TOL as of April 09, 2017
1Q US Earnings Season
The US markets have not really gone anywhere for the past few weeks. However, US Earnings Season is here and it could be the catalyst for the markets to move higher.
The following are some analysis on 1Q Earnings from Zack Research:-
1. Total Q1 earnings for the S&P 500 index are expected to be up +6.5% from the same period last year, on +6.3% higher revenues.
2. Q1 estimates came down as the quarter got underway, with the current +6.5% down from +10.4% in late December.
4. The Energy sector is a big contributor to growth this quarter, with the sector alone accounting for 4 percentage points of the aggregate +6.5% growth.
5. If we exclude the Energy sector from the aggregate Q1 earnings tally, earnings growth for the quarter drops to +2.5%.
6. Technology and Basic Materials are the only sectors with double-digit growth this quarter.
7. Earnings growth is expected to be negative for 6 sectors in Q1, with Transportation having weakest growth of them all at -22.3%.
8 Actual growth will be higher than this, which could be as high as the +10.4% growth pace that was expected at year-end 2016.
In view of the above, I need to remind myself to be a bit careful about shorting the markets. There's still ample Liquidity on the sidelines and any dip would probably be bought.
Anyway, one important piece of economic news this week, was the weak US Auto Sales. In view of that, I have discontinued the monitoring Palladium, as 80% of it's supply is being consumed by the auto industry.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$52.29 from US$50.85 last week from US$48.14 two weeks ago. Vested in RH Petrogas; Sold SCO (Inverse Oil 2x ETF )
Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. Iran's output at 3.6m bpd; Used to have 40m 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 1.8m bpd; Expecting extension of 6 months in May 25, 2017
m. Libya: Fighting decreased supply by 125k bpd
n. Fracking: +0.5m bpd @ US$60; +1m bpd @ US$70; +0.4m bpd 2017; +1m bpd 2018
o. Trump's deregulation may increase supply?
p. How will the new sanctions on Iran affect Oil? War with Iran?
q. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
r. More than 30 oil supertankers are sitting off the coast of Singapore
s. US imports 8m bpd (Total Demand of India and Japan combined)
t. Summer driving will start soon
u. Refinery maintenance will be over soon, meaning higher demand for crude
v. Am not expecting the Syrian issue to affect Oil significantly
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.25 from US$3.19 from US$3.08. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. LNG are being exported from US to Latin America and AsiaTrade
f. Trade war with Mexico will bring prices down
g. Suppy increasing by 4% pa; Demand growing by 7% pa
h. Trump's deregulation may increase supply?
i. Winter storage declined modestly; Oversupply as winter ends?
j. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1256 from US$1252 from US$1243. Record US$1920.
Vested - Physical Gold Coins
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.99 from US$18.28 from US$17.78
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Higher; US$957 from US$953 from US$965
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica May 17) - Higher. US$140 from US$139 from US$138
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups)
b. USA 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. 60% of Production
f. Robusta, grown in Vietnam (20% global); 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
n. Record Arabica crop 2017? Price +30% in US for 2016
o. Robusta crop down 6% yoy; Price +60% in London for 2016
p. Illy: Rebalancing in 2017
q. Brazil is the biggest coffee producer, producing 1/3 of world’s coffee
r. Europe is the largest importer, accounting for 1/3 of world’s consumption.
s. Coffee is the most traded commodity in the world, following crude oil.
t. Coffee crops are expected to fall 9% in Brazil in 2017/18
u. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Lower. US$23.50 (April 3) from US$24.50 (Mar27) from US$25.50 (Mar 20). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$136 (2008); $20 (2005) to $136 (2007), 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Stockpile: 1b lbs ( till 2022) ; Companies normally store 5-years supply
e. Japanese Demand: 13 lbs pa; Starting 21/54 reactors ?
f. Global Demand: 160m lbs pa to 225m lbs pa (2025)
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016; Would there be another deal?
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening so nuclear energy maybe expanding
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear power accounts for about 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
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 fell 65% to around $350 per kwh
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20
9. Zinc; Lower - US$2694 from US$2768 from US$2836
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)
viewtopic.php?f=33&t=367&start=20
10. Sugar (#11 May 17); Lower - US$16.73 from US$16.82 from US$17.77
a. 5m tonnes deficit
b. Droughts in Thailand, Brazil and India
viewtopic.php?f=33&t=2136&start=150
11. Nickel; Higher - US$10213 from US$10023 from US$9880
a. Used in Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
12. If there's a crash, Commodities would not be spared.
13. The High USD is not good for Commodities
14. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2356 from 2363 last week from 2344 two weeks ago. Sold SCO (Oil Inverse 2x) and VXX (Volatility 2x)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 24267 from 24112 from 24358; Traded Standard Chartered
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3287 from 3223 from 3269
Support at 2450; Resistance 3450; No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Lower. 18665 from 18909 from 19263. Stronger Yen is a concern.
6. Malaysian Equities - Traded OSK
7. Australian Equities - No Trade
Medical Marijuana Industry
a. Trump's AG, Jefferson Beauregard Sessions III hates marijuana
b. Trump's Health and Human Services secretary, Tom Price, also hates marijuana
c. The American marijuana industry now employs 100,000 to 150,000 people
d. In comparison, the American coal industry employs only 85,000 Americans
e. Last year, legal marijuana spending was $7b. By 2021, it should reach $22b
f. Both legal and illegal USA sales was $53b last year. Illegal sales was 85% of sales
g. Marijuana has been legalized for recreational use in 8 states including Washington, Colorado, California and the District of Columbia.
viewtopic.php?f=63&t=7650&start=10
Currencies- Mixed
1. USD to JPY - JPY Stronger. 111.04 from 111.38 last week from 111.33 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; 3.1579 from 3.1685 from 3.1631
3. AUD to USD - AUD Weaker. 0.7510 from 0.7641 from 0.7634
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. 1.0543 from 1.0668 from 1.0674
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 Weaker. 3.3295 from 3.3802 from 3.3763
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Weaker. 1.0598 from 1.0669 from 1.0801
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. 7.7671 from 7.7690 from 7.7658
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. 4.4335 from 4.4240 from 4.4230
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.4039 from 1.3963 from 1.3983
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 Weaker; 6.8977 from 6.8831 from 6.8802
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2375 from 1.2545 from 1.2472
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. 5.4864 from 5.5499 from 5.5164
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 101.18 from 100.35 from 99.63
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Bad Debts (US$2t)
v) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
c. US
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Oil Bad Debts (US$0.2t /US$2.5t);
v) Household Debts (US$12t);
vi) Auto Debts (US$1t);
vii) Mortgage Debts (US$8t);
viii) Foreigners Holding of US Treasuries (US$6.3t);
ix) Students Loan (US$1.4t, +20% pa, 4.2m people, 40% default);
x) Junk Bonds Maturing (2017-2021) - US$1.5t;
xi) US Feds Leverage (113 to 1);
xii) StockMarket Cap/GDP (200%);
xiii) Unfunded US pensions: US$6t from US$300b in 2007;
xiv) Margin Debts: US$530b
xv) US ETFs (US$2.8t)
d. Europe
i) NPLs (US$1.3t)
ii) Italian NPLs: 18%; US$0.4t
e. Emerging Markets:
i) US$ Debts (US$10t)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes being auctioned
x) Unexpected relaxation of the curbs implies market is weaker than expected?
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in the first 9 mths of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
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
vii) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
viii) 40% of smaller cities saw their housing investories drop to < 12 mths
ix) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
x) Sales in value terms grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016, suggesting home prices continue to race ahead.
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. 94,000 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
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Annual Supply of 20,000 from 8000%
Xiv) Centaline: Prices to increase 20% by Dec 2019
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? (1.1m jobs in Financial Services)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and will prime prices will probably be flat for 2017
viewtopic.php?f=11&t=3673&start=70
6. Yield on 10 Year US Treasuries - Lower. 2.38% from 2.39 % from 2.41%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German government bonds hit record lows, trading at negative 90 basis points
e. Russia reduced key rate from 10% to 9.75%
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.76 from 36.93 from 36.54
9. Baltic Dry Index - Lower; 1223 from 1297 from 1240; Low 290; High 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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viewtopic.php?f=26&t=3168
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Winston's Investment Ideas 04 (Oct 15 - May 19)
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Apr 09, 2017 3:16 pm
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Apr 16, 2017 9:19 am
TOL as of April 16, 2017
Geopolitical Issues
The markets are in risk-off mode, due to the two current geopolitical issues ie. Syria and North Korea.
For Syria, the risks would be if the US is dragged into a major conflict with either Russia or Iran. Intuitively, I dont see that happening but it's very hard to say, with this type of situations.
At least all three major players here ie. the US, Russia and Iran, do not want to have war with each other and everyone is doing their best not to step on each other's toe. However, the complication here is that Israel would like the US to take out Iran, while Saudi Arabia is also waiting to take out Iran.
As for Korea, it's a very different story. The US is very determined to take out Kim Jong Un asap. His missiles supposedly cannot reach the US now but in a few year's time, it can.
Therefore, I can see a surgical strike happening quite soon, especially when THAAD is fully operational and when the USS Carl Vinson plus the other ships, are in placed.
The Chinese are now caught between a rock and a hard place. I think that they would not have any choice but to move into North Korea after the US has started their surgical strike. They do have 250,000 troops at the border and they must have a buffer with South Korea.
Thereafter, it would be interesting to see whether the South Koreans wants Reunification or can accept a North Korea under Chinese influenced.
The complication here, is that a desperate and cornered Kim, may take a pre-emptive strike at Seoul and Tokyo, before the US is ready to act.
Anyway, I have started to buy the Korea Inverse ETF (7326) that's listed in HK. I'm also watching KORZ (Inverse 3x) listed in the US but it's thinly traded.
I'm also watching the JPY, Japan Inverse ETF (EWV), Gold, Sillver, USD, VXX and some Inverse ETFs.
Geopoltical issues could now over-shadow US earnings season and the markets could be in risk-off mode for quite a while more.
Risk-Off[/b] (Data as of Saturday)
1. Oil - Higher. US$52.91 from US$52.29 last week from US$50.85 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$55
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. Iran's output at 3.6m bpd; Used to have 40m 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 1.8m bpd; Expecting extension of 6 months in May 25, 2017
m. Libya: Fighting decreased supply by 125k bpd
n. Fracking: +0.5m bpd @ US$60; +1m bpd @ US$70; +0.4m bpd 2017; +1m bpd 2018
o. Trump's deregulation may increase supply?
p. How will the new sanctions on Iran affect Oil? War with Iran?
q. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
r. More than 30 oil supertankers are sitting off the coast of Singapore
s. US imports 8m bpd (Total Demand of India and Japan combined)
t. Summer driving will start soon
u. Refinery maintenance will be over soon, meaning higher demand for crude
v. Am not expecting the Syrian issue to affect Oil significantly
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Flat: US$3.24 from US$3.25 from US$3.19. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. LNG are being exported from US to Latin America and Asia
f. Trade war with Mexico will bring prices down
g. Suppy increasing by 4% pa; Demand growing by 7% pa
h. Trump's deregulation may increase supply?
i. Winter storage declined modestly; Oversupply as winter ends?
j. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1290 from US$1256 from US$1252. Record US$1920.
Vested - Physical Gold Coins
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$18.54 from US$17.99 from US$18.28
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Higher; US$976 from US$957 from US$953
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica May 17) - Lower. US$139 from US$140 from US$139
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups)
b. USA 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. 60% of Production
f. Robusta, grown in Vietnam (20% global); 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
n. Record Arabica crop 2017? Price +30% in US for 2016
o. Robusta crop down 6% yoy; Price +60% in London for 2016
p. Illy: Rebalancing in 2017
q. Brazil is the biggest coffee producer, producing 1/3 of world’s coffee
r. Europe is the largest importer, accounting for 1/3 of world’s consumption.
s. Coffee is the most traded commodity in the world, following crude oil.
t. Coffee crops are expected to fall 9% in Brazil in 2017/18
u. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$23.50 (Apr 10) from US$23.50 (April 3) from US$24.50 (Mar27). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$136 (2008); $20 (2005) to $136 (2007), 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Stockpile: 1b lbs ( till 2022) ; Companies normally store 5-years supply
e. Japanese Demand: 13 lbs pa; Starting 21/54 reactors? Currently, only two online
f. Global Demand: 160m lbs pa to 225m lbs pa (2025)
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016; Would there be another deal?
