TOL as of July 03, 2016
New Money From The New Month of July
It's a new month again and new money would be flowing into the markets again. Therefore, I'm expecting a spike in the US markets early next week. Thereafter, I'm not too sure that the market can sustain it's current rally.
It's also summer in the Northern Hemisphere and a lot of people are going on their summer holidays. And I cant see why these people would want to be be sitting on a big position when they are on vacation, during this period of high volatilty.
As for myself, I have sold most of my positions that I've picked up after Brexit.
However, there are some other positions that I'm holding on for a while longer eg. Prudential (PUK), Ping An (2318) and Lloyd's Banking Group (LYG).
I'm also waiting for the chance to buy-back some of the short positions that I have sold. However, I dont want to be too early to the party else I could be whip-lashed. Markets do have a habit of being irrational during times of volatility.
As for my Currency Risk, I have probably missed the chance to buy more USD and Silver. Therefore, I would probably have to wait for a few months before the next opportunity arrives.
I would be probably be avoiding the GBP and EUR for the next few years as I think that they are in a multi-year decline.
I would also be avoiding the Yen as their debts are quite high, although it did bounce during Brexit. I'm now thinking of shorting the Yen through the YCS traded in the US.
I have some gold so I wont be adding to my gold position. However, I may buy some Silver for it's expanding industrial demand.
I'm also interested in Lithium. I'm not sure about Coffee but it has been moving up lately.
As most of the Commodities are priced in USD, they tend to drop when the USD is very high, as in the case currently.
Happy July !
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$49.28 from US$47.57 last week from US$48.26 two weeks ago. Sold ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; Producing 2.3m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Higher. US$1345 from US$1319 from US$1302. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$19.86 from US$17.77 from US$17.52. Range High: 49. Not vested
4. Copper - Higher. US$2.22 from US$2.11 from US$2.05. Not vested
5. Coffee - Higher. US$144.85 from US$134 from US$141. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the rise in the USD would not be positive for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2103 from 2037 last week from 2071 two weeks ago. Traded Prudential (PUK) and Barclay's (BCS)
2. HK Equities - Higher. 20794 from 20259 from 20170. Support at 20000 then 18050, Resistance 21350. Sold AIA, HSBC, China Resources Land and Standard Chartered
3. Shanghai Equities - Higher. 2932 from 2854 from 2885; Support at 2450; No trade
4. Spore Equities - Higher. 2846 from 2735 from 2759. Sold DBXT E50 ETF and DBXT Europe ETF.
5. Japan Equities - Higher. 15682 from 14952 from 15600. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1646 from 1634 from 1624. Traded MAA
Currencies- Mixed ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 102.52 from 102.26 last week from 104.17 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.982 from 3.0256 from 3.0289
3. AUD to USD - AUD Stronger. 0.7510 from 0.7476 from 0.7394.
4. AUD to SGD - AUD Weaker. 1.0099 from 1.0116 from 0.9981. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 3.0114 from 3.0609 from 3.0232. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Stronger. 1.1140 from 1.1118 from 1.1276. Not vested in the EUR
7. USD to HKD - HKD Stronger. 7.7578 from 7.7612 from 7.7614. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.010 from 4.0940 from 4.0885; 52 Week Range is 3.27 to 4.47. The MYR weakening and I need to quickly diversify away some of my MYR exposure.
9. GBP to USD:- GBP Weaker. 1.3278 from 1.3684 from 1.4359. Monitoring the GBP. How low can it go ?
10. Dollar Index - USD Stronger. 95.65 from 95.45 from 94.21; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vii) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
viii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
ix) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Lower. 1.44% from 1.56% last week from 1.61% two weeks ago. Low 1.38%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 35.53 from 35.10 last week from 34.95 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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Winston's Investment Ideas 04 (Oct 15 - May 19)
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Jul 03, 2016 9:41 am
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Jul 10, 2016 9:47 am
TOL as of July 10, 2016
US Earnings Season
It will be the start of the US Q2 Earnings season soon.
So would that be the catalyst to move Equities much higher from here ?
As you may know, at every earnings season, the analysts would first come out with a low estimate. Thereafter, when the actual result beats that estimate, the stock would rise despite the low number set by the analyst in the first place.
After so many years of this BS, you would think that the market participants would be smart enough to see through this con game. Yet, share prices always rise whenever the results beat expectations !
Therefore, I'm of the opinion that the machines have already being programmed before the earnings release. And it's actually the machines that are doing all the trading nowadays especially during earnings season.
Anyway, I'm sitting on quite a bit of Cash now. And I'm not willing to buy anything unless I see a convincing story that can last for at leasdt 3 years.
At the same time, I'm not willing to have a big short position, as there seems to be quite a bit of Cash on the sidelines, that can be deployed on any major dips.
In addition, the markets nowadays can easily be manipulated due to the low summer volume. ( Try trading the Hang Seng Index and you will know what I mean ).
The big picture is also not that appealing - low growth, high debt, unattractive valuation, riots, strikes, terrorism, geopolitical issues etc.
In view of the above, why would you want to be invested in this type of market ?
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Lower. US$45.12 from US$49.28 last week from US$47.57 two weeks ago. Traded ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; Producing 2.3m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Higher. US$1367 from US$1345 from US$1319. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$20.35 from US$19.86 from US$17.77. Range High: 49. Not vested
4. Copper - Lower. US$2.12 from US$2.22 from US$2.11. Not vested
5. Coffee - Lower. US$142.75 from US$144.85 from US$134. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. Any rise in the USD would not be positive for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2130 from 2103 last week from 2037 two weeks ago. Traded LABD (Inverse Biotech 3x); ERY (Inverse Energy 3x); UVXY (Volatilty 3x); FAZ (Inverse Financial 3x) and EDZ (Inverse Emerging Markets 3x)
2. HK Equities - Lower. 20564 from 20794 from 20259. Support at 20000 then 18050, Resistance 21350. Traded Ping An
3. Shanghai Equities - Higher. 2988 from 2932 from 2854; Support at 2450; No trade
4. Spore Equities - Flat. 2847 from 2846 from 2735. Bought DBXT S&P Short ETF
5. Japan Equities - Lower. 15107 from 15682 from 14952. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Flat. 1645 from 1646 from 1634. Sold MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 100.50 from 102.52 last week from 102.26 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9779 from 2.982 from 3.0256
3. AUD to USD - AUD Stronger. 0.7580 from 0.7510 from 0.7476
4. AUD to SGD - AUD Stronger. 1.0182 from 1.0099 from 1.0116. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0321 from 3.0114 from 3.0609. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1057 from 1.1140 from 1.1118. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Still Strong. 7.7580 from 7.7578 from 7.7612. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Flat. 4.000 from 4.010 from 4.0940; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Weaker. 1.2950 from 1.3278 from 1.3684. Will not be investing in the GBP as I think that it's in a multi-year decline
10. Dollar Index - USD Stronger. 96.30 from 95.65 from 95.45; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Lower. 1.36% from 1.44% last week from 1.56% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.08 from 35.53 lst week from 35.10 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
US Earnings Season
It will be the start of the US Q2 Earnings season soon.
So would that be the catalyst to move Equities much higher from here ?
As you may know, at every earnings season, the analysts would first come out with a low estimate. Thereafter, when the actual result beats that estimate, the stock would rise despite the low number set by the analyst in the first place.
After so many years of this BS, you would think that the market participants would be smart enough to see through this con game. Yet, share prices always rise whenever the results beat expectations !
Therefore, I'm of the opinion that the machines have already being programmed before the earnings release. And it's actually the machines that are doing all the trading nowadays especially during earnings season.
Anyway, I'm sitting on quite a bit of Cash now. And I'm not willing to buy anything unless I see a convincing story that can last for at leasdt 3 years.
At the same time, I'm not willing to have a big short position, as there seems to be quite a bit of Cash on the sidelines, that can be deployed on any major dips.
In addition, the markets nowadays can easily be manipulated due to the low summer volume. ( Try trading the Hang Seng Index and you will know what I mean ).
The big picture is also not that appealing - low growth, high debt, unattractive valuation, riots, strikes, terrorism, geopolitical issues etc.
In view of the above, why would you want to be invested in this type of market ?
