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

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Nov 04, 2018 8:19 am

TOL @ Nov 4, 2018

nimble.jpg


Time To be Nimble?

As mentioned last week, I was expecting a spike in the markets from the "New Money From The New Month". Now that we have seen that spike in the markets, I'm expecting the market to correct for a few days, before the "Buybacks" start kicking in again.

In addition, the markets were ecstatic when Trump tweeted that he had "a long nice call with Xi". And thereafter, it was also reported that Trump had supposedly ask his Secretaries to draft an agreement to end the Trade Conflict (although it was subsequently denied by Larry Kudlow).

IMHO, I think Trump called Xi with the intention of only propping up the US markets before the mid-term election. I dont see them signing an agreement at the G20 at the end of November but with Trump, anything is also possible.

Anyway, I took the chance to unload some equities over the past few days. I dont think that the Trade Conflict will end (unless both the US & China, can fnd a face-saving way of telling their own citizens that they have gotten what they want although both sides have not really budged at all).

In addition, the Iran Sanctions will be kicking in soon although some countries have already received exemptions.

And finally, you have the close Mid-Term elections.

Now that I have raised some Cash, I may go shopping should the market plunge again. However, I need to remind myself to be a bit more patient this time, as "cheap can become much cheaper in a free falling market".


Weekly Risk Management Progress Report:-
1. Reduce Equities: Making Progress (decreased from 41% to 33% of Liquid Assets)
2. Buy Inverse ETFs and Puts - No Progress (Sold LABD)
3. Increase "USD/HKD/Gold" - Slight Progress (25% to 26%)


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$62.86 from US$67.68 last week from US$69.37 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -100k bpd?
b. Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total Demand of India and Japan combined)
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years ? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2019?; +300k bpd; No more Spare capacity;
i. China: SPR reached 51/90 days; 2018 Imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -1.6m bpd by 1Q, 2019
m. Russia, Saudi, US - no more spare capacity?
n. Winter: lower demand for oil
viewtopic.php?f=33&t=7550&start=210

2. Gold - Flat. US$1235 from US$1236 from US$1230
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 261.5m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.75 from US$14.72 from US$14.65
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$872 from US$836 from US$834
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

5. Zinc - Lower; US$2549 from US$2654 from US$2627
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

6. Copper - Higher; US$2.82 from US$2.75 from US$2.78
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$1979 from US$1991 from US$2009
a. Sanctions on Rusal has removed 7% of world's supply

8. Uranium - Flat; US$27.90 from US$27.80 from US$27.70
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. Cobalt; Lower; $23.93 ($52750/t) from $27.56 ($60750/t) from $26.31 ($58,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

9. If there's a crash, Commodities would not be spared
10. The High USD is not good for Commodities


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

1. US Equities - Higher. 2723 from 2659 last week from 2768 two weeks ago
a. Support: 2740; 2560; Resistance: 3000; Fwd PE 16
b. Traded LABD (Biotech Inverse 3x)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26486 from 24718 from 25561
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Bought Guoco Group (0053)
c. Sold Sands China (1928)
d. Sold Sunny Optical
e. Sold AAC
f. Sold SJM
g. Sold Galaxy
h. Sold MMG
i. Sold Yangzhou Coal
j. Sold 2/3 Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2676 from 2599 from 2550
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold 1/2 A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3116 from 2972 from 3063
a. Resistance 3850
b. Bought UOL
c. Sold Genting Singapore
d. Sold OUE
e. Sold Gallant Venture
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22244 from 21185 from 22532
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1714 from 1683 from 1732
a. No Trade
viewtopic.php?f=10&t=6292&start=30



[b]Currencies- Risk Off
(Data from XE.com)

1. USD to JPY - JPY Weaker; 113.22 from 111.99 last week from 112.41 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0276 from 3.0238 from 3.0173
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7211 from 0.7030 from 0.7141
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9916 from 0.9731 from 0.9837
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0021 from 2.9408 from 2.9686
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1388 from 1.1341 from 1.1464
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8223 from 7.8407 from 7.8394
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1625 from 4.1850 from 4.1576
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3751 from 1.3843 from 1.3778
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.8910 from 6.9458 from 6.9292
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2973 from 1.2782 from 1.3024
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.3998 from 5.3510 from 5.4152

13. Dollar Index - USD Weaker 96.54 from 96.83 from 95.98
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

Yield on 10 Year US Treasuries - Higher; 3.21% from 3.08% last week from 3.19% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.90% from 2.81% from 2.90%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.13 from 35.09 from 35.37

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 84.27 from 84.23 from 84.90

Baltic Dry Index - Lower; 1470 from 1516 from 1576; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Nov 11, 2018 8:32 am

TOL @ Nov 11, 2018

Buy Sell.jpg


Arguments To Buy And Sell

The markets have been very volatile lately and it's time to revisit the various arguments to Buy or Sell.