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening so nuclear energy maybe expanding
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear power accounts for about 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
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 fell 65% to around $350 per kwh
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20
9. Zinc; Lower - US$2625 from US$2694 from US$2768
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)
viewtopic.php?f=33&t=367&start=20
10. Sugar (#11 May 17); Lower - US$16.68 from US$16.73 from US$16.82
a. 5m tonnes deficit
b. Droughts in Thailand, Brazil and India
viewtopic.php?f=33&t=2136&start=150
11. Nickel; Lower - US$9708 from US$10213 from US$10023
a. Used in Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
12. If there's a crash, Commodities would not be spared.
13. The High USD is not good for Commodities
14. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2329 from 2356 last week from 2363 two weeks ago. No Trade.
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Flat. 24262 from 24267 from 24112; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3246 from 3287 from 3223
Support at 2450; Resistance 3450; No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Lower. 18336 from 18665 from 18909. Stronger Yen is a concern.
6. Malaysian Equities - Sold MUI
7. Australian Equities - No Trade
8. Korean Equities - 2135. Bought 7326 (Korea Inverse ETF) listed in HK
Medical Marijuana Industry
a. Trump's AG, Jefferson Beauregard Sessions III hates marijuana
b. Trump's Health and Human Services secretary, Tom Price, also hates marijuana
c. The American marijuana industry now employs 100,000 to 150,000 people
d. In comparison, the American coal industry employs only 85,000 Americans
e. Last year, legal marijuana spending was $7b. By 2021, it should reach $22b
f. Both legal and illegal USA sales was $53b last year. Illegal sales was 85% of sales
g. Marijuana has been legalized for recreational use in 8 states including Washington, Colorado, California and the District of Columbia.
viewtopic.php?f=63&t=7650&start=10
Currencies- Mixed
1. USD to JPY - JPY Stronger. 108.48 from 111.04 last week from 111.38 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; 3.1536 from 3.1579 from 3.1685
3. AUD to USD - AUD Stronger. 0.7586 from 0.7510 from 0.7641
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. 1.0596 from 1.0543 from 1.0668
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. 3.3414 from 3.3295 from 3.3802
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0615 from 1.0598 from 1.0669
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. 7.7714 from 7.7671 from 7.7690
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.4050 from 4.4335 from 4.4240
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3968 from 1.4039 from 1.3963
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; 6.8834 from 6.8977 from 6.8831
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2520 from 1.2375 from 1.2545
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. 5.5149 from 5.4864 from 5.5499
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 100.51 from 101.18 from 100.35
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Bad Debts (US$2t)
v) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
c. US
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Oil Bad Debts (US$0.2t /US$2.5t);
v) Household Debts (US$12t);
vi) Auto Debts (US$1t);
vii) Mortgage Debts (US$8t);
viii) Foreigners Holding of US Treasuries (US$6.3t);
ix) Students Loan (US$1.4t, +20% pa, 4.2m people, 40% default);
x) Junk Bonds Maturing (2017-2021) - US$1.5t;
xi) US Feds Leverage (113 to 1);
xii) StockMarket Cap/GDP (200%);
xiii) Unfunded US pensions: US$6t from US$300b in 2007;
xiv) Margin Debts: US$530b
xv) US ETFs (US$2.8t)
d. Europe
i) NPLs (US$1.3t)
ii) Italian NPLs: 18%; US$0.4t
e. Emerging Markets:
i) US$ Debts (US$10t)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes being auctioned
x) Unexpected relaxation of the curbs implies market is weaker than expected?
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in the first 9 mths of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m will be raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014 are now on the market
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value terms grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016, suggesting home prices continue to race ahead.
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. 94,000 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
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Annual Supply of 20,000 from 8000%
Xiv) Centaline: Prices to increase 20% by Dec 2019
*http://investideas.net/forum/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? (1.1m jobs in Financial Services)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.24% from 2.38% from 2.39 %
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.70 from 36.76 from 36.93
9. Baltic Dry Index - Higher; 1296 from 1223 from 1297; Low 290; High 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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viewtopic.php?f=26&t=3168
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Geopolitical Issues
The markets are in risk-off mode, due to the two current geopolitical issues ie. Syria and North Korea.
For Syria, the risks would be if the US is dragged into a major conflict with either Russia or Iran. Intuitively, I dont see that happening but it's very hard to say, with this type of situations.
At least all three major players here ie. the US, Russia and Iran, do not want to have war with each other and everyone is doing their best not to step on each other's toe. However, the complication here is that Israel would like the US to take out Iran, while Saudi Arabia is also waiting to take out Iran.
As for Korea, it's a very different story. The US is very determined to take out Kim Jong Un asap. His missiles supposedly cannot reach the US now but in a few year's time, it can.
Therefore, I can see a surgical strike happening quite soon, especially when THAAD is fully operational and when the USS Carl Vinson plus the other ships, are in placed.
The Chinese are now caught between a rock and a hard place. I think that they would not have any choice but to move into North Korea after the US has started their surgical strike. They do have 250,000 troops at the border and they must have a buffer with South Korea.
Thereafter, it would be interesting to see whether the South Koreans wants Reunification or can accept a North Korea under Chinese influenced.
The complication here, is that a desperate and cornered Kim, may take a pre-emptive strike at Seoul and Tokyo, before the US is ready to act.
Anyway, I have started to buy the Korea Inverse ETF (7326) that's listed in HK. I'm also watching KORZ (Inverse 3x) listed in the US but it's thinly traded.
I'm also watching the JPY, Japan Inverse ETF (EWV), Gold, Sillver, USD, VXX and some Inverse ETFs.
Geopoltical issues could now over-shadow US earnings season and the markets could be in risk-off mode for quite a while more.
Risk-Off[/b] (Data as of Saturday)
1. Oil - Higher. US$52.91 from US$52.29 last week from US$50.85 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$55
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. Iran's output at 3.6m bpd; Used to have 40m 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 1.8m bpd; Expecting extension of 6 months in May 25, 2017
m. Libya: Fighting decreased supply by 125k bpd
n. Fracking: +0.5m bpd @ US$60; +1m bpd @ US$70; +0.4m bpd 2017; +1m bpd 2018
o. Trump's deregulation may increase supply?
p. How will the new sanctions on Iran affect Oil? War with Iran?
q. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
r. More than 30 oil supertankers are sitting off the coast of Singapore
s. US imports 8m bpd (Total Demand of India and Japan combined)
t. Summer driving will start soon
u. Refinery maintenance will be over soon, meaning higher demand for crude
v. Am not expecting the Syrian issue to affect Oil significantly
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Flat: US$3.24 from US$3.25 from US$3.19. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. LNG are being exported from US to Latin America and Asia
f. Trade war with Mexico will bring prices down
g. Suppy increasing by 4% pa; Demand growing by 7% pa
h. Trump's deregulation may increase supply?
i. Winter storage declined modestly; Oversupply as winter ends?
j. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1290 from US$1256 from US$1252. Record US$1920.
Vested - Physical Gold Coins
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$18.54 from US$17.99 from US$18.28
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Higher; US$976 from US$957 from US$953
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica May 17) - Lower. US$139 from US$140 from US$139
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups)
b. USA 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. 60% of Production
f. Robusta, grown in Vietnam (20% global); 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
n. Record Arabica crop 2017? Price +30% in US for 2016
o. Robusta crop down 6% yoy; Price +60% in London for 2016
p. Illy: Rebalancing in 2017
q. Brazil is the biggest coffee producer, producing 1/3 of world’s coffee
r. Europe is the largest importer, accounting for 1/3 of world’s consumption.
s. Coffee is the most traded commodity in the world, following crude oil.
t. Coffee crops are expected to fall 9% in Brazil in 2017/18
u. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$23.50 (Apr 10) from US$23.50 (April 3) from US$24.50 (Mar27). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$136 (2008); $20 (2005) to $136 (2007), 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Stockpile: 1b lbs ( till 2022) ; Companies normally store 5-years supply
e. Japanese Demand: 13 lbs pa; Starting 21/54 reactors? Currently, only two online
f. Global Demand: 160m lbs pa to 225m lbs pa (2025)
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016; Would there be another deal?
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening so nuclear energy maybe expanding
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear power accounts for about 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
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 fell 65% to around $350 per kwh
f. Vehicle: LIT (not vested)
viewtopic.php?f=33&t=1667&start=20
9. Zinc; Lower - US$2625 from US$2694 from US$2768
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)
viewtopic.php?f=33&t=367&start=20
10. Sugar (#11 May 17); Lower - US$16.68 from US$16.73 from US$16.82
a. 5m tonnes deficit
b. Droughts in Thailand, Brazil and India
viewtopic.php?f=33&t=2136&start=150
11. Nickel; Lower - US$9708 from US$10213 from US$10023
a. Used in Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
12. If there's a crash, Commodities would not be spared.
13. The High USD is not good for Commodities
14. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2329 from 2356 last week from 2363 two weeks ago. No Trade.
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Flat. 24262 from 24267 from 24112; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3246 from 3287 from 3223
Support at 2450; Resistance 3450; No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Lower. 18336 from 18665 from 18909. Stronger Yen is a concern.
6. Malaysian Equities - Sold MUI
7. Australian Equities - No Trade
8. Korean Equities - 2135. Bought 7326 (Korea Inverse ETF) listed in HK
Medical Marijuana Industry
a. Trump's AG, Jefferson Beauregard Sessions III hates marijuana
b. Trump's Health and Human Services secretary, Tom Price, also hates marijuana
c. The American marijuana industry now employs 100,000 to 150,000 people
d. In comparison, the American coal industry employs only 85,000 Americans
e. Last year, legal marijuana spending was $7b. By 2021, it should reach $22b
f. Both legal and illegal USA sales was $53b last year. Illegal sales was 85% of sales
g. Marijuana has been legalized for recreational use in 8 states including Washington, Colorado, California and the District of Columbia.
viewtopic.php?f=63&t=7650&start=10
Currencies- Mixed
1. USD to JPY - JPY Stronger. 108.48 from 111.04 last week from 111.38 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; 3.1536 from 3.1579 from 3.1685
3. AUD to USD - AUD Stronger. 0.7586 from 0.7510 from 0.7641
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. 1.0596 from 1.0543 from 1.0668
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. 3.3414 from 3.3295 from 3.3802
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0615 from 1.0598 from 1.0669
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. 7.7714 from 7.7671 from 7.7690
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.4050 from 4.4335 from 4.4240
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3968 from 1.4039 from 1.3963
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; 6.8834 from 6.8977 from 6.8831
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2520 from 1.2375 from 1.2545
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. 5.5149 from 5.4864 from 5.5499
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 100.51 from 101.18 from 100.35
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Bad Debts (US$2t)
v) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
c. US
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Oil Bad Debts (US$0.2t /US$2.5t);
v) Household Debts (US$12t);
vi) Auto Debts (US$1t);
vii) Mortgage Debts (US$8t);
viii) Foreigners Holding of US Treasuries (US$6.3t);
ix) Students Loan (US$1.4t, +20% pa, 4.2m people, 40% default);
x) Junk Bonds Maturing (2017-2021) - US$1.5t;
xi) US Feds Leverage (113 to 1);
xii) StockMarket Cap/GDP (200%);
xiii) Unfunded US pensions: US$6t from US$300b in 2007;
xiv) Margin Debts: US$530b
xv) US ETFs (US$2.8t)
d. Europe
i) NPLs (US$1.3t)
ii) Italian NPLs: 18%; US$0.4t
e. Emerging Markets:
i) US$ Debts (US$10t)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes being auctioned
x) Unexpected relaxation of the curbs implies market is weaker than expected?
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in the first 9 mths of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m will be raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014 are now on the market
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value terms grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016, suggesting home prices continue to race ahead.
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. 94,000 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
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Annual Supply of 20,000 from 8000%
Xiv) Centaline: Prices to increase 20% by Dec 2019
*http://investideas.net/forum/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? (1.1m jobs in Financial Services)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.24% from 2.38% from 2.39 %
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.70 from 36.76 from 36.93
9. Baltic Dry Index - Higher; 1296 from 1223 from 1297; Low 290; High 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
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Apr 23, 2017 10:00 am
TOL as of April 23, 2017
Sell In May And Go Away
Summer will be here soon and many of the Traders will be going on vacation.
