funds would flow to the USD quickly, unless something catastrophic happens to the USA. And if that's the case, then the funds would probably flow to the JPY, AUD, CNY and EUR.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$50.32 from US$49.55 last week from US$48.05 two weeks ago
a. Glut 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.28 from US$3.17 from US$2.90
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Lower. US$1252 from US$1269 from US$1319. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Lower. US$17.42 from US$17.58 from US$19.24. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Lower. US$2.11 from US$2.17 from US$2.21. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$155.40 from US$148 from US$151.55
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Higher. US$22.75 (Oct 10) from US$22.50 (Oct 3) from US$23.75 (Sep 26)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery fell 65 percent in 2015 to around $350 per kilowatt hour,
viewtopic.php?f=33&t=1667&start=20
6. If there's a crash, Commodities would not be spared.
7. The High USD is not good for Commodities
Equities - Lower ( Data as of Saturday every week )
1. US Equities - Lower. 2133 from 2154 last week from 2168 two weeks ago. Traded LABD (Short Biotech 3x) and TZA(Short Russell 2000 3x); Sold FCG (First Trust Natural Gas), SGDM (Sprott's Gold Miners) and Franco Nevada (FNV);
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 23233 from 23852 from 23297. Support 23000 then 22500. Traded HKEX
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3064 from 3005 from 3005; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Lower. 2815 from 2875 from 2869. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Lower. 16856 from 16860 from 16450. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1659 from 1665 from 1653. No Trade
viewtopic.php?f=10&t=6292&start=30
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.15 from 102.89 last week from 101.32 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0222 from 3.0273 from 3.0364. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7628 from 0.7599 from 0.7668. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1,0598 from 1.0427 from 1.0443. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2029 from 3.1565 from 3.1708. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0972 from 1.1206 from 1.1245. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7588 from 7.7575 from 7.7554. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.199 from 4.154 from 4.135; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3894 from 1.3722 from 1.3618; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.7247 from 6.6684 from 6.6685; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2192 from 1.2438 from 1.2979. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Weaker. 5.1195 from 5.1669
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Stronger; 0.7607 from 0.7523 from 0.7619. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 98.02 from 96.63 from 95.46; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Home values dropped 10.8% from the peak in 2013; Sales have declined to about half the level in 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in the Tier 1 & 2 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go ? 65%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's popoulation is at 8.7m. 50,000 new households pa. Supply of 20,000 new homes pa.
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.80% from 1.72% from 1.59%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.58 from 36.68 from 36.72
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Is The Storm Just Around The Corner ?
The markets have been quite weak the past week.
The US markets have been down every other day for the past 6 trading sessions.
HK is even worst. It has been down 5 out of the last 6 trading days.
So is the storm just around the corner ?
Intuitively, I think that it may be time to raise some more Cash. However, I'm not too sure that it's time to aggresively short the market yet.
Perhaps all you need now, is for the Indices to drop below the Support Level and thereafter, the algos will kick in, to drive the markets much lower.
Do you remember "Black Monday", October 19, 1987, where the Dow dropped 23% in a day on program trading ?
However, the "optimists" are saying that a crash will not occur due to :-
a. Low Interest Rates: The US$60b on the sidelines is looking for a place to go
b. Market Sentiment: Market is not Euphoric, which is an ingredient for a crash
c. Buybacks by Corporations
d. Valuation: PE 17 on S&P 500 is high but not "excessive"
e. The Plunge Protection Team will ensure that the market will not dive
Although I can agree with the "optimists" on some of the above, accidents do happen (as in the case of the 6% plunge in the GBP recently).
And it would not be fun if you are caught in an "accident", especially if it last for a few days. (For Brexit, the UK Financial companies were free-falling for two days ).
Peter Lynch has mentioned that there could be a 10% correction every two years and a 25% plunge every 4 years or so. Therefore, we are quite overdue for one already.
Anyway, I do not think that the market will suddenly plunge yet. Instead, it may go through a "Chinese Water Torture" ie. dripping slowly downwards. If this scenario occurs, it would then be a "wait and see" situation as it's still "too high to buy".
As for my Currency Risk, I've converted some MYR to GBP recently, as the GBP has dropped about 20% against the MYR (weak currency):-
i. Deadline: March 2017 for Article 50
ii. Risk: If "Hard Brexit", the GBP could be in for a multi-year decline
iii. Malaysian Election: Probably early 2017
iv. Bersih Rally: November 9, 2016
My other currency positions are doing quite well now:-
a. AUD vs SGD
b. AUD vs MYR
c. USD vs MYR
d. USD vs SGD
However, I still have about 70% of my portfolio being exposed to the MYR, SGD and AUD. If another storm does hit, all the funds would flow to the USD quickly, unless something catastrophic happens to the USA. And if that's the case, then the funds would probably flow to the JPY, AUD, CNY and EUR.
Commodities:- Mixed (Data as of Saturday)
1. Oil - Higher. US$50.32 from US$49.55 last week from US$48.05 two weeks ago
a. Glut 0.5m bpd - rebalancing in 2018?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand to grow by around 0.5m to 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for the Saudis to have high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at abput 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.28 from US$3.17 from US$2.90
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Lower. US$1252 from US$1269 from US$1319. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Lower. US$17.42 from US$17.58 from US$19.24. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Lower. US$2.11 from US$2.17 from US$2.21. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$155.40 from US$148 from US$151.55
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2012, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Higher. US$22.75 (Oct 10) from US$22.50 (Oct 3) from US$23.75 (Sep 26)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery fell 65 percent in 2015 to around $350 per kilowatt hour,
viewtopic.php?f=33&t=1667&start=20
6. If there's a crash, Commodities would not be spared.
7. The High USD is not good for Commodities
Equities - Lower ( Data as of Saturday every week )
1. US Equities - Lower. 2133 from 2154 last week from 2168 two weeks ago. Traded LABD (Short Biotech 3x) and TZA(Short Russell 2000 3x); Sold FCG (First Trust Natural Gas), SGDM (Sprott's Gold Miners) and Franco Nevada (FNV);
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 23233 from 23852 from 23297. Support 23000 then 22500. Traded HKEX
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3064 from 3005 from 3005; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Lower. 2815 from 2875 from 2869. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Lower. 16856 from 16860 from 16450. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Lower. 1659 from 1665 from 1653. No Trade
viewtopic.php?f=10&t=6292&start=30
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.15 from 102.89 last week from 101.32 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0222 from 3.0273 from 3.0364. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7628 from 0.7599 from 0.7668. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1,0598 from 1.0427 from 1.0443. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2029 from 3.1565 from 3.1708. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0972 from 1.1206 from 1.1245. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7588 from 7.7575 from 7.7554. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.199 from 4.154 from 4.135; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3894 from 1.3722 from 1.3618; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.7247 from 6.6684 from 6.6685; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2192 from 1.2438 from 1.2979. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Weaker. 5.1195 from 5.1669
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Stronger; 0.7607 from 0.7523 from 0.7619. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 98.02 from 96.63 from 95.46; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Home values dropped 10.8% from the peak in 2013; Sales have declined to about half the level in 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in the Tier 1 & 2 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go ? 65%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's popoulation is at 8.7m. 50,000 new households pa. Supply of 20,000 new homes pa.