1. Various Arguments To Buy:-
a. US Buybacks - Starting around Nov 8 (US$1t pa)
b. End of US-China Trade Conflict - Meeting at G20 (November 30)
c. Presidential Cycle - Normally good after Mid-Term Elections
d. Year End Window Dressing - a few weeks before Dec 31, 2018
e. Infrastructure Program (US$1t)
f. Rising Interest Rates - well telegraphed
g. Weak Commodity Prices - improving margins
h. Deregulations - improving margins
i. Middle Class Tax Cut - additional 10%
j. US Foreign Repatriation (US$2.5tb)
k. Fair Stock Valuation (except for some Tech companies)

2. Various Arguments To Sell:-
a. Hedge Fund Redemptions - Nov15 (45 days deadline, US$15b per mth?)
b. US Tax Loss Seliing - by Dec 31, 2018
c. No end to US-China Trade Conflict
d. Grid-lock - No Deregulation, Infrastructure Spending, Middle Class Tax Cut
e. Trump Impeachment (could also be positive for markets)
f. US Quantitative Tightening (US$50b per month)
g. Europe: 2019 (End of QE); Rising Interest Rates Jul 2019; Italy;
h. High Debt Levels (US$500t) vs Assets (US$300t); Rising Interest Rates
i. US Inflation - Rising wages, US-China Trade Conflict etc.
j. US Yield Inversion - Recession in 2020 ?
k. Strong USD - US Imports; Emerging Market's USD Debts; Commodities

In view of the above, it looks like things will continue to be volatile for a while more and it may still be a Trading Market. Therefore, I can probably still buy on extreme dips and then sell into the technical rebound.

The main unknown is still the US-China Trade Conflict. If it continues till the US Presidential Election, it can be very bad. However, I'm expecting a truce to be signed at the G-20.

Very likely, Trump will still impose a 10% Tariff (US$50b pa which can be used to pay for the US deficit) while forcing China to buy more US goods and Services. Thereafter, Trump can continue to leverage this tariff next year, to incrementally ask for more concessions from China.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: No Progress (maintained at 33% of Liquid Assets)
2. To Buy Inverse ETFs and Puts - No Progress (no trade)
3. To Increase "USD/HKD/Gold" - Slight Progress (increased from 26% to 29%)


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - NKorea; Syria; Iran; Qatar, Afghanistan; South China Sea; Europe; Venezuela; Russia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$59.84 from US$62.86 last week from US$67.68 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined)
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2019?; +300k bpd; No more Spare Capacity;
i. China: SPR reached 51/90 days; 2018 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.6m bpd to -1.6m bpd by 1Q, 2019?
m. Russia, Saudi, US - no more spare capacity?
n. Winter: lower demand for oil
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1210 from US$1235 from US$1236
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$14.13 from US$14.75 from US$14.72
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$856 from US$872 from US$836
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

5. Zinc - Lower; US$2505 from US$2549 from US$2654
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

6. Copper - Lower; US$2.68 from US$2.82 from US$2.75
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$1957 from US$1979 from US$1991
a. Sanctions on Rusal will remove 7% of world's supply

8. Uranium - Higher; US$29.05 from US$27.90 from US$27.80
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. Cobalt; Higher; $24.72 ( $54500/t) from $23.93 ($52750/t) from $27.56 ($60750/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t


9. If there's a crash, Commodities would not be spared
10. The High USD is not good for Commodities


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

1. US Equities - Higher. 2781 from 2723 last week from 2659 two weeks ago
a. Support: 2740; 2560; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 25602 from 26486 from 24718
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Bought Wynn Macau
c. Bought Uni-President
e. Sold CNOOC
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2599 from 2676 from 2599
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold 1/2 A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3078 from 3116 from 2972
a. Resistance 3850
b. Bought UOL
c. Sold Stamford Land
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22250 from 22244 from 21185
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1708 from 1714 from 1683
a. Traded Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Risk Off
(Data from XE.com)

1. USD to JPY - JPY Weaker; 113.83 from 113.22 last week from 111.99 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0333 from 3.0276 from 3.0238
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7243 from 0.7211 from 0.7030
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. I need to diversify my AUD into another currency
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9975 from 0.9916 from 0.9731
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0256 from 3.0021 from 2.9408
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1353 from 1.1388 from 1.1341
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8297 from 7.8223 from 7.8407
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1780 from 4.1625 from 4.1850
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3774 from 1.3751 from 1.3843
a. High 1.70 (2004); Low 1.20 (2011)
b. Am very uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9481 from 6.8910 from 6.9458
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.3026 from 1.2973 from 1.2782
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.4419 from 5.3998 from 5.3510

13. Dollar Index - USD Weaker 96.78 from 96.54 from 96.83
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

Yield on 10 Year US Treasuries - Lower; 3.18% from 3.21% last week from 3.08% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.92% from 2.90% from 2.81%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Flat; 35.14 from 35.13 from 35.09

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 84.36 from 84.27 from 84.23

Baltic Dry Index - Lower; 1231 from 1470 from 1516; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Nov 18, 2018 8:45 am

TOL @ Nov 18, 2018

excite.jpg


What Can Excite The Markets?

The markets have been quite weak and some "experts" are now even asking you to sell into any rallies.

As for myself, I think that the markets are a bit oversold (especially in HK) and may be due for a rebound.