So far, it has been a good year, so there's no good reason to have a big position when one is on holidays.
At the same time, Geopolitical Risks have increased, the Trump Trade is still based on "Hope" and the markets are not cheap.
In view of the above, it's may be better to be careful than to be aggresive.
This is despite what Mnuchin has said about launching Tax Reform soon.
Talk is cheap. Didn't Trump said that he would brand China a Currency Manipulator? Or kill Obamacare? And build a Wall to be paid by the Mexicans? Or renegotiate NAFTA?
Intention is not Execution. And Trump also has Congress and his Ultra Conservatives to worry about.
So why would you want to believe Mnuchin and buy US equities at this point in time?
Next week, we have the US Debt Ceiling issue, French Presidential Election and the arrival of the USS Carl Vinsson off Korea.
Risk-Off[/b] (Data as of Saturday)
1. Oil - Lower. US$49.63 from US$52.91 last week from US$52.29 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$55
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
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 1.8m bpd; Expecting extension of 6 months in May 25, 2017
m. Libya: Fighting decreased supply by 125k bpd
n. Fracking: +0.5m bpd @ US$60; +1m bpd @ US$70; +0.4m bpd 2017; +1m bpd 2018
0. How will the new sanctions on Iran affect Oil? War with Iran?
p. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
q. More than 30 oil supertankers are sitting off the coast of Singapore
r. Summer driving will start soon
s. Refinery maintenance will be over soon, meaning higher demand for crude
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.10 from US$3.24 from US$3.25. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Trade war with Mexico will bring prices down
g. Suppy increasing by 4% pa; Demand growing by 7% pa
h. Trump's deregulation may increase supply?
i. Winter storage declined modestly; Oversupply as winter ends?
j. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1286 from US$1290 from US$1256. Record US$1920.
Vested - Physical Gold Coins
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.90 from US$18.54 from US$17.99
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Lower; US$975 from US$976 from US$957
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica) - Lower. US$133 from US$139 from US$140
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups)
b. USA 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. 60% of Production
f. Robusta, grown in Vietnam (20% global); 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
n. Record Arabica crop 2017? Price +30% in US for 2016
o. Robusta crop down 6% yoy; Price +60% in London for 2016
p. Illy: Rebalancing in 2017
q. Brazil is the biggest coffee producer, producing 1/3 of world’s coffee
r. Europe is the largest importer, accounting for 1/3 of world’s consumption.
s. Coffee is the most traded commodity in the world, following crude oil.
t. Coffee crops are expected to fall 9% in Brazil in 2017/18
u. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$23.25 (Apr 17) from US$23.50 (Apr 10) from US$23.50 (April 3). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$136 (2008); $20 (2005) to $136 (2007), 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Stockpile: 1b lbs ( till 2022) ; Companies normally store 5-years supply
e. Japanese Demand: 13 lbs pa; Starting 21/54 reactors? Currently, only two online
f. Global Demand: 160m lbs pa to 225m lbs pa (2025)
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016; Would there be another deal?
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening so nuclear energy maybe expanding
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear power accounts for about 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
8. Nickel; Lower - US$9380 from US$9708 from US$10213
a. Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Higher. 2349 from 2329 last week from 2356 two weeks ago. No Trade.
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 24042 from 24262 from 24267; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3173 from 3246 from 3287
Support at 2450; Resistance 3450; No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 18621 from 18336 from 18665. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2165 from 2135. No trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 109.08 from 108.48 last week from 111.04 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; 3.1512 from 3.1536 from 3.1579
3. AUD to USD - AUD Weaker. 0.7554 from 0.7586 from 0.7510
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. 1.0543 from 1.0596 from 1.0543
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 Weaker. 3.3223 from 3.3414 from 3.3295
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0728 from 1.0615 from 1.0598
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. 7.7736 from 7.7714 from 7.7671
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3980 from 4.4050 from 4.4335
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3957 from 1.3968 from 1.4039
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 Weaker; 6.8844 from 6.8834 from 6.8977
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2814 from 1.2520 from 1.2375
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. 5.6354 from 5.5149 from 5.4864. Sold GBP for MYR
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 99.98 from 100.51 from 101.18
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Bad Debts (US$2t)
v) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
c. US
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Oil Bad Debts (US$0.2t /US$2.5t);
v) Household Debts (US$12t);
vi) Auto Debts (US$1t);
vii) Mortgage Debts (US$8t);
viii) Foreigners Holding of US Treasuries (US$6.3t);
ix) Students Loan (US$1.4t, +20% pa, 4.2m people, 40% default);
x) Junk Bonds Maturing (2017-2021) - US$1.5t;
xi) US Feds Leverage (113 to 1);
xii) StockMarket Cap/GDP (200%);
xiii) Unfunded US pensions: US$6t from US$300b in 2007;
xiv) Margin Debts: US$530b
xv) US ETFs (US$2.8t)
xvi) Risk Parity Funds (US$500b)
d. Europe
i) NPLs (US$1.3t)
ii) Italian NPLs: 18%; US$0.4t
e. Emerging Markets:
i) US$ Debts (US$10t)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes being auctioned
x) Unexpected relaxation of the curbs implies market is weaker than expected?
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014 are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value terms grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016, suggesting home prices continue to race ahead.
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. 94,000 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
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Annual Supply of 20,000 from 8000%
Xiv) Centaline: Prices to increase 20% by Dec 2019
*http://investideas.net/forum/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? (1.1m jobs in Financial Services)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Flat. 2.25% from 2.24% from 2.38%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.87 from 36.70 from 36.76
9. Baltic Dry Index - Lower; 1195 from 1296 from 1223; Low 290; High 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
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Sell In May And Go Away
Summer will be here soon and many of the Traders will be going on vacation.
So far, it has been a good year, so there's no good reason to have a big position when one is on holidays.
At the same time, Geopolitical Risks have increased, the Trump Trade is still based on "Hope" and the markets are not cheap.
In view of the above, it's may be better to be careful than to be aggresive.
This is despite what Mnuchin has said about launching Tax Reform soon.
Talk is cheap. Didn't Trump said that he would brand China a Currency Manipulator? Or kill Obamacare? And build a Wall to be paid by the Mexicans? Or renegotiate NAFTA?
Intention is not Execution. And Trump also has Congress and his Ultra Conservatives to worry about.
So why would you want to believe Mnuchin and buy US equities at this point in time?
Next week, we have the US Debt Ceiling issue, French Presidential Election and the arrival of the USS Carl Vinsson off Korea.
Risk-Off[/b] (Data as of Saturday)
1. Oil - Lower. US$49.63 from US$52.91 last week from US$52.29 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$55
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
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 1.8m bpd; Expecting extension of 6 months in May 25, 2017
m. Libya: Fighting decreased supply by 125k bpd
n. Fracking: +0.5m bpd @ US$60; +1m bpd @ US$70; +0.4m bpd 2017; +1m bpd 2018
0. How will the new sanctions on Iran affect Oil? War with Iran?
p. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
q. More than 30 oil supertankers are sitting off the coast of Singapore
r. Summer driving will start soon
s. Refinery maintenance will be over soon, meaning higher demand for crude
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.10 from US$3.24 from US$3.25. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Trade war with Mexico will bring prices down
g. Suppy increasing by 4% pa; Demand growing by 7% pa
h. Trump's deregulation may increase supply?
i. Winter storage declined modestly; Oversupply as winter ends?
j. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1286 from US$1290 from US$1256. Record US$1920.
Vested - Physical Gold Coins
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.90 from US$18.54 from US$17.99
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Lower; US$975 from US$976 from US$957
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica) - Lower. US$133 from US$139 from US$140
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups)
b. USA 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. 60% of Production
f. Robusta, grown in Vietnam (20% global); 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
n. Record Arabica crop 2017? Price +30% in US for 2016
o. Robusta crop down 6% yoy; Price +60% in London for 2016
p. Illy: Rebalancing in 2017
q. Brazil is the biggest coffee producer, producing 1/3 of world’s coffee
r. Europe is the largest importer, accounting for 1/3 of world’s consumption.
s. Coffee is the most traded commodity in the world, following crude oil.
t. Coffee crops are expected to fall 9% in Brazil in 2017/18
u. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Flat. US$23.25 (Apr 17) from US$23.50 (Apr 10) from US$23.50 (April 3). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. High US$136 (2008); $20 (2005) to $136 (2007), 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Stockpile: 1b lbs ( till 2022) ; Companies normally store 5-years supply
e. Japanese Demand: 13 lbs pa; Starting 21/54 reactors? Currently, only two online
f. Global Demand: 160m lbs pa to 225m lbs pa (2025)
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016; Would there be another deal?
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening so nuclear energy maybe expanding
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear power accounts for about 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
8. Nickel; Lower - US$9380 from US$9708 from US$10213
a. Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Higher. 2349 from 2329 last week from 2356 two weeks ago. No Trade.
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 24042 from 24262 from 24267; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3173 from 3246 from 3287
Support at 2450; Resistance 3450; No trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 18621 from 18336 from 18665. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2165 from 2135. No trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 109.08 from 108.48 last week from 111.04 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; 3.1512 from 3.1536 from 3.1579
3. AUD to USD - AUD Weaker. 0.7554 from 0.7586 from 0.7510
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. 1.0543 from 1.0596 from 1.0543
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 Weaker. 3.3223 from 3.3414 from 3.3295
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0728 from 1.0615 from 1.0598
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. 7.7736 from 7.7714 from 7.7671
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3980 from 4.4050 from 4.4335
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3957 from 1.3968 from 1.4039
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 Weaker; 6.8844 from 6.8834 from 6.8977
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2814 from 1.2520 from 1.2375
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. 5.6354 from 5.5149 from 5.4864. Sold GBP for MYR
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 99.98 from 100.51 from 101.18
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Bad Debts (US$2t)
v) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
c. US
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Oil Bad Debts (US$0.2t /US$2.5t);
v) Household Debts (US$12t);
vi) Auto Debts (US$1t);
vii) Mortgage Debts (US$8t);
viii) Foreigners Holding of US Treasuries (US$6.3t);
ix) Students Loan (US$1.4t, +20% pa, 4.2m people, 40% default);
x) Junk Bonds Maturing (2017-2021) - US$1.5t;
xi) US Feds Leverage (113 to 1);
xii) StockMarket Cap/GDP (200%);
xiii) Unfunded US pensions: US$6t from US$300b in 2007;
xiv) Margin Debts: US$530b
xv) US ETFs (US$2.8t)
xvi) Risk Parity Funds (US$500b)
d. Europe
i) NPLs (US$1.3t)
ii) Italian NPLs: 18%; US$0.4t
e. Emerging Markets:
i) US$ Debts (US$10t)
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes being auctioned
x) Unexpected relaxation of the curbs implies market is weaker than expected?
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014 are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value terms grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016, suggesting home prices continue to race ahead.
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. 94,000 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
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Annual Supply of 20,000 from 8000%
Xiv) Centaline: Prices to increase 20% by Dec 2019
*http://investideas.net/forum/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? (1.1m jobs in Financial Services)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Flat. 2.25% from 2.24% from 2.38%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.87 from 36.70 from 36.76
9. Baltic Dry Index - Lower; 1195 from 1296 from 1223; Low 290; High 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.
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Apr 30, 2017 9:24 am
TOL as of April 29, 2017
New Money From The New Month
It's a new month again so new money would be flowing into the markets again.
Therefore, we should see at least one spike in the markets next week, unless the Fund Managers have already deployed their new money during this week.
Anyway, the markets were strong last week. So is it time to Buy, Sell or Hold now?
Intuitively, I think that we are still safe for the time being. However, my indicators are starting to move up:-
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 6 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 5 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Taxes; Deregulations
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan
The above indicators are very subjective but it does helps me focus on the various issues, without getting too emotional about them. I do not want to be miss out on the last leg of the rally which is normally the most rewarding.
In view of the above, it does not hurt to raise some Cash while still having a bullishly cautious attitude.
At this point in time, I'm still not expecting a crash but only a 5% correction. Therefore, I should remind myself to not aggresively buy those Leverage Inverse ETFs for the time being.