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.80% from 1.72% from 1.59%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.58 from 36.68 from 36.72
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Oct 23, 2016 10:01 am
TOL as of Oct 23, 2016
Going Nowhere
It was an uneventful week for most markets.
When you expect it to drop below the support levels, it just flat-lines.
Has the storm passed or is it waiting to catch you ?
Anyway, I need to remind myself to be disciplined as it's very easy to have itchy fingers when you are sitting on Cash.
The issue is compounded when you are starting to see articles on the coming Santa Rally and Year-End Window Dressing.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Higher. US$51.00 from US$50.32 last week from US$49.55 two weeks ago
Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
s. Crude stocks -5.2m barrels. Normally, it would rise at refinery maintenance
t. Oil in storage has decreased from a high of 50m barrels to about 10m barrels
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.96 from US$3.28 from US$3.17. Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1267 from US$1252 from US$1269. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$17.53 from US$17.42 from US$17.58. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Lower. US$2.09 from US$2.11 from US$2.17. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$156.10 from US$155.40 from US$148; Not vested
L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$21.25 (Oct 17) from US$22.75 (Oct 10) from US$22.50 (Oct 3). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per kilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - vested thru COW (ipath Bloomberg Livestocks)
a. Live Cattle: US$101.15; L US$94; H US$170; Turning Around?
b. Hog: US$41.85; L US$41; H US$130; Turning Around? How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000 hogs in area
viewtopic.php?f=33&t=53&start=60
9. Grains - vested thru JJG (ipath Bloomberg Grains)
a. Wheat: US$414; L US$390; H US$900 (2012); Turning Around?
b. Corn: US$352.40; L US$315; H US$800 (2012); Turning Around ?
c. Soyabean: US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew?
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2141 from 2133 last week from 2154 two weeks ago.
Bought COW (ipath Livestock) and JJG (ipath Grains)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 23374 from 23233 from 23852. Support 23000 then 22500. Traded Sands China
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3091 from 3064 from 3005; Support at 2450; Sold CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Higher. 2831 from 2815 from 2875. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Higher. 17185 from 16856 from 16860. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1670 from 1659 from 1665. No Trade
viewtopic.php?f=10&t=6292&start=30
7. Australian Equities - Bought Crown Resorts (CWN.ASX). I think that the 18% drop from the arrest in China of 18 of their staff, is too excessive, especially when VIP business represents only 14% of their revenue
viewtopic.php?f=55&t=8201
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 103.80 from 104.15 last week from 102.89 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0045 from 3.0222 from 3.0273. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7617 from 0.7628 from 0.7599. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1.0610 from 1.0598 from 1.0427. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Weaker. 3.1878 from 3.2029 from 3.1565. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0887 from 1.0972 from 1.1206. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7579 from 7.7588 from 7.7575. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.185 from 4.199 from 4.154; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3929 from 1.3894 from 1.3722; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.7654 from 6.7247 from 6.6684; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2236 from 1.2192 from 1.2438. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.1209 from 5.1195 from 5.1669
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7501 from 0.7607 from 0.7523. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 98.70 from 98.02 from 96.63; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 65%? Would you be able to break-even in 5 years ?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's popoulation is at 8.7m. 50,000 new households pa. Supply of 20,000 new homes pa.
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Lower. 1.73% from 1.80% from 1.72%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Indonesia cut rates by 25 bps to 4.75%
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.84 from 36.58 from 36.68
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Going Nowhere
It was an uneventful week for most markets.
When you expect it to drop below the support levels, it just flat-lines.
Has the storm passed or is it waiting to catch you ?
Anyway, I need to remind myself to be disciplined as it's very easy to have itchy fingers when you are sitting on Cash.
The issue is compounded when you are starting to see articles on the coming Santa Rally and Year-End Window Dressing.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Higher. US$51.00 from US$50.32 last week from US$49.55 two weeks ago
Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
s. Crude stocks -5.2m barrels. Normally, it would rise at refinery maintenance
t. Oil in storage has decreased from a high of 50m barrels to about 10m barrels
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.96 from US$3.28 from US$3.17. Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1267 from US$1252 from US$1269. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$17.53 from US$17.42 from US$17.58. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Lower. US$2.09 from US$2.11 from US$2.17. Over-supply?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$156.10 from US$155.40 from US$148; Not vested
L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$21.25 (Oct 17) from US$22.75 (Oct 10) from US$22.50 (Oct 3). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per kilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - vested thru COW (ipath Bloomberg Livestocks)
a. Live Cattle: US$101.15; L US$94; H US$170; Turning Around?
b. Hog: US$41.85; L US$41; H US$130; Turning Around? How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000 hogs in area
viewtopic.php?f=33&t=53&start=60
9. Grains - vested thru JJG (ipath Bloomberg Grains)
a. Wheat: US$414; L US$390; H US$900 (2012); Turning Around?
b. Corn: US$352.40; L US$315; H US$800 (2012); Turning Around ?
c. Soyabean: US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew?
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2141 from 2133 last week from 2154 two weeks ago.
Bought COW (ipath Livestock) and JJG (ipath Grains)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 23374 from 23233 from 23852. Support 23000 then 22500. Traded Sands China
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3091 from 3064 from 3005; Support at 2450; Sold CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Higher. 2831 from 2815 from 2875. No Trade
viewtopic.php?f=10&t=6828&start=80m
5. Japan Equities - Higher. 17185 from 16856 from 16860. No Trade. The Strong Yen will hurt earnings
6. Malaysian Equities - Higher. 1670 from 1659 from 1665. No Trade
viewtopic.php?f=10&t=6292&start=30
7. Australian Equities - Bought Crown Resorts (CWN.ASX). I think that the 18% drop from the arrest in China of 18 of their staff, is too excessive, especially when VIP business represents only 14% of their revenue
viewtopic.php?f=55&t=8201
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 103.80 from 104.15 last week from 102.89 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Weaker. 3.0045 from 3.0222 from 3.0273. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0.7617 from 0.7628 from 0.7599. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1.0610 from 1.0598 from 1.0427. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Weaker. 3.1878 from 3.2029 from 3.1565. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0887 from 1.0972 from 1.1206. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7579 from 7.7588 from 7.7575. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.185 from 4.199 from 4.154; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3929 from 1.3894 from 1.3722; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.7654 from 6.7247 from 6.6684; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2236 from 1.2192 from 1.2438. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.1209 from 5.1195 from 5.1669
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7501 from 0.7607 from 0.7523. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 98.70 from 98.02 from 96.63; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) So how much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 65%? Would you be able to break-even in 5 years ?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's popoulation is at 8.7m. 50,000 new households pa. Supply of 20,000 new homes pa.
