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

[winston]

TOL as of Nov 20, 2016

Overbought.gif

Overbought US Markets ?

It was only two weeks ago that I was questioning whether the markets were oversold. (See my blog of November 6, 2016)

And in just two weeks, the US markets has jumped about 4.5%!

So where do we go from here? Will it continue to rally? Take a breather? Or correct steeply?

Intuitively, I think that the US market will be taking a breather from here. It could also decline slowly due to profit taking.

In addition, the move over the past few weeks were probably driven by "hot" money and they do sometimes leave as fast as they come ie.
1. when traders stop buying, they do start selling
2. when prices are too high, they do come down
3. when people run out of things to buy, the people who got in early, do start taking profits

In view of the above, I have started to add to my short positions again:-

1. Bought EUM (Short Emerging Markets 1x). I think that the money which left the EM would not be returning so soon. In addition, the strong USD would hurt the EM Currencies and their USD loans. I did not use EDZ (Short Emerging Markets 3x) as the decline was very fast and I dont want to be caught in any backlash (probably from short-covering). However, I may buy some EDZ after the technical rebound.

2. Bought back some DBXT S&P Short in SGX. I wanted to have some short positions in Asia so that I could react to any bad news in the US while they are sleeping. Two weeks ago, I sold my DBXT Short S&P in Spore when the US Futures were plunging in Asia (-800). However, I'm also a bit concerned that the ETF is being managed by DB (not your strongest IB).


I need to also remind myself of the following:-
1. Avoid Commodities. The high USD will definitely affect Commodity prices
2. Watch Precious Metals. The correction was very steep so it's time to clean up the watchlist
3. Raise Cash. It's time to be careful with EM Equities
4. Watch Technology. This Trump Tantrum may be a good buying opportunity. Starting to buy Tencent (700)
5. Watch Europe. Italian Referendum, Lisbon Treaty, Article 50, various elections etc
6. Watch Interest rates. The US 10 year treasuries are now touching 2.35%. And it was only 1.35% not too long ago. The December rate hike is probably priced in. However, a 50 bps hike is not.
7. Currency Risks. Watch USD as I should buy more USD when it corrects
8. Watch A Shares. China didn't really correct during Trump Tantrum. Why ?
9. Watch Macau. They dont seemed to be dropping amymore on bad news


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Higher. US$45.58 from US$43.12 last week from US$44.13 two weeks ago. Vested - RH Petrogas;
a. Glut 1m bpd - rebalancing 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
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; 4100 "Drilled but Uncompleted" (DUC) Wells
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. OPEC Meeting: November 30
p. Crude stocks: -5.2m barrels. Normally, it would rise 1.5m bpd for a few months, at refinery maintenance
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$2.85 from US$2.63 from US$2.78. 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$1207 from US$1227 from US$1305. 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$16.54 from US$17.36 from US$18.42. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Lower. US$2.47 from US$2.51 from US$2.26. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee - Lower. US$158.38 from US$159.57 from US$171.35;
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) - Lower. US$18.50 (Nov14) from US$18.75 (Nov 7) from US$18.75 (Oct 31). 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; With Trump there, perhaps the Russian will agree to a Nuclear Deal again.
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 - Higher. US$409 from US$403 from US$414
a. L US$390; H US$900 (2012); Turning Around?
b. Vested in WEAT
viewtopic.php?f=33&t=6363&start=80

10. Palladium; US$725
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.

12. The High USD is not good for Commodities


Equities - Mixed ( Data as of Saturday every week )

1. US Equities - Higher. 2182 from 2164 last week from 2085 two weeks ago.
Bought Aramak (ARMK) and EUM (Inverse Emerging Markets 1x). Sold EDZ (Inverse Emerging Markets 3x)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 22344 from 22531 from 22643. Support at 22800 then 22500. Bought China Mobile and Tencent. Traded Standard Chartered
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3193 from 3196 from 3125; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Bought DBXT S&P Short ETF

5. Japan Equities - Higher. 17967 from 17373 from 16905

6. Malaysian Equities - Sold 1/2 IGB

7. Australian Equities - Sold Crown Resort


Currencies- Mixed

1. USD to JPY - JPY Weaker. 110.87 from 106.645 last week from 103.09 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. 3.0982 from 3.0354 from 3.0350.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD

3. AUD to USD - AUD Weaker. 0.7346 from 0.7555 from 0.7680
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. 1.0468 from 1.0665 from 1.0615
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. 3.2432 from 3.2374 from 3.2217
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. 1.0590 from 1.0858 from 1.1150
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 Stronger. 7.7560 from 7.7575 from 7.7545. 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. 4.4150 from 4.285 from 4.195; 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; 1.4250 from 1.4117 from 1.3822; 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; 6.8873 from 6.8090 from 6.7535;
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50

11. GBP to USD:- GBP Weaker. 1.2347 from 1.2599 from 1.2518.
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. 5.4512 from 5.3988 from 5.2515
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. Dollar Index - USD Stronger. 101.21 from 99.06 from 97.07; 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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) Price 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) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter, 5.5% qoq and lowest since 2015, for residential properties > HK$12m
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. 2.35% from 2.15% from 1.78%.
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.
e. Mexico increased interest rates by 50 bps

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 35.62 from 35.13 from 35.82

9. Baltic Dry Index; 1257; Low 290; High 1257; 2330 (2013)


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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[winston]

TOL as of Nov 27, 2016

greed.jpg

Be Fearful When Others Are Greedy

The US Markets have rallied for about 3 weeks already. Can it really continue to go up on just hope ?

Even if Trump can really spend US$1t on infrastructure, he will still need to convince Congress first, that the US can pay for it. And that process alone could easily take 6 to 9 months.

In the meantime, you have the Italian Referendum, Lisbon Treaty, various elections in Europe, Aricle 50 and the stress caused by the high USD and higher interest rates, not to mentioned any social-political problems.

And the optimists are now saying that there's a Great Rotation from Bonds to Equities. Do you really think that the sheeps who were willing to accept a paltry return on their bonds in the first place, would suddenly now be willing to accept potential losses by investing in Equities ?

In view of the above, I need to remind myself to be a bit careful and to raise some Cash. Something does not feel right somewhere. I dont want to be running with the lemmings towards the edge of the cliff.

Anyway, it's probably too late now to chase the rally in the US markets, the USD as well as the Metal's rally. So the only thing to do now is to wait patiently for the 50% retracement if I still want to play these markets.

Looking forward, there could be one spike from the new money flowing in from the new month of December, over the next one to two weeks.

Also, Year End Window Dressing would be here soon. However, my gut is telling me that it may be a bit muted this time, as the rally over the past few weeks have been very strong.