Therefore, I have been thinking of the catalysts that may trigger that rally:-
a. US Buybacks - Starting around Nov 8 (US$1t pa)
b. End of US-China Trade Conflict - Meeting at G20 (November 30)
c. Year End Window Dressing - a few weeks before Dec 31, 2018
d. Infrastructure Program (US$1t)
e. Pause to the Interest Rates rise due to the slowing US economy
f. Middle Class Tax Cut - additional 10%
g. US Foreign Repatriation (US$2.5tb)

Of the above, the ones that can probably get the animal spirits will probably be:-
1. A halt to the 25% Sanctions in Jan 2019 and
2. A pause in the rise of interest rates in Dec, 2018

At this point on time, I would assign a probability of about 60% to the first one and a 50% probability to the second one.

If either one happens, I can see the markets rising about 10% to 15%.

If both do not happen, the markets may drop a lot, especially after the "January Effect" in mid-January, 2019.

In the meantime, I will probably continue to buy on any extreme dips and then try to sell into the technical rebound.

However, I may need to be wary about catching falling knives now, as it may be a falling piano instead.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Worse (increased to 38% from 33% of Liquid Assets)
2. To Diversify From Asian Equities (currently 100%) - need to buy US Equities
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - Worse (decreased to 28% from 29%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$56.83 from US$59.84 last week from US$62.86 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021?; -500k bpd; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1222 from US$1210 from US$1235
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.39 from US$14.13 from US$14.75
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$848 from US$856 from US$872
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

5. Zinc - Higher; US$2626 from US$2505 from US$2549
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

6. Copper - Higher; US$2.79 from US$2.68 from US$2.82
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

7. Aluminium - Lower; US$1947 from US$1957 from US$1979
a. Sanctions on Rusal will remove 7% of world's supply

8. Uranium - Higher; US$29.15 from US$29.05 from US$27.90
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

8. Cobalt; Higher; $24.95 ($55,000/t) from $24.72 ( $54500/t) from $23.93 ($52750/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

9. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2736 from 2781 last week from 2723 two weeks ago
a. Support: 2700; 2640; 2560; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26184 from 25602 from 26486
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Bought CNOOC
c. Traded Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2679 from 2599 from 2676
a. Support: 2450; Resistance 2900; 3300; 3600
b. Bought A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3084 from 3082 from 3078
a. Resistance 3850
b. Added to HPL
c. Added to UOL
d. Traded Genting Singapore
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21680 from 22250 from 22244
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1706 from 1708 from 1714
a. No Trade
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com)

1. USD to JPY - JPY Stronger; 113.34 from 113.83 last week from 113.22 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0439 from 3.0333 from 3.0276
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7255 from 0.7243 from 0.7211
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9989 from 0.9975 from 0.9916
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 3.0415 from 3.0256 from 3.0021
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1343 from 1.1353 from 1.1388
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8319 from 7.8297 from 7.8223
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1916 from 4.1780 from 4.1625
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3766 from 1.3774 from 1.3751
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9490 from 6.9481 from 6.8910
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2796 from 1.3026 from 1.2973
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3627 from 5.4419 from 5.3998

13. Dollar Index - USD Stronger 96.88 from 96.78 from 96.54
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$6t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 3.06% from 3.18% last week from 3.21% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.80% from 2.92% from 2.90%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 34.61 from 35.14 from 35.13

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 83.27 from 84.36 from 84.27

Baltic Dry Index - Lower; 1020 from 1231 from 1470; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Nov 25, 2018 3:26 pm

TOL @ Nov 25, 2018

truce.png


US-China Trade Truce At G20?

The markets are hoping that there would be a trade truce between the US and China at the G20.

And if there's really a truce, the markets could fly. (And Trump can claim that he's the cause of the stock markets rise again).

Anyway, I dont think that Trump is a moron. I think that he knows that if the 25% sanctions is imposed, there could be a recession in China. Thereafter, the US will also be hurt eg. less purchases from China, more expensive goods in the US, delay in custom clearance for US goods, supply-chain disruptions etc.

And If there's a truce ie. 10% sanctions still being imposed with China promising to buy more US goods, Trump still can claim victory. Next year, just before the US Presidential election, he can impose another 10% again.

Tightening the screws slowly would surely be a better strategy then a 25% sanctions in 2019. Is that the reason why Peter Navarro is not invited to the dinner at the G-20?

Jobs is very important to Trunp, as seen by his behaviour and actions with regards to the murder of the American resident journalist. Can some weapon deal from Saudi Arabia be that much bigger than the order from China?

Anyway, Trump has permanently damaged the relationship between the US and China and we are now in another Cold War and probably heading into a real war.