Commodities: Mixed (Data as of Saturday)
1. Oil - Lower. US$49.14 from US$49.63 last week from US$52.91 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells to show activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; Expecting extension for another 6 mths on May 25
m. Libya: +300,000 bpd ?
n. Fracking: +0.5m bpd @US$60; +1m bpd @US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving will start soon
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.27 from US$3.10 from US$3.24. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1270 from US$1286 from US$1290. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.26 from US$17.90 from US$18.54
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Lower; US$948 from US$975 from US$976
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica) - Flat. US$133 from US$133 from US$139
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Lower. US$22.75 (Apr24) from US$23.25 (Apr 17) from US$23.50 (Apr 10). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
8. Nickel; Higher - US$9450 from US$9380 from US$9708
a. Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2384 from 2349 last week from 2329 two weeks ago. Traded Seagate Technology (STX) and US Steel (X); Bought Barrick Gold (ABX)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 24615 from 24042 from 24262; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3155 from 3173 from 3246; Support at 2450; Resistance 3450; Bought 2822 (A50 ETF)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 19197 from 18621 from 18336. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - Sold 1/3 Bellamy's Australia
8. Korean Equities - Higher; 2205 fvrom 2165 from 2135. No trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 111.50 from 109.08 last week from 108.48 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; 3.1082 from 3.1512 from 3.1536
3. AUD to USD - AUD Weaker. 0.7499 from 0.7554 from 0.7586
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. 1.0468 from 1.0543 from 1.0596
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 Weaker. 3.2536 from 3.3223 from 3.3414
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0897 from 1.0728 from 1.0615
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7766 from 7.7736 from 7.7714
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3390 from 4.3980 from 4.4050
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3960 from 1.3957 from 1.3968
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 Weaker; 6.8899 from 6.8844 from 6.8834
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2950 from 1.2814 from 1.2520
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. 5.6191 from 5.6354 from 5.5149
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 99.05 from 99.98 from 100.51
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Household Debts (US$12t);
v) Mortgage Debts (US$8t);
vi) Foreigners Holding of US Treasuries (US$6.3t);
vii) Margin Debts: US$530b
viii) US ETFs (US$2.8t)
ix) US Feds Leverage (113 to 1);
x) StockMarket Cap/GDP (200%);
xi) Unfunded US pensions: US$6t from US$300b in 2007
xii) Risk Parity Funds (US$500b)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 4.2m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 19,000 people left HK last year
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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? (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Flat. 2.28% 2.25% from 2.24% from 2.38%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.14 from 36.87 from 36.70
9. Baltic Dry Index - Lower; 1109 from 1195 from 1296; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page.
New Money From The New Month
It's a new month again so new money would be flowing into the markets again.
Therefore, we should see at least one spike in the markets next week, unless the Fund Managers have already deployed their new money during this week.
Anyway, the markets were strong last week. So is it time to Buy, Sell or Hold now?
Intuitively, I think that we are still safe for the time being. However, my indicators are starting to move up:-
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 6 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 5 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Taxes; Deregulations
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan
The above indicators are very subjective but it does helps me focus on the various issues, without getting too emotional about them. I do not want to be miss out on the last leg of the rally which is normally the most rewarding.
In view of the above, it does not hurt to raise some Cash while still having a bullishly cautious attitude.
At this point in time, I'm still not expecting a crash but only a 5% correction. Therefore, I should remind myself to not aggresively buy those Leverage Inverse ETFs for the time being.
Commodities: Mixed (Data as of Saturday)
1. Oil - Lower. US$49.14 from US$49.63 last week from US$52.91 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q, 2017? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells to show activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; Expecting extension for another 6 mths on May 25
m. Libya: +300,000 bpd ?
n. Fracking: +0.5m bpd @US$60; +1m bpd @US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving will start soon
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.27 from US$3.10 from US$3.24. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1270 from US$1286 from US$1290. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US - 8000 tons; IMF - 3000 tons; Germany - 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.26 from US$17.90 from US$18.54
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Platinum - Lower; US$948 from US$975 from US$976
a. Use: Catalytic Converters (43%); Jewelery (35%)
b. Rare: 170 metric tons (Gold 3100 Metric tons)
c. Demand > Supply: 120,000 ounces (5th year of Deficit )
d. US Auto Sales weak
viewtopic.php?f=33&t=8172&start=120
6. Coffee (Arabica) - Flat. US$133 from US$133 from US$139
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
7. Uranium (U3O8 UXC) - Lower. US$22.75 (Apr24) from US$23.25 (Apr 17) from US$23.50 (Apr 10). Vested in Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons etc;
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
8. Nickel; Higher - US$9450 from US$9380 from US$9708
a. Construction, Cars, Cookware, Jets, Appliances, Lithium Ion Batteries etc
b. Phillippines: 1/4 of Global Supply; 30 mines closed (1/2 PI Output)
c. Indonesia: Allowed exports but requires 51% ownership by locals
d. Chinese Stainless Steel: +12% yoy
e. Global Demand: +6% pa
f. Battery Demand for Nickel: +20% in 2016
g. Demand for Lithium Ion Batteries: +14% pa
h. Deficit: Rising from 67k tonnes in 2016 to 93k tonnes in 2017
i. Vehicle: JJN (iPath Bloomberg Nickel)
viewtopic.php?f=33&t=969
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2384 from 2349 last week from 2329 two weeks ago. Traded Seagate Technology (STX) and US Steel (X); Bought Barrick Gold (ABX)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 24615 from 24042 from 24262; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3155 from 3173 from 3246; Support at 2450; Resistance 3450; Bought 2822 (A50 ETF)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 19197 from 18621 from 18336. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - Sold 1/3 Bellamy's Australia
8. Korean Equities - Higher; 2205 fvrom 2165 from 2135. No trade
Currencies- Mixed
1. USD to JPY - JPY Weaker. 111.50 from 109.08 last week from 108.48 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; 3.1082 from 3.1512 from 3.1536
3. AUD to USD - AUD Weaker. 0.7499 from 0.7554 from 0.7586
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. 1.0468 from 1.0543 from 1.0596
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 Weaker. 3.2536 from 3.3223 from 3.3414
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.0897 from 1.0728 from 1.0615
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7766 from 7.7736 from 7.7714
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3390 from 4.3980 from 4.4050
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3960 from 1.3957 from 1.3968
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 Weaker; 6.8899 from 6.8844 from 6.8834
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2950 from 1.2814 from 1.2520
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. 5.6191 from 5.6354 from 5.5149
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 99.05 from 99.98 from 100.51
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused ?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Bank Debts (US$60t);
iii) Corporate Debts (US$5.5t);
iv) Household Debts (US$12t);
v) Mortgage Debts (US$8t);
vi) Foreigners Holding of US Treasuries (US$6.3t);
vii) Margin Debts: US$530b
viii) US ETFs (US$2.8t)
ix) US Feds Leverage (113 to 1);
x) StockMarket Cap/GDP (200%);
xi) Unfunded US pensions: US$6t from US$300b in 2007
xii) Risk Parity Funds (US$500b)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 4.2m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 19,000 people left HK last year
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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? (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Flat. 2.28% 2.25% from 2.24% from 2.38%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.14 from 36.87 from 36.70
9. Baltic Dry Index - Lower; 1109 from 1195 from 1296; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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viewtopic.php?f=26&t=3168
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun May 07, 2017 9:08 am
TOL as of May 07, 2017
Climbing The Wall Of Worries
The S&P has been grinding higher and it's now close to the resistance of 2400. Can it push through this strong resistance or would this be the top for the time being?
Intuitively, I think that there should be a pause in the rise now. Summer is almost here and a lot of traders will be going away for their summer vacation.
In addition, there are now plenty more things to worry about. However, none of my indicators have tipped the market into the "danger" zone yet, although I have adjusted two of my indicators upwards recently:-
1. Credit Problems: worsening Credit Cards and Auto Loans numbers
2. Liquidity: Tightening by PBOC
I'm still not expecting a crash yet, so any Convincing Story could still be bought. However, one would need to be quite nimble now, as this type of situation can change very quickly.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 7 from 6 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 from 5 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan
Total: 49 out of 70 (70%)
Commodities: Risk-Off (Data as of Saturday)
I have discontinued the monitoring of Platinum and Nickel on a weekly basis.
1. Oil - Lower. US$46.51 from US$49.14 last week from US$49.63 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; Expecting extension for another 6 mths on May 25
m. Libya: +300,000 bpd ?
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving will start soon
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Flat: US$3.28 from US$3.27 from US$3.10. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1229 from US$1270 from US$1286. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$16.38 from US$17.26 from US$17.90
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Higher. US$136 from US$133 from US$133
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$22.50 (May1) from US$22.75 (Apr24) from US$23.25 (Apr 17). Added to Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2399 from 2384 last week from 2349 two weeks ago. Added to Cameco (CCJ)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 24477 from 24615 from 24042; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3103 from 3155 from 3173;
a. Support at 2450; Resistance 3450;
b. Vested 2822 (A50 ETF) for Annual Dividends and MSCI Inclusion June 2017
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 19446 from 19197 from 18621; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - Sold 1/2 Bellamy's Australia
8. Korean Equities - Higher; 2241 from 2205 from 2165
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Weaker. 112.70 from 111.50 last week from 109.08 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; 3.0883 from 3.1082 from 3.1512
3. AUD to USD - AUD Weaker. 0.7427 from 0.7499 from 0.7554
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. 1.0426 from 1.0468 from 1.0543
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 Weaker. 3.2197 from 3.2536 from 3.3223
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1005 from 1.0897 from 1.0728
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7821 from 7.7766 from 7.7736
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3350 from 4.3390 from 4.3980
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.4037 from 1.3960 from 1.3957
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 Weaker; 6.9020 from 6.8899 from 6.8844
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2981 from 1.2950 from 1.2814
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. 5.6272 from 5.6191 from 5.6354
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 98.65 from 99.05 from 99.98
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Canfused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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? (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.35% from 2.28% from 2.25%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.93 from 37.14 from 36.87
9. Baltic Dry Index - Lower; 994 from 1109 from 1195; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
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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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Climbing The Wall Of Worries
The S&P has been grinding higher and it's now close to the resistance of 2400. Can it push through this strong resistance or would this be the top for the time being?
Intuitively, I think that there should be a pause in the rise now. Summer is almost here and a lot of traders will be going away for their summer vacation.
In addition, there are now plenty more things to worry about. However, none of my indicators have tipped the market into the "danger" zone yet, although I have adjusted two of my indicators upwards recently:-
1. Credit Problems: worsening Credit Cards and Auto Loans numbers
2. Liquidity: Tightening by PBOC
I'm still not expecting a crash yet, so any Convincing Story could still be bought. However, one would need to be quite nimble now, as this type of situation can change very quickly.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 7 from 6 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 from 5 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan
Total: 49 out of 70 (70%)
Commodities: Risk-Off (Data as of Saturday)
I have discontinued the monitoring of Platinum and Nickel on a weekly basis.
1. Oil - Lower. US$46.51 from US$49.14 last week from US$49.63 two weeks ago. Vested in RH Petrogas;
Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; Expecting extension for another 6 mths on May 25
m. Libya: +300,000 bpd ?
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving will start soon
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Flat: US$3.28 from US$3.27 from US$3.10. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1229 from US$1270 from US$1286. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$16.38 from US$17.26 from US$17.90
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Higher. US$136 from US$133 from US$133
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$22.50 (May1) from US$22.75 (Apr24) from US$23.25 (Apr 17). Added to Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing nuclear plants; Currently, building 20; To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2399 from 2384 last week from 2349 two weeks ago. Added to Cameco (CCJ)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Lower. 24477 from 24615 from 24042; No Trade
a. Support: 23250, 21575; Resistance: 24650
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3103 from 3155 from 3173;
a. Support at 2450; Resistance 3450;
b. Vested 2822 (A50 ETF) for Annual Dividends and MSCI Inclusion June 2017
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade.