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Higher. US$45.96 from US$45.58 last week from US$43.12 two weeks ago. Vested - RH Petrogas;
a. Glut 1m bpd - rebalancing 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
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)' Will the Cash Cruch in India now affect Consumption?
g. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
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 before the IPO
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. OPEC Meeting: November 30
p. Crude stocks: -5.2m barrels. Normally, it would rise 1.5m bpd for a few months during refinery maintenance
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.19 from US$2.85 from US$2.63. 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$1183 from US$1207 from US$1227. 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
d. Indian Import Ban ?
e. When would Gold be declared a Halal investment ?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Lower. US$16.52 from US$16.54 from US$17.36. 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$2.68 from US$2.47 from US$2.51. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee - Lower. US$155.80 from US$158.38 from US$159.57;
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$18.50 (Nov21) from US$18.50 (Nov14) from US$18.75 (Nov 7). 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; With Trump there, perhaps the Russian will agree to a Nuclear Deal again.
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$396.75 from US$409 from US$403
a. L US$390; H US$900 (2012); Turning Around?
b. Vested in WEAT
viewtopic.php?f=33&t=6363&start=80

10. Palladium; US$908.10
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.

12. The High USD is not good for Commodities


Equities - Mixed ( Data as of Saturday every week )

1. US Equities - Higher. 2213 from 2182 last week from 2164 two weeks ago.
Bought Tyson Foods (TSN). Sold Aramak (ARMK)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 22723 from 22344 from 22531. Support at 22800 then 22500. No trade.
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 3262 from 3193 from 3196; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Bought DBXT S&P Short ETF

5. Japan Equities - Higher. 18381 from 17967 from 17373

6. Malaysian Equities - No Trade

7. Australian Equities - No Trade


Currencies- Mixed

1. USD to JPY - JPY Weaker. 113.23 from 110.87 last week from 106.645 two weeks ago.
a. 52 week range is 76 to 126.
b. Is the drop in the Yen overdone ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger. 3.1147 from 3.0982 from 3.0354.
a. With the investments by the China into Malaysia, perhaps the MYR could rise against the SGD later

3. AUD to USD - AUD Stronger. 0.7451 from 0.7346 from 0.7555
a. The range is 0.70 (2016) to 1,10 (2011).
b. Expecting the AUD to rise against the USD over the medium term
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0637 from 1.0468 from 1.0665
a. The range is 0.98 (2016) to 1.36 (2012).
b. Expecting the AUD to rise against the SGD in the medium term

5. AUD to MYR - AUD Stronger. 3.3131 from 3.2432 from 3.2374
a. The range is 2.20 (2008) to 3.34 (2016).
b. Expecting the AUD to rise against the MYR over the medium term
c. Overhead Resistance taken out recently

6. EUR to USD - EUR Stronger. 1.0595 from 1.0590 from 1.0858
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 Flat. 7.7560 from 7.7560 from 7.7575. 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. 4.4465 from 4.4150 from 4.285; 52 Week Range is 3.27 to 4.54.
a. Expecting the MYR to drop against the USD in the medium term; 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; 1.4276 from 1.4250 from 1.4117; High 1.70 (2004); Low 1.20 (2011)
a. Expecting the SGD to drop against the USD in the medium term
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9176 from 6.8873 from 6.8090.
a. Expecting the CNY to drop against the USD in the medium term
viewtopic.php?f=32&t=7720&start=50

11. GBP to USD:- GBP Stronger. 1.2485 from 1.2347 from 1.2599.
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. 5.5516 from 5.4512 from 5.3988
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. Dollar Index - USD Stronger. 101.49 from 101.21 from 99.06; 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 - Euphoric ?

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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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) Private residential prices fell 1.5% in Sept. 30, 2016 (qoq); biggest decline since June 2009
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) 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
v) How's the demand from Mainland Chinese ? Malaysia As Second Home Visa ?
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) Price 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) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter, 5.5% qoq and lowest since 2015, for residential properties > HK$12m
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 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. 2.36% from 2.35% from 2.15%
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.
e. Mexico increased interest rates by 50 bps
f. Turkey increased interest rates by 50 bps to 8%

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.09 from 35.62 from 35.13

9. Baltic Dry Index - Lower; 1181 from 1257; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Dec 04, 2016

european-contagion-spreads.jpg

European Contagion?

Austria will be having their election today while Italy will be having their referendum. If Austria is going far-right and Italy loses their PM, what are the consequences?

And if the above two events does not start a contagion in Europe, can any of the following start it ?
1. Lisbon Treaty by end 2016
2. Holland going far-right in March 2017
3. Article 50 for Brexit by March 2017
4. France going far-right in May 2017
5. Merkel losing the German election in Autumn 2017

From the above, It looks like Europe would be quite pre-occupied for the next year.

In the meantime, we also have Trump taking office in January, with his unpredictability.

This is not to mentioned that the current high USD and higher interest rates, leading to another set of problems.

In view of the above, it does not hurt to be a bit more conservative and be raising cash whenever possible.

At the same time, there's currently no "Clear & Present Danger", so there's also no need to worry about the end of the world yet. Perhaps the right attitude is to be "Bullishly Cautious".


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Higher. US$51.68 from US$45.96 last week from US$45.58 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
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; 4100 "Drilled but Uncompleted" (DUC) Wells
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. OPEC Nov 30 Meeting: Cutting Production by 1.2m bpd before Jan 2017
p. Crude stocks: -5.2m barrels. Normally, it would rise 1.5m bpd for a few months during refinery maintenance
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.46 from US$3.19 from US$2.85. 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
f. In Mar 2016, supply was nearly 40% above its five-year average.
viewtopic.php?f=33&t=1863&start=130

3. Gold - Lower. US$1179 from US$1183 from US$1207. 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 - Higher. US$16.80 from US$16.52 from US$16.54. Range High: 49
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Lower. US$2.63 from US$2.68 from US$2.47. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Lower. US$145.82 from US$155.80 from US$158.38
Support US$146. Not vested. L US$120; H US$300 (2011). Vested in JO
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 would have doubled
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Lower. US$18.25 (Nov 28) from US$18.50 (Nov21) from US$18.50 (Nov14). 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; With Trump there, perhaps the Russian will agree to a Nuclear Deal again.
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Lower; US$744.55 from US$908.10
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

10. Zinc; US$2664
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.

12. The High USD is not good for Commodities


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

1. US Equities - Lower. 2192 from 2213 last week from 2182 two weeks ago.
Bought JO (Coffee ETF). Sold Tyson Foods (TSN), EUM( Short Emerging Markets) and WEAT (Wheat ETF)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 22565 from 22723 from 22344. Support 21700 .
Bought Fairwood (0052) and Sands China (1928); Sold Tencent (0700) and China Mobile (0941)
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3244 from 3262 from 3193; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Sold Manulife US Reit

5. Japan Equities - Higher. 18426 from 18381 from 17967

6. Malaysian Equities - No Trade

7. Australian Equities - Bought Bellamy's


Currencies- Mixed

1. USD to JPY - JPY Weaker. 113.50 from 113.23 last week from 110.87 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. 3.1300 from 3.1147 from 3.0982.
a. With the investments by the China into Malaysia, can the MYR rise against the SGD ?

3. AUD to USD - AUD Stronger. 0.7468 from 0.7451 from 0.7346
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. 1.0637 from 1.0468 from 1.0665
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. 3.3131 from 3.2432 from 3.2374
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. 1.0593 from 1.0595 from 1.0590
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 Stronger. 7.7540 from 7.7560 from 7.7560. 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. 4.4400 from 4.4465 from 4.4150; 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 Stronger; 1.4185 from 1.4276 from 1.4250; 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; 6.8830 from 6.9176 from 6.8873.
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=50

11. GBP to USD:- GBP Stronger. 1.2729 from 1.2485 from 1.2347
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. 5.6519 from 5.5516 from 5.4512

13. Dollar Index - USD Weaker. 100.77 from 101.49 from 101.21; 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price 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) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
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 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 years to sell the homes under construction
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Higher. 2.38% from 2.36% from 2.35%
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. 36.01 from 36.09 from 35.62

9. Baltic Dry Index - Higher; 1198 from 1181 from 1257; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Dec 11, 2016

Santa Rally.jpg

Santa Rally ?

We are touching the time of the year where stocks are supposed to be rallying, especially due to Year End Window Dressing.

However, the markets have been very strong since Trump got elected, so my gut feel is that the Window Dressing this year, may be quite muted.

Anyway, the bullish "experts" are saying that the under-performing fund managers have to play "catch-up", so the markets have no where to go but up.