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Lower. 1.73% from 1.80% from 1.72%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Indonesia cut rates by 25 bps to 4.75%
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.84 from 36.58 from 36.68
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Oct 30, 2016 9:54 am
TOL as of Oct 23, 2016
Grinding Lower
The US Markets have been down 4 out of the past 5 sessions.
It looks like we are going through a "Chinese Water Torture" now ie. drip by drip lower. (And after the 10,000th drip, that drop of water on your forehead would probably feel like a rock).
And the drop in bond's prices is also something to worry about. Interest rates are moving higher. 10 Year Treasuries are now at 1.85%. Not too long ago, it was only 1.35%.
So what could break the camel's back ?
1. US Earnings: Looks ok so far.
2. Interest Rates: Still low despite the rise over the past few days
3. High USD: Not having much effect on Earnings, Commodities and USD Loans
4. Bad Loans: Seems ok for the time being
5. Trump Presidency: Not priced in yet
6. High Oil Prices: Not priced in yet
7. Europe - Italian Referendum, Lisbon Treaty, Merkel's Defeat; Slow motion train wreck
8. Geopolitical Issues: Nothing yet that will make you stay awake at night
From the above, it looks like the "torture" may continue for a while longer.
However, the markets would soon be getting some new money from the new month of November. Therefore, we could get a spike next week before continuing with the 'Chinese Water Torture" until late November.
In early December, we would be looking at Year End Window Dressing, the Santa Rally and January Effect.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Lower. US$48.66 from US$51.00 last week from US$50.32 two weeks ago
Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
s. Crude stocks -5.2m barrels. Normally, it would rise at refinery maintenance
t. Oil in storage has decreased from a high of 50m barrels to about 10m barrels
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.11 from US$2.96 from US$3.28. Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1276 from US$1267 from US$1252. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$17.76 from US$17.53 from US$17.42. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Higher. US$2.20 from US$2.09 from US$2.11. Vested in ipath Bloomberg Copper. Over-sold ?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$165.50 from US$156.10 from US$155.40; Not vested
L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$20 (Oct 24) from US$21.25 (Oct 17) from US$22.75 (Oct 10). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - not vested
a. Live Cattle: Higher. US$104 from US$101.15; L US$94; H US$170; Turning Around?
b. Hog: Higher. US$46.99 from US$41.85; L US$41; H US$130; Turning Around? How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000 hogs in area
viewtopic.php?f=33&t=53&start=60
9. Grains - vested thru JJG (ipath Bloomberg Grains)
a. Wheat: Lower. US$408 from US$414; L US$390; H US$900 (2012); Turning Around?
b. Corn: Higher. US$355 from US$352.40; L US$315; H US$800 (2012); Turning Around ?
c. USDA: 2016: 15.057b bushels; - 36m bushels yoy; Price: $325
d. Soyabean: Higher. US$10002 from US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew?
e. USDA: 2016 4.269b bushels; +68m bushels;
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Lower. 2126 from 2141 last week from 2133 two weeks ago.
Bought JJC (ipath Copper). Sold COW (ipath Livestock)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22955 from 23374 from 23233. Support 22800 then 22500. Bought Zijin (2899) and 2800 Tracker Fund
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3104 from 3091 from 3064; Support at 2450; Bought CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Bought Silverlake Axis
5. Japan Equities - Higher. 17446 from 17185 from 16856. The Strong Yen will hurt earnings
6. Malaysian Equities - Bought IGB
7. Australian Equities - No Trade
Currencies- Mixed ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.69 from 103.80 last week from 104.15 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.0175 from 3.0045 from 3.0222. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0,7602 from 0.7617 from 0.7628. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0574 from 1.0610 from 1.0598. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.1907 from 3.1878 from 3.2029. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.0987 from 1.0887 from 1.0972. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7534 from 7.7579 from 7.7588. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.197 from 4.185 from 4.199; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3909 from 1.3929 from 1.3894; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.7758 from 6.7654 from 6.7247; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2189 from 1.2236 from 1.2192. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Weaker. 5.1158 from 5.1209 from 5.1195
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7474 from 0.7501 from 0.7607. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Weaker. 98.35 from 98.70 from 98.02; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) How much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 65%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's population @ 8.7m. 50k new households pa. Supply 20,000 new homes pa
vi) CEBR: Property prices in London to fall 5.6% in 2017
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.85% from 1.73% from 1.80%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Indonesia cut rates by 25 bps to 4.75%
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.37 from 36.84 from 36.58
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
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Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Grinding Lower
The US Markets have been down 4 out of the past 5 sessions.
It looks like we are going through a "Chinese Water Torture" now ie. drip by drip lower. (And after the 10,000th drip, that drop of water on your forehead would probably feel like a rock).
And the drop in bond's prices is also something to worry about. Interest rates are moving higher. 10 Year Treasuries are now at 1.85%. Not too long ago, it was only 1.35%.
So what could break the camel's back ?
1. US Earnings: Looks ok so far.
2. Interest Rates: Still low despite the rise over the past few days
3. High USD: Not having much effect on Earnings, Commodities and USD Loans
4. Bad Loans: Seems ok for the time being
5. Trump Presidency: Not priced in yet
6. High Oil Prices: Not priced in yet
7. Europe - Italian Referendum, Lisbon Treaty, Merkel's Defeat; Slow motion train wreck
8. Geopolitical Issues: Nothing yet that will make you stay awake at night
From the above, it looks like the "torture" may continue for a while longer.
However, the markets would soon be getting some new money from the new month of November. Therefore, we could get a spike next week before continuing with the 'Chinese Water Torture" until late November.