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Lower. US$45.12 from US$49.28 last week from US$47.57 two weeks ago. Traded ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; Producing 2.3m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Higher. US$1367 from US$1345 from US$1319. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$20.35 from US$19.86 from US$17.77. Range High: 49. Not vested
4. Copper - Lower. US$2.12 from US$2.22 from US$2.11. Not vested
5. Coffee - Lower. US$142.75 from US$144.85 from US$134. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. Any rise in the USD would not be positive for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2130 from 2103 last week from 2037 two weeks ago. Traded LABD (Inverse Biotech 3x); ERY (Inverse Energy 3x); UVXY (Volatilty 3x); FAZ (Inverse Financial 3x) and EDZ (Inverse Emerging Markets 3x)
2. HK Equities - Lower. 20564 from 20794 from 20259. Support at 20000 then 18050, Resistance 21350. Traded Ping An
3. Shanghai Equities - Higher. 2988 from 2932 from 2854; Support at 2450; No trade
4. Spore Equities - Flat. 2847 from 2846 from 2735. Bought DBXT S&P Short ETF
5. Japan Equities - Lower. 15107 from 15682 from 14952. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Flat. 1645 from 1646 from 1634. Sold MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 100.50 from 102.52 last week from 102.26 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9779 from 2.982 from 3.0256
3. AUD to USD - AUD Stronger. 0.7580 from 0.7510 from 0.7476
4. AUD to SGD - AUD Stronger. 1.0182 from 1.0099 from 1.0116. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0321 from 3.0114 from 3.0609. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1057 from 1.1140 from 1.1118. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Still Strong. 7.7580 from 7.7578 from 7.7612. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Flat. 4.000 from 4.010 from 4.0940; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Weaker. 1.2950 from 1.3278 from 1.3684. Will not be investing in the GBP as I think that it's in a multi-year decline
10. Dollar Index - USD Stronger. 96.30 from 95.65 from 95.45; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Lower. 1.36% from 1.44% last week from 1.56% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.08 from 35.53 lst week from 35.10 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
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winston - Billionaire Boss
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Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Jul 17, 2016 9:57 am
TOL as of July 17, 2016
Euphoria ?
The markets have been extremely strong over the past few weeks. People (or machines) have been buying as if there's no tomorrow.
Is the rally due to the shorts covering their positions ? Or the machines performing their momentum trading ? Or both ?
Whatever the reason, I need to remind myself that "markets tend to die on euphoria". So are we at that euphoric stage yet or are we still only half-way there ?
A few days ago, Larry Fink mentioned that the current rally is due to shorts covering their positions. And if that's the case, then it wouldn't be too long before some sanity returns to the market.
By the way, over the past few months, I have been researching a lot of stocks. However, I have not being able to find find many stocks that is trading at a "fair" price. And if that's the case, when would the current "expensive" valuation of the markets, return to something more reasonable ?
Anyway, I need to also remind myself that "markets can be unreasonable much longer than I can be solvent". Therefore, it's also not the time to aggresively short the markets yet.
Perhaps when the "M" appears on the charts, that's the time to short the markets aggresively.
When the Shanghai market crashed not too long ago, I didn't really make full use of the opportunity to make lots of money. Therefore, I need to make sure that I dont miss this coming opportunity when the US market crashes.
Long time readers would know that I've been worrying about my Currency Risk. With Brexit, it looks like the Euro and GBP is off limits now. And since I dont like the JPY and CNY, that leaves only the USD, CAD and AUD to consider, by elimination.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$46.28 from US$45.12 last week from US$49.28 two weeks ago. Sold ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Lower. US$1338 from US$1367 from US$1345. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Flat. US$20.30 from US$20.35 from US$19.86. Range High: 49. Not vested
4. Copper - Higher. US$ 2.23 from US$2.12 from US$2.22. Not vested
5. Coffee - Higher. US$145.70 from US$142.75 from US$144.85. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2162 from 2130 last week from 2103 two weeks ago. Bought UVXY (Volatility 3x). Sold ERY (Inverse Energy 3x) and Prudential UK (PUK)
2. HK Equities - Higher. 21659 from 20564 from 20794. Support at 20000 then 18050, Resistance 21700. Traded Ping An
3. Shanghai Equities - Higher. 3054 from 2988 from 2932; Support at 2450; No trade
4. Spore Equities - Higher. 2925 from 2847 from 2846. Sold Dairy Farm
5. Japan Equities - Higher. 16498 from 15107 from 15682. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1668 from 1645 from 1646. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.65 from 100.50 last week from 102.52 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9294 from 2.9779 from 2.982
3. AUD to USD - AUD Flat. 0.7583 from 0.7580 from 0.7510
4. AUD to SGD - AUD Stronger. 1.0212 from 1.0182 from 1.0099. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 2.9916 from 3.0321 from 3.0114. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1038 from 1.1057 from 1.1140. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7540 from 7.7580 from 7.7578. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 3.945 from 4.000 from 4.010; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3180 from 1.2950 from 1.3278. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 96.58 from 96.30 from 95.65; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Higher. 1.55% from 1.36% last week from 1.44% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.11 from 36.08 last week from 35.53 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
Euphoria ?
The markets have been extremely strong over the past few weeks. People (or machines) have been buying as if there's no tomorrow.
Is the rally due to the shorts covering their positions ? Or the machines performing their momentum trading ? Or both ?
Whatever the reason, I need to remind myself that "markets tend to die on euphoria". So are we at that euphoric stage yet or are we still only half-way there ?
A few days ago, Larry Fink mentioned that the current rally is due to shorts covering their positions. And if that's the case, then it wouldn't be too long before some sanity returns to the market.
By the way, over the past few months, I have been researching a lot of stocks. However, I have not being able to find find many stocks that is trading at a "fair" price. And if that's the case, when would the current "expensive" valuation of the markets, return to something more reasonable ?
Anyway, I need to also remind myself that "markets can be unreasonable much longer than I can be solvent". Therefore, it's also not the time to aggresively short the markets yet.
Perhaps when the "M" appears on the charts, that's the time to short the markets aggresively.
When the Shanghai market crashed not too long ago, I didn't really make full use of the opportunity to make lots of money. Therefore, I need to make sure that I dont miss this coming opportunity when the US market crashes.
Long time readers would know that I've been worrying about my Currency Risk. With Brexit, it looks like the Euro and GBP is off limits now. And since I dont like the JPY and CNY, that leaves only the USD, CAD and AUD to consider, by elimination.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$46.28 from US$45.12 last week from US$49.28 two weeks ago. Sold ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Lower. US$1338 from US$1367 from US$1345. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Flat. US$20.30 from US$20.35 from US$19.86. Range High: 49. Not vested
4. Copper - Higher. US$ 2.23 from US$2.12 from US$2.22. Not vested
5. Coffee - Higher. US$145.70 from US$142.75 from US$144.85. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2162 from 2130 last week from 2103 two weeks ago. Bought UVXY (Volatility 3x). Sold ERY (Inverse Energy 3x) and Prudential UK (PUK)
2. HK Equities - Higher. 21659 from 20564 from 20794. Support at 20000 then 18050, Resistance 21700. Traded Ping An
3. Shanghai Equities - Higher. 3054 from 2988 from 2932; Support at 2450; No trade
4. Spore Equities - Higher. 2925 from 2847 from 2846. Sold Dairy Farm
5. Japan Equities - Higher. 16498 from 15107 from 15682. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1668 from 1645 from 1646. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 104.65 from 100.50 last week from 102.52 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9294 from 2.9779 from 2.982
3. AUD to USD - AUD Flat. 0.7583 from 0.7580 from 0.7510
4. AUD to SGD - AUD Stronger. 1.0212 from 1.0182 from 1.0099. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 2.9916 from 3.0321 from 3.0114. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1038 from 1.1057 from 1.1140. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7540 from 7.7580 from 7.7578. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 3.945 from 4.000 from 4.010; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3180 from 1.2950 from 1.3278. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 96.58 from 96.30 from 95.65; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Higher. 1.55% from 1.36% last week from 1.44% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.11 from 36.08 last week from 35.53 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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"
-
winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Jul 24, 2016 8:49 am
TOL as of July 24, 2016
The Emperor Is Not Wearing Any Clothes !
As I reflect on the state of affairs in the world, I'm reminded of the story of the boy, who shouted that that the emperor is not wearing any clothes, when the emperor was proudly walking down the street.
This was despite everyone around the emperor, saying that the emperor is wearing clothings that are made of special threads that were invisible to anyone who was either stupid or not fit for his position.
Similarly, we are currently being told that things are not too bad in the world. This is despite various warning signs which include some of the following:-
1. Why do the Central Banksters have to meet so often, to think of ways to stimulate the global economy? And what are they up to this weekend in China?