Next week, we have the Fed's announcement. If they dont raise interest rates or if they raise it by 50bps, then it may be bad for the market. More importantly, everyone would be straining their ears, to hear how many times the Feds would like to hike rates next year.

As we look towards 2017, it should be smooth sailing until Trump is in the White House, unless his next tweet create a major incident. (Just a few days ago, the biotech companies did drop due to his tweet).


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Lower. US$51.48 from US$51.68 last week from US$45.96 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. Cutting Production by 1.2m bpd before Jan 2017
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.72 from US$3.46 from US$3.19. 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. New injections into storage are at about 40% below the pace of two years ago
d. U.S. EIA: Volume of gas in storage is now only 2% above the 5 year average
e. In Mar 2016, supply was nearly 40% above its 5 year average
f. Cold Winter ?
viewtopic.php?f=33&t=1863&start=130

3. Gold - Lower. US$1161 from US$1179 from US$1183. 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 - Higher. US$16.92 from US$16.80 from US$16.52. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Higher. US$2.66 from US$2.63 from US$2.68. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Lower. US$139.38 from US$145.82 from US$155.80
L US$120; H US$300 (2011). Vested in JO
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 would have doubled
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Lower. US$18.00 (Dec 05) from US$18.25 (Nov 28) from US$18.50 (Nov21). 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; With Trump there, perhaps the Russian will agree to a Nuclear Deal again.
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Lower; US$731 from US$744.55 from US$908.10
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

10. Zinc; Higher - US$2712 from US$2664
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.

12. The High USD is not good for Commodities


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

1. US Equities - Higher. 2259 from 2192 last week from 2213 two weeks ago. No trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 22761 from 22565 from 22723. Support 21700 .
Bought Galaxy (0027), SJM (0880) and Sands China (1928). Sold Tracker Fund (2800)
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3233 from 3244 from 3262; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - No Trade

5. Japan Equities - Higher. 18996 from 18426 from 18381

6. Malaysian Equities - No Trade

7. Australian Equities - Bought Crown Resorts


Currencies- Mixed

1. USD to JPY - JPY Weaker. 115.27 from 113.50 last week from 113.23 two weeks ago.
a. 52 week range is 76 to 126.
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker. 3.0927 from 3.1300 from 3.1147
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?

3. AUD to USD - AUD Weaker. 0.7458 from 0.7468 from 0.7451
a. The range is 0.70 (2016) to 1,10 (2011).
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0663 from 1.0637 from 1.0468
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 Weaker. 3.2977 from 3.3131 from 3.2432
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. 1.0564 from 1.0593 from 1.0595
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. 7.7623 from 7.7540 from 7.7560.
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. 4.4215 from 4.4400 from 4.4465; 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 ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.4297 from 1.4185 from 1.4276; 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; 6.9041 from 6.8830 from 6.9176.
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2577 from 1.2729 from 1.2485
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 Weaker. 5.5607 from 5.6519 from 5.5516

13. Dollar Index - USD Stronger. 101.59 from 100.77 from 101.49
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Euphoric ?

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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Higher. 2.47% from 2.38% from 2.36%
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) - Higher. 36.46 from 36.01 from 36.09

9. Baltic Dry Index - Lower; 1090 from 1198 from 1181; Low 290; High 1257; 2330 (2013)


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:-

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

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InvestIdeas • View active topics

[winston]

TOL as of Dec 18, 2016

Geopolitical Issues.jpg

Geopolitical Issues

I'm starting to think that the markets will now be affected more by geopolitical issues than macroeconomics.

We currently have a few hot-spots around the world and anyone of them can flare up into something much bigger:-

a. South China Sea - China has just seized a US underwater drone as well as placed weapons onto the various artificial islands. Am waiting to see how Trump will react.

b. One China Policy - GM has been targetted for monopolistic behaviour in China

c. Noth Korea - With China's support, the sanctions against North Korea is not working. Is this a good excuse to impose sanctions on China now?

c. Syria - It looks like the Russia & Syrians are winning now. What would be Turkey's (NATO) response ?

d. Middle East - Trump is not interested in any regime change so it's likely that the US will be withdrawing from the Middle East whenever they can

e. Iran / Israel - Would Trump recognise the Nuclear deal? Trump did meet the Head of Israel not too long ago. The F35 is also now being used by the Israelis. Trump has also said that he will move the US embassy to Jerusalem.

f. Ukraine / Europe - Will Trump continue or lift sanctions on Russia? How would the refugees issue be resolved ? How will Article 50 be handled? Would Europe be leaning to the right and disintegrate ?

g. Cuba - Probably too small to be meaningful. Guantanamo would probably be continued.

h. NAFTA - How will Trump handle this with Canada and Mexico?

i. India / Pakistan - How will Trump handle these two Nuclear powers ?


In view of the above, I think that it's prudent to minimize my exposure to HK and China shares. I do not see Trump kowtowing to China. The outflows from China will continue.

When the fireworks start, all Emerging Markets and Commodities Currencies would be affected. Therefore, I should change my SGD, AUD and MYR into the USD, whenever I can.

I should also monitor the EUM (Emerging markets Inverse 1x) and EDZ (Emerging Markets Inverse 3x) for any trading activities.

With the high USD, higher US interest rates and the issues with China, it's probably better not to buy any Commodities now, unless there's a very convincing story from the cdemand side.


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Higher. US$52.03 from US$51.48 last week from US$51.68 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. Cutting Production by 1.2m bpd before Jan 2017
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Lower: US$3.38 from US$3.72 from US$3.46. 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. New injections into storage are at about 40% below the pace of two years ago
d. U.S. EIA: Volume of gas in storage is now only 2% above the 5 year average
e. In Mar 2016, supply was nearly 40% above its 5 year average
f. Cold Winter ?
viewtopic.php?f=33&t=1863&start=130

3. Gold - Lower. US$1137 from US$1161 from US$1179. 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
d. How's the demand by Muslim countries now that Gold is a halal investment ?
e. Would India ban gold imports temporarily ?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Lower. US$16.14 from US$16.92 from US$16.80. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Lower. US$2.55 from US$2.66 from US$2.63. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Higher. US$142.32 from US$139.38 from US$145.82
L US$135; US$120; H US$175; US$300 (2011). Vested in JO
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 would have doubled
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Higher. US$18.75 (Dec 12) from US$18.00 (Dec 05) from US$18.25 (Nov 28). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
i. Russia withdrew from Nuclear deal in Oct 2016; With Trump there, perhaps the Russian will agree to a Nuclear Deal again.
j. Paris Climate Deal - implemented in November 2016
k. Some buyers are supposedly locking in long term contracts at US$40, twice the spot rates
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Lower; US$696 from US$731 from US$745
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

10. Zinc; Lower - US$2734 from US$2712 from US$2664
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.

12. The High USD is not good for Commodities


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

1. US Equities - Flat. 2258 from 2259 last week from 2192 two weeks ago. No trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 22021 from 22761 from 22565. Support 21700 . Sold SJM (0880)
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3123 from 3233 from 3244; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Bought Silverlake Axis

5. Japan Equities - Higher. 19401 from 18996 from 18426

6. Malaysian Equities - No Trade

7. Australian Equities - No Trade


Currencies- Mixed

1. USD to JPY - JPY Weaker. 117.84 from 115.27 last week from 113.50 two weeks ago.
a. 52 week range is 76 to 126.
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger. 3.0985 from 3.0927 from 3.1300
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?