In early December, we would be looking at Year End Window Dressing, the Santa Rally and January Effect.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Lower. US$48.66 from US$51.00 last week from US$50.32 two weeks ago
Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC: Agreement to have an agreement
r. US Typhoon Season
s. Crude stocks -5.2m barrels. Normally, it would rise at refinery maintenance
t. Oil in storage has decreased from a high of 50m barrels to about 10m barrels
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.11 from US$2.96 from US$3.28. Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1276 from US$1267 from US$1252. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 300 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$17.76 from US$17.53 from US$17.42. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Higher. US$2.20 from US$2.09 from US$2.11. Vested in ipath Bloomberg Copper. Over-sold ?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$165.50 from US$156.10 from US$155.40; Not vested
L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$20 (Oct 24) from US$21.25 (Oct 17) from US$22.75 (Oct 10). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - not vested
a. Live Cattle: Higher. US$104 from US$101.15; L US$94; H US$170; Turning Around?
b. Hog: Higher. US$46.99 from US$41.85; L US$41; H US$130; Turning Around? How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000 hogs in area
viewtopic.php?f=33&t=53&start=60
9. Grains - vested thru JJG (ipath Bloomberg Grains)
a. Wheat: Lower. US$408 from US$414; L US$390; H US$900 (2012); Turning Around?
b. Corn: Higher. US$355 from US$352.40; L US$315; H US$800 (2012); Turning Around ?
c. USDA: 2016: 15.057b bushels; - 36m bushels yoy; Price: $325
d. Soyabean: Higher. US$10002 from US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew?
e. USDA: 2016 4.269b bushels; +68m bushels;
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Lower. 2126 from 2141 last week from 2133 two weeks ago.
Bought JJC (ipath Copper). Sold COW (ipath Livestock)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22955 from 23374 from 23233. Support 22800 then 22500. Bought Zijin (2899) and 2800 Tracker Fund
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3104 from 3091 from 3064; Support at 2450; Bought CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Bought Silverlake Axis
5. Japan Equities - Higher. 17446 from 17185 from 16856. The Strong Yen will hurt earnings
6. Malaysian Equities - Bought IGB
7. Australian Equities - No Trade
Currencies- Mixed ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.69 from 103.80 last week from 104.15 two weeks ago. 52 week range is 76 to 126. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.0175 from 3.0045 from 3.0222. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Weaker. 0,7602 from 0.7617 from 0.7628. The range is 0.70 (2016) to 1,10 (2011). Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0574 from 1.0610 from 1.0598. The range is 0.98 (2016) to 1.36 (2012). Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.1907 from 3.1878 from 3.2029. The range is 2.20 (2008) to 3.30 (2012). Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.0987 from 1.0887 from 1.0972. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7534 from 7.7579 from 7.7588. 52 week range is 7.7452 - 7.8296. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.197 from 4.185 from 4.199; 52 Week Range is 3.27 to 4.47. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
a. Decoupling of the MYR and Oil ?
b. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3909 from 1.3929 from 1.3894; Expecting the SGD to drop against the USD; High 1.70 (2004); Low 1.20 (2011)
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.7758 from 6.7654 from 6.7247; Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Weaker. 1.2189 from 1.2236 from 1.2192. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Weaker. 5.1158 from 5.1209 from 5.1195
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can also make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7474 from 0.7501 from 0.7607. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Weaker. 98.35 from 98.70 from 98.02; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.4t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: Revised to 0% for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) How much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 65%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's population @ 8.7m. 50k new households pa. Supply 20,000 new homes pa
vi) CEBR: Property prices in London to fall 5.6% in 2017
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 1.85% from 1.73% from 1.80%. Low 1.32%; High 2.69%. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. Indonesia cut rates by 25 bps to 4.75%
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.37 from 36.84 from 36.58
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Nov 06, 2016 9:48 am
TOL as of Nov 6, 2016
Oversold Markets ?
The markets have been weak for the past week, probably in anticipation of a close US Election. So would it bounce up regardless of who wins on November 8 ?
Intuitively, a "Trump Win", may trigger some sell orders. Thereafter, that could be the right time to go shopping, in anticipation of the Santa Rally and Year-End Window Dressing.
On the other hand, a "Hilary Win". would probably trigger some buy orders, except for the Healthcare sector.
And according to the "experts", regardless of who wins, Infrastructure and Defense, would probably do well.
Anyway, most "professionals" have already raised Cash or hedged their long positions. Therefore, there's a high probability that markets would rally after the US elections as those Cash are being deployed back into the markets.
However, markets do have a habit of surprising everyone, so it's probably best to stay on the side-lines and watch the actions.
As for myself, I have also raised some Cash as I'm very uncomfortable with the direction of the markets.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Lower. US$44.13 from US$48.66 last week from US$51.00 two weeks ago. Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage is being drawn-down ?
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC Meeting: November 30
r. Crude stocks: -5.2m barrels. Normally, it would rise at refinery maintenance
s. Oil in storage has decreased from a high of 50m barrels to about 10m barrels ?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.78 from US$3.11 from US$2.96. Support 2.40? Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
d. New injections into storage are at about 40% below the pace of two years ago
e. U.S. EIA: Volume of gas in working storage is now only 2% above the five-year average. In Mar 2016, supply was nearly 40% above its five-year average.
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1305 from US$1276 from US$1267. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 250 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$18.42 from US$17.76 from US$17.53. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Higher. US$2.26 from US$2.20 from US$2.09. not vested. Over-sold?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$171.35 from US$165.50 from US$156.10; Support US$146. Not vested. L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures and more resilient pests
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
i. By 2050, suitable land will halved and demand will double
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$18.75 (Oct 31) from US$20 (Oct 24) from US$21.25 (Oct 17). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - not vested
a. Live Cattle: Lower. US$103 from US$104 from US$101.15; Low US$94; High US$170
b. Hog: Lower. US$46.29 from US$46.99 from US$41.85; L US$41; H US$130; How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000
viewtopic.php?f=33&t=53&start=60
9. Grains
a. Wheat: Higher. US$414 from US$408 from US$414; L US$390; H US$900 (2012); Turning Around? vested in WEAT
b. Corn: Lower. US$347 from US$355 from US$352.40; L US$315; H US$800 (2012); Not vested
c. USDA: 2016: 15.057b bushels; - 36m bushels yoy; Price: $325
d. Soyabean: Lower. US$986 from US$10002 from US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew? Not vested
e. USDA: 2016 4.269b bushels; +68m bushels;
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2085 from 2126 last week from 2141 two weeks ago.