5. Japan Equities - Higher. 19446 from 19197 from 18621; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - Sold 1/2 Bellamy's Australia
8. Korean Equities - Higher; 2241 from 2205 from 2165
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Weaker. 112.70 from 111.50 last week from 109.08 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; 3.0883 from 3.1082 from 3.1512
3. AUD to USD - AUD Weaker. 0.7427 from 0.7499 from 0.7554
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. 1.0426 from 1.0468 from 1.0543
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 Weaker. 3.2197 from 3.2536 from 3.3223
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1005 from 1.0897 from 1.0728
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7821 from 7.7766 from 7.7736
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3350 from 4.3390 from 4.3980
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.4037 from 1.3960 from 1.3957
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 Weaker; 6.9020 from 6.8899 from 6.8844
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2981 from 1.2950 from 1.2814
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. 5.6272 from 5.6191 from 5.6354
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 98.65 from 99.05 from 99.98
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Canfused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 months of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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? (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.35% from 2.28% from 2.25%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at negative 90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.93 from 37.14 from 36.87
9. Baltic Dry Index - Lower; 994 from 1109 from 1195; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun May 14, 2017 1:00 pm
TOL as of May 14, 2017
Danger Zone?
The US markets have not gone anywhere for the past two weeks. So are we in the Danger Zone now, especially when Earnings Season will be over soon and that the US political situation is not getting better?
Intuitively, I think that we are not in the Danger Zone yet. None of my Market Risk Indicators are flashing any danger yet.
In fact, I have just revised the Geopolitical Issues Risk downwards, from 8 to 7, due to the election of a new Korean President and the improving situation in the South China Sea.
In view of the above, I think that it's still safe to trade any convincing story but I will need to be quite nimble as the situation can change very quickly.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 from 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Higher. US$47.88 from US$46.51 last week from US$49.14 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; 9 months extension on May 25?
m. Libya: +300,000 bpd
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving is here
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.43 from US$3.28 from US$3.27. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Flat. US$1229 from US$1229 from US$1270. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$16.47 from US$16.38 from US$17.26
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$135 from US$136 from US$133
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$22.50 (May8) from US$22.50 (May1) from US$22.75 (Apr24). Sold 2/3 Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Lower. 2391 from 2399 last week from 2384 two weeks ago.
a. Resistance: 2400; 2650
b. Sold 2/3 Cameco (CCJ)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25156 from 24477 from 24615; Sold Fairwood (0052)
a. Support: 23250, 21575; Resistance: 25350
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3084 from 3103 from 3155
a. Support at 2950; 2450; Resistance 3450; Higher.
b. Vested 2822 (A50 ETF) for Annual Dividends and MSCI Inclusion June 2017
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Higher. 19884 from 19446 from 19197; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2286 from 2241 from 2205
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Weaker. 113.28 from 112.70 last week from 111.50 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; 3.0962 from 3.0883 from 3.1082
3. AUD to USD - AUD Weaker. 0.7393 from 0.7427 from 0.7499
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. 1.0373 from 1.0426 from 1.0468
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 Weaker. 3.2116 from 3.2197 from 3.2536
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Weaker. 1.0933 from 1.1005 from 1.0897
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7945 from 7.7821 from 7.7766
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.3440 from 4.3350 from 4.3390
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.4030 from 1.4037 from 1.3960
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; 6.8971 from 6.9020 from 6.8899
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2888 from 1.2981 from 1.2950
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. 5.5984 from 5.6272 from 5.6191
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 99.25 from 98.65 from 99.05
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 mths of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
x) Land Cost rising
xi) Tightening of Leverage
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.33% from 2.35% from 2.28%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.09 from 36.93 from 37.14
9. Baltic Dry Index - Higher; 1014 from 994 from 1109; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168
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.
Danger Zone?
The US markets have not gone anywhere for the past two weeks. So are we in the Danger Zone now, especially when Earnings Season will be over soon and that the US political situation is not getting better?
Intuitively, I think that we are not in the Danger Zone yet. None of my Market Risk Indicators are flashing any danger yet.
In fact, I have just revised the Geopolitical Issues Risk downwards, from 8 to 7, due to the election of a new Korean President and the improving situation in the South China Sea.
In view of the above, I think that it's still safe to trade any convincing story but I will need to be quite nimble as the situation can change very quickly.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 from 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Higher. US$47.88 from US$46.51 last week from US$49.14 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; 9 months extension on May 25?
m. Libya: +300,000 bpd
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving is here
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.43 from US$3.28 from US$3.27. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Flat. US$1229 from US$1229 from US$1270. Record US$1920.
Vested - Physical Gold Coins, ABX
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$16.47 from US$16.38 from US$17.26
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$135 from US$136 from US$133
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$22.50 (May8) from US$22.50 (May1) from US$22.75 (Apr24). Sold 2/3 Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 years, from 440 to 595
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Mixed ( Data as of Saturday every week )
1. US Equities - Lower. 2391 from 2399 last week from 2384 two weeks ago.
a. Resistance: 2400; 2650
b. Sold 2/3 Cameco (CCJ)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25156 from 24477 from 24615; Sold Fairwood (0052)
a. Support: 23250, 21575; Resistance: 25350
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3084 from 3103 from 3155
a. Support at 2950; 2450; Resistance 3450; Higher.
b. Vested 2822 (A50 ETF) for Annual Dividends and MSCI Inclusion June 2017
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Higher. 19884 from 19446 from 19197; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2286 from 2241 from 2205
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Weaker. 113.28 from 112.70 last week from 111.50 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; 3.0962 from 3.0883 from 3.1082
3. AUD to USD - AUD Weaker. 0.7393 from 0.7427 from 0.7499
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. 1.0373 from 1.0426 from 1.0468
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 Weaker. 3.2116 from 3.2197 from 3.2536
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Weaker. 1.0933 from 1.1005 from 1.0897
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7945 from 7.7821 from 7.7766
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.3440 from 4.3350 from 4.3390
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.4030 from 1.4037 from 1.3960
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; 6.8971 from 6.9020 from 6.8899
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2888 from 1.2981 from 1.2950
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. 5.5984 from 5.6272 from 5.6191
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 99.25 from 98.65 from 99.05
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 mths of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
x) Land Cost rising
xi) Tightening of Leverage
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.33% from 2.35% from 2.28%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.09 from 36.93 from 37.14
9. Baltic Dry Index - Higher; 1014 from 994 from 1109; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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viewtopic.php?f=26&t=3168
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun May 21, 2017 2:03 pm
TOL as of May 21, 2017
Technical Rebound?
The US Markets dipped on Wednesday and have recovered more than 50% of the dip on Thursday and Friday. Can it still continued it's climb or will it start to move down again?
Intuitively, I think it may be a slow grind going forward:-
1. Earnings season is winding down
2. New Money from the new month of June is still 2 weeks away
3. 2Q Window Dressing is a month away
4. Fundamentals have not really changed ie. Congress and Senate would be bogged down with the FBI probe, Debt Ceiling debate and Obamacare, to be working on Lower Tax Rates, Foreign Repatriation, Deregulation and Infrastructure Spending
My Market Indicators have not flashed danger yet so any convincing story can still be bought at this point in time.
Anyway, I bought Lockheed Martin (LMT) again, just before Trump's trip to the Middle East. I'm expecting some contract wins from Saudi Arabia, Israel etc. during Trump's trip.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 from 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Higher. US$50.48 from US$47.88 last week from US$46.51 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; 9 months extension on May 25?
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving is here
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
t. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.25 from US$3.43 from US$3.28. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1255 from US$1229 from US$1229. Record US$1920.
Vested - Physical Gold Coins; Sold Barrick Gold (ABX)
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$16.88 from US$16.47 from US$16.38
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$132 from US$135 from US$136
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$21.50 (May15) from US$22.50 (May8) from US$22.50 (May1). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2382 from 2391 last week from 2399 two weeks ago.
a. Resistance: 2400; 2650
b. Bought Lockheed (LMT) and EUM (Inverse Emerging Market)
c. Sold American Barrick (ABX)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Flat. 25175 from 25156 from 24477
a. Support: 23250, 21575; Resistance: 25350
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3084 from 3103 from 3155; Sold A50 (2822)
a. Support at 2950; 2450; Resistance 3450; Higher.
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Lower. 19591 from 19884 from 19446; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Sold OSK
7. Australian Equities - No Trade
8. Korean Equities - Flat; 2288 from 2286 from 2241
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 111.16 from 113.28 last week from 112.70 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; 3.1191 from 3.0962 from 3.0883
3. AUD to USD - AUD Stronger. 0.7462 from 0.7393 from 0.7427
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. 1.0335 from 1.0373 from 1.0426
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. 3.2236 from 3.2116 from 3.2197
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1204 from 1.0933 from 1.1005
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7818 from 7.7945 from 7.7821
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3200 from 4.3440 from 4.3350
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.385 from 1.4030 from 1.4037
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; 6.8829 from 6.8971 from 6.9020
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.3036 from 1.2888 from 1.2981
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. 5.6314 from 5.5984 from 5.6272
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 97.14 from 99.25 from 98.65
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 mths of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
x) Land Cost rising
xi) Tightening of Leverage
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.24% from 2.33% from 2.35%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.18 from 37.09 from 36.93
9. Baltic Dry Index - Higher; 956 from 1014 from 994; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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viewtopic.php?f=26&t=3168
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Technical Rebound?
The US Markets dipped on Wednesday and have recovered more than 50% of the dip on Thursday and Friday. Can it still continued it's climb or will it start to move down again?
Intuitively, I think it may be a slow grind going forward:-
1. Earnings season is winding down
2. New Money from the new month of June is still 2 weeks away
3. 2Q Window Dressing is a month away
4. Fundamentals have not really changed ie. Congress and Senate would be bogged down with the FBI probe, Debt Ceiling debate and Obamacare, to be working on Lower Tax Rates, Foreign Repatriation, Deregulation and Infrastructure Spending
My Market Indicators have not flashed danger yet so any convincing story can still be bought at this point in time.
Anyway, I bought Lockheed Martin (LMT) again, just before Trump's trip to the Middle East. I'm expecting some contract wins from Saudi Arabia, Israel etc. during Trump's trip.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 from 8 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Higher. US$50.48 from US$47.88 last week from US$46.51 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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 1.8m bpd; 9 months extension on May 25?
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. More than 30 oil supertankers are sitting off the coast of Singapore
q. Summer driving is here
r. Refinery maintenance over; Big drawdown of 3.6m barrels
s. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
t. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.25 from US$3.43 from US$3.28. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1255 from US$1229 from US$1229. Record US$1920.
Vested - Physical Gold Coins; Sold Barrick Gold (ABX)
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$16.88 from US$16.47 from US$16.38
Support: US$17.00; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$132 from US$135 from US$136
Low: US$135; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops are expected to fall 9% in Brazil in 2017/18
t. Production of Arabica coffee in Brazil may fall by 12.6%; Robusta to increase 4.2%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$21.50 (May15) from US$22.50 (May8) from US$22.50 (May1). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2382 from 2391 last week from 2399 two weeks ago.
a. Resistance: 2400; 2650
b. Bought Lockheed (LMT) and EUM (Inverse Emerging Market)
c. Sold American Barrick (ABX)
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Flat. 25175 from 25156 from 24477
a. Support: 23250, 21575; Resistance: 25350
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3084 from 3103 from 3155; Sold A50 (2822)
a. Support at 2950; 2450; Resistance 3450; Higher.
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Lower. 19591 from 19884 from 19446; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Sold OSK
7. Australian Equities - No Trade
8. Korean Equities - Flat; 2288 from 2286 from 2241
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 111.16 from 113.28 last week from 112.70 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; 3.1191 from 3.0962 from 3.0883
3. AUD to USD - AUD Stronger. 0.7462 from 0.7393 from 0.7427
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. 1.0335 from 1.0373 from 1.0426
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. 3.2236 from 3.2116 from 3.2197
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1204 from 1.0933 from 1.1005
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7818 from 7.7945 from 7.7821
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.3200 from 4.3440 from 4.3350
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.385 from 1.4030 from 1.4037
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; 6.8829 from 6.8971 from 6.9020
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.3036 from 1.2888 from 1.2981
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. 5.6314 from 5.5984 from 5.6272
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 97.14 from 99.25 from 98.65
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP) (iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$530b
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013; Sales dropped by half since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties could total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by volume for the first 2 mths of 2017, were up 26% yoy vs 34.8% for 2016
ix) Sales in value grew 25.1 per cent in the first 2 months of 2017 vs 22.5% in 2016
x) Land Cost rising
xi) Tightening of Leverage
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) Centaline: Mainland Chinese made up 16% of buyers during quarter
x) DTZ: Prices to increase 5-10% by July 1, 2017
xi) Citi: Prices to drop 15% in 2017
xii) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xiii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k 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
viii) Prices have surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.24% from 2.33% from 2.35%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d, Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.18 from 37.09 from 36.93
9. Baltic Dry Index - Higher; 956 from 1014 from 994; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
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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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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun May 28, 2017 9:53 am
TOL as of May 28, 2017
New Money From The New Month
It will be a new month soon and new money would again be flowing into the markets.