3. AUD to USD - AUD Weaker. 0.7314 from 0.7458 from 0.7468
a. The range is 0.70 (2016) to 1,10 (2011).
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0565 from 1.0663 from 1.0637
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 Weaker. 3.2735 from 3.2977 from 3.3131
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. 1.0454 from 1.0564 from 1.0593
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. 7.7649 from 7.7623 from 7.7540
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. 4.4755 from 4.4215 from 4.4400; 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 ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.4444 from 1.4297 from 1.4185; 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; 6.9569 from 6.9041 from 6.8830
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2488 from 1.2577 from 1.2729
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. 5.5892 from 5.5607 from 5.6519

13. Dollar Index - USD Stronger. 102.95 from 101.59 from 100.77
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Euphoric ?

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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 5,587 resales in first 9 months 2016, up on the 4,696 sales yoy
vii) More than 800 condo units were resold at a loss this year as economy slows
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
vii) Rightmove: Declines of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Higher. 2.59% from 2.47% from 2.38%
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. Expecting interest rates to remain low for a long time
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: three rate hikes in 2017

8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.29 from 36.46 from 36.01

9. Baltic Dry Index - Lower; 946 from 1090 from 1198; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Dec 25, 2016

Risk Mgt.jpg

Risk Management

Merry X'mas !

As we head towards the end of the year, it's timely to remind myself that the risk level has risen and it's time to be careful.

I need to do the following ASAP and definitely by January 20th, 2017:-
1. I need to sell down as much Equities as much as possible
2. I need to refrain from buying any more Equities unless it has a very convincing story
3. I need to raise as much Cash as possible
4. I need to convert my Cash into the USD or HKD asap

Any tweets from Trump can now spark an unintended event with it's unintended consequences. I also cannot see China backing down from it's hardline approach, as it has a leadership meeting next year. And the Russians will certainly push forward in Syria and Ukraine. And we have not even discussed Brexit, European Contagion, Iran, Saudi Arabia, Turkey, Pakistan and India.


Commodities:- Risk-Off/b] (Data as of Saturday)

1. Oil - Higher. US$53.25 from US$52.03 last week from US$51.48 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. OPEC: Cutting Production by 1.2m bpd before Jan 2017
l. Libya: Ouput increasing by another 300,000 bpd in addition to current 300,000 bpd
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.68 from US$3.38 from US$3.72. 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. New injections into storage are at about 40% below the pace of two years ago
d. U.S. EIA: Volume of gas in storage is now only 2% above the 5 year average
e. In Mar 2016, supply was nearly 40% above its 5 year average
f. Cold Winter ?
viewtopic.php?f=33&t=1863&start=130

3. Gold - Lower. US$1135 from US$1137 from US$1161. 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
d. Demand by Muslim countries now that Gold is a halal investment ?
e. Would India temporarily ban gold imports ?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Lower. US$15.78 from US$16.14 from US$16.92. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Lower. US$2.48 from US$2.55 from US$2.66. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Lower. US$136 from US$142 from US$139
L US$135; US$120; H US$175; US$300 (2011). Vested in JO
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Current Supply: 145m bags
d. By 2030, demand to rise to 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% over past 3 yrs
i. By 2050, suitable land will halved and demand would have doubled
j. Farmers in Central America are replacing coffee with cocoa due to climate change
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Higher. US$20.25 (Dec 19) from US$18.75 (Dec 12) from US$18.00 (Dec 05). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
i. Russia withdrew from Nuclear deal in Oct 2016; With Trump, would there be another deal or would there be another arms race ?
j. Paris Climate Deal - implemented in November 2016;
k. China's air pollution worsening so nuclear energy maybe expanding
l. Some buyers are locking in long term contracts at US$40, twice the spot rates
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Lower; US$659 from US$696 from US$731
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

10. Zinc; Lower - US$2602 from US$2734 from US$2712
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.
12. The High USD is not good for Commodities
13. Global economy worsening ( from trade wars etc) ?


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

1. US Equities - Flat. 2264 from 2258 last week from 2259 two weeks ago. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 21575 from 22021 from 22761. Support 21700 . No Trade
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3110 from 3123 from 3233; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Sold Sabana Reit

5. Japan Equities - Higher. 19428 from 19401 from 18996

6. Malaysian Equities - No Trade

7. Australian Equities - Sold Crown Resorts


Currencies- Mixed

1. USD to JPY - JPY Stronger. 117.32 from 117.84 last week from 115.27 two weeks ago.
a. 52 week range is 76 to 126.
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker. 3.0948 from 3.0985 from 3.0927
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?

3. AUD to USD - AUD Weaker. 0.7182 from 0.7314 from 0.7458
a. The range is 0.70 (2016) to 1,10 (2011).
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 1.0379 from 1.0565 from 1.0663
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 Weaker. 3.2121 from 3.2735 from 3.2977
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 Flat. 1.0455 from 1.0454 from 1.0564
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. 7.7585 from 7.7649 from 7.7623
a. 52 week range is 7.7452 - 7.8296.
b. 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. 4.4725 from 4.4755 from 4.4215;
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.60 (1998)
c. Decoupling of the MYR and Oil ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.4452 from 1.4444 from 1.4297
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9431 from 6.9569 from 6.9041
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2285 from 1.2488 from 1.2577
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 Weaker. 5.4946 from 5.5892 from 5.5607

13. Dollar Index - USD Stronger. 103.10 from 102.95 from 101.59
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Euphoric ?

2. Headwinds - Global Derivatives (US$700t); Global Debts (US$225t, 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; US Feds Leverage (113 to 1);

3. Tailwinds - Low Interest Rates, Cash Sidelines (US$60t); 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 5,587 resales in first 9 months 2016, up on the 4,696 sales yoy
vii) More than 800 condo units were resold at a loss this year as economy slows
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
vii) Rightmove: Declines of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Lower. 2.54% from 2.59% from 2.47%
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. Expecting interest rates to remain low for a long time
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017?

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.66 from 36.29 from 36.46

9. Baltic Dry Index - Higher; 961 from 946 from 1090; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Jan 01, 2017

Opportunist.jpg

Be Cautious, Not Pessimistic

Happy 2017!

Numerically 2017 is a ONE year, 2+0+1+7=10 and 1+0=1. One is the number that reflects rebirth, transformation and new beginnings.

Therefore, in this year of Rebirth, Transformation and New Beginnings, it's timely to remind myself not to be too overly pessimistic but to look for the Opportunities around me.

It's also timely to look at the "Elephant In the Room" and to act on it-

1. Trump would probably be having a Trade War (if not WW3) with China
Action: Avoid all Asian & Emerging Market's Equities, Commodities and Commodities Currencies,unless there's a very convincing story

2. US Interest Rates would probably be trending up
Action: Buy USD; Avoid Bonds, REITs, Utilities and companies with huge USD loans; Not sure about buying Banks (better NIM but worsening NPLs)

As for the rest of the issues, I'm not able to see their outcome and to properly put together an action plan for them:-
a. Europe: Article 50, European Elections; Euro Demise; European Contagion
b. Oil: Cheating by the members of OPEC? Comeback by Fracking companies?
c. US Infracture: How soon? How's Trump going to pay for it?
d. US Defense: How soon? How's Trump going to pay for it?
e. Russia: Would Trump be removing the sanctions?
f. Middle East: What are the consequences of Trump's support for Israel?

In view of the above, Volatility may be increasing. However, that does not mean that buying UVXY (2x) or VXX is the right strategy, as these instruments have been behaving strangely (manipulated?).

Hence, the only logical strategy left for me is to:-
1. Raise Cash
2. Reduce exposure to Equities & Bonds
3. Be in the right currency (USD & HKD ?)
4. Wait; Be patient; Wait for the correction
5. Short whenever there's Fear; Cover on Extreme Pessimism
6. Be cautious but not too overly pessismistic

Finally, it's good to also remind myself that if I see any good quality stocks that are cheap and on an uptrend, then it's probably time to start buying. There's about US$60t of Cash on the sidelines and they are all looking for a place to go.