2. Why does Mario Draghi has to continue shouting that he will do whatever it takes? And wasn't he a bit pathetic two days ago? And when would the European banks starts collapsing? What about the millions of refugees streaming into Europe? And would Brexit lead to the breaking up of the EU and a recession in Europe ?
3. Why does Japan needs to keep talking about the three arrows? And is the rumored US$200b stimulus, be really enough to turn around their 25 year decline?
4. Why are the numbers in China declining eg. imports, exports, electricity usage, railway freights, forex reserves etc. ? And how bad are their bad debts?
5. Why haven't they increase interest rates in the US yet? And when was the last time you saw any yoy increase in their company's Profit and Revenue? And what about the US$170t in Unfunded Debts in the US?
Anyway, the US markets are at a record high now because of the record low interest rates. And people now seemed to be only interested in "return on capital" instead of "return of capital", eventhough it's a meagre 3%. Therefore, this rally may have some more legs until a strong opposite force reverses it.
And what could be that strong opposite force ? How about the following ?
1. Geopolitical Issue eg. war in Ukraine, Spratly's, North Korea, Middle East etc
2. Natural Disaster eg. earthquake in California, Japan etc.
3. Hyperinflation from the collapse of fiat currencies through over-printing
4. Cyber Security issue eg. hacking of stock-exchanges, trading accounts, central banks, banks, infrastructures etc
5. Collapse of major banks from bad debts, derivatives etc
6. Social Issues eg. riots, strikes, terrorism etc.
etc
From the list above, the first three have very low probabilities while the next three are quite possible scenarios.
At the same time, there's about US$13t in negative yield bonds, that is looking for a place to provide some decent return. And this could provide some tailwind to the stock-markets until they become "ridiculously over-priced".
So how far are we from that "ridiculously over-priced" situation ? Currently, we are already at PE 25 on the S&P 500 and probably going higher, as the strong USD will certainly lower the earnings of the International US companies.
And when would someone start shouting that the emperor is naked, which could trigger the next crash ? In two years? In a year? In 6 months? Within 3 months?
And when the stampede starts, would you be able to run through the emergency exit in time? If not, what are you doing to protect yourself before the stampede ?
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$44.26 from US$46.28 last week from US$45.12 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Lower. US$1322 from US$1338 from US$1367. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.69 from US$20.30 from US$20.35. Range High: 49. Not vested
4. Copper - Flat. US$2.24 from US$ 2.23 from US$2.12. Not vested
5. Coffee - Lower. US$141.90 from US$145.70 from US$142.75. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2175 from 2162 last week from 2130 two weeks ago. No Trade
2. HK Equities - Higher. 21964 from 21659 from 20564. Support at 20000 then 18050, Resistance 22000. No Trade
3. Shanghai Equities - Lower. 3013 from 3054 from 2988; Support at 2450; No trade
4. Spore Equities - Higher. 2945 from 2925 from 2847. No Trade
5. Japan Equities - Higher. 16627 from 16498 from 15107. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1657 from 1668 from 1645. Sold menang and MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 106.15 from 104.65 last week from 100.50 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 2.9906 from 2.9294 from 2.9779
3. AUD to USD - AUD Weaker. 0.7472 from 0.7583 from 0.7580
4. AUD to SGD - AUD Weaker. 1.0144 from 1.0212 from 1.0182. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0337 from 2.9916 from 3.0321. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.0981 from 1.1038 from 1.1057. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7540 from 7.7580. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.060 from 3.945 from 4.000; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3110 from 1.3180 from 1.2950. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7621 from 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 97.47 from 96.58 from 96.30; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Derivatives (US$700t); Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debts (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
1X) Citi & MS: Expecting prices to turnaround in 2H 2016
6. Yield on 10 Year US Treasuries - Higher. 1.57% from 1.55% last week from 1.36% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $13 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.36 from 36.11 kast week from 36.08 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
The Emperor Is Not Wearing Any Clothes !
As I reflect on the state of affairs in the world, I'm reminded of the story of the boy, who shouted that that the emperor is not wearing any clothes, when the emperor was proudly walking down the street.
This was despite everyone around the emperor, saying that the emperor is wearing clothings that are made of special threads that were invisible to anyone who was either stupid or not fit for his position.
Similarly, we are currently being told that things are not too bad in the world. This is despite various warning signs which include some of the following:-
1. Why do the Central Banksters have to meet so often, to think of ways to stimulate the global economy? And what are they up to this weekend in China?
2. Why does Mario Draghi has to continue shouting that he will do whatever it takes? And wasn't he a bit pathetic two days ago? And when would the European banks starts collapsing? What about the millions of refugees streaming into Europe? And would Brexit lead to the breaking up of the EU and a recession in Europe ?
3. Why does Japan needs to keep talking about the three arrows? And is the rumored US$200b stimulus, be really enough to turn around their 25 year decline?
4. Why are the numbers in China declining eg. imports, exports, electricity usage, railway freights, forex reserves etc. ? And how bad are their bad debts?
5. Why haven't they increase interest rates in the US yet? And when was the last time you saw any yoy increase in their company's Profit and Revenue? And what about the US$170t in Unfunded Debts in the US?
Anyway, the US markets are at a record high now because of the record low interest rates. And people now seemed to be only interested in "return on capital" instead of "return of capital", eventhough it's a meagre 3%. Therefore, this rally may have some more legs until a strong opposite force reverses it.
And what could be that strong opposite force ? How about the following ?
1. Geopolitical Issue eg. war in Ukraine, Spratly's, North Korea, Middle East etc
2. Natural Disaster eg. earthquake in California, Japan etc.
3. Hyperinflation from the collapse of fiat currencies through over-printing
4. Cyber Security issue eg. hacking of stock-exchanges, trading accounts, central banks, banks, infrastructures etc
5. Collapse of major banks from bad debts, derivatives etc
6. Social Issues eg. riots, strikes, terrorism etc.
etc
From the list above, the first three have very low probabilities while the next three are quite possible scenarios.
At the same time, there's about US$13t in negative yield bonds, that is looking for a place to provide some decent return. And this could provide some tailwind to the stock-markets until they become "ridiculously over-priced".
So how far are we from that "ridiculously over-priced" situation ? Currently, we are already at PE 25 on the S&P 500 and probably going higher, as the strong USD will certainly lower the earnings of the International US companies.
And when would someone start shouting that the emperor is naked, which could trigger the next crash ? In two years? In a year? In 6 months? Within 3 months?
And when the stampede starts, would you be able to run through the emergency exit in time? If not, what are you doing to protect yourself before the stampede ?
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$44.26 from US$46.28 last week from US$45.12 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
2. Gold - Lower. US$1322 from US$1338 from US$1367. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.69 from US$20.30 from US$20.35. Range High: 49. Not vested
4. Copper - Flat. US$2.24 from US$ 2.23 from US$2.12. Not vested
5. Coffee - Lower. US$141.90 from US$145.70 from US$142.75. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2175 from 2162 last week from 2130 two weeks ago. No Trade
2. HK Equities - Higher. 21964 from 21659 from 20564. Support at 20000 then 18050, Resistance 22000. No Trade
3. Shanghai Equities - Lower. 3013 from 3054 from 2988; Support at 2450; No trade
4. Spore Equities - Higher. 2945 from 2925 from 2847. No Trade
5. Japan Equities - Higher. 16627 from 16498 from 15107. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1657 from 1668 from 1645. Sold menang and MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 106.15 from 104.65 last week from 100.50 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 2.9906 from 2.9294 from 2.9779
3. AUD to USD - AUD Weaker. 0.7472 from 0.7583 from 0.7580
4. AUD to SGD - AUD Weaker. 1.0144 from 1.0212 from 1.0182. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0337 from 2.9916 from 3.0321. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.0981 from 1.1038 from 1.1057. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7540 from 7.7580. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.060 from 3.945 from 4.000; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3110 from 1.3180 from 1.2950. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7621 from 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 97.47 from 96.58 from 96.30; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Derivatives (US$700t); Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t); Energy Debts (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
1X) Citi & MS: Expecting prices to turnaround in 2H 2016
6. Yield on 10 Year US Treasuries - Higher. 1.57% from 1.55% last week from 1.36% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $13 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 36.36 from 36.11 kast week from 36.08 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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"
-
winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Jul 31, 2016 9:47 am
TOL as of July 31, 2016
New Money From The New Month Of August
It's a new month so new money would be flowing into the markets again. Therefore, there should be a spike in prices sometime next week.