Finally, the beauty of Democracy, Free Press, Rule of Law, Free Speech etc. is that you have the chance to throw out any clown every four years.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (decreased from 38% to 37% of Liquid Assets)
2. To Diversify From Asian Equities: Progress (decreased from 100% to 98%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$50.42 from US$56.83 last week from US$59.84 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Flat. US$1223 from US$1222 from US$1210
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$14.26 from US$14.39 from US$14.13
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$843 from US$848 from US$856
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - ; US$1102
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Lower; US$2508 from US$2626 from US$2505
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.75 from US$2.79 from US$2.68
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1942 from US$1947 from US$1957
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.00 from US$29.15 from US$29.05
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Higher; $25.06 ($55,250/t) from $24.95 ($55,000/t) from $24.72 ($54500/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2633 from 2736 last week from 2781 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Bought Nvidia
c. Bought Baidu
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 25928 from 26184 from 25602
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Traded Tencent
c. Sold Wynn Macau
d. Sold Uni-President
e. Sold 1/4 Rusal
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2579 from 2679 from 2599
a. Support: 2450; Resistance 2900; 3300; 3600
b. Added to A50 (2822) listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3084 from 3082 from 3078
a. Resistance 3850
b. Added to HPL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21647 from 21680 from 22250
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1706 from 1708 from 1714
a. No Trade
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com)

1. USD to JPY - JPY Stronger; 112.90 from 113.34 last week from 113.83 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0535 from 3.0439 from 3.0333
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7238 from 0.7255 from 0.7243
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9948 from 0.9989 from 0.9975
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0378 from 3.0415 from 3.0256
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1369 from 1.1343 from 1.1353
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8269 from 7.8319 from 7.8297
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1971 from 4.1916 from 4.1780
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3745 from 1.3766 from 1.3774
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9446 from 6.9490 from 6.9481
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2839 from 1.2796 from 1.3026
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.3888 from 5.3627 from 5.4419

13. Dollar Index - USD Weaker 96.73 from 96.88 from 96.78
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 3.04% from 3.06% last week from 3.18% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.81% from 2.80% from 2.92%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 34.40 from 34.61 from 35.14

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 82.71 from 83.27 from 84.36

Baltic Dry Index - Lower; 1018 from 1020 from 1231; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Dec 02, 2018 1:37 pm

TOL @ Dec 02, 2018

December.jpg


New Money From The New Month

It's a new month again and new money would be flowing into the markets again.

Therefore, there should be at least one spike in the markets next week, unless the Fund Managers have already spent their December money in advance. (We did get a rally on Tuesday and Thursday).

Anyway, everyone is watching the Trump-Xi Dinner. Most people are expecting a truce and have tried to front-run the event (hence, the rallies on Tuesday and Thursday). So it may not be surprising if there's some profit-taking and selling on the news.

Going forward, it's likely to be a long cold-war between the US and China in the future. In anticipation of this, the Chinese have tried to soften the impact through:-
1. RMB Devaluation: 5% to 15%
2. Lower taxes: 5% to 15%
3. Subsidies, Incentives, Deregulation etc: 5% to 15%
etc.

IMHO, China can probably still withstand a 25% tariff lasting till the US Presidential Election.

However, it will not be a pleasant time as there are other moving parts as well eg. Rising Interest Rates, Feds QT, Italy's Debts, China's Slowdown etc.

Finally, on the horizon, we have the following:-
Dec 7: US Government Shutdown; Probably non-event
Dec 7-8: OPEC Meeting; Probably Non-Event as the Saudis know that Trump wants lower oil prices and are obliging due to the MBS issue
Dec 8: ICERD Rally in KL; Probably non-event


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Getting Worse (increased to 40% from 37% of Liquid Assets)
2. To Diversify From Asian Equities: Progress (decreased from 100% to 95%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$50.70 from $50.42 from US$56.83 last week from US$59.84 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1228 from US$1223 from US$1222
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Flat. US$14.25 from US$14.26 from US$14.39
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$801 from US$843 from US$848
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher ; US$1147 from US$1102
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2541 from US$2508 from US$2626
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.79 from US$2.75 from US$2.79
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1958 from US$1942 from US$1947
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.10 from US$29.00 from US$29.15
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.06 ($55,250/t) from $25.06 ($55,250/t) from $24.95 ($55,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Higher. 2760 from 2633 last week from 2736 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Sold 1/2 Nvidia (NVDA)
c. Bought Royal Dutch Shell A (RDS.A)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26507 from 25928 from 26184
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2588 from 2579 from 2679
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3118 from 3084 from 3082
a. Resistance 3850
b. Bought Genting Singapore
c. Sold Mandarin Oriental
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22351 from 21647 from 21680
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1680 from 1706 from 1708
a. Bought Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com)

1. USD to JPY - JPY Weaker; 113.51 from 112.90 last week from 113.34 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0523 from 3.0535 from 3.0439
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7298 from 0.7238 from 0.7255
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0009 from 0.9948 from 0.9989
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0553 from 3.0378 from 3.0415
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1363 from 1.1369 from 1.1343
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8219 from 7.8269 from 7.8319
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1850 from 4.1971 from 4.1916
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3714 from 1.3745 from 1.3766
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9444 from 6.9446 from 6.9490
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2754 from 1.2839 from 1.2796
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3384 from 5.3888 from 5.3627

13. Dollar Index - USD Stronger; 96.94 from 96.73 from 96.88
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.99% from 3.04% last week from 3.06%
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.79% from 2.81% from 2.80%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 34.73 from 34.40 from 34.61

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 83.60 from 82.71 from 83.27

Baltic Dry Index - Higher; 1281 from 1018 from 1020; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Dec 02, 2018 1:37 pm

TOL @ Dec 02, 2018

December.jpg


New Money From The New Month

It's a new month again and new money would be flowing into the markets again.