Commodities:- Risk-On/b] (Data as of Saturday)

1. Oil - Higher. US$53.89 from US$53.25 last week from US$52.03 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. OPEC: Cutting Production by 1.2m bpd before Jan 2017
l. Libya: Ouput increasing by another 300,000 bpd in addition to current 300,000 bpd
m. Fracking: Expecting +0.5m bpd @ US$60; +1m bpd @ US$70
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.74 from US$3.68 from US$3.38. 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. Now at 129
c. New injections into storage are at about 40% below the pace of two years ago
d. EIA: Supply now only 2% above the 5 year average vs +40% in March 2016
e. Cold Winter; The heating degree days (HDD) was 11% above average
viewtopic.php?f=33&t=1863&start=130

3. Gold - Higher. US$1152 from US$1135 from US$1137. 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
d. Demand by Muslim countries now that Gold is a halal investment ?
e. Would India temporarily ban gold imports ?
f. Indians are supposedly paying 2 times spot due to their cash issues
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Higher. US$15.96 from US$15.78 from US$16.14. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Higher. US$2.51 from US$2.48 from US$2.55. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Higher. US$137 from US$136 from US$142
L US$135; US$120; H US$175; US$300 (2011). Vested in JO
a. 150m Americans drink coffee daily (400m cups)
b. America imports US$4b of coffee yearly
c. Current Supply: 145m bags; US$19b trade
d. By 2030, demand to rise to around 200m bags; 5% growth pa
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 hardy; 40% more caffeine than Arabica
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% over past 3 yrs
i. By 2050, suitable land will halved and demand would have doubled
j. Farmers in Central America are replacing coffee with cocoa due to climate change
k. Over 2.25 billion cups of coffee are consumed in the world every day.
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Higher. US$20.25 (Dec 26) from US$20.25 (Dec 19) from US$18.75 (Dec 12). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
i. Russia withdrew from Nuclear deal in Oct 2016; With Trump, would there be another deal or would there be another arms race ?
j. Paris Climate Deal - implemented in November 2016;
k. China's air pollution worsening so nuclear energy maybe expanding
l. Some buyers are locking in long term contracts at US$40, twice the spot rates
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Higher; US$680 from US$659 from US$696
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

10. Zinc; Lower - US$2589 from US$2602 from US$2734
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.
12. The High USD is not good for Commodities
13. Global economy is worsening ( from trade wars etc) ?


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

1. US Equities - Lower. 2239 from 2264 last week from 2258 two weeks ago. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 22001 from 21575 from 22021; No Trade
a. Support 21575; Resistance 24100;
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3104 from 3110 from 3123; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - No Trade

5. Japan Equities - Lower. 19114 from 19428 from 19401

6. Malaysian Equities - Sold icapita;.biz

7. Australian Equities - No Trade


Currencies- Mixed

1. USD to JPY - JPY Stronger. 116.95 from 117.32 last week from 117.84 two weeks ago.
a. 52 week range is 76 to 126
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger. 3.0999 from 3.0948 from 3.0985
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?
b. Malaysians working in Singapore, would soon be changing their Bonus into MYR

3. AUD to USD - AUD Stronger. 0.7214 from 0.7182 from 0.7314
a. The range is 0.70 (2016) to 1,10 (2011).
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0436 from 1.0379 from 1.0565
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. 3.2351 from 3.2121 from 3.2735
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. 1.0522 from 1.0455 from 1.0454
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 Stronger. 7.7529 from 7.7585 from 7.7649
a. 52 week range is 7.7452 - 7.8296.
b. 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. 4.4845 from 4.4725 from 4.4755;
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.60 (1998)
c. Decoupling of the MYR and Oil ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Weaker; 1.4467 from 1.4452 from 1.4444
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9429 from 6.9431 from 6.9569
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger. 1.2342 from 1.2285 from 1.2488
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. 5.5346 from 5.4946 from 5.5892

13. Dollar Index - USD Weaker. 102.21 from 103.10 from 102.95
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Euphoric ?

2. Headwinds - Global Derivatives (US$700t); Global Debts (US$225t, 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; US Feds Leverage (113 to 1);

3. Tailwinds - Low Interest Rates, Cash Sidelines (US$60t); 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 5,587 resales in first 9 months 2016, up on the 4,696 sales yoy
vii) More than 800 condo units were resold at a loss this year as economy slows
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
vii) Rightmove: Declines of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Lower. 2.44% from 2.54% from 2.59%
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. Expecting interest rates to remain low for a long time
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017?

8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.45 from 36.66 from 36.29

9. Baltic Dry Index - Flat; 961 from 961 from 946; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Jan 08, 2017

Trump Storm.jpg

Calm Before The January 20th Storm

The markets have been grinding higher.

And one of the reasons for this is because of the new money arriving from the new month of January.

So what would happen after those new money has been deployed?

Are there any other money on the side-lines, that would be willing to chase the current elevated prices?

And if you are a fund-manager, would you be chasing stocks now or trying to raise some cash, before Trump is being crowned on January 20th?

What about the ETFs? Would the retail players be adding to their positions in ETFs or be cashing out now?

Anyway, I'm still cautious but not too overly pessimistic.

At this time, I'm not chasing any stocks but if there's any 20% correction, I would probably be buying. I'm also not expecting any 80% crash anytime soon, as there's still US$60t on the sidelines waiting for a place to go.

At the same time, I would probably not hesitate to take any 5% trading profits. It's a Trading Market so I will need to behave accordingly.


Commodities:- Mixed/b] (Data as of Saturday)

1. Oil - Lower. US$53.70 from US$53.89 last week from US$53.25 two weeks ago. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. OPEC: Cutting Production by 1.2m bpd before Jan 2017
l. Libya: Ouput increasing by another 300,000 bpd in addition to current 300,000 bpd
m. Fracking: Expecting +0.5m bpd @ US$60; +1m bpd @ US$70
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Lower: US$3.26 from US$3.74 from US$3.68
a. Support 3.30; 2.60; 1.70; Resistance $4.00
b. Uses: Heating, Cooking, Transportation (CNG), Ammonia (Fertiliser), Hydrogen (Chemical Industry), Fabrics, Glass, Steel, Plastics Paint etc
c. High: US$13.69 (2008); Low: US$1.61 (March 2015)
d. Natural gas rigs: Dropped from 1,606 (2008) to low of 81. Now at 129
e. New injections into storage are at about 40% below the pace of two years ago
f. EIA: Supply now only 2% above the 5 year average vs +40% in March 2016
g. Cold Winter; The heating degree days (HDD) was 11% above average
viewtopic.php?f=33&t=1863&start=130

3. Gold - Higher. US$1173 from US$1152 from US$1135. 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
d. Demand by Muslim countries now that Gold is a halal investment ?
e. Would India temporarily ban gold imports ?
f. Indians are supposedly paying 2 times spot due to their cash issues
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Higher. US$16.52 from US$15.96 from US$15.78. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Higher. US$2.54 from US$2.51 from US$2.48. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Higher. US$143 from US$137 from US$136
L US$135; US$120; H US$175; US$300 (2011). Vested in JO
a. 150m Americans drink coffee daily (400m cups)
b. America imports US$4b of coffee yearly
c. Current Supply: 145m bags; US$19b trade
d. By 2030, demand to rise to around 200m bags; 5% growth pa
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 hardy; 40% more caffeine than Arabica
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% over past 3 yrs
i. By 2050, suitable land will halved and demand would have doubled
j. Farmers in Central America are replacing coffee with cocoa due to climate change
k. Over 2.25 billion cups of coffee are consumed in the world every day.
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Flat. US$20.25 (Jan02) from US$20.25 (Dec 26) from US$20.25 (Dec 19). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
i. Russia withdrew from Nuclear deal in Oct 2016; With Trump, would there be another deal or would there be another arms race ?
j. Paris Climate Deal - implemented in November 2016;
k. China's air pollution worsening so nuclear energy maybe expanding
l. Some buyers are locking in long term contracts at US$40, twice the spot rates
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Higher; US$756 from US$680 from US$659
a. Support: US$600; US$500; US$200; Resistance: US$730; US$800; US$900;
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

10. Zinc; Higher - US$2624 from US$2589 from US$2602
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.
12. The High USD is not good for Commodities
13. Global economy is worsening ( from trade wars etc) ?