Thereafter, the markets could be in a trading range for a while, unless there are some major earnings surprises.
Anyway, some US Strategists are calling for a minor dip of 3% to 5% for the summer, with the bull resuming it's charge later in Autumn.
As for myself, I'm not as smart as these Strategists so I will look at the markets a few days at a time.
I'm not expecting a major plunge but if one does occur, I would think that it would be "V" shaped as there's a lot of money on the sidelines.
Finally, as the USD has been rising strongly, I'm starting to worry about my Currency Risk again. At this point in time, I'm waiting for the right time to buy some USD and CAD. I'm also waiting for the right time to sell some more SGD.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Lower. US$41.38 from US$44.26 last week from US$46.28 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Higher. US$1358 from US$1322 from US$1338. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$20.38 from US$19.69 from US$20.30. Range High: 49. Not vested
4. Copper - Flat. US$2.23 from US$2.24 from US$ 2.23. Not vested
5. Coffee - Higher. US$146 from US$142 from US$146. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Flat. 2174 from 2175 last week from 2162 two weeks ago. Traded ERY (Inverse Energy 3x) and UVXY (Volatility 3x)
2. HK Equities - Lower. 21891 from 21964 from 21659. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Lower. 2979 from 3013 from 3054; Support at 2450; No trade
4. Spore Equities - Lower. 2869 from 2945 from 2925. No Trade
5. Japan Equities - Lower. 16569 from 16627 from 16498. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1653 from 1657 from 1668. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 102.05 from 106.15 last week from 104.65 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 3.0084 from 2.9906 from 2.9294
3. AUD to USD - AUD Stronger. 0.7609 from 0.7472 from 0.7583
4. AUD to SGD - AUD Stronger. 1.0186 from 1.0144 from 1.0212. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0644 from 3.0337 from 2.9916. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Stronger. 1.1178 from 1.0981 from 1.1038. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7565 from 7.7560 from 7.7540. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.0275 from 4.060 from 3.945; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3232 from 1.3110 from 1.3180. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.7676 from 0.7621 from 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 95.53 from 97.47 from 96.58; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Lower. 1.45% from 1.57% last week from 1.55% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.06 from 36.36 last week from 36.11 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
New Money From The New Month Of August
It's a new month so new money would be flowing into the markets again. Therefore, there should be a spike in prices sometime next week.
Thereafter, the markets could be in a trading range for a while, unless there are some major earnings surprises.
Anyway, some US Strategists are calling for a minor dip of 3% to 5% for the summer, with the bull resuming it's charge later in Autumn.
As for myself, I'm not as smart as these Strategists so I will look at the markets a few days at a time.
I'm not expecting a major plunge but if one does occur, I would think that it would be "V" shaped as there's a lot of money on the sidelines.
Finally, as the USD has been rising strongly, I'm starting to worry about my Currency Risk again. At this point in time, I'm waiting for the right time to buy some USD and CAD. I'm also waiting for the right time to sell some more SGD.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Lower. US$41.38 from US$44.26 last week from US$46.28 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Higher. US$1358 from US$1322 from US$1338. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$20.38 from US$19.69 from US$20.30. Range High: 49. Not vested
4. Copper - Flat. US$2.23 from US$2.24 from US$ 2.23. Not vested
5. Coffee - Higher. US$146 from US$142 from US$146. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Flat. 2174 from 2175 last week from 2162 two weeks ago. Traded ERY (Inverse Energy 3x) and UVXY (Volatility 3x)
2. HK Equities - Lower. 21891 from 21964 from 21659. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Lower. 2979 from 3013 from 3054; Support at 2450; No trade
4. Spore Equities - Lower. 2869 from 2945 from 2925. No Trade
5. Japan Equities - Lower. 16569 from 16627 from 16498. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1653 from 1657 from 1668. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 102.05 from 106.15 last week from 104.65 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 3.0084 from 2.9906 from 2.9294
3. AUD to USD - AUD Stronger. 0.7609 from 0.7472 from 0.7583
4. AUD to SGD - AUD Stronger. 1.0186 from 1.0144 from 1.0212. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0644 from 3.0337 from 2.9916. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Stronger. 1.1178 from 1.0981 from 1.1038. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7565 from 7.7560 from 7.7540. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.0275 from 4.060 from 3.945; 52 Week Range is 3.27 to 4.47.
9. GBP to USD:- GBP Stronger. 1.3232 from 1.3110 from 1.3180. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.7676 from 0.7621 from 0.7713; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 95.53 from 97.47 from 96.58; If not the USD, then what currency ?
Others
1. Sentiment - Euphoric ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
6. Yield on 10 Year US Treasuries - Lower. 1.45% from 1.57% last week from 1.55% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Lower. 36.06 from 36.36 last week from 36.11 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
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Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sat Aug 06, 2016 5:01 pm
TOL as of Aug 7, 2016
Waiting
It's been a slow three weeks in the markets and I'm still expecting a small correction
However, it's still not the time to short aggressively as volatility is very low.
And I still have not found any stock that I really like, despite researching quite a number of companies. Therefore, I'm still sitting on quite a bit of cash.
And in times like this, I need to remind myself to be disciplined, as having lots of cash, tends to make one careless.
The strategy now is to wait for things to unfold. It could be very boring and may take a few months.
However, I'm convinced that the wait would be quite worthwhile, in view of the complacency out there.
Finally, I'm still worried about my Currency Risk and am still waiting for the right time to buy some more USD and CAD. At least, my AUD position is starting to show some results now.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Higher. US$41.98 from US$41.38 last week from US$44.26 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Lower. US$1341 from US$1358 from US$1322 from US$1338. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.72 from $20.38 from US$19.69. Range High: 49. Not vested
4. Copper - Lower. US$2.16 from US$2.23 from US$2.24. Not vested
5. Coffee - Lower. US$142.50 from US$146 from US$142. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2183 from 2174 last week from 2175 two weeks ago. No Trade
2. HK Equities - Higher. 22146 from 21891 from 21964. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Lower. 2977 from 2979 from 3013; Support at 2450; No trade
4. Spore Equities - Lower. 2828 from 2869 from 2945. No Trade
5. Japan Equities - Lower. 16254 from 16569 from 16627. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1664 from 1653 from 1657. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.82 from 102.05 last week from 106.15 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.997 from 3.0084 from 2.9906
3. AUD to USD - AUD Stronger. 0.7626 from 0.7609 from 0.7472
4. AUD to SGD - AUD Stronger. 1.0257 from 1.0186 from 1.0144. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0740 from 3.0644 from 3.0337. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1086 from 1.1178 from 1.0981. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7547 from 7.7565 from 7.7560. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.030 from 4.0275 from 4.060; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Weaker. 1.3073 from 1.3232 from 1.3110. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7585 from 0.7676 from 0.7621; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 96.19 from 95.53 from 97.47; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 11% from last year’s peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
6. Yield on 10 Year US Treasuries - Higher. 1.59% from 1.45% last week from 1.57% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.06 from 36.06 last week from 36.36 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
Waiting
It's been a slow three weeks in the markets and I'm still expecting a small correction
However, it's still not the time to short aggressively as volatility is very low.
And I still have not found any stock that I really like, despite researching quite a number of companies. Therefore, I'm still sitting on quite a bit of cash.
And in times like this, I need to remind myself to be disciplined, as having lots of cash, tends to make one careless.
The strategy now is to wait for things to unfold. It could be very boring and may take a few months.
However, I'm convinced that the wait would be quite worthwhile, in view of the complacency out there.
Finally, I'm still worried about my Currency Risk and am still waiting for the right time to buy some more USD and CAD. At least, my AUD position is starting to show some results now.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Higher. US$41.98 from US$41.38 last week from US$44.26 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Lower. US$1341 from US$1358 from US$1322 from US$1338. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.72 from $20.38 from US$19.69. Range High: 49. Not vested
4. Copper - Lower. US$2.16 from US$2.23 from US$2.24. Not vested
5. Coffee - Lower. US$142.50 from US$146 from US$142. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2183 from 2174 last week from 2175 two weeks ago. No Trade
2. HK Equities - Higher. 22146 from 21891 from 21964. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Lower. 2977 from 2979 from 3013; Support at 2450; No trade
4. Spore Equities - Lower. 2828 from 2869 from 2945. No Trade
5. Japan Equities - Lower. 16254 from 16569 from 16627. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1664 from 1653 from 1657. Bought MAA
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.82 from 102.05 last week from 106.15 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.997 from 3.0084 from 2.9906
3. AUD to USD - AUD Stronger. 0.7626 from 0.7609 from 0.7472
4. AUD to SGD - AUD Stronger. 1.0257 from 1.0186 from 1.0144. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0740 from 3.0644 from 3.0337. Waiting to convert some AUD back to MYR again.