Therefore, there should be at least one spike in the markets next week, unless the Fund Managers have already spent their December money in advance. (We did get a rally on Tuesday and Thursday).

Anyway, everyone is watching the Trump-Xi Dinner. Most people are expecting a truce and have tried to front-run the event (hence, the rallies on Tuesday and Thursday). So it may not be surprising if there's some profit-taking and selling on the news.

Going forward, it's likely to be a long cold-war between the US and China in the future. In anticipation of this, the Chinese have tried to soften the impact through:-
1. RMB Devaluation: 5% to 15%
2. Lower taxes: 5% to 15%
3. Subsidies, Incentives, Deregulation etc: 5% to 15%
etc.

IMHO, China can probably still withstand a 25% tariff lasting till the US Presidential Election.

However, it will not be a pleasant time as there are other moving parts as well eg. Rising Interest Rates, Feds QT, Italy's Debts, China's Slowdown etc.

Finally, on the horizon, we have the following:-
Dec 7: US Government Shutdown; Probably non-event
Dec 7-8: OPEC Meeting; Probably Non-Event as the Saudis know that Trump wants lower oil prices and are obliging due to the MBS issue
Dec 8: ICERD Rally in KL; Probably non-event


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Getting Worse (increased to 40% from 37% of Liquid Assets)
2. To Diversify From Asian Equities: Progress (decreased from 100% to 95%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live)

1. WTI Oil - Lower. US$50.70 from $50.42 from US$56.83 last week from US$59.84 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada +200k bpd; Nigeria -300k bpd; Iraq +500k bpd; Kurdistan -350k bpd; US +400k bpd to +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1228 from US$1223 from US$1222
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Flat. US$14.25 from US$14.26 from US$14.39
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$801 from US$843 from US$848
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher ; US$1147 from US$1102
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2541 from US$2508 from US$2626
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.79 from US$2.75 from US$2.79
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1958 from US$1942 from US$1947
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.10 from US$29.00 from US$29.15
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.06 ($55,250/t) from $25.06 ($55,250/t) from $24.95 ($55,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Higher. 2760 from 2633 last week from 2736 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Sold 1/2 Nvidia (NVDA)
c. Bought Royal Dutch Shell A (RDS.A)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26507 from 25928 from 26184
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2588 from 2579 from 2679
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3118 from 3084 from 3082
a. Resistance 3850
b. Bought Genting Singapore
c. Sold Mandarin Oriental
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 22351 from 21647 from 21680
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1680 from 1706 from 1708
a. Bought Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com)

1. USD to JPY - JPY Weaker; 113.51 from 112.90 last week from 113.34 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0523 from 3.0535 from 3.0439
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7298 from 0.7238 from 0.7255
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 1.0009 from 0.9948 from 0.9989
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0553 from 3.0378 from 3.0415
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1363 from 1.1369 from 1.1343
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8219 from 7.8269 from 7.8319
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1850 from 4.1971 from 4.1916
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3714 from 1.3745 from 1.3766
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.9444 from 6.9446 from 6.9490
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2754 from 1.2839 from 1.2796
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3384 from 5.3888 from 5.3627

13. Dollar Index - USD Stronger; 96.94 from 96.73 from 96.88
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.99% from 3.04% last week from 3.06%
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.79% from 2.81% from 2.80%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 34.73 from 34.40 from 34.61

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 83.60 from 82.71 from 83.27

Baltic Dry Index - Higher; 1281 from 1018 from 1020; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sat Dec 08, 2018 6:59 am

TOL @ Dec 08, 2018

Reasons.jpg


Do You Know Why You Are Buying Or Selling?

The markets have been volatile and I have been getting some calls from friends who have been telling me why the markets will collapsed.

Incidentally, they have been sitting on Cash and have missed one of the biggest rally on Monday.

Their irrational fears include:-
1. Trump will walk out of the G20's Dinner with Xi (as with Putin)
2. The detention of Huawei's daughter will destroy the Trade Truce
3. There would be sanctions on the Saudis. Hence, the Saudis are selling now
4. Putin will start WW3 with Ukraine
5. Iran will block the Straits of Hormuz and start WW3
etc.

Anyway, before Buying or Selling, I will always try to ask myself why I'm Buying or Selling. If my answer is reasonable and logical, I would go ahead with the trade.

If I cannot come out with a reasonable answer, I will normally not proceed and will reflect more on the issue.

In times of volatility, there's irrational exuberance and irrational fear and you must be able to single them out.

In the words of Peter Lynch: "There's always something to worry about".

As far as I'm concerned, when the markets are euphoric (like Monday), it was time to take some profit.

And when the markets are in panic mode (as in Thursday US time, when the Dow dropped 800 points). it's time to do some buying.