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

1. US Equities - Higher. 2277 from 2239 last week from 2264 two weeks ago. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 22503 from 22001 from 21575; No Trade
a. Support 21575; Resistance 24100;
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 3154 from 3104 from 3110; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Sold Silverlake Axis

5. Japan Equities - Higher. 19454 from 19114 from 19428

6. Malaysian Equities - No Trade

7. Australian Equities - No Trade


Currencies- Mixed

1. USD to JPY - JPY Weaker. 117.02 from 116.95 last week from 117.32 two weeks ago
a. 52 week range is 76 to 126
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger. 3.1084 from 3.0999 from 3.0948
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?
b. Malaysians working in Singapore, would soon be changing their Bonus into MYR

3. AUD to USD - AUD Stronger. 0.7308 from 0.7214 from 0.7182
a. The range is 0.70 (2016) to 1,10 (2011).
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0511 from 1.0436 from 1.0379
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. 3.2673 from 3.2351 from 3.2121
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. 1.0533 from 1.0522 from 1.0455
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. 7.7540 from 7.7529 from 7.7585
a. 52 week range is 7.7452 - 7.8296.
b. 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. 4.4710 from 4.4845 from 4.4725
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.60 (1998)
c. Decoupling of the MYR and Oil ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.4384 from 1.4467 from 1.4452
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9175 from 6.9429 from 6.9431
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2288 from 1.2342 from 1.2285
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 Weaker. 5.4940 from 5.5346 from 5.4946

13. Dollar Index - USD Flat. 102.22 from 102.21 from 103.10
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Euphoric ?

2. Headwinds - Global Derivatives (US$700t); Global Debts (US$225t, 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; US Feds Leverage (113 to 1);

3. Tailwinds - Low Interest Rates, Cash Sidelines (US$60t); 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 5,587 resales in first 9 months 2016, up on the 4,696 sales yoy
vii) More than 800 condo units were resold at a loss this year as economy slows
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed this year. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
vii) Rightmove: Declines of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Lower. 2.42% from 2.44% from 2.54%
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. Expecting interest rates to remain low for a long time
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017?

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.74 from 36.45 from 36.66

9. Baltic Dry Index - Higher; 963 from 961 from 961; Low 290; High 1257; 2330 (2013)


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.
viewtopic.php?f=26&t=3168

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
InvestIdeas • View active topics

[winston]

TOL as of Jan 15, 2017

waiting.gif

Waiting Again

The markets have no gone anywhere for the past week so it's back to waiting again.

There's the Davos meeting but I'm not expecting much from it, unless someone wants to use it as a platform, to say something unexpected.

There's also the US Earnings season but I'm not expecting much from it either.

There's also another 5 more days of tweets from Trump before his crowning. Thereafter, the number of tweets should drop. However, a leopord cannot really change his spots.

So what am I waiting for ?

1. I'm waiting for Asian Equities, Commodities and Commodities Currencies, to be hit, when Trump takes on China

2. I'm waiting for US Infrastructure plays to be hit, when everyone realised that it will take some time for Trump to deliver on his US$1t infrastructure spending

3. I'm waiting for Trump to take on the Healthcare Industry

4. I'm waiting for Trump to spend a lot more on weapons

5. I'm waiting for the US to increase rates at a much faster pace


I need to also remind myself that times now are very uncertain and it's best that I do the following:-
1. Raise Cash (preferably in USD)
2. Reduce exposure to Equities, Commodities and Commodities Currencies
3. Do not have big short positions yet until you can feel the fear
4. Do not take action prematurely. Wait for secondary confirmations
5. The coming volatile period would be a very good time to trade
6. Be very alert and nimble
7. Do not be too pessimistic. Just be cautious


Commodities:- Risk-On/b] (Data as of Saturday)

1. Oil - Lower. US$52.52 from US$53.70 last week from US$53.89 two weeks ago. Expecting Oil to be range-trading with a lower bias. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing by 3Q 2017?; Supply 98.3m bpd?; Demand 97.3m 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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to decrease by 4Q 2016 ( -700,000 bpd)
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices
i. China: Imports +13% yoy; SPR reached 51/90 days; 2017 Imports decreasing?
j. Russia: ramping drilling activities in existing brownfields
k. OPEC: Cutting Production by 1.2m bpd before Jan 2017
l. Libya: Ouput increased to 700k bpd from 200k bpd; Used to produce 1.6m bpd
m. Fracking: Additional 0.5m bpd @ US$60; +1m bpd @ US$70 ?
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Higher: US$3.42 from US$3.26 from US$3.74
a. Support 3.30; 2.60; 1.70; Resistance $4.00
b. Uses: Heating, Cooking, Transportation (CNG), Ammonia (Fertiliser), Hydrogen (Chemical Industry), Fabrics, Glass, Steel, Plastics Paint etc
c. High: US$13.69 (2008); Low: US$1.61 (March 2015)
d. Natural gas rigs: Dropped from 1,606 (2008) to low of 81. Now at 129
e. New injections into storage are at about 40% below the pace of two years ago
f. EIA: Supply now only 2% above the 5 year average vs +40% in March 2016
g. Cold Winter; The heating degree days (HDD) was 11% above average
h. Trade War with Mexico will bring prices down
i. LNG are being exported from US to Latin America and Asia
j. Suppy increasing by 4% pa; Demand growing by 7% pa
viewtopic.php?f=33&t=1863&start=130

3. Gold - Higher. US$1197 from US$1173 from US$1152. 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
d. Demand increasing by Muslim countries now that Gold is a halal investment
e. Would India temporarily ban gold imports ?
f. Indians are supposedly paying 2 times spot due to their cash issues
g. If the USD weakens, Gold would likely rise and vice-versa
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Higher. US$16.84 from US$16.52 from US$15.96. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Supply: 22,000 metric tons per year
c. 35% (7700 metric tons) for Electronics
d. 25% (5500 metric tons) for bullions & coins
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Copper - Higher. US$2.71 from US$2.54 from US$2.51. Not vested. Over-bought?
viewtopic.php?f=33&t=5598&start=90