Bought WEAT (Teucrium Wheat); Sold JJC (ipath Copper) and JJG(ipath Grains)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22643 from 22955 from 23374. Support 22800 then 22500. Traded Cofco Meat. Sold AIA (1299) and Zijin (2899)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3125 from 3104 from 3091; Support at 2450; Sold CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Lower. 16905 from 17446 from 17185. The Strong Yen will hurt earnings
6. Malaysian Equities - Traded IFCA
7. Australian Equities - No Trade
Currencies- Mixed
1. USD to JPY - JPY Stronger. 103.09 from 104.69 last week from 103.80 two weeks ago.
a. 52 week range is 76 to 126.
b. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.035 from 3.0175 from 3.0045.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD
3. AUD to USD - AUD Stronger. 0.7680 from 0.7602 from 0.7617.
a. The range is 0.70 (2016) to 1,10 (2011).
b. Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0615 from 1.0574 from 1.0610.
a. The range is 0.98 (2016) to 1.36 (2012).
b. Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2217 from 3.1907 from 3.1878.
a. The range is 2.20 (2008) to 3.30 (2012).
b. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.115 from 1.0987 from 1.0887.
a. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7545 from 7.7534 from 7.7579. 52 week range is 7.7452 - 7.8296.
a. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.195 from 4.197 from 4.185; 52 Week Range is 3.27 to 4.47.
a. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
b. Decoupling of the MYR and Oil ?
c. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3822 from 1.3909 from 1.3929; High 1.70 (2004); Low 1.20 (2011)
a. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.7535 from 6.7758 from 6.7654;
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2518 from 1.2189 from 1.2236.
a. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.2515 from 5.1158 from 5.1209
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7463 from 0.7474 from 0.7501.
a. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Weaker. 97.07 from 98.35 from 98.70; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; European NPLs (US$1.3t); Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.3t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iv) Volume and Value of transactions declined 14% and 11%, in the first 9 months
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: No rise for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
xiii) Home prices rose for 6th month in Sept, accumulative 8.9%
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) How much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 60%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
vi) CEBR: Property prices in London to fall 5.6% in 2017
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Lower. 1.78% from 1.85% from 1.73%. Low 1.32%; High 2.69%.
a. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. The US Feds will probably raise rates in Dec 2016 and twice in 2017.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 35.82 from 36.37 from 36.84
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please 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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InvestIdeas • View active topics
Oversold Markets ?
The markets have been weak for the past week, probably in anticipation of a close US Election. So would it bounce up regardless of who wins on November 8 ?
Intuitively, a "Trump Win", may trigger some sell orders. Thereafter, that could be the right time to go shopping, in anticipation of the Santa Rally and Year-End Window Dressing.
On the other hand, a "Hilary Win". would probably trigger some buy orders, except for the Healthcare sector.
And according to the "experts", regardless of who wins, Infrastructure and Defense, would probably do well.
Anyway, most "professionals" have already raised Cash or hedged their long positions. Therefore, there's a high probability that markets would rally after the US elections as those Cash are being deployed back into the markets.
However, markets do have a habit of surprising everyone, so it's probably best to stay on the side-lines and watch the actions.
As for myself, I have also raised some Cash as I'm very uncomfortable with the direction of the markets.
Commodities:- Risk-On/b] (Data as of Saturday)
1. Oil - Lower. US$44.13 from US$48.66 last week from US$51.00 two weeks ago. Vested - RH Petrogas;
a. Glut 0.5m bpd - rebalancing in 2017?; Supply 94m bpd; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd, currently, 3.6m bpd; 40m barrels in storage is being drawn-down ?
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 4Q 2016
i. Nigerian Oil disruption ending? (400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Refineries Maintenance: 1.5m bpd for a few months
m. Libya's oil export resuming? (300,000 bpd)
n. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
o. Russia: ramping drilling activities in existing brownfields
p. Saudi's production at about 11m bpd
q. OPEC Meeting: November 30
r. Crude stocks: -5.2m barrels. Normally, it would rise at refinery maintenance
s. Oil in storage has decreased from a high of 50m barrels to about 10m barrels ?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.78 from US$3.11 from US$2.96. Support 2.40? Not vested
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
d. New injections into storage are at about 40% below the pace of two years ago
e. U.S. EIA: Volume of gas in working storage is now only 2% above the five-year average. In Mar 2016, supply was nearly 40% above its five-year average.
viewtopic.php?f=33&t=1863&start=130
2. Gold - Higher. US$1305 from US$1276 from US$1267. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 250 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
3. Silver - Higher. US$18.42 from US$17.76 from US$17.53. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Copper - Higher. US$2.26 from US$2.20 from US$2.09. not vested. Over-sold?
viewtopic.php?f=33&t=5598&start=90
5. Coffee - Higher. US$171.35 from US$165.50 from US$156.10; Support US$146. Not vested. L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures and more resilient pests
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
i. By 2050, suitable land will halved and demand will double
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$18.75 (Oct 31) from US$20 (Oct 24) from US$21.25 (Oct 17). Vested in Cameco (CCJ)
a. Breakeven: US$60 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
viewtopic.php?f=33&t=705&start=80
7. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
viewtopic.php?f=33&t=1667&start=20
8. Meat - not vested
a. Live Cattle: Lower. US$103 from US$104 from US$101.15; Low US$94; High US$170
b. Hog: Lower. US$46.29 from US$46.99 from US$41.85; L US$41; H US$130; How bad is the damage from Hurricane Matthew? Initial report: 5000/600,000
viewtopic.php?f=33&t=53&start=60
9. Grains
a. Wheat: Higher. US$414 from US$408 from US$414; L US$390; H US$900 (2012); Turning Around? vested in WEAT
b. Corn: Lower. US$347 from US$355 from US$352.40; L US$315; H US$800 (2012); Not vested
c. USDA: 2016: 15.057b bushels; - 36m bushels yoy; Price: $325
d. Soyabean: Lower. US$986 from US$10002 from US$983; L US$942; H US$1760 (2012); How bad is the damage from Hurricane Matthew? Not vested
e. USDA: 2016 4.269b bushels; +68m bushels;
viewtopic.php?f=33&t=6363&start=80
10. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2085 from 2126 last week from 2141 two weeks ago.