6. EUR to USD - EUR Weaker. 1.1086 from 1.1178 from 1.0981. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7547 from 7.7565 from 7.7560. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.030 from 4.0275 from 4.060; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Weaker. 1.3073 from 1.3232 from 1.3110. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7585 from 0.7676 from 0.7621; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 96.19 from 95.53 from 97.47; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 11% from last year’s peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
6. Yield on 10 Year US Treasuries - Higher. 1.59% from 1.45% last week from 1.57% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.06 from 36.06 last week from 36.36 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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"
-
winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Aug 14, 2016 12:45 pm
TOL as of Aug 14, 2016
The Stronger Force: Liquidity or Earnings ?
The markets continue to grind higher despite the weak revenue and earnings of the US companies.
It looks like Liquidity is still the stronger force, despite being the dominant force since the Financial Tsunami.
In addition, Liquidity would probably continue to be the stronger force due to the following:-
1. We now have about US$13t of negative yield bonds. That is more than 3 times the QE program in the US. These US$13t is constantly looking for a place to go.
2. The BoE, BoJ and ECB will continue with their money printing.
3. With the weakening Chinese economy, it would also not be a surprise if the PBOC would also be printing some money if they have not already been doing so. Are they obliged to inform you ?
In view of the above, it may be quite dangerous to short the markets despite the following :-
1. weak revenues
2. weak earnings
3. weak margins
4. weak economic growth
5. high valuation
6. high debt - country, corporate and personal
7. poor geopolitical situation
8. terrorism
9. high dollar etc.
At this point in time, there's no event yet that can reverse the grind higher. However, that does not mean that it cannot appear suddenly and cause a lot of damage eg. war, riots, cybersecurity issue, majot bank collapse, massive earthquake in California or Japan etc.
There's a need now to stay nimble and on the first sign of trouble, it's time to dash through the emergency exit.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Higher. US$44.69 from US$41.98 last week from US$41.38 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing in 4Q
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Flat. US$1342 from US$1341 from US$1358. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Flat. US$19.72 from US$19.72 from $20.38. Range High: 49. Not vested
4. Copper - Flat. US$2.14 from US$2.16 from US$2.23. Not vested
5. Coffee - Lower. US$136.85 from from US$142.50 from US$146. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Flat. 2184 from 2183 last week from 2174 two weeks ago. No Trade
2. HK Equities - Higher. 22767 from 22146 from 21891. Support at 20000 then 18050, Resistance 22500. Trade Naga Corp
3. Shanghai Equities - Higher. 3051 from 2977 from 2979; Support at 2450; No trade
4. Spore Equities - Higher. 2867 from 2828 from 2869. No Trade
5. Japan Equities - Higher. 16920 from 16254 from 16569. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1684 from 1664 from 1653. No Trade
Currencies- Risk-On ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.25 from 101.82 last week from 102.05 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9955 from 2.997 from 3.0084
3. AUD to USD - AUD Stronger. 0.7653 from 0.7626 from 0.7609
4. AUD to SGD - AUD Stronger. 1.0296 from 1.0257 from 1.0186. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0841 from 3.0740 from 3.0644.
6. EUR to USD - EUR Stronger. 1.1164 from 1.1086 from 1.1178. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7547 from 7.7565. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Flat. 4.03 from 4.030 from 4.0275; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Weaker. 1.2923 from 1.3073 from 1.3232. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.772 from 0.7585 from 0.7676; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 95.72 from 96.19 from 95.53; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: Price drop of 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
x) About 19,000 left HK last year
6. Yield on 10 Year US Treasuries - Lower. 1.51% from 1.59% last week from 1.45% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.44 from 36.06 last week from 36.06 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
The Stronger Force: Liquidity or Earnings ?
The markets continue to grind higher despite the weak revenue and earnings of the US companies.
It looks like Liquidity is still the stronger force, despite being the dominant force since the Financial Tsunami.
In addition, Liquidity would probably continue to be the stronger force due to the following:-
1. We now have about US$13t of negative yield bonds. That is more than 3 times the QE program in the US. These US$13t is constantly looking for a place to go.
2. The BoE, BoJ and ECB will continue with their money printing.
3. With the weakening Chinese economy, it would also not be a surprise if the PBOC would also be printing some money if they have not already been doing so. Are they obliged to inform you ?
In view of the above, it may be quite dangerous to short the markets despite the following :-
1. weak revenues
2. weak earnings
3. weak margins
4. weak economic growth
5. high valuation
6. high debt - country, corporate and personal
7. poor geopolitical situation
8. terrorism
9. high dollar etc.
At this point in time, there's no event yet that can reverse the grind higher. However, that does not mean that it cannot appear suddenly and cause a lot of damage eg. war, riots, cybersecurity issue, majot bank collapse, massive earthquake in California or Japan etc.
There's a need now to stay nimble and on the first sign of trouble, it's time to dash through the emergency exit.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Higher. US$44.69 from US$41.98 last week from US$41.38 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing in 4Q
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Flat. US$1342 from US$1341 from US$1358. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Flat. US$19.72 from US$19.72 from $20.38. Range High: 49. Not vested
4. Copper - Flat. US$2.14 from US$2.16 from US$2.23. Not vested
5. Coffee - Lower. US$136.85 from from US$142.50 from US$146. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Flat. 2184 from 2183 last week from 2174 two weeks ago. No Trade
2. HK Equities - Higher. 22767 from 22146 from 21891. Support at 20000 then 18050, Resistance 22500. Trade Naga Corp
3. Shanghai Equities - Higher. 3051 from 2977 from 2979; Support at 2450; No trade
4. Spore Equities - Higher. 2867 from 2828 from 2869. No Trade
5. Japan Equities - Higher. 16920 from 16254 from 16569. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1684 from 1664 from 1653. No Trade
Currencies- Risk-On ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 101.25 from 101.82 last week from 102.05 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9955 from 2.997 from 3.0084
3. AUD to USD - AUD Stronger. 0.7653 from 0.7626 from 0.7609
4. AUD to SGD - AUD Stronger. 1.0296 from 1.0257 from 1.0186. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Stronger. 3.0841 from 3.0740 from 3.0644.
6. EUR to USD - EUR Stronger. 1.1164 from 1.1086 from 1.1178. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7547 from 7.7565. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Flat. 4.03 from 4.030 from 4.0275; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Weaker. 1.2923 from 1.3073 from 1.3232. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.772 from 0.7585 from 0.7676; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 95.72 from 96.19 from 95.53; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: Price drop of 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
x) About 19,000 left HK last year
6. Yield on 10 Year US Treasuries - Lower. 1.51% from 1.59% last week from 1.45% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.44 from 36.06 last week from 36.06 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
-
winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Aug 21, 2016 7:13 am
TOL as of Aug 21, 2016
The 4 Horsemen Of Catastrophic Losses
As the markets have not been going anywhere, it's timely to remind myself of the 4 Horsemen of Catastrophic Losses ie. Ignorance, Arrogance, Fear and Greed.
1. Ignorance: Lack of knowledge or information
Example: Buying a London property or the GBP just a few weeks before Brexit and NOT knowing that there is this coming referendum called Brexit
Losing money due to ignorance means not doing the required homework.
And in this internet age, there's just no excuse for being ignorant.
2. Arrogance: A way of thinking or behaving, that comes from believing that you are better or smarter
Example: Buying a London property or the GBP just a few weeks before Brexit, eventhough you know of Brexit but believed that you are able to predict the outcome of Brexit and it's consequences
Losing money due to Arrogance also probably means that you constantly believed that the market is wrong and that you are right.
And it may also means that you are consistently averaging down on your losing positions, thus setting yourself up for catastrophic losses if that investment does go to zero.
Arrogant people will have to learn things the hard way. And if they do make money, they think that it's due to their Skill and not just plain Luck.
I do know of someone who would intentionally encourage arrogant people to make a trade, where he believes that the probability is very high that the arrogant guy would lose money, just to teach him a lesson in humility.
3. Fear: Feeling induced by perceived danger which causes a change in behavior, such as fleeing, hiding, or freezing from perceived traumatic events.