Therefore, there would probably be a spike in the markets sometime next week or the week after.
There's also nothing much on the horizon except for the expected 25 bps hike in interest rates on June 13, 2017.
We would also be touching Window Dressing time in the middle of the June, so the markets should be quite stable until the first week of July.
None of my indicators are flashing danger so any Convincing Story can still be bought for the time being.
By the way, the MYR has appreciated and I'm starting to be aware of my MYR Currency Risk again. Intuitively, I think that the MYR should be quite stable until the election but it does not hurt to start monitoring the currency movement now.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$49.87 from US$50.48 last week from US$47.88 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now? d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. Refinery maintenance over; Big drawdown of 3.6m barrels
q. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
r. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.30 from US$3.25 from US$3.43. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1267 from US$1255 from US$1229. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$17.35 from US$16.88 from US$16.47
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$131 from US$132 from US$135
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$21.50 (May22) from US$21.50 (May15) from US$22.50 (May8). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2416 from 2382 last week from 2391 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25639 from 25175 from 25156
a. Support: 23250, 21575; Resistance: 27500
b. Traded Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3110 from 3084 from 3103
a. Support at 2950; 2450; Resistance 3450;
b. Traded A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Higher. 19687 from 19591 from 19884; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2355 from 2288 from 2286
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 110.79 from 111.16 last week from 113.28 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; 3.0530 from 3.1191 from 3.0962
3. AUD to USD - AUD Stronger. 0.7485 from 0.7462 from 0.7393
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. 1.0290 from 1.0335 from 1.0373
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 Weaker. 3.1417 from 3.2236 from 3.2116
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1236 from 1.1204 from 1.0933
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7546 from 7.7818 from 7.7945
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.1970 from 4.3200 from 4.3440
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3750 from 1.385 from 1.4030
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; 6.7263 from 6.8829 from 6.8971
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2876 from 1.3036 from 1.2888
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. 5.4030 from 5.6314 from 5.5984
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 97.44 from 97.14 from 99.25
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by Volume for the first 2 mths of 2017: 26% yoy vs 34.8% for 2016
ix) Sales in Value for first 2 months of 2017: 25.1% yoy vs 22.5% for 2016
x) Land Cost rising
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) DTZ: Prices to increase 5-10% by July 1, 2017
x) Citi: Prices to drop 15% in 2017
xi) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.25% from 2.24% from 2.33%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d. Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.33 from 37.18 from 37.09
9. Baltic Dry Index - Lower; 912 from 956 from 1014; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page.
New Money From The New Month
It will be a new month soon and new money would again be flowing into the markets.
Therefore, there would probably be a spike in the markets sometime next week or the week after.
There's also nothing much on the horizon except for the expected 25 bps hike in interest rates on June 13, 2017.
We would also be touching Window Dressing time in the middle of the June, so the markets should be quite stable until the first week of July.
None of my indicators are flashing danger so any Convincing Story can still be bought for the time being.
By the way, the MYR has appreciated and I'm starting to be aware of my MYR Currency Risk again. Intuitively, I think that the MYR should be quite stable until the election but it does not hurt to start monitoring the currency movement now.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$49.87 from US$50.48 last week from US$47.88 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now? d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. Refinery maintenance over; Big drawdown of 3.6m barrels
q. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
r. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.30 from US$3.25 from US$3.43. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1267 from US$1255 from US$1229. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$17.35 from US$16.88 from US$16.47
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$131 from US$132 from US$135
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$21.50 (May22) from US$21.50 (May15) from US$22.50 (May8). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2416 from 2382 last week from 2391 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25639 from 25175 from 25156
a. Support: 23250, 21575; Resistance: 27500
b. Traded Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3110 from 3084 from 3103
a. Support at 2950; 2450; Resistance 3450;
b. Traded A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Traded Noble
5. Japan Equities - Higher. 19687 from 19591 from 19884; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - No Trade
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2355 from 2288 from 2286
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 110.79 from 111.16 last week from 113.28 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; 3.0530 from 3.1191 from 3.0962
3. AUD to USD - AUD Stronger. 0.7485 from 0.7462 from 0.7393
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. 1.0290 from 1.0335 from 1.0373
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 Weaker. 3.1417 from 3.2236 from 3.2116
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1236 from 1.1204 from 1.0933
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7546 from 7.7818 from 7.7945
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.1970 from 4.3200 from 4.3440
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3750 from 1.385 from 1.4030
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; 6.7263 from 6.8829 from 6.8971
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2876 from 1.3036 from 1.2888
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. 5.4030 from 5.6314 from 5.5984
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Stronger. 97.44 from 97.14 from 99.25
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by Volume for the first 2 mths of 2017: 26% yoy vs 34.8% for 2016
ix) Sales in Value for first 2 months of 2017: 25.1% yoy vs 22.5% for 2016
x) Land Cost rising
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) DTZ: Prices to increase 5-10% by July 1, 2017
x) Citi: Prices to drop 15% in 2017
xi) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.25% from 2.24% from 2.33%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d. Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 37.33 from 37.18 from 37.09
9. Baltic Dry Index - Lower; 912 from 956 from 1014; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
viewtopic.php?f=26&t=3168
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page.
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Jun 04, 2017 9:26 am
TOL as of June 04, 2017
1H Window Dressing
Last week, I mentioned that there could be a spike in the markets this week, from the new money flowing from the new month. And we received that spike on Thursday, June 2nd.
So where do we go from here? Intuitively, I think that the markets will probably be directionless with a positive bias.
In addition, we will be touching Window Dressing time soon. The fund managers will make sure that they will have the better performing stocks in their portfolio, while shedding the poorly performing stocks.
And since it was a good quarter, I do not see the need for the fund managers to really push prices very much higher by June 30th. However, they will probably support their counters if there's a sharp dip before June 30th.
On the horizon, we have the following:-
1. June 8: UK Election - not expecting much here, as the sun has already set on the Queen's empire. I still think that May's decision to have an election was not thought through thoroughly. And even if she wins big, she will still not be able to obtain much concession from the EU during Brexit negotiations. I may buy some GBP if it plunges. A few polls have already mentioned that there could be a hung parliament.
2. June 13: Am expecting the Feds to raise interest rates by 25 bps. If they do not raise or is they raise by 50bps then there would be some excitement.
3. June 20: Am expecting MSCI to include China into their Emerging Market index. China already has the 2nd largest stock market in the world and has no weighting in the index. Am expecting MSCI to start with a 5% weighting intially. Once China is in the MSCI, some passive money will be flowing into the Chinese stiocks. Have bought the A50 ETF (2822) that's listed in HK, to try to front-run the passive money.
Finally, my Market Indicators below are not showing any danger sign, so I still think that it's still safe to be buying stocks on any convincing story.
By the way, I added to my position in OSK this week on the merger between RHB and AMMB. OSK owns 400m shares of RHB. That position in RHB already equals the market cap of OSK. That means that you are getting all of OSK's Land, Properties and Hotels for free.
Initially, I was a bit worried about OSK's massive project in Melbourne. However, they have now managed to get the EPF to share their risk on that Melbourne project. Therefore, I'm now quite comfortable holding this share over the next few years. It's trading at a huge discount to it's RNAV. It would also be great if a Chinese Bank buys into the merged RHB-AMMB entity later.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$47.78 from US$49.87 last week from US$50.48 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now?
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. Refinery maintenance over; Big drawdown of 3.6m barrels
q. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
r. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.01 from US$3.30 from US$3.25. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1279 from US$1267 from US$1255. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$17.55 from US$17.35 from US$16.88
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$125 from US$131 from US$132
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$19.25 (May29) from US$21.50 (May22) from US$21.50 (May15). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2439 from 2416 last week from 2382 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25924 from 25639 from 25175
a. Support: 23250, 21575; Resistance: 27500
b. Sold Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3106 from 3110 from 3084
a. Support at 2950; 2450; Resistance 3450;
b. Bought A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Higher. 20177 from 19687 from 19591; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Added to OSK & OSK Warrants.
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2372 from 2355 from 2288
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 109.86 from 110.79 last week from 111.16 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; 3.0735 from 3.0530 from 3.1191
3. AUD to USD - AUD Weaker. 0.7479 from 0.7485 from 0.7462
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. 1.0280 from 1.0290 from 1.0335
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. 3.1585 from 3.1417 from 3.2236
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1344 from 1.1236 from 1.1204
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7693 from 7.7546 from 7.7818
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.2232 from 4.1970 from 4.3200 from 4.3440
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3739 from 1.3750 from 1.385
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; 6.6612 from 6.7263 from 6.8829
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2958 from 1.2876 from 1.3036
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. 5.4724 from 5.4030 from 5.6314
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 96.72 from 97.44 from 97.14
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by Volume for the first 2 mths of 2017: 26% yoy vs 34.8% for 2016
ix) Sales in Value for first 2 months of 2017: 25.1% yoy vs 22.5% for 2016
x) Land Cost rising
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) DTZ: Prices to increase 5-10% by July 1, 2017
x) Citi: Prices to drop 15% in 2017
xi) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.16% from 2.25% from 2.24%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% 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. 37.28 from 37.33 from 37.18
9. Baltic Dry Index - Lower; 830 from 912 from 956; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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viewtopic.php?f=26&t=3168
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1H Window Dressing
Last week, I mentioned that there could be a spike in the markets this week, from the new money flowing from the new month. And we received that spike on Thursday, June 2nd.
So where do we go from here? Intuitively, I think that the markets will probably be directionless with a positive bias.
In addition, we will be touching Window Dressing time soon. The fund managers will make sure that they will have the better performing stocks in their portfolio, while shedding the poorly performing stocks.
And since it was a good quarter, I do not see the need for the fund managers to really push prices very much higher by June 30th. However, they will probably support their counters if there's a sharp dip before June 30th.
On the horizon, we have the following:-
1. June 8: UK Election - not expecting much here, as the sun has already set on the Queen's empire. I still think that May's decision to have an election was not thought through thoroughly. And even if she wins big, she will still not be able to obtain much concession from the EU during Brexit negotiations. I may buy some GBP if it plunges. A few polls have already mentioned that there could be a hung parliament.
2. June 13: Am expecting the Feds to raise interest rates by 25 bps. If they do not raise or is they raise by 50bps then there would be some excitement.
3. June 20: Am expecting MSCI to include China into their Emerging Market index. China already has the 2nd largest stock market in the world and has no weighting in the index. Am expecting MSCI to start with a 5% weighting intially. Once China is in the MSCI, some passive money will be flowing into the Chinese stiocks. Have bought the A50 ETF (2822) that's listed in HK, to try to front-run the passive money.
Finally, my Market Indicators below are not showing any danger sign, so I still think that it's still safe to be buying stocks on any convincing story.
By the way, I added to my position in OSK this week on the merger between RHB and AMMB. OSK owns 400m shares of RHB. That position in RHB already equals the market cap of OSK. That means that you are getting all of OSK's Land, Properties and Hotels for free.
Initially, I was a bit worried about OSK's massive project in Melbourne. However, they have now managed to get the EPF to share their risk on that Melbourne project. Therefore, I'm now quite comfortable holding this share over the next few years. It's trading at a huge discount to it's RNAV. It would also be great if a Chinese Bank buys into the merged RHB-AMMB entity later.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 48 out of 70 (68.5%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$47.78 from US$49.87 last week from US$50.48 two weeks ago. Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now?
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +250,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300,000 bpd; Brazil +200,000 bpd; Canada +200,000 bpd;
n. Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Iraq increasing production by 500,000 bpd to 5m bpd from 4.5m bpd
p. Refinery maintenance over; Big drawdown of 3.6m barrels
q. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
r. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Lower: US$3.01 from US$3.30 from US$3.25. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Higher. US$1279 from US$1267 from US$1255. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold now occupies 0.03% of US investments. In 1981, it was 8%
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Higher. US$17.55 from US$17.35 from US$16.88
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Lower. US$125 from US$131 from US$132
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Lower. US$19.25 (May29) from US$21.50 (May22) from US$21.50 (May15). Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5-years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, from 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - implemented in November 2016;
n. China's air pollution worsening; nuclear energy expanding?
o. Some buyers are locking in long term contracts at US$40, twice spot rates
p. Kazakhtan reducing supply by 10% (40% of global production)
q. Competition: Natural Gas, Solar, Wind, Wave etc
r. Nuclear: 20% of the electricity generated in the U.S
s. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
t. Will the bankruptcy of Westinghouse affect Uranium demand ?
u. 1b pounds has to be purchased for long-term contracts over next 5-10 years
v. Average reactor needs 600,000 to 700,000 pounds to run for a year
w. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. If there's a crash, Commodities would not be spared.