Bought WEAT (Teucrium Wheat); Sold JJC (ipath Copper) and JJG(ipath Grains)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22643 from 22955 from 23374. Support 22800 then 22500. Traded Cofco Meat. Sold AIA (1299) and Zijin (2899)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3125 from 3104 from 3091; Support at 2450; Sold CSI 300 (3188) listed in HK
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Lower. 16905 from 17446 from 17185. The Strong Yen will hurt earnings
6. Malaysian Equities - Traded IFCA
7. Australian Equities - No Trade
Currencies- Mixed
1. USD to JPY - JPY Stronger. 103.09 from 104.69 last week from 103.80 two weeks ago.
a. 52 week range is 76 to 126.
b. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.035 from 3.0175 from 3.0045.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD
3. AUD to USD - AUD Stronger. 0.7680 from 0.7602 from 0.7617.
a. The range is 0.70 (2016) to 1,10 (2011).
b. Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Weaker. 1.0615 from 1.0574 from 1.0610.
a. The range is 0.98 (2016) to 1.36 (2012).
b. Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2217 from 3.1907 from 3.1878.
a. The range is 2.20 (2008) to 3.30 (2012).
b. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Stronger. 1.115 from 1.0987 from 1.0887.
a. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7545 from 7.7534 from 7.7579. 52 week range is 7.7452 - 7.8296.
a. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.195 from 4.197 from 4.185; 52 Week Range is 3.27 to 4.47.
a. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
b. Decoupling of the MYR and Oil ?
c. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3822 from 1.3909 from 1.3929; High 1.70 (2004); Low 1.20 (2011)
a. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.7535 from 6.7758 from 6.7654;
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2518 from 1.2189 from 1.2236.
a. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.2515 from 5.1158 from 5.1209
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7463 from 0.7474 from 0.7501.
a. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Weaker. 97.07 from 98.35 from 98.70; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; European NPLs (US$1.3t); Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.3t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iv) Volume and Value of transactions declined 14% and 11%, in the first 9 months
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: No rise for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
xiii) Home prices rose for 6th month in Sept, accumulative 8.9%
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) How much have you lost if you have bought just before Brexit? About 40%? (Currency 15%, Decline 15%, Fees 10%)? And how low can it go? 60%?
iv) Hard Brexit - 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
v) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
vi) CEBR: Property prices in London to fall 5.6% in 2017
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Lower. 1.78% from 1.85% from 1.73%. Low 1.32%; High 2.69%.
a. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. The US Feds will probably raise rates in Dec 2016 and twice in 2017.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 35.82 from 36.37 from 36.84
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
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InvestIdeas • View active topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111059
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Nov 13, 2016 12:58 pm
TOL as of Nov 13, 2016
Currency Risk
Over the past few days, the currencies of various Emerging Markets have plunged. The MYR was also not spared.
So where do we go from here ? Would there be Capital Control again in Malaysia? And how low can the MYR go this time ?
Intuitively, I do not think that this is the big one. The money from the Mainland Chinese are flowing into Malaysia and the Malaysian economy is growing at 4.3%.
However, I won't be converting my foreign currencies to MYR yet, in view of the coming Bersih Rally on Nov 19, as well as the General Election expected next year.
I have been worried about my Currency Risk for a few months and have written on the issue many times.
Unfortunately, a lot of people have not protected themselves when times were relatively stable.
If you need to buy any foreign goods or services, it may be a good idea to do it now before they adjust the price upwards.
Commodities:- Risk-Off/b] (Data as of Saturday)
1. Oil - Lower. US$43.12 from US$44.13 last week from US$48.66 two weeks ago. Vested - RH Petrogas;
a. Glut 1-2m bpd - rebalancing in 3Q 2017?; Supply 97.8m bpd?; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd; Currently, at 3.6m bpd; 40m barrels in storage is being drawn-down ?
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 4Q 2016 ( - 700,000 bpd)
i. Nigerian Oil disruption ending? ( + 400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Libya's oil export resuming? (+300,000 bpd)
m. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
n. Russia: ramping drilling activities in existing brownfields
o. Saudi's production at about 11m bpd
p. OPEC Meeting: November 30
q. Crude stocks: -5.2m barrels. Normally, it would rise 1.5m bpd for a few months, at refinery maintenance
r. Oil in storage has decreased from a high of 50m barrels to about 10m barrels ?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.63 from US$2.78 from US$3.11. Support 2.40?
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
d. New injections into storage are at about 40% below the pace of two years ago
e. U.S. EIA: Volume of gas in working storage is now only 2% above the five-year average. In Mar 2016, supply was nearly 40% above its five-year average.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1227 from US$1305 from US$1276. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 250 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.36 from US$18.42 from US$17.76. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Copper - Higher. US$2.51 from US$2.26 from US$2.20. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90
6. Coffee - Lower. US$159.57 from US$171.35 from US$165.50;
Support US$146. Not vested. L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures and more resilient pests
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
i. By 2050, suitable land will halved and demand will double
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$18.75 (Nov 7) from US$18.75 (Oct 31) from US$20 (Oct 24). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
i. Russia withdrew from Nuclear deal in Oct 2016
j. Paris Climate Deal - implemented in November 2016
viewtopic.php?f=33&t=705&start=80
8. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20
9. Wheat - Lower. US$403 from US$414 from US$408
a. L US$390; H US$900 (2012); Turning Around?
b. Vested in WEAT
viewtopic.php?f=33&t=6363&start=80
10. Palladium
a. Used in Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemical Applications, Groundwater Treatment, Jewelry and Fuel Cells
b. Auto industry consumes 80% of supply
c. Demand by Auto industry doubled in past 10 years
d. Growth Demand: 3% a year for next 4 years
e. Russia and South Africa produced 3/4 of the world's mined palladium supply.
f. Heading toward its 8th annual supply deficit in 2017
g. Up more than 40% from its January low
h. Vehicle: PALL (not vested)
viewtopic.php?f=33&t=7070
11. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2164 from 2085 last week from 2126 two weeks ago.
Traded LABD (Inverse Biotech 3x), UVXY (Volatility 3x), STZ (Constellation Brands) and EDZ (Inverse Emerging Markets 3x)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22531 from 22643 from 22955. Support at 22800 then 22500. Traded Ping An and ICBC
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3196 from 3125 from 3104; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Bought Manulife US Commercial Reit; Sold Silverlake Axis and 1/4 DBXT S&P Short ETF
5. Japan Equities - Higher. 17373 from 16905 from 17446. The Strong Yen will hurt earnings
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 106.645 from 103.09 last week from 104.69 two weeks ago.
a. 52 week range is 76 to 126.
b. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.0354 from 3.0350 from 3.0175.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD
3. AUD to USD - AUD Weaker. 0.7555 from 0.7680 from 0.7602.
a. The range is 0.70 (2016) to 1,10 (2011).
b. Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1.0665 from 1.0615 from 1.0574.
a. The range is 0.98 (2016) to 1.36 (2012).
b. Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2374 from 3.2217 from 3.1907.
a. The range is 2.20 (2008) to 3.30 (2012).
b. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0858 from 1.1150 from 1.0987.
a. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7575 from 7.7545 from 7.7534. 52 week range is 7.7452 - 7.8296.
a. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.285 from 4.195 from 4.197; 52 Week Range is 3.27 to 4.54.
a. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
b. Decoupling of the MYR and Oil ?
c. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.4117 from 1.3822 from 1.3909; High 1.70 (2004); Low 1.20 (2011)
a. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.8090 from 6.7535 from 6.7758;
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2599 from 1.2518 from 1.2189.
a. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.3988 from 5.2515 from 5.1158
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7384 from 0.7463 from 0.7474.
a. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 99.06 from 97.07 from 98.35; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; European NPLs (US$1.3t); Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021);
US Feds Leverage (113 to 1);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.3t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iv) Volume and Value of transactions declined 14% and 11%, in the first 9 months
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: No rise for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
xiii) Home prices rose for 6th month in Sept, accumulative 8.9%
xiv) DB: Prices to drop 11% in 2017
xv) CS: Prices to drop 22% by end 2018
xvi) BoA: Prices to drop 5%
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) Hard BrexitL 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iv) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
v) CEBR: Property prices in London to fall 5.6% in 2017
vi) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vii) Molior: Will take more than 2.3 years to sell the homes under construction based on the current sales rate
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 2.15% from 1.78% from 1.85%.
Low 1.32%; High 2.69%.
a. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. The US Feds will probably raise rates in Dec 2016 and twice in 2017.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 35.13 from 35.82 from 36.37
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please 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.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics
Currency Risk
Over the past few days, the currencies of various Emerging Markets have plunged. The MYR was also not spared.
So where do we go from here ? Would there be Capital Control again in Malaysia? And how low can the MYR go this time ?
Intuitively, I do not think that this is the big one. The money from the Mainland Chinese are flowing into Malaysia and the Malaysian economy is growing at 4.3%.
However, I won't be converting my foreign currencies to MYR yet, in view of the coming Bersih Rally on Nov 19, as well as the General Election expected next year.
I have been worried about my Currency Risk for a few months and have written on the issue many times.
Unfortunately, a lot of people have not protected themselves when times were relatively stable.
If you need to buy any foreign goods or services, it may be a good idea to do it now before they adjust the price upwards.
Commodities:- Risk-Off/b] (Data as of Saturday)
1. Oil - Lower. US$43.12 from US$44.13 last week from US$48.66 two weeks ago. Vested - RH Petrogas;
a. Glut 1-2m bpd - rebalancing in 3Q 2017?; Supply 97.8m bpd?; Demand 93.5m bpd?
b. Global Stockpiles: 3b barrels (66 days of consumption?)
c. US SPR: 695m barrels out of max 727m barrels; To sell 8% from 2018-2023
d. Iran used to export 4m bpd; Currently, at 3.6m bpd; 40m barrels in storage is being drawn-down ?
e. Demand growth: around 0.5m to 1m bpd pa, mainly from Asia
f. India overtaken China in consumption (400,000 bpd vs China's 320,000)
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 4Q 2016 ( - 700,000 bpd)
i. Nigerian Oil disruption ending? ( + 400,000 bpd)
j. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
k. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
l. Libya's oil export resuming? (+300,000 bpd)
m. China: Imports +13% yoy; SPR reached 51 days out of planned 90 days
n. Russia: ramping drilling activities in existing brownfields
o. Saudi's production at about 11m bpd
p. OPEC Meeting: November 30
q. Crude stocks: -5.2m barrels. Normally, it would rise 1.5m bpd for a few months, at refinery maintenance
r. Oil in storage has decreased from a high of 50m barrels to about 10m barrels ?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$2.63 from US$2.78 from US$3.11. Support 2.40?
a. High: US$13.69 (2008); Low: US$1.61 (March 2015)
b. Natural gas rigs: Dropped from 1,606 (2008) to low of 81
c. Switching from Coal to Natural Gas
d. New injections into storage are at about 40% below the pace of two years ago
e. U.S. EIA: Volume of gas in working storage is now only 2% above the five-year average. In Mar 2016, supply was nearly 40% above its five-year average.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1227 from US$1305 from US$1276. Record US$1920
a. Electronics, Gold Coins, Central Banks, Jewellery etc.
b. 250 oz of paper contract for every oz of physical gold holding on Comex.
c. Output to fall by 100 metric tons (3%), from 3,150 in 2015 to 3,050 this year
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.36 from US$18.42 from US$17.76. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Copper - Higher. US$2.51 from US$2.26 from US$2.20. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90
6. Coffee - Lower. US$159.57 from US$171.35 from US$165.50;
Support US$146. Not vested. L US$120; H US$300 (2011)
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. In 2030, demand around 200m bags
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures and more resilient pests
f. Robusta is grown in Vietnam and is more robust
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America has lowered supply by 30%
i. By 2050, suitable land will halved and demand will double
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$18.75 (Nov 7) from US$18.75 (Oct 31) from US$20 (Oct 24). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$140 (2008);
c. Global production: 160m lbs pa
d. Stockpile: 1b lbs ( Nomal for companies to store 5 to 7 years supply )
e. Japanese Demand: 13 lbs pa
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. Many legacy long-term supply contracts expiring in 2017-18
i. Russia withdrew from Nuclear deal in Oct 2016
j. Paris Climate Deal - implemented in November 2016
viewtopic.php?f=33&t=705&start=80
8. Lithium - not vested
a. Global Lithium Demand: 184kt; 202kt - 535kt
b. Batteries: 40% demand now rising to 70% in 2025; Growth 45% yoy
c. 81% Global Supply: Chile, Australia and Argentina
d. 83% Global Suppy: Turning Around ?Albemarle, SQM, FMC and Sichuan Tianqi
e. Cost of lithium-ion battery [b] fell 65 percent in 2015 to around $350 per ilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20
9. Wheat - Lower. US$403 from US$414 from US$408
a. L US$390; H US$900 (2012); Turning Around?
b. Vested in WEAT
viewtopic.php?f=33&t=6363&start=80
10. Palladium
a. Used in Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemical Applications, Groundwater Treatment, Jewelry and Fuel Cells
b. Auto industry consumes 80% of supply
c. Demand by Auto industry doubled in past 10 years
d. Growth Demand: 3% a year for next 4 years
e. Russia and South Africa produced 3/4 of the world's mined palladium supply.
f. Heading toward its 8th annual supply deficit in 2017
g. Up more than 40% from its January low
h. Vehicle: PALL (not vested)
viewtopic.php?f=33&t=7070
11. If there's a crash, Commodities would not be spared. 11. The High USD is not good for Commodities
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Higher. 2164 from 2085 last week from 2126 two weeks ago.