Example: Selling your UK and European shares into the plunge after Brexit, instead of waiting for the technical rebound just two days after the initial plunge.
If you want to panic, do it early. If you are not able to get out early, then wait for the 50% technical rebound to get out.
4. Greed: Excessive or rapacious desire especially for possessions.
Example: Trying to catch the falling knives on the first day of the plunge after Brexit, instead of waiting for the second or third day of the plunge to buy, when the knives have hit the floor.
Cheap can become cheaper. Always know what's the Value in addition to the Price.
Again the above is to remind myself of the 4 Horsemen. It's not to boost my ego that I'm a perfect trader as I know that I'm not, as I still make stupid mistakes.
It's also not to make fun of anybody although some of the examples above could be real life examples. Learning from the losses of others are much cheaper than having to learn from your own losses.
Finally, for next week, It's probably the same old summer doldrums unless Yellen wants to surprise everyone at Wyoming on Friday, August 26.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$48.57 last week from US$44.69 last week from US$41.98 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Higher. US$1346 from US$1342 from US$1341. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.30 from US$19.72 from US$19.72. Range High: 49. Not vested
4. Copper - Higher. US$2.17 from US$2.14 from US$2.16. Not vested
5. Coffee - Higher. US$138.80 from US$136.85 from from US$142.50. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Flat. 2184 from 2184 last week from 2183 two weeks ago. No Trade
2. HK Equities - Higher. 22937 from 22767 from 22146. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Higher. 3108 from 3051 from 2977; Support at 2450; No Trade
4. Spore Equities - Higher. 2844 from 2867 from 2828. No Trade
5. Japan Equities - Lower. 16546 from 16920 from 16254. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1688 from 1684 from 1664. No Trade
Currencies- Mixed ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 100.21 from 101.25 last week from 101.82 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9796 from 2.9955 from 2.997
3. AUD to USD - AUD Weaker. 0.7623 from 0.7653 from 0.7626
4. AUD to SGD - AUD Weaker. 1.0261 from 1.0296 from 1.0257. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 3.0572 from 3.0841 from 3.0740
6. EUR to USD - EUR Stronger. 1.1331 from 1.1164 from 1.1086. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7530 from 7.7560 from 7.7547. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.0105 from 4.030 from 4.030; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Stronger. 1.3075 from 1.2923 from 1.3073. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.7782 from 0.7720 from 0.7585; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 94.51 from 95.72 from 96.19; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t); Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: Price drop of 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
x) About 19,000 people left HK last year
6. Yield on 10 Year US Treasuries - Higher. 1.58% from 1.51% last week from 1.59% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.55 from 36.44 last week from 36.06 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
The 4 Horsemen Of Catastrophic Losses
As the markets have not been going anywhere, it's timely to remind myself of the 4 Horsemen of Catastrophic Losses ie. Ignorance, Arrogance, Fear and Greed.
1. Ignorance: Lack of knowledge or information
Example: Buying a London property or the GBP just a few weeks before Brexit and NOT knowing that there is this coming referendum called Brexit
Losing money due to ignorance means not doing the required homework.
And in this internet age, there's just no excuse for being ignorant.
2. Arrogance: A way of thinking or behaving, that comes from believing that you are better or smarter
Example: Buying a London property or the GBP just a few weeks before Brexit, eventhough you know of Brexit but believed that you are able to predict the outcome of Brexit and it's consequences
Losing money due to Arrogance also probably means that you constantly believed that the market is wrong and that you are right.
And it may also means that you are consistently averaging down on your losing positions, thus setting yourself up for catastrophic losses if that investment does go to zero.
Arrogant people will have to learn things the hard way. And if they do make money, they think that it's due to their Skill and not just plain Luck.
I do know of someone who would intentionally encourage arrogant people to make a trade, where he believes that the probability is very high that the arrogant guy would lose money, just to teach him a lesson in humility.
3. Fear: Feeling induced by perceived danger which causes a change in behavior, such as fleeing, hiding, or freezing from perceived traumatic events.
Example: Selling your UK and European shares into the plunge after Brexit, instead of waiting for the technical rebound just two days after the initial plunge.
If you want to panic, do it early. If you are not able to get out early, then wait for the 50% technical rebound to get out.
4. Greed: Excessive or rapacious desire especially for possessions.
Example: Trying to catch the falling knives on the first day of the plunge after Brexit, instead of waiting for the second or third day of the plunge to buy, when the knives have hit the floor.
Cheap can become cheaper. Always know what's the Value in addition to the Price.
Again the above is to remind myself of the 4 Horsemen. It's not to boost my ego that I'm a perfect trader as I know that I'm not, as I still make stupid mistakes.
It's also not to make fun of anybody although some of the examples above could be real life examples. Learning from the losses of others are much cheaper than having to learn from your own losses.
Finally, for next week, It's probably the same old summer doldrums unless Yellen wants to surprise everyone at Wyoming on Friday, August 26.
Commodities:- Risk-On (Data as of Saturday)
1. Oil - Higher. US$48.57 last week from US$44.69 last week from US$41.98 two weeks ago.
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd; Recovering
i. Nigerian Oil disruption - 1m bpd; Recovered 500,000 bpd; Attacks continuing.
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintencance: 1.5m bpd for a few months
2. Gold - Higher. US$1346 from US$1342 from US$1341. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$19.30 from US$19.72 from US$19.72. Range High: 49. Not vested
4. Copper - Higher. US$2.17 from US$2.14 from US$2.16. Not vested
5. Coffee - Higher. US$138.80 from US$136.85 from from US$142.50. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Flat. 2184 from 2184 last week from 2183 two weeks ago. No Trade
2. HK Equities - Higher. 22937 from 22767 from 22146. Support at 20000 then 18050, Resistance 22500. No Trade
3. Shanghai Equities - Higher. 3108 from 3051 from 2977; Support at 2450; No Trade
4. Spore Equities - Higher. 2844 from 2867 from 2828. No Trade
5. Japan Equities - Lower. 16546 from 16920 from 16254. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Higher. 1688 from 1684 from 1664. No Trade
Currencies- Mixed ( Data as of Saturday every week )
1. USD to JPY - JPY Stronger. 100.21 from 101.25 last week from 101.82 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9796 from 2.9955 from 2.997
3. AUD to USD - AUD Weaker. 0.7623 from 0.7653 from 0.7626
4. AUD to SGD - AUD Weaker. 1.0261 from 1.0296 from 1.0257. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 3.0572 from 3.0841 from 3.0740
6. EUR to USD - EUR Stronger. 1.1331 from 1.1164 from 1.1086. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Stronger. 7.7530 from 7.7560 from 7.7547. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Stronger. 4.0105 from 4.030 from 4.030; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Stronger. 1.3075 from 1.2923 from 1.3073. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Stronger; 0.7782 from 0.7720 from 0.7585; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Weaker. 94.51 from 95.72 from 96.19; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$13t); Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: Price drop of 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vi) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
vii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
viii) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
ix) Government forecasts 18,203 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
x) About 19,000 people left HK last year
6. Yield on 10 Year US Treasuries - Higher. 1.58% from 1.51% last week from 1.59% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.55 from 36.44 last week from 36.06 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Aug 28, 2016 9:28 am
TOL as of Aug 28, 2016
Time to Short ?
The markets have been weak for the past two weeks.
So is it time to short the markets?
Intuitively, I think that it's still not the time to aggressively short the markets yet. There's still no strong catalyst yet, to drive the markets lower.
The weak markets over the past two weeks could be due to the traders being away for their summer holidays and that there's no more catalyst from the US earnings season.
So where do we go from here ?
I think that it's very important to remain disciplined. I've a higher Cash position than normal so there's this strong tendency to want to do something with that Cash.
In times like this this, I need to remind myself to be disciplined and to do the following:-
1. buy only good companies at fair prices (not fair companies at good prices)
2. ensure that the valuation is reasonable against growth
3. confirm that there's a strong catalyst to propel the stock higher
4. wait for the right set-up before taking a position
5. limit my position size
6. have a mental trailing stop-loss
As for next week, it would probably be another uneventful week with a slight downward bias.