8. The High USD is not good for Commodities
9. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2439 from 2416 last week from 2382 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 25924 from 25639 from 25175
a. Support: 23250, 21575; Resistance: 27500
b. Sold Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Lower. 3106 from 3110 from 3084
a. Support at 2950; 2450; Resistance 3450;
b. Bought A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Higher. 20177 from 19687 from 19591; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Added to OSK & OSK Warrants.
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2372 from 2355 from 2288
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Mixed
1. USD to JPY - JPY Stronger. 109.86 from 110.79 last week from 111.16 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; 3.0735 from 3.0530 from 3.1191
3. AUD to USD - AUD Weaker. 0.7479 from 0.7485 from 0.7462
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. 1.0280 from 1.0290 from 1.0335
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. 3.1585 from 3.1417 from 3.2236
a. The range is 2.20 (2008) to 3.41 (2017)
b. Waiting to convert more AUD to MYR
6. EUR to USD - EUR Stronger. 1.1344 from 1.1236 from 1.1204
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Weaker. 7.7693 from 7.7546 from 7.7818
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during a crisis ?
c. Will China ask HK to depeg from the USD ?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.2232 from 4.1970 from 4.3200 from 4.3440
a. 52 Week Range is 3.27 to 4.54.
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil ?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Stronger; 1.3739 from 1.3750 from 1.385
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; 6.6612 from 6.7263 from 6.8829
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Stronger. 1.2958 from 1.2876 from 1.3036
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. 5.4724 from 5.4030 from 5.6314
a. Which has more effect ? Article 50 or Malaysian Election ?
13. Dollar Index - USD Weaker. 96.72 from 97.44 from 97.14
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Confused?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$12t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) About 24,000 private homes are vacant
iii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iv) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
v) The existing stock of unsold homes may take three years to sell
vi) Americans became the 2nd most frequent buyers of high-end homes
vii) More than 800 condo units were resold at a loss in 2016 as economy slows
viii) Prices fell 3% in 2016 for third straight yearly decline
ix) >80% more homes are being auctioned
x) Unexpected relaxation of the curbs, implies market is weaker than expected
xi) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xii) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is + 23.5% yoy
iii) Shanghai is + 31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) Sales grew 25% in first 2 months of 2017 vs Dec 2016′s 11.8%
vii) 40% of smaller cities saw their housing investories drop to < 12 mths
viii) Sales by Volume for the first 2 mths of 2017: 26% yoy vs 34.8% for 2016
ix) Sales in Value for first 2 months of 2017: 25.1% yoy vs 22.5% for 2016
x) Land Cost rising
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20% to 30%, by end 2017
ix) DTZ: Prices to increase 5-10% by July 1, 2017
x) Citi: Prices to drop 15% in 2017
xi) Cushman & Wakefield: Prices to rise 5-10% in 1H 2017
xii) Centaline: Prices to increase 20% by Dec 2019
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: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices dropped 6% in 2016 and prime prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Lower. 2.16% from 2.25% from 2.24%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% 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. 37.28 from 37.33 from 37.18
9. Baltic Dry Index - Lower; 830 from 912 from 956; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
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viewtopic.php?f=26&t=3168
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 111129
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 17)
by winston » Sun Jun 11, 2017 9:37 am
TOL as of June 10, 2017
Tech Sell-Off?
The Nasdaq dropped 1.8% on Friday while the Dow was still strong. So is the tech sell-off that we have been waiting for?
Intuitively, I think that this is just a small dip and that it will probably not translate to a bigger sell-off.
In Nov / Dec 2016, when President Trump was talking about curbing the Visas for the tech professionals, the tech stocks were also weak for a few weeks before resuming it's climb.
Anyway, if a "M" starts forming on the charts, then I would need to be a bit careful.
I also need to remind myself of IBD's rule to avoid the markets, when there's a succession of 0.3% losses.
At the same time, I have been waiting a long time to buy AMZN, FB, GOOG, AAPL, MFST, WB, BIDU, BABA, SINA, Tencent, CTRIP etc and this could be the buying opportunity.
My Market Indicators below are still not showing any danger sign yet. So I still think that it's safe to buy any convincing story. However, I have increased the Geo-Political score from 7 to 8 on the deployment of the third air-craft carrier to Korea.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: Increase to 8 from 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 49 out of 70 (70%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$45.91 from US$47.78 last week from US$49.87 two weeks ago.
Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now?
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +500,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria +200k bpd; Iraq +500k bpd
n. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Refinery maintenance over; Big drawdown of 3.6m barrels
p. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
q. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.04 from US$3.01 from US$3.30. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1269 from US$1279 from US$1267. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, cooled off each year. 2017: 700 tonnes; 2020: 900 tonnes
i. China Demand: Since 2013, tumbled 32.9% from 940 tonnes to 630 tonnes last year
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.16 from US$17.55 from US$17.35
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Higher. US$127 from US$125 from US$131
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$19.25 (Jun5) from US$19.25 (May29) from US$21.50 (May22).
Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - how will it affect Nuclear Energy?
n. Some buyers are locking in long term contracts at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. Nuclear: 20% of the electricity generated in the U.S
r. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
s. 1b pounds has to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. Zinc - US$2537
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. Zinc inventories at the LME have dropped to their lowest level since 2009
viewtopic.php?f=33&t=367&start=208.
8. Palladium - US$857
a. Support: US$600; US$500; US$200; Resistance: US$800; US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. Heading toward its 8th annual supply deficit in 2017; 650,000 ounces in 2016
h. Vehicle: PALL (not vested)
i. US Auto Sales weak
viewtopic.php?f=33&t=7070&start=10
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Lower. 2432 from 2439 last week from 2416 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 26030 from 25924 from 25639
a. Support: 23250, 21575; Resistance: 27500; 28200
b. Traded AAC (2018) and Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3158 from 3106 from 3110
a. Support at 2950; 2450; Resistance 3450;
b. Vested A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Lower. 20013 from 20177 from 19687; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Traded OSK and OSK Warrants
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2382 from 2372 from 2355
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Risk-On
1. USD to JPY - JPY Stronger. 109.74 from 109.86 last week from 110.79 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; 3.0551 from 3.0735 from 3.0530
3. AUD to USD - AUD Stronger. 0.7566 from 0.7479 from 0.7485
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. 1.0421 from 1.0280 from 1.0290
a. The range is 0.98 (2016) to 1.36 (2012)
5. AUD to MYR - AUD Stronger. 3.1833 from 3.1585 from 3.1417
a. The range is 2.20 (2008) to 3.41 (2017)
6. EUR to USD - EUR Weaker. 1.1254 from 1.1344 from 1.1236
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7585 from 7.7693 from 7.7546
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.2073 from 4.2232 from 4.1970
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3773 from 1.3739 from 1.3750
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD over the next few years
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.6475 from 6.6612 from 6.7263
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2802 from 1.2958 from 1.2876
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. 5.3880 from 5.4724 from 5.4030
a. Which has more effect? Brexit or Malaysian Election?
13. Dollar Index - USD Stronger. 97.27 from 96.72 from 97.44
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$13t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iii) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
iv) The existing stock of unsold homes may take 2-3 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) >80% more homes are being auctioned
ix) Unexpected relaxation of the curbs, implies market is weaker than expected
x) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xi) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is +23.5% yoy
iii) Shanghai is +31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) 40% of smaller cities saw their housing investories drop to <12 mths
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20%-30% by end 2017
ix) Citi: Prices to drop 15% in 2017
x) Centaline: Prices to increase 20% by Dec 2019
xi) DB: Prices to drop by 50% in 10 years on ageing population and ample supply
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Savills: Prices will not rise until 2019
ii) Hard Brexit: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.20% from 2.16% from 2.25%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d. Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 37.13 from 37.28 from 37.33
9. Baltic Dry Index - Higher; 849 from 830 from 912; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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viewtopic.php?f=26&t=3168
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Tech Sell-Off?
The Nasdaq dropped 1.8% on Friday while the Dow was still strong. So is the tech sell-off that we have been waiting for?
Intuitively, I think that this is just a small dip and that it will probably not translate to a bigger sell-off.
In Nov / Dec 2016, when President Trump was talking about curbing the Visas for the tech professionals, the tech stocks were also weak for a few weeks before resuming it's climb.
Anyway, if a "M" starts forming on the charts, then I would need to be a bit careful.
I also need to remind myself of IBD's rule to avoid the markets, when there's a succession of 0.3% losses.
At the same time, I have been waiting a long time to buy AMZN, FB, GOOG, AAPL, MFST, WB, BIDU, BABA, SINA, Tencent, CTRIP etc and this could be the buying opportunity.
My Market Indicators below are still not showing any danger sign yet. So I still think that it's safe to buy any convincing story. However, I have increased the Geo-Political score from 7 to 8 on the deployment of the third air-craft carrier to Korea.
Market Risk Indicators: Still not in Danger Zone yet
1. Euphoria: 8 (Low: 1; High: 10) - Inflows into ETFs; Margin Debts; SWFs; Central Banks
2. Credit Problems: 7 (Very Good: 1; Very Bad: 10) - Housing, Auto; Student Loans; Credit Cards; Junk Bonds
3. Recession: 6 (Strong Economy: 1; Depression: 10) - GDP; Taxes; Factory Output; Housing; Auto; Retail
4. Liquidity: 6 (Very Liquid: 1; Tight 100) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds)
5. Inverted Yield: 6 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion
6. Valuation; 8 (Safe: PE15; Danger: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Lower Tax Rates; Repatriation of Foreign Funds; Deregulation
7. Geopolitical Issues: Increase to 8 from 7 (Peaceful: 1; War: 10) - North Korea; Syria; Iran; South China Sea; Afghanistan; Europe
Total: 49 out of 70 (70%)
Commodities: Risk-On (Data as of Saturday)
1. Oil - Lower. US$45.91 from US$47.78 last week from US$49.87 two weeks ago.
Vested in RH Petrogas; Support: US$48; US$42; Resistance: US$53
a. Glut 0.5m bpd - rebalancing in 3Q? Supply 98.3m bpd; Demand 97.9m bpd
b. Global Stockpiles: 2.5b barrels? US has 533m barrels
c. US SPR: 700m barrels; To sell 190m barrels from 2017-2025; To sell half now?
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. US Oil Capex: US$1t; 4100 "Drilled but Uncompleted" (DUC) Wells for activity
f. US Supply: +500,000 bpd
g. China (4th largest producer) - Reserve life fallen from 10 years to 6 years
h. China Supply: -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. Summer driving is here
l. OPEC: Cutting 1.8m bpd; 9 months extension on May 25
m. Libya: +300k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria +200k bpd; Iraq +500k bpd
n. US Fracking: +0.5m bpd US$60; +1m bpd US$70; +0.4m bpd 2017; +1m bpd 2018
o. Refinery maintenance over; Big drawdown of 3.6m barrels
p. IEA: Lowest amount of new discoveries in 2016; Supply shortage in 2020?
q. OPEC: Floating oil storage has dropped by one-third in 2017
viewtopic.php?f=33&t=7550&start=210
2. Natural Gas - Higher: US$3.04 from US$3.01 from US$3.30. Not vested
a. Support US$2.80; US$1.70; Resistance US$4.00
b. 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. Panama Canal Expansion: Europe & Asian markets expanding
f. Suppy increasing by 4% pa; Demand growing by 7% pa
g. Natural-gas stockpiles rose 2b cubic feet versus expected 7.8b cubic feet
h. Storage levels is about 15% above the 5 yr average
i. Mild weather in February and March caused inventory drawdowns to slow.
j. Glut of LNG will persist in the 2020s but the market will tighten in the late 2020s
viewtopic.php?f=33&t=1863&start=130
3. Gold - Lower. US$1269 from US$1279 from US$1267. Record US$1920.
Vested - Physical Gold Coins;
a. Global Gold: 33,000 tons; US 8000 tons; IMF 3000 tons; Germany 3000 tons
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex?