Traded LABD (Inverse Biotech 3x), UVXY (Volatility 3x), STZ (Constellation Brands) and EDZ (Inverse Emerging Markets 3x)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 22531 from 22643 from 22955. Support at 22800 then 22500. Traded Ping An and ICBC
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3196 from 3125 from 3104; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Bought Manulife US Commercial Reit; Sold Silverlake Axis and 1/4 DBXT S&P Short ETF
5. Japan Equities - Higher. 17373 from 16905 from 17446. The Strong Yen will hurt earnings
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 106.645 from 103.09 last week from 104.69 two weeks ago.
a. 52 week range is 76 to 126.
b. Expecting the Yen to drop against the USD
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger. 3.0354 from 3.0350 from 3.0175.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD
3. AUD to USD - AUD Weaker. 0.7555 from 0.7680 from 0.7602.
a. The range is 0.70 (2016) to 1,10 (2011).
b. Expecting the AUD to rise against the USD
viewtopic.php?f=32&t=5256&start=130
4. AUD to SGD - AUD Stronger. 1.0665 from 1.0615 from 1.0574.
a. The range is 0.98 (2016) to 1.36 (2012).
b. Expecting the AUD to rise against the SGD
5. AUD to MYR - AUD Stronger. 3.2374 from 3.2217 from 3.1907.
a. The range is 2.20 (2008) to 3.30 (2012).
b. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.0858 from 1.1150 from 1.0987.
a. Will not be investing in the EUR as I think that it's in a multi-year decline
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7575 from 7.7545 from 7.7534. 52 week range is 7.7452 - 7.8296.
a. Will they remove the peg to the USD during a crisis ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.285 from 4.195 from 4.197; 52 Week Range is 3.27 to 4.54.
a. Expecting the MYR to drop against the USD; Lowest: 4.60 (1998)
b. Decoupling of the MYR and Oil ?
c. Over the past month, the ringgit has fallen 1.6% vs USD, while oil has risen 9.3%
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.4117 from 1.3822 from 1.3909; High 1.70 (2004); Low 1.20 (2011)
a. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Weaker; 6.8090 from 6.7535 from 6.7758;
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50
11. GBP to USD:- GBP Stronger. 1.2599 from 1.2518 from 1.2189.
a. Will not be investing in the GBP versus the USD, as I think that it's in a multi-year decline
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Stronger. 5.3988 from 5.2515 from 5.1158
a. GBP has dropped about 20% to the MYR
b. However, cheap can always become cheaper
c. At the same time, you can make money if things go from bad to "less bad"
d. Already Converted some MYR to GBP. Waiting to convert two more tranches if the opportunity presents itself
13. CAD to USD:- CAD Weaker; 0.7384 from 0.7463 from 0.7474.
a. Expecting the CAD to drop against the USD, as Oil is still weak and the Bank of Canada is expected to reduce interest rates
viewtopic.php?f=32&t=393&start=40
14. Dollar Index - USD Stronger. 99.06 from 97.07 from 98.35; If not the USD, then what currency? If the Financial System does collapse, it's probably better to be in physical assets instead of the USD, eg. Farmland, Real Estate, Commodities, Gold, Silver etc.
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds - Global Derivatives (US$700t); Global Debts (US$150t, 225% Global GDP); Global Corporate Debt (US$50t); China Debts (US$23t); Chinese Corporate Debts (US$18t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); StockMarket Cap/GDP(200%); Emerging Markets US$ Debts (US$10t); US$ Oil Bad Debts (US$0.2t /US$2.5t); Foreigners Holding of US Treasuries (US$6.3t); US Students Loan (US$1.4t); Trump Presidency; European NPLs (US$1.3t); Italian NPLs (US$0.4t); Junk Bonds Maturing (2017-2021): US$1.5t (2017-2021);
US Feds Leverage (113 to 1);
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$70t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1.3t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$89t); EM Consumption;
4. 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
5. Properties
a. Spore Properties
i) Prices down 10.8% from peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Incoming supply: 10,000 units in 2H16 and another 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Spike in buying from wealthy Indonesians to get around Tax Amnesty Program
vi) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vii) Americans became the 2nd most frequent buyers of high-end homes
viii) There were 5,587 resales in first 9 months of 2016, up on the 4,696 sales in the same period last year
viewtopic.php?f=10&t=7750&start=40
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developer's schemes eg. unemployment insurance, 10/90 scheme, loans etc
iii) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iv) Volume and Value of transactions declined 14% and 11%, in the first 9 months
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) About 4 years supply at Tier 3 & 4 cities
ii) Various new curbs in more than 20 cities
iii) Beijing is + 23.5% yoy
iv) Shanghai is + 31.2% yoy
v) Shenzhen is +36.8% yoy
vi) Guangzhou is +21.1% yoy
viewtopic.php?f=10&t=8150&start=30
d. HK Properies
i) Prices has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. Pipeline of 93,000 units expected in the next three to four years (up 40%)
iii) About 19,000 people left HK last year
iv) Daiwa: Prices to go up 1% in 2016; +5% for 2017
v) In Sep 2016, about 3,100 new flats sold, mostly mass residential
vi) The number of deals > HK$10 million, jumped 40% to 200 in the first 11 days of Sep 2016 (month -on-month)
vii) Henderson focusing on building tiny flats
viii) Margins have decreased to 25% from 40%
ix) Spike in buying from Mainlanders despite the various curbs
x) Knight Frank: No rise for 2016 from -5%; +5% for 2017
xi) Macquarie: +5% for 2017
xii) Prices has risen 11% from the low in March 2016
xiii) Home prices rose for 6th month in Sept, accumulative 8.9%
xiv) DB: Prices to drop 11% in 2017
xv) CS: Prices to drop 22% by end 2018
xvi) BoA: Prices to drop 5%
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
ii) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
iii) Hard BrexitL 75,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iv) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
v) CEBR: Property prices in London to fall 5.6% in 2017
vi) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vii) Molior: Will take more than 2.3 years to sell the homes under construction based on the current sales rate
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Higher. 2.15% from 1.78% from 1.85%.
Low 1.32%; High 2.69%.
a. The new regulation on Money Market Funds would probably be decreasing the yield for US Treasuries
7. Interest Rates:-
a. Since Jan 1, 2015, > 25 Central Banks have cut interest rates
b. Expecting interest rates to remain low for a long time
c. About US$10t or about 1/4 of the world’s bonds now have negative yields.
d. The US Feds will probably raise rates in Dec 2016 and twice in 2017.
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 35.13 from 35.82 from 36.37
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please 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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