Finally, I'm still worried about my Currency Risk as I have about 75% of my assets in SGD, MYR and AUD. I'm still waiting for an opportunity to buy more USD as well as some CAD. My objective is to diversify away some of my MYR and SGD assets before the next crash.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$47.29 from US$48.57 last week from US$44.69 two weeks ago.
a. Glut of 0.5m bpd is being rebalanced ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; 40m barrels in storage
e. Demand to grow by around 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Nigerian Oil disruption - around 500,000 bpd ?
i. China (4th largest producer ) - Reserve life has fallen from over 10 years to about six.
j. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
k. Refineries Maintenance: 1.5m bpd for a few months
2. Gold - Lower. US$1324 from US$1346 last week from US$1342. Record US$1920. Vested.
a. There's around 300 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$18.63 from US$19.30 from US$19.72. Range High: 49. Not vested
4. Copper - Lower. US$2.08 from US$2.17 from US$2.14. Not vested
5. Coffee - Higher. US$143.90 from US$138.80 from US$136.85. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2169 from 2184 last week from 2184 two weeks ago. Sold Lloyd's Group (LYG)
2. HK Equities - Lower. 22910 from 22937 from 22767. Support at 20000 then 18050, Resistance 23300. Bought NagaCorp (3918) and China Shipping Development (1138). Traded Phoenixhealth (1515) and Kingsoft (3888).
3. Shanghai Equities - Lower. 3070 from 3108 from 3051; Support at 2450; No Trade
4. Spore Equities - Higher. 2858 from 2844 from 2867. No Trade
5. Japan Equities - Lower. 16361 from 16546 from 16920. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1683 from 1688 from 1684. Bought IGB and iCapital.biz
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 101.81 from 100.21 last week from 101.25 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9671 from 2.9796 from 2.9955
3. AUD to USD - AUD Weaker. 0.7572 from 0.7623 from 0.7653
4. AUD to SGD - AUD Stronger. 1.0284 from 1.0261 from 1.0296. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 3.0514 from 3.0572 from 3.0841
6. EUR to USD - EUR Weaker. 1.1201 from 1.1331 from 1.1164. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7555 from 7.7530 from 7.7560. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.030 from 4.0105 from 4.030; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Stronger. 1.3137 from 1.3075 from 1.2923. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7701 from 0.7782 from 0.7720; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 95.57 from 94.51 from 95.72; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t); Negative Yield Bonds (US$13t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: 18,908 of the 81,894 units of residential and commercial properties launched in the 1Q 2016 have yet to be sold
c. China Properties
i) 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
v) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
vi) Government forecasts 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vii) About 19,000 people left HK last year
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Higher. 1.63% from 1.58% last week from 1.51% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than a quarter of the world’s bonds now have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.54 from 36.55 last week from 36.44 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
Time to Short ?
The markets have been weak for the past two weeks.
So is it time to short the markets?
Intuitively, I think that it's still not the time to aggressively short the markets yet. There's still no strong catalyst yet, to drive the markets lower.
The weak markets over the past two weeks could be due to the traders being away for their summer holidays and that there's no more catalyst from the US earnings season.
So where do we go from here ?
I think that it's very important to remain disciplined. I've a higher Cash position than normal so there's this strong tendency to want to do something with that Cash.
In times like this this, I need to remind myself to be disciplined and to do the following:-
1. buy only good companies at fair prices (not fair companies at good prices)
2. ensure that the valuation is reasonable against growth
3. confirm that there's a strong catalyst to propel the stock higher
4. wait for the right set-up before taking a position
5. limit my position size
6. have a mental trailing stop-loss
As for next week, it would probably be another uneventful week with a slight downward bias.
Finally, I'm still worried about my Currency Risk as I have about 75% of my assets in SGD, MYR and AUD. I'm still waiting for an opportunity to buy more USD as well as some CAD. My objective is to diversify away some of my MYR and SGD assets before the next crash.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$47.29 from US$48.57 last week from US$44.69 two weeks ago.
a. Glut of 0.5m bpd is being rebalanced ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; 40m barrels in storage
e. Demand to grow by around 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Nigerian Oil disruption - around 500,000 bpd ?
i. China (4th largest producer ) - Reserve life has fallen from over 10 years to about six.
j. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
k. Refineries Maintenance: 1.5m bpd for a few months
2. Gold - Lower. US$1324 from US$1346 last week from US$1342. Record US$1920. Vested.
a. There's around 300 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Lower. US$18.63 from US$19.30 from US$19.72. Range High: 49. Not vested
4. Copper - Lower. US$2.08 from US$2.17 from US$2.14. Not vested
5. Coffee - Higher. US$143.90 from US$138.80 from US$136.85. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.
6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-Off ( Data as of Saturday every week )
1. US Equities - Lower. 2169 from 2184 last week from 2184 two weeks ago. Sold Lloyd's Group (LYG)
2. HK Equities - Lower. 22910 from 22937 from 22767. Support at 20000 then 18050, Resistance 23300. Bought NagaCorp (3918) and China Shipping Development (1138). Traded Phoenixhealth (1515) and Kingsoft (3888).
3. Shanghai Equities - Lower. 3070 from 3108 from 3051; Support at 2450; No Trade
4. Spore Equities - Higher. 2858 from 2844 from 2867. No Trade
5. Japan Equities - Lower. 16361 from 16546 from 16920. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1683 from 1688 from 1684. Bought IGB and iCapital.biz
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 101.81 from 100.21 last week from 101.25 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Weaker. 2.9671 from 2.9796 from 2.9955
3. AUD to USD - AUD Weaker. 0.7572 from 0.7623 from 0.7653
4. AUD to SGD - AUD Stronger. 1.0284 from 1.0261 from 1.0296. The 52 week range is 0.98 to 1.36.
5. AUD to MYR - AUD Weaker. 3.0514 from 3.0572 from 3.0841
6. EUR to USD - EUR Weaker. 1.1201 from 1.1331 from 1.1164. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7555 from 7.7530 from 7.7560. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.030 from 4.0105 from 4.030; 52 Week Range is 3.27 to 4.47. Waiting to buy some USD.
9. GBP to USD:- GBP Stronger. 1.3137 from 1.3075 from 1.2923. Will not be investing in the GBP as I think that it's in a multi-year decline
10. CAD to USD:- CAD Weaker; 0.7701 from 0.7782 from 0.7720; Monitoring the CAD now as the EUR, GBP and JPY are off-limits now.
11. Dollar Index - USD Stronger. 95.57 from 94.51 from 95.72; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t ); Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t); Negative Yield Bonds (US$13t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: 18,908 of the 81,894 units of residential and commercial properties launched in the 1Q 2016 have yet to be sold
c. China Properties
i) 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
v) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017
vi) Government forecasts 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vii) About 19,000 people left HK last year
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Higher. 1.63% from 1.58% last week from 1.51% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than a quarter of the world’s bonds now have negative yields
8. JNK (SPDR Barclays High Yield Bond ETF) - Flat. 36.54 from 36.55 last week from 36.44 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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"
-
winston - Billionaire Boss
- Posts: 118900
- Joined: Wed May 07, 2008 9:28 am
Re: Winston's Investment Ideas 04 (Oct 15 - Dec 16)
by winston » Sun Sep 04, 2016 12:35 pm
TOL as of Sep 04, 2016
New Money From The New Month
It's a new month again so there should be at least one spike in the markets next week, from the new money flowing from the new month.
Thereafter, things could be slow until probably the second half of the month, where there could be some Window Dressing activities. However, since the markets are quite high, the Window Dressing activities may be a bit muted this time.
Anyway, the Central Banksters are meeting in Hangzhou on Sept 4-5 so there could be some coordinated announcements thereafter:-
1. Sep 8: ECB
2. Sep 20: BoE
3. Sep 21: BoJ
4. Sep 20-21: US Feds
In view of the above, it's likely that the markets would not be correcting much over the next few weeks. Therefore, it's probably still not the time to aggresively short the markets yet.
At the same time, it's also probably not a good time to aggresively chase the markets as the markets are now probably "an accident waiting to happen" in view of the following:-
1. High Valuations; PE on the S&P 500 is now around 25
2. Worsening Geopolitical Issues eg Spratly's, Middle-East, Ukraine, North Korea etc
3. Deteriorating Macroeconomic conditions eg. NPLs - China, Europe, Oil & Gas, weaker global trade, high USD etc.
4. Complacent Market Sentiments
IMHO, September will probably be another "wait and see month" and the way to make money in the markets are probably through good old fashioned disciplined stock-picking and special situation stocks.