6. Coffee (Mar 17th ) - Higher. US$149 from US$143 from US$137
L US$135; US$120; H US$175; US$300 (2011). Sold JO
a. 150m Americans drink coffee daily (400m cups)
b. America imports US$4b of coffee yearly
c. Supply: 152m bags; US$19b trade; Deficit 3.5m bags;
d. Demand 155m bags. By 2030, rising to 200m bags; 5% growth pa
e. Arabica, which is grown in Brazil (50m bags), is used in premium oulets. At risk from higher temperatures and more resilient pests
f. Robusta, grown in Vietnam; Used in Instant Coffee; 40% more caffeine than Arabica
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% over past 3 yrs
i. By 2050, suitable land will halved and demand would have doubled
j. Farmers in Central America are replacing coffee with cocoa due to climate change
k. Over 2.25 billion cups of coffee are consumed in the world every day
l. Growth: USA +1.5%; China +5%; India +4%
m. Bumper crops in Brazil, Colombia and Honduras
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Higher. US$22,00 (Jan 09) from US$20.25 (Jan02) from US$20.25 (Dec 26). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 new reactors planned
i. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
j. Russia withdrew from Nuclear deal in Oct 2016; With Trump, would there be another deal or would there be another arms race ?
j. Paris Climate Deal - implemented in November 2016;
k. China's air pollution worsening so nuclear energy maybe expanding
l. Some buyers are locking in long term contracts at US$40, twice the spot rates
m. Kazakhtan reducing supply by 10% (40% of global production)
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% in 2015 to around $350 per kilowatt hour,
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Lower; US$752 from US$756 from US$680
a. Support: US$600; US$500; US$200; Resistance: US$730; US$800; US$900;
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

10. Zinc; Higher - US$2783 from US$2624 from US$2589
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.
12. The High USD is not good for Commodities
13. Global economy is worsening eg. potential trade wars etc


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

1. US Equities - Lower. 2275 from 2277 last week from 2239 two weeks ago. Bought LABD ( Inverse Biotech 3x ). Sold JO (Coffee ETN)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 22937 from 22503 from 22001; Sold Sands China and Galaxy
a. Support 21575; Resistance 24100;
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 3113 from 3154 from 3104; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - No Trade

5. Japan Equities - Lower. 19287 from 19454 from 19114

6. Malaysian Equities - No Trade

7. Australian Equities - Added to Bellamy's (BAL)


Currencies- Mixed

1. USD to JPY - JPY Stronger. 114.47 from 117.02 last week from 116.95 two weeks ago
a. 52 week range is 76 to 126
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger. 3.1280 from 3.1084 from 3.0999
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?
b. Malaysians working in Singapore, are in the process of changing their Bonuses into MYR

3. AUD to USD - AUD Stronger. 0.7509 from 0.7308 from 0.7214
a. The range is 0.70 (2016) to 1,10 (2011)
b. Am concerned that the spat between the US and China will affect the AUD
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0707 from 1.0511 from 1.0436
a. The range is 0.98 (2016) to 1.36 (2012).
b. Am concerned that the spat between the US and China will affect the AUD

5. AUD to MYR - AUD Stronger. 3.3491 from 3.2673 from 3.2351
a. The range is 2.20 (2008) to 3.35 (2017).

6. EUR to USD - EUR Stronger. 1.0646 from 1.0533 from 1.0522
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 Stronger. 7.7532 from 7.7540 from 7.7529
a. 52 week range is 7.7452 - 7.8296.
b. 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. 4.4600 from 4.4710 from 4.4845
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.60 (1998)
c. Decoupling of the MYR and Oil ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.4259 from 1.4384 from 1.4467
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8984 from 6.9175 from 6.9429
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker. 1.2183 from 1.2288 from 1.2342
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 Weaker. 5.4337 from 5.4940 from 5.5346
a. Which has more effect ? Article 50 or Malaysian Election ?

13. Dollar Index - USD Weaker. 101.18 from 102.22 from 102.21
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Confused ?

2. Headwinds - Global Derivatives (US$700t); Global Debts (US$225t, 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; US Feds Leverage (113 to 1);

3. Tailwinds - Low Interest Rates, Cash Sidelines (US$60t); 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 about 11% from the 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) Americans became the 2nd most frequent buyers of high-end homes
vi) 5,587 resales in first 9 months 2016, up on the 4,696 sales yoy
vii) More than 800 condo units were resold at a loss this year as economy slows
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed in 2016. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) BoA: Prices to drop 5%
viii) Bocom: Prices to drop 20% to 30% by end 2017
ix) Centaline: Mainland Chinese made up 15.8% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) 34,000 flats in pipeline for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise from Jan 1, 2016
vi) Molior: Will take more than 2 years to sell the homes under construction
vii) Rightmove: Declines of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Lower. 2.40% from 2.42% from 2.44%
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. Expecting interest rates to remain low for a long time
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017?

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.78 from 36.74 from 36.45

9. Baltic Dry Index - Lower; 910 from 963 from 961; Low 290; High 1257; 2330 (2013)


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:-

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

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InvestIdeas • View active topics

[winston]

TOL as of Jan 22, 2017

Trading Break.jpeg

Trading Break

Trump has been crowned without much incident, so the focus now would probably be back to what he intends to do eg. China, Infrastructure, Taxes, Repatriation of Foreign Funds, NAFTA, Deregulations, Jerusalem, Russia etc.

And for every of this subjects, things could go either way, due to the high expectations and the difficulty in it's execution. Not to mentioned that it now takes only 140 characters, to adversely affect your positions.

It's very difficult to focus on fundfamentals and to be able to value things properly, when there are so many moving parts.

In times like this, it may be a good idea to take a trading break. It's good to stay detached from the markets for a while and to also use the down-time to do other things eg. travel, reading etc.

I need to also remind myself that the top traders tend to only break-even when their mental efficiencies dropped to 90%. And anything below that, they will start to lose money.

Sometimes, we are so close to the forest that we cant see the trees. A break would help us see market factors in another perspective.


Commodities:- Risk-On/b] (Data as of Saturday)

1. Oil - Higher. US$53.25 from US$52.52 last week from US$53.70 two weeks ago. Expecting Oil to be range-bound with a negative bias. Vested in RH Petrogas
a. Glut 1m bpd - rebalancing in 2017 ?; Supply 98.3m bpd?; Demand 97.3m bpd?
b. Global Stockpiles: 2b barrels ?
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
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells
f. US Supply expected to increase by 250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: Down 7% (300,000 bpd)
i. Saudi Aramco's IPO in 2018. Incentive for Saudis to maintain high oil prices ?
j. China: SPR reached 51/90 days; 2017 Imports to decrease?
k. Russia: ramping drilling activities in existing brownfields
l. OPEC: Cutting Production by 1.2m bpd before Jan 2017
m. Libya: 700k bpd from 200k bpd (+0.5m bpd ); Used to produce 1.6m bpd
n. Fracking: Additional 0.5m bpd @ US$60; +1m bpd @ US$70 ?
viewtopic.php?f=33&t=7550&start=210

2. Natural Gas - Lower: US$3.20 from US$3.42 from US$3.26
a. Support 3.10; 2.85; 1.70; Resistance $4.00
b. Uses: Heating, Cooking, Transportation (CNG), Ammonia (Fertiliser), Hydrogen (Chemical Industry), Fabrics, Glass, Steel, Plastics Paint etc
c. High: US$13.69 (2008); Low: US$1.61 (March 2015)
d. Natural gas rigs: Dropped from 1,606 (2008) to low of 81. Now at 129
e. New injections into storage are at about 40% below the pace of two years ago
f. EIA: Supply now only 2% above the 5 year average vs +40% in March 2016
g. Cold Winter; The heating degree days (HDD) was 11% above average
h. LNG are being exported from US to Latin America and AsiaTrade
i. War with Mexico will bring prices down
j. Suppy increasing by 4% pa; Demand growing by 7% pa
viewtopic.php?f=33&t=1863&start=130

3. Gold - Higher. US$1210 from US$1197 from US$1173. 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
d. Demand increasing by Muslim countries now that Gold is a halal investment
e. Would India temporarily ban gold imports ?
f. Indians are supposedly paying 2 times spot due to their cash issues
g. If the USD weakens, Gold would likely rise and vice-versa
h. Interest rates are rising and would not be good for gold
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Silver - Higher. US$17.12 from US$16.84 from US$16.52. Range High: 49
a. Solar Panels, Data Storage, Antibacterial products, Silver Coins, Jewelery etc
b. Demand: 1.2b ounces in 2015
c. Supply: 0.9b ounces in 2015
d. 35% (7700 metric tons) for Electronics
e. 25% (5500 metric tons) for bullions & coins
f. India imports more Silver than the US
viewtopic.php?f=33&t=7589&p=202084#p202084

