TOL as of May 17, 2015
Summer Doldrums ?
It's normally a traditional weak period for the markets during summer. And we will be touching Summer soon with the coming US Memorial Day weekend.
So is it time to sell in view of the current volatility in the bond markets ?
The current cons for Equities investing include high US valuation, weak corporate revenue growth, high margin financing level, potential Grexit, global economic slowdown and high government debts.
The current pros for Equities investing include continued low interest rates, various global QE programs, declining USD, low raw material cost, corporate buybacks and high cash level on the sidelines.
In view of the above, I still feel that there would not be any prolonged correction in the markets and any dips would still be a buying opportunity.
At the same time, I should not be too complacent as a Black Swan has not appeared in a while and they have a habit of appearing when everyone is sleepy and complacent.
Anyway, I do have a healthy cash level to take advantage of any dip. However, if there's a prolonged sharp downturn, a 32% exposure to equities would still be quite painful although it wont be able to wipe me out unless I continue to average down in a deep crash.
Commodities:- - Risk-On
1. Oil - Higher. US$60 from US$59 from US$59
a. Global Oil Production vs Demand: 95m bpd vs 94m bpd
b. Global Stockpiles: 4.1b barrels ( 43 days if no more global production )
c. Global Government Stockpile: 1.4b barrels
d. US Oil Production vs Demand: 10m bpd vs 20m bpd
e. US Strategic Petroleum Reserve: 690m barrels out of max 727m barrels
f. US Private Industry Reserves: 485m barrels
I'm expecting oil to remain low for the foreseeable future and I need to remind myself to stay away from the Oil Services companies for the time being
2. Gold - Higher. US$1223 from US$1187 from US$1177. Record US$1920. Vested.
3. Platinum - Higher. $1168 from $1141 from $1131.
4. Silver - Higher. US$18 from US$16 from US$16. Range High: 49
5. Copper - Higher. US$2.93 from US$2.91 from US$2.94
6. Monitoring Commodities. It's cheap, hated, cheap but not on uptrend yet.
Equities - Risk-On
1. US Equities - Higher. 2123 from 2118 from 2108. Bought Dupont.
2. HK Equities - Higher. 27822 from 27577 from 28133. Sold Wasion and 1/2 BBMG..
3. Shanghai Equities - Higher. 4309 from 4206 from 4442. Decision on China's MSCI inclusion on June 9
4. Spore Equities - Higher. 3463 from 3452 from 3487. Bought Suntec Reit
5. Japan Equities - Higher. 19733 from 19379 from 19532
6. Malaysian Equities - Higher. 1812 from 1808 from 1818. Traded MAA. Menang's Quarterly Result will be out within 2 weeks
7. Warrants & Inverse ETF - No Trade
Currencies- Risk-Off
1. USD to JPY - JPY Stronger. 119 from 120 from 120. The 52 week range is 76 to 122. Not vested
2. SGD to MYR - MYR Flat. 2.70 from 2.70 from 2.70. Vested.
3. AUD to USD - AUD Stronger. 0.80 from 0.79 from 0.79. Not vested
4. AUD to SGD - AUD Stronger. 1.06 from 1.05 from 1.05. H 1.36; L 1.04; Vested
5. AUD to MYR - AUD Stronger. 2.86 from 2.85 from 2.82. Vested
6. EUR to USD - EUR Stronger. 1.14 from 1.12 from 1.12. Not vested
7. USD to HKD - HKD Stronger. 7.7510 from 7.7535 from 7.7523. 52 week range is 7.7497 - 7.7677. Vested
8. Dollar Index - USD Weaker. 93.23 from 94.79 from 95.21
Others
1. Sentiment - Complacent
2. Headwinds - Rating Agencies' Downgrades , Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Russian Foreign Debts (US$670b); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); US Oil Capex (US$1t ); Strong USD; Plunging Commodities; Chinese Stocks Margin (300%; US$123b); US Fracking Debts (US$0.5t); Emerging Markets US Loans (US$6t ); Margin Debts (US$0.5t)
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in Corporations (US$2t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t)
4. Risk Management - How do you manage Greed, Fear, Arrogance & Ignorance ?
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - 30% of the high-end condos in KL are vacant ?
c. HK - strong demand for new small and medium sized homes due to developer's financing.
d. China - stabilizing at higher end ? Still falling at 2nd Tier Cities and lower end ?
6. Yield on 10 Year US Treasuries - Lower. 2.14% from 2.15% from 2.11%. High 2.32%
7. Interest Rates: Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
8. Net Exposure to Equities: 26% (Long 32%; Short 6%) from 26% from 18%
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 also feel free to provide me with your kind thoughts and comments
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