I'm starting to think that this is a Trading Market so I need to remind myself to behave accordingly.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Some Progress (decreased from 40% to 35% of Liquid Assets)
2. To Diversify From Asian Equities: Worse (increased from 95% to 100%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live on Dec 7)

1. WTI Oil - Higher. US$51.20 from US$50.70 last week from $50.42 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1246 from US$1228 from US$1223
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.60 from US$14.25 from US$14.26
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$791 from US$801 from US$843
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher ; US$1152 from US$1147 from US$1102
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2640 from US$2541 from US$2508
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.76 from US$2.79 from US$2.75
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1954 from US$1958 from US$1942
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.10 from US$29.10 from US$29.00
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.06 ($55250/t) from $25.06 ($55,250/t) from $25.06 ($55,250/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2633 from 2760 last week from 2633 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Sold Baidu
c. Sold Nvidia (NVDA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26056 from 26507 from 25928 from 26184
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Added to Tencent
c. Bought Galaxy
d. Sold CNOOC
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2606 from 2588 from 2579
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold A50 2822 listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3116 from 3118 from 3084
a. Resistance 3850
b. Sold Genting Singapore
c. Sold UOL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21679 from 22351 from 21647
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1679 from 1680 from 1706
a. Added to Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com on Dec 7)

1. USD to JPY - JPY Stronger; 112.82 from 113.51 last week from 112.90 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0452 from 3.0523 from 3.0535
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7223 from 0.7298 from 0.7238
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9888 from 1.0009 from 0.9948
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0553 from 3.0378 from 3.0415
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1376 from 1.1363 from 1.1369
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8142 from 7.8219 from 7.8269
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1684 from 4.1850 from 4.1971
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3691 from 1.3714 from 1.3745
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8797 from 6.9444 from 6.9446
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2753 from 1.2754 from 1.2839
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3153 from 5.3384 from 5.3888

13. Dollar Index - USD Weaker; 96.89 from 96.94 from 96.73
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets
8. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.88% from 2.99% last week from 3.04% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.75% from 2.79% from 2.81%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 34.48 from 34.73 from 34.40

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 82.99 from 83.60 from 82.71

Baltic Dry Index - Higher; 1339 from 1281 from 1018; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sat Dec 08, 2018 6:59 am

TOL @ Dec 08, 2018

Reasons.jpg


Do You Know Why You Are Buying Or Selling?

The markets have been volatile and I have been getting some calls from friends who have been telling me why the markets will collapsed.

Incidentally, they have been sitting on Cash and have missed one of the biggest rally on Monday.

Their irrational fears include:-
1. Trump will walk out of the G20's Dinner with Xi (as with Putin)
2. The detention of Huawei's daughter will destroy the Trade Truce
3. There would be sanctions on the Saudis. Hence, the Saudis are selling now
4. Putin will start WW3 with Ukraine
5. Iran will block the Straits of Hormuz and start WW3
etc.

Anyway, before Buying or Selling, I will always try to ask myself why I'm Buying or Selling. If my answer is reasonable and logical, I would go ahead with the trade.

If I cannot come out with a reasonable answer, I will normally not proceed and will reflect more on the issue.

In times of volatility, there's irrational exuberance and irrational fear and you must be able to single them out.

In the words of Peter Lynch: "There's always something to worry about".

As far as I'm concerned, when the markets are euphoric (like Monday), it was time to take some profit.

And when the markets are in panic mode (as in Thursday US time, when the Dow dropped 800 points). it's time to do some buying.

I'm starting to think that this is a Trading Market so I need to remind myself to behave accordingly.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Some Progress (decreased from 40% to 35% of Liquid Assets)
2. To Diversify From Asian Equities: Worse (increased from 95% to 100%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live on Dec 7)

1. WTI Oil - Higher. US$51.20 from US$50.70 last week from $50.42 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1246 from US$1228 from US$1223
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.60 from US$14.25 from US$14.26
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$791 from US$801 from US$843
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher ; US$1152 from US$1147 from US$1102
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2640 from US$2541 from US$2508
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.76 from US$2.79 from US$2.75
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1954 from US$1958 from US$1942
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.10 from US$29.10 from US$29.00
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.06 ($55250/t) from $25.06 ($55,250/t) from $25.06 ($55,250/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2633 from 2760 last week from 2633 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Sold Baidu
c. Sold Nvidia (NVDA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26056 from 26507 from 25928 from 26184
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Added to Tencent
c. Bought Galaxy
d. Sold CNOOC
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2606 from 2588 from 2579
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold A50 2822 listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3116 from 3118 from 3084
a. Resistance 3850
b. Sold Genting Singapore
c. Sold UOL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21679 from 22351 from 21647
a. Forward PE 13
b. Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1679 from 1680 from 1706
a. Added to Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Mixed
(Data from XE.com on Dec 7)

1. USD to JPY - JPY Stronger; 112.82 from 113.51 last week from 112.90 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0452 from 3.0523 from 3.0535
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7223 from 0.7298 from 0.7238
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9888 from 1.0009 from 0.9948
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0553 from 3.0378 from 3.0415
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1376 from 1.1363 from 1.1369
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8142 from 7.8219 from 7.8269
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1684 from 4.1850 from 4.1971
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3691 from 1.3714 from 1.3745
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8797 from 6.9444 from 6.9446
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2753 from 1.2754 from 1.2839
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3153 from 5.3384 from 5.3888

13. Dollar Index - USD Weaker; 96.89 from 96.94 from 96.73
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets
8. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.88% from 2.99% last week from 3.04% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.75% from 2.79% from 2.81%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 34.48 from 34.73 from 34.40

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 82.99 from 83.60 from 82.71

Baltic Dry Index - Higher; 1339 from 1281 from 1018; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Dec 16, 2018 9:31 am

TOL @ Dec 16, 2018

Window Dressing.jpg


Window Dressing

We have another two weeks to go before the and then sold into end of the year and Window Dressing season is here.