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, cooled off each year. 2017: 700 tonnes; 2020: 900 tonnes
i. China Demand: Since 2013, tumbled 32.9% from 940 tonnes to 630 tonnes last year
viewtopic.php?f=33&t=7589&p=202084#p202084
4. Silver - Lower. US$17.16 from US$17.55 from US$17.35
Support: US$16.50; Resistance: US$18.50; Range High: US$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
g. JPM has 67m ounces
viewtopic.php?f=33&t=7589&p=202084#p202084
5. Coffee (Arabica) - Higher. US$127 from US$125 from US$131
Low: US$127; US$120; High: US$175; US$300 (2011). Not vested
a. 150m Americans drink coffee daily (400m cups); World: 2.25b cups
b. USA 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 (Brazil) - 50m bags; Risk - higher temperatures and pests
f. Robusta (Vietnam: 20% global); Instant Coffee; 40% more caffeine
g. Breaking price for coffee: In 2011, reached US$300
h. 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. Central America replacing coffee with cocoa, due to climate change
k. Growth: USA +1.5%; China +5%; India +4%
l. Bumper crops in Brazil, Colombia and Honduras
m. Record Arabica crop 2017? Price +30% in US for 2016
n. Robusta crop down 6% yoy; Price +60% in London for 2016
o. Illy: Rebalancing in 2017
p. Brazil: biggest coffee producer, producing 1/3 of world’s coffee
q. Europe: largest importer, accounting for 1/3 of world’s consumption.
r. Coffee is the most traded commodity in the world, following crude oil.
s. Coffee crops to fall 9% in Brazil in 2017; Arabica -13%; Robusta -4%
viewtopic.php?f=33&t=3812&start=80
6. Uranium (U3O8 UXC) - Flat. US$19.25 (Jun5) from US$19.25 (May29) from US$21.50 (May22).
Vested Cameco (CCJ)
a. Breakeven: US$40 per lb
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global production: 158m lbs pa; 15% of Supply from decommisioned weapons
d. Global Demand: 160m lbs pa to 225m lbs pa (2025)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 13 lbs pa; Starting 26/54 reactors? Currently, only 3 online
g. Number of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 456
h. 61 new reactors under construction; 149 planned; How many would be built ?
i. China: 35 existing plants; Building 21; 2017: 7 Ready: To build 177 more?
j. India: 22 existing nuclear plants; Currently building 5; To build 64 more?
k. 25% long-term supply contracts expiring in 2017-18; 75% between 2017-2025;
l. Russia withdrew from Nuclear deal in Oct 2016
m. Paris Climate Deal - how will it affect Nuclear Energy?
n. Some buyers are locking in long term contracts at US$40, twice spot rates
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. Nuclear: 20% of the electricity generated in the U.S
r. Supply: 50k tonnes; Demand: 68k tonnes; 2k tonnes enriched for weapons
s. 1b pounds has to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs 600,000 to 700,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% of its uranium requirements
viewtopic.php?f=33&t=705&start=80
7. Zinc - US$2537
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. Zinc inventories at the LME have dropped to their lowest level since 2009
viewtopic.php?f=33&t=367&start=208.
8. Palladium - US$857
a. Support: US$600; US$500; US$200; Resistance: US$800; US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. Heading toward its 8th annual supply deficit in 2017; 650,000 ounces in 2016
h. Vehicle: PALL (not vested)
i. US Auto Sales weak
viewtopic.php?f=33&t=7070&start=10
9. If there's a crash, Commodities would not be spared.
10. The High USD is not good for Commodities
11. Global economy may worsening eg. potential trade wars etc
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Lower. 2432 from 2439 last week from 2416 two weeks ago.
a. Resistance: 2650
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Higher. 26030 from 25924 from 25639
a. Support: 23250, 21575; Resistance: 27500; 28200
b. Traded AAC (2018) and Sunny Optical (2382)
viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher. 3158 from 3106 from 3110
a. Support at 2950; 2450; Resistance 3450;
b. Vested A50 ETF (2822)
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - No Trade
5. Japan Equities - Lower. 20013 from 20177 from 19687; No Trade
a. Stronger Yen is a concern.
6. Malaysian Equities - Traded OSK and OSK Warrants
7. Australian Equities - No Trade
8. Korean Equities - Higher; 2382 from 2372 from 2355
a. Expecting Trump to take action against North Korea within 2 years
b. Vested 7326 (Inverse KOSPI ETF) listed in HK
Currencies- Risk-On
1. USD to JPY - JPY Stronger. 109.74 from 109.86 last week from 110.79 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; 3.0551 from 3.0735 from 3.0530
3. AUD to USD - AUD Stronger. 0.7566 from 0.7479 from 0.7485
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. 1.0421 from 1.0280 from 1.0290
a. The range is 0.98 (2016) to 1.36 (2012)
5. AUD to MYR - AUD Stronger. 3.1833 from 3.1585 from 3.1417
a. The range is 2.20 (2008) to 3.41 (2017)
6. EUR to USD - EUR Weaker. 1.1254 from 1.1344 from 1.1236
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7585 from 7.7693 from 7.7546
a. 52 week range is 7.7452 - 7.8296.
b. Will they remove the peg to the USD during the next crisis?
c. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Stronger. 4.2073 from 4.2232 from 4.1970
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
c. Decoupling of the MYR and Oil?
d. Macquarie: 4.90 (Dec 31, 2017)
e. UOB: 4.35 (July 2017)
viewtopic.php?f=32&t=397&start=60
9. USD to SGD:- SGD Weaker; 1.3773 from 1.3739 from 1.3750
a. High 1.70 (2004); Low 1.20 (2011)
b. Expecting the SGD to drop against the USD over the next few years
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.6475 from 6.6612 from 6.7263
a. Expecting the CNY to continue dropping against the USD
viewtopic.php?f=32&t=7720&start=90
11. GBP to USD:- GBP Weaker. 1.2802 from 1.2958 from 1.2876
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. 5.3880 from 5.4724 from 5.4030
a. Which has more effect? Brexit or Malaysian Election?
13. Dollar Index - USD Stronger. 97.27 from 96.72 from 97.44
viewtopic.php?f=32&t=7616&start=60
Others
1. Sentiment - Complacent?
2. Headwinds
a. Global
i) Derivatives (US$700t);
ii) Debts (US$225t, 225% GDP);
iii) Corporate Debt (US$50t);
iv) Institutional Investors (US$0.5t)
b. China
i) Debts (US$23t)
ii) Debt / GDP = 277%
ii) Corporate Debts (US$18t)
iii) Local Government Debts (US$3t; >30% GDP)
iv) Mortgages: 1/4 Credit; 1/2 New Loans in 2016
v) Bad Debts (US$2t)
vi) US$Debt (US$1.1t)
c. US (Warning Signs)
i) Unfunded Debts (US$170t);
ii) Unfunded Liabilities for Medicare, Medicaid; Social Security (US$106t)
iii) Unfunded State Pensions (US$3t)
iv) Unfunded US pensions: US$6t from US$300b in 2007
v) Bank Debts (US$60t);
vii) Current Deficit US$20t
viii) Corporate Debts (US$5.5t);
ix) Household Debts (US$13t);
x Mortgage Debts (US$8t);
xi) Foreigners Holding of US Treasuries (US$6.3t);
xii) Margin Debts: US$550b; up 20% yoy
xiii) US ETFs (US$2.8t)
xiv) US Feds Leverage (113 to 1);
xv) StockMarket Cap/GDP (200%);
xvi) Risk Parity Funds (US$500b)
xvii) Revolving Credits (US$1t)
xviii) Hedge Funds: Net leverage 73% while gross exposures is 230%
US (Expected Defaults)
i) Auto Sub-Prime Debts (US$1t); If 30% default: US$300b
ii) Students Loan (US$1.4t, +20% pa, 42m people); If 40% default: US$550b
iii) Junk Bonds ( Maturing 2017-2021) - US$1.5t; If 10% default: US$150b
iv) Oil Debts (US$2.5t); if 10% default: US$250b
d. Europe
i) NPLs: US$1.3t
ii) Italian NPLs: US$0.4t (18%)
e. Emerging Markets:
i) US$ Debts (US$10t)
ii) Corporate Debts (US$18t)
iii) Expected Defaults: US$100b (15% of EM debts) in next 4 years
3. Tailwinds - Low Interest Rates, Cash Sidelines (US$50t); QE Programs US$18t - US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t); Negative Yield Bonds (US$4t from US$10t); US Foreign Funds Repatriation (US$2.5t); Cash US Corps (US$1t); Cash Japanese Corp (US$2t); Buybacks, US Household Net Worth (US$90t); 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 declined by 11% since 2013
ii) Developers sold 8,000 homes in 2016 compared to 7400 in 2015;
iii) Supply: 13,000 in 2017; 9300 in 2018; 7300 in 2019
iv) The existing stock of unsold homes may take 2-3 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) >80% more homes are being auctioned
ix) Unexpected relaxation of the curbs, implies market is weaker than expected
x) Developers sold 977 units in Feb 2017, compared with a 382 units in Jan 2017
xi) 2100 homes remain unsold in 57 projects; Penalties total about S$647m
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% of residential & commercial properties from 1Q 2016 unsold
iii) Volume and Value of transactions declined 14% and 11%, in first 3Qs of 2016
iv) Prices moderated for 4 years, from +11.8% in 2012 to +5.3% in 3Q 2016
v) Stamp duty for properties > RM1m, raised from 3% to 4%, effective 1/1/2018
vi) Properties purchased on DIS between 2010 and 2014, are now on the market
vii) NAPIC: 3Q 2016 vs 2Q 2016, total transactions dropped 9.3%
viii) 600,000 houses are in planned supply; Altogether houses total 6.4m
ix) NAPIC: Supply inflated to 94,124 units compared to 82,837 units in 2015
x) 51,453 units of the 94,124 are in the luxury category, indicating over-supply
viewtopic.php?f=10&t=4220&start=150
c. China Properties
i) Various new curbs in more than 20 cities
ii) Beijing is +23.5% yoy
iii) Shanghai is +31.2% yoy
iv) Shenzhen is +36.8% yoy
v) Guangzhou is +21.1% yoy
vi) 40% of smaller cities saw their housing investories drop to <12 mths
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.
iii) 34,000 flats in pipeline for 2017; 96,000 units in next 3-4 years (up 40%)
iv) About 7600 people left HK in 2016 vs 7000 in 2015
v) Margins have decreased to 25% from 40%
vi) DB: Prices to drop 11% in 2017
vii) CS: Prices to drop 22% by end 2018
viii) Bocom: Prices to drop 20%-30% by end 2017
ix) Citi: Prices to drop 15% in 2017
x) Centaline: Prices to increase 20% by Dec 2019
xi) DB: Prices to drop by 50% in 10 years on ageing population and ample supply
viewtopic.php?f=10&t=7785&p=202051#p202051
e. London Properties
i) Savills: Prices will not rise until 2019
ii) Hard Brexit: 9,000 jobs axed immediately (1.1m jobs affected)
iii) London's population @ 8.7m. New households @ 50k pa. Supply 20k pa
iv) CEBR: Property prices in London to fall 6% in 2017
v) Molior: Homes built without buyer secured - 10,829; 24% rise yoy
vi) Molior: 2 years to sell homes under construction
vii) Rightmove: Decline of 5% by end 2017
viii) Prices surged about 86% since 2009
ix) Knight Frank: Prices will be flat for 2017
x) Expensive homes in Inner London -4.2% yoy; Cheaper outer suburbs +1.7%
viewtopic.php?f=11&t=3673&start=80
6. Yield on 10 Year US Treasuries - Higher. 2.20% from 2.16% from 2.25%
a. Low 1.32%; High 2.69%.
b. New regulations on Money Markets are decreasing yield for US Treasuries
7. Interest Rates:-
a. Expecting interest rates to rise slowly over next two years
b. About US$9t or about 20% of the world’s bonds now have negative yields
c. US Feds: Three rate hikes in 2017? Four rate hikes in 2018 ?
d. Yield on 2-year German bonds hit record lows, trading at -90 basis points
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 37.13 from 37.28 from 37.33
9. Baltic Dry Index - Higher; 849 from 830 from 912; Low 290; High 2330 (2013)
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
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