5. Coffee (Mar 17th ) - Higher. US$153 from US$149 from US$143
L US$135; US$120; H US$175; US$300 (2011). Sold JO
a. 150m Americans drink coffee daily (400m cups)
b. America imports US$4b of coffee yearly
c. Supply: 152m bags; US$19b trade; Deficit 3.5m bags;
d. Demand 155m bags. By 2030, rising to 200m bags; 5% growth pa
e. Arabica, grown in Brazil (50m bags), is used in premium oulets. At risk from higher temperatures and more resilient pests
f. Robusta, grown in Vietnam; Used in Instant Coffee; 40% more caffeine
g. What would be the breaking price for coffee ? In 2011, it touched US$300
h. Coffee Rust Disease in Central America lowered supply by 30% over past 3 yrs
i. By 2050, suitable land will halved and demand would have doubled
j. Farmers in Central America replacing coffee with cocoa due to climate change
k. Over 2.25 billion cups of coffee are consumed in the world every day
l. Growth: USA +1.5%; China +5%; India +4%
m. Bumper crops in Brazil, Colombia and Honduras
viewtopic.php?f=33&t=3812&start=80

7. Uranium (U3O8 UXC) - Higher. US$22.50 (Jan 16) from US$22.00 (Jan 09) from US$20.25 (Jan02). 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; Starting 21/54 reactors ?
f. Global Demand: 180m lbs pa
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 new reactors planned
i. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
j. Russia withdrew from Nuclear deal in Oct 2016; With Trump, would there be another deal or would there be another arms race ?
k. Paris Climate Deal - implemented in November 2016;
l. China's air pollution worsening so nuclear energy maybe expanding
m. Some buyers are locking in long term contracts at US$40, twice the spot rates
n. Kazakhtan reducing supply by 10% (40% of global production)
viewtopic.php?f=33&t=705&start=80

8. Lithium - not vested
a. Global Lithium Demand: 185 ktpa; In 2025: 500 ktpa; Growth: 11% pa
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% to around $350 per kwh
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20

9. Palladium (Mar 17) - Higher; US$789 from US$752 from US$756
a. Support: US$600; US$500; US$200; Resistance: US$800; US$900;
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

10. Zinc; Lower - US$2757 from US$2783 from US$2624
a. Supply Deficit 1.2m tons;
b. High US$4400 (2007); Low $1600 (Jan 2016)
c. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer,
d. Producers: Glencore (GLEN.L), Trevali (TV.TO), Nevsun Resources (NEV)

11. If there's a crash, Commodities would not be spared.
12. The High USD is not good for Commodities
13. Global economy is worsening eg. potential trade wars etc


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

1. US Equities - Lower. 2271 from 2275 last week from 2277 two weeks ago. Traded Cameco (CCJ); Sold LABD ( Inverse Biotech 3x )
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 22886 from 22937 from 22503; No Trade
a. Support 21575; Resistance 24100;
viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 3123 from 3113 from 3154; Support at 2450; No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - No Trade

5. Japan Equities - Lower. 19138 from 19287 from 19454

6. Malaysian Equities - No Trade

7. Australian Equities - No Trade


Currencies- Mixed

1. USD to JPY - JPY Weaker. 114.60 from 114.47 last week from 117.02 two weeks ago
a. 52 week range is 76 to 126
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.1188 from 3.1280 from 3.1084
a. With the investments by the China into Malaysia, can the MYR rise against the SGD?
b. Malaysians working in Singapore, are in the process of changing their Bonuses into MYR

3. AUD to USD - AUD Stronger. 0.7567 from 0.7509 from 0.7308
a. The range is 0.70 (2016) to 1.10 (2011)
b. Am concerned that the spat between the US and China will affect the AUD
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0780 from 1.0707 from 1.0511
a. The range is 0.98 (2016) to 1.36 (2012).
b. Am concerned that the spat between the US and China will affect the AUD

5. AUD to MYR - AUD Stronger. 3.3621 from 3.3491 from 3.2673
a. The range is 2.20 (2008) to 3.43 (2016)
b. Converted some AUD to MYR

6. EUR to USD - EUR Stronger. 1.0707 from 1.0646 from 1.0533
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. 7.7557 from 7.7532 from 7.7540
a. 52 week range is 7.7452 - 7.8296.
b. 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. 4.4430 from 4.4600 from 4.4710
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.60 (1998)
c. Decoupling of the MYR and Oil ?
viewtopic.php?f=32&t=397&start=60

9. USD to SGD:- SGD Stronger; 1.4246 from 1.4259 from 1.4384
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8728 from 6.8984 from 6.9175
a. Expecting the CNY to drop against the USD.
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger. 1.2373 from 1.2183 from 1.2288
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. 5.4973 from 5.4337 from 5.4940
a. Which has more effect ? Article 50 or Malaysian Election ?

13. Dollar Index - USD Weaker. 100.74 from 101.18 from 102.22
viewtopic.php?f=32&t=7616&start=60


Others

1. Sentiment - Confused ?

2. Headwinds - Global Derivatives (US$700t); Global Debts (US$225t, 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%); US Corporate Debt (US$5.5t); Emerging Markets US$ 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; US Feds Leverage (113 to 1);

3. Tailwinds - Low Interest Rates, Cash Sidelines (US$60t); 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 about 11% from the peak in 3Q 2013
ii) About 24,000 private homes are vacant
iii) Supply: 14,500 units in 2017
iv) The existing stock of unsold homes may take three years to sell
v) Americans became the 2nd most frequent buyers of high-end homes
vi) More than 800 condo units were resold at a loss in 2016 as economy slows
vii) Prices fell 3% in 2016 for third straight yearly decline
viii) UDA: Developers sold 8000+ homes in 2016, compared to 7,440 in 2015
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) NAPIC: About 23% (19000/ 82,000) of residential & commercial properties from 1Q 2016 unsold
iii) 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) Price has surged almost 370% from 2003 to Sep 2015
ii) 18,000 new units completed in 2016. 93,000 units in next 3-4 years (up 40%)
iii) About 19,000 people left HK last year
iv) Margins have decreased to 25% from 40%
v) DB: Prices to drop 11% in 2017
vi) CS: Prices to drop 22% by end 2018
vii) Bocom: Prices to drop 20% to 30% by end 2017
viii) Centaline: Mainland Chinese made up 16% of buyers during quarter
ix) DTZ: Prices to increase 5-10% by July 1, 2017
x) Citi: Prices to drop 15% in 2017
xi) 34,000 flats in pipeline for 2017
viewtopic.php?f=10&t=7785&p=202051#p202051

e. London Properties
i) Savills: 9% drop for luxury properties in 2016 and will not rise until 2019
ii) Hard Brexit: 5,000 jobs axed immediately? And how many of the 1.1m jobs in the Financial Services sector can survive ?
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20,000 new homes pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829, a 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viewtopic.php?f=11&t=3673&start=70

6. Yield on 10 Year US Treasuries - Higher. 2.47% from 2.40% from 2.42%
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. Expecting interest rates to rise slowly over next two years
b. About US$10t or about 1/4 of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?

8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.75 from 36.78 from 36.74

9. Baltic Dry Index - Higher; 925 from 910 from 963; Low 290; High 1257; 2330 (2013)


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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