However, the traders seems to be more interested in selling into any rallies this time then to chase them.

Intuitively, I still think that it's a Trading Market so any deep correction should be bought and then sold into the eventual technical rebound.

However, this strategy can probably work till mid-January only. Thereafter, I would be a bit more careful.

On the horizon, we have the following:-
1. Dec 18: China's 40th Anniversary for Economic Reform; Will the National Team be propping up the China market?
2. Dec 19: US Interest Rate Hike; Non-event
3. Dec 21: US Government Shutdown; Non-event; I'm more interested whether they would try to impeach Trump when the Democrats take over Congress.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: No Progress (Still at 40% of Liquid Assets)
2. To Diversify From Asian Equities: Some Progress (decreased to 96% from 100%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Risk - HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 8 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 53 out of 70 (76%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live on Dec 14)

1. WTI Oil - Higher. US$52,23 from US$51.20 last week from US$50.70 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1242 from US$1246 from US$1228
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.70 from US$14.60 from US$14.25
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$794 from US$791 from US$801
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher; US$1173 from US$1152 from US$1147
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters, Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 70% 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. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Lower; US$2521 from US$2640 from US$2541
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.74 from US$2.76 from US$2.79
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1923 from US$1954 from US$1958
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Lower; US$28.75 from US$29.10 from US$29.10
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.06 ($55250/t) from $25.06 ($55250/t) from $25.06 ($55,250/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2599 from 2633 last week from 2760 two weeks ago
a. Support: 2560; Resistance: 3000; Fwd PE 16
b. Bought Baidu
c. Bought Nvidia (NVDA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26095 from 26056 from 26507
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Added to Tencent
c. Sold Galaxy
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2594 from 2606 from 2588
a. Support: 2450; Resistance 2900; 3300; 3600
b. Bought A50 2822 listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3077 from 3116 from 3118
a. Resistance 3850
b. Added to HPL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 21375 from 21679 from 22351
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1662 from 1679 from 1680
a. Added to Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Risk-Off
(Data from XE.com on Dec 7)

1. USD to JPY - JPY Weaker; 113.53 from 112.82 last week from 113.51 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0418 from 3.0452 from 3.0523
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7165 from 0.7223 from 0.7298
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9861 from 0.9888 from 1.0009
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 3.0006 from 3.0553 from 3.0378
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1295 from 1.1376 from 1.1363
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8174 from 7.8142 from 7.8219
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1855 from 4.1684 from 4.1850
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3762 from 1.3691 from 1.3714
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9025 from 6.8797 from 6.9444
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2594 from 1.2753 from 1.2754
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2720 from 5.3153 from 5.3384

13. Dollar Index - USD Stronger; 97.55 from 96.89 from 96.94
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets
8. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Flat; 2.88% from 2.88% last week from 2.99% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.73% from 2.75% from 2.79%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Three in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 34.70 from 34.48 from 34.73

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 83.51 from 82.99 from 83.60

Baltic Dry Index - Higher; 1365 from 1339 from 1281; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Dec 18)

Postby winston » Sun Dec 23, 2018 3:38 pm

TOL @ Dec 23, 2018

HPL.png


Time To Buy Hotel Properties Limited (HPL)?

It was a good week. Three of my counters have had a good run (GentingM, Tencent & Rusal) despite the corrections in the US markets.

Hopefully, my luck will continue and I will have another big winner, maybe in the form of Hotel Properties Limited (HPL), listed in Singapore.

As you may know, I have been accumulating HPL over the past year. The following are my reasons:-
1. The 5 years deadline for 68 Holdings is April 13, 2019; (Can that deadline be easily extended?)
2. The last privatisation offer was around Sin$4.05 in 2014
3. 68 Holdings needs only 3.7% to delist the company (around Sin$250m)
4. Ong Beng Seng is getting old and may not have a successor. Therefore, it's in his interest to sort things out ASAP and to have Professional Managers (Wheelock?) run things going forward
5. According to OCBC, the RNAV of HPL is around Sin$8.20
6. Wheelock has already privatised. For easier decision-making and execution, it makes sense to also privatise HPL
7. Still waiting for HPL or Wheelock, to buy the public car park and thereafter, they will have that whole stretch of Orchard Road

Warning: Some of the information above may not be accurate or complete as there's so much info to digest and analyse. Therefore, please take the above information with a tablespoonful of salt. Please do provide me with your kind comments if my info or assumptions are not that accurate or correct. This is not a recommendation to Buy or Sell but to put my thoughts in writing, so that I can use them for future reference.

The following are my notes on HPL over the past few years;-
viewtopic.php?f=47&t=141&start=10

As the stock is very illiquid, whenever I see some selling below 3.65, I would try to add to my existing position.

I'm expecting a Privatisation Offer of around Sin$4.50, representing about a 25% premium over the average current price of around Sin$3.60. Not sure whether there would be any increase in Offer Price after the Initial Offer.

Weekly Risk Management Progress Report:-
1. To Reduce Equities: Worse (increased from 35% to 44% of Liquid Assets)
2. To Diversify From Asian Equities: Progress (decreased from 100% to 76%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies

Market Risk Indicators
1. Euphoria: 6 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 8 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 8 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 52 out of 70 (74%); (Safe: 50%; Danger: 80%)


Commodities: Risk-Off (Data from Commodities Live on Dec 14)

1. WTI Oil - Lower. US$45.24 from US$52,23 last week from US$51.20 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Dec 6th Meeting;
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1263 from US$1242 from US$1246
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand 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, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$14.75 from US$14.70 from US$14.60
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Flat; US$790 from US$794 from US$791
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Flat; US$1176 from US$1173 from US$1152
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2538 from US$2521 from US$2640
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.69 from US$2.74 from US$2.76
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1909 from US$1923 from US$1954
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.60 from US$28.75 from US$29.10
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Higher; $25.40 ($56,000/t) from $25.06 ($55250/t) from $25.06 ($55250/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

12. If there's a crash, Commodities would not be spared
10. The strong USD is also not good for Commodities


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

1. US Equities - Lower. 2417 from 2599 last week from 2633 two weeks ago
a. Support: 2465; 2420; 2320; Resistance: 3000; Fwd PE 16
b. Bought Facebook (FB)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 25753 from 26095 from 26056
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Bought CNOOC
c. Bought Galaxy
d. Bought Sands China
e. Added to Xiomi
f. Traded Rusal
g. Sold 2/3 Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2516 from 2594 from 2606
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3060 from 3077 from 3116
a. Resistance 3850
b. Bought Genting Singapore
c. Added to HPL
d. Sold Global Investments
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 20166 from 21375 from 21679
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1670 from 1662 from 1679
a. Sold Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


[b]Currencies- Risk-Off
(Data from XE.com on Dec 7)

1. USD to JPY - JPY Stronger; 111.20 from 113.53 last week from 112.82 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0447 from 3.0418 from 3.0452
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7094 from 0.7165 from 0.7223
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9721 from 0.9861 from 0.9888
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9587 from 3.0006 from 3.0553
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1404 from 1.1295 from 1.1376
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8284 from 7.8174 from 7.8142
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1721 from 4.1855 from 4.1684
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3702 from 1.3762 from 1.3691
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.9068 from 6.9025 from 6.8797
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2656 from 1.2594 from 1.2753
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.2806 from 5.2720 from 5.3153

13. Dollar Index - USD Weaker; 96.66 from 97.55 from 96.89
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
i) Derivatives (US$700t);
ii) Debts (US$237t, 318% GDP);
iii) Corporate Debt (US$50t); US Corp Debts (US$9t)
iv) Institutional Investors (US$0.5t)
v) ETFs AUM (US$3.4t)
vi) Bitcoin (US$200b)
vii) US Pension Short-Fall: US$385b
viii) NPLs at European Banks: EUR$1t
ix) China's Bond Market: US$12t (third largest)

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks: US$120b 2Q, 2017 (-10% qoq; -6% yoy); US$3.2t since 2009; i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
l. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016
m. Private Equities: US$600b Cash

Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants

HK Properties
1. Vacancy tax
2. 9000 vacant apartments
3. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
4. Rising Interest rates
5. Slowing Economy / Trade War
6. Depreciating Yuan
7. Weak Stock Markets
8. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
1. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )

Malaysian Properties
1. NAPIC: Overhang - 29,200 units (2018) vs 20,800 (2017) vs 13,400 (2016)
2. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
1. 20% of Urban Housing is vacant (50m homes)
2. In 2018, nationwide ASPs have climbed by 15% to a record high
3. Since 2015, Tier One cities have risen by 55%
4. Since 2015, Tier Two cities have risen by 35%
5. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Lower; 2.79% from 2.88% last week from 2.88% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.66% from 2.73% from 2.75%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$6t or about 15% of the world’s bonds have negative yields
c. US rate hike in Dec, 2018? Two in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 33.40 from 34.70 from 34.48

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 80.63 from 83.51 from 82.99

Baltic Dry Index - Lower; 1318 from 1365 from 1339; Low 290; High 2330 (2013)


The above is to from help me crystallize my thinking. It's not a recommendation to Buy or Sell. Use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments


Please Note:-

Support the forum button - If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
You do not have the required permissions to view the files attached to this post.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

PreviousNext

Return to Useful References - Blogs, Websites & Forums, etc.

Who is online

Users browsing this forum: No registered users and 2 guests