As for my Currency Risk, I'm still waiting for the right time to convert some SGD to the USD. I need to reduce my exposure to SGD assets as it's currently too high when view on a global context.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$44.20 from US$47.29 last week from US$48.57 two weeks ago. Eexpecting Oil to be between US$40 to US$50.
a. Glut of 0.5m bpd is being rebalanced ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; 40m barrels in storage
e. Demand to grow by around 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption - around 500,000 bpd ?
j. China (4th largest producer ) - Reserve life has fallen from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintenance: 1.5m bpd for a few months
m. US Summer Driving almost over
2. Gold - Higher. US$1329 from US$1324 from US$1346. Record US$1920. Vested.
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens if those paper contracts all suddenly wants some physical gold ?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$19.52 from US$18.63 from US$19.30. Range High: 49. Not vested.
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Flat. US$2.08 from US$2.08 from US$2.17. Not vested. Over-supply ?
5. Coffee - Higher. US$150.10 from US$143.90 from US$138.80. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 50m bags of coffee in the next decade. That’s more than the entire current crop of Brazil and 1/3 current global supply of 145m bags
d. In 2030, demand expected to be around 200m bags
e. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What price would be the breaking point for coffee ? Around 2012, it touched US$300
6. Monitoring Commodities. It's cheap, hated, and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2180 from 2169 last week from 2184 two weeks ago. Bought Orasure Tech (OSUR)
2. HK Equities - Higher. 23267 from 22910 from 22937. Support at 20000 then 18050, Resistance 23300. Bought NagaCorp (3918). Sold China Shipping Development (1138).
3. Shanghai Equities - Lower. 3067 from 3070 from 3108; Support at 2450; No Trade
4. Spore Equities - Lower. 2804 from 2858 from 2844. Bought Silverlake Axis and ixBiopharma
5. Japan Equities - Higher. 16926 from 16361 from 16546. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1672 from 1683 from 1688. No Trade.
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 103.98 from 101.81 last week from 100.21 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 3.0011 from 2.9671 from 2.9796. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7583 from 0.7572 from 0.7623. Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0309 from 1.0284 from 1.0261. The 52 week range is 0.98 to 1.36. Expecting the AUD to rise against the SGD. The high was abround 1.35 in 2012.
5. AUD to MYR - AUD Stronger. 3.0940 from 3.0514 from 3.0572. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1158 from 1.1201 from 1.1331. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7555 from 7.7530. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.080 from 4.030 from 4.0105; 52 Week Range is 3.27 to 4.47. Expecting the USD to rise against the MYR
9. USD to SGD:- 1.3595; Waiting to convert some SGD to USD.
10. GBP to USD:- GBP Stronger. 1.3295 from 1.3137 from 1.3075. Will not be investing in the GBP as I think that it's in a multi-year decline
11. CAD to USD:- CAD Flat; 0.7700 from 0.7701 from 0.7782. Expecting the USD to rise aginst the CAD as Oil is weak and the Bank of Canada is reducing interest rates
12. Dollar Index - USD Stronger. 95.84 from 95.57 from 94.51; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t); Buybacks, QE - UK, Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t); Negative Yield Bonds (US$13t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: About 23% (19,000 of the 82,000 units) of residential and commercial properties launched in 1Q 2016 are not sold yet
c. China Properties
i) 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes;
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
iv) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vi) About 19,000 people left HK last year
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Lower. 1.60% from 1.63% last week from 1.58% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than 1/4 of the world’s bonds now have negative yields. These money are constantly looking for a place to go.
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.63 from 36.54 last week from 36.55 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
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New Money From The New Month
It's a new month again so there should be at least one spike in the markets next week, from the new money flowing from the new month.
Thereafter, things could be slow until probably the second half of the month, where there could be some Window Dressing activities. However, since the markets are quite high, the Window Dressing activities may be a bit muted this time.
Anyway, the Central Banksters are meeting in Hangzhou on Sept 4-5 so there could be some coordinated announcements thereafter:-
1. Sep 8: ECB
2. Sep 20: BoE
3. Sep 21: BoJ
4. Sep 20-21: US Feds
In view of the above, it's likely that the markets would not be correcting much over the next few weeks. Therefore, it's probably still not the time to aggresively short the markets yet.
At the same time, it's also probably not a good time to aggresively chase the markets as the markets are now probably "an accident waiting to happen" in view of the following:-
1. High Valuations; PE on the S&P 500 is now around 25
2. Worsening Geopolitical Issues eg Spratly's, Middle-East, Ukraine, North Korea etc
3. Deteriorating Macroeconomic conditions eg. NPLs - China, Europe, Oil & Gas, weaker global trade, high USD etc.
4. Complacent Market Sentiments
IMHO, September will probably be another "wait and see month" and the way to make money in the markets are probably through good old fashioned disciplined stock-picking and special situation stocks.
As for my Currency Risk, I'm still waiting for the right time to convert some SGD to the USD. I need to reduce my exposure to SGD assets as it's currently too high when view on a global context.
Commodities:- Risk-Off (Data as of Saturday)
1. Oil - Lower. US$44.20 from US$47.29 last week from US$48.57 two weeks ago. Eexpecting Oil to be between US$40 to US$50.
a. Glut of 0.5m bpd is being rebalanced ?
b. Global Stockpiles: 3b barrels (66 days of consumption ? )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to export 4m bpd; Currently, exporting 2m bpd; 40m barrels in storage
e. Demand to grow by around 1m bpd annually, mainly from Asia
f. India has overtaken China in consumption (400,000 bpd vs China's 320,000).
g. US Oil Capex: US$1t
h. US Supply expected to decrease by 700,000 bpd by 3Q 2016
i. Nigerian Oil disruption - around 500,000 bpd ?
j. China (4th largest producer ) - Reserve life has fallen from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO
l. Refineries Maintenance: 1.5m bpd for a few months
m. US Summer Driving almost over
2. Gold - Higher. US$1329 from US$1324 from US$1346. Record US$1920. Vested.
a. Electronics, Gold Coins, Central Banks, Jewelery etc.
b. There's around 300 oz of paper contract for every oz of gold holdings on Comex. What happens if those paper contracts all suddenly wants some physical gold ?
c. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year
3. Silver - Higher. US$19.52 from US$18.63 from US$19.30. Range High: 49. Not vested.
a. Solar Panels, Antibacterial products, Silver Coins, Jewelery etc
4. Copper - Flat. US$2.08 from US$2.08 from US$2.17. Not vested. Over-supply ?
5. Coffee - Higher. US$150.10 from US$143.90 from US$138.80. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption means production will have to rise by an extra 50m bags of coffee in the next decade. That’s more than the entire current crop of Brazil and 1/3 current global supply of 145m bags
d. In 2030, demand expected to be around 200m bags
e. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
f. Robusta is grown in Vietnam and is more robust
g. What price would be the breaking point for coffee ? Around 2012, it touched US$300
6. Monitoring Commodities. It's cheap, hated, and maybe on an uptrend now. However, the strong USD would be a headwind for Commodities.
Equities - Risk-On ( Data as of Saturday every week )
1. US Equities - Higher. 2180 from 2169 last week from 2184 two weeks ago. Bought Orasure Tech (OSUR)
2. HK Equities - Higher. 23267 from 22910 from 22937. Support at 20000 then 18050, Resistance 23300. Bought NagaCorp (3918). Sold China Shipping Development (1138).
3. Shanghai Equities - Lower. 3067 from 3070 from 3108; Support at 2450; No Trade
4. Spore Equities - Lower. 2804 from 2858 from 2844. Bought Silverlake Axis and ixBiopharma
5. Japan Equities - Higher. 16926 from 16361 from 16546. No Trade. The Strong Yen will continue to hurt.
6. Malaysian Equities - Lower. 1672 from 1683 from 1688. No Trade.
Currencies- Risk-Off ( Data as of Saturday every week )
1. USD to JPY - JPY Weaker. 103.98 from 101.81 last week from 100.21 two weeks ago. The 52 week range is 76 to 126. Where is the line in the sand for intervention ?
2. SGD to MYR - SGD Stronger. 3.0011 from 2.9671 from 2.9796. Expecting the SGD to rise against the MYR
3. AUD to USD - AUD Stronger. 0.7583 from 0.7572 from 0.7623. Expecting the AUD to rise against the USD
4. AUD to SGD - AUD Stronger. 1.0309 from 1.0284 from 1.0261. The 52 week range is 0.98 to 1.36. Expecting the AUD to rise against the SGD. The high was abround 1.35 in 2012.
5. AUD to MYR - AUD Stronger. 3.0940 from 3.0514 from 3.0572. Expecting the AUD to rise against the MYR
6. EUR to USD - EUR Weaker. 1.1158 from 1.1201 from 1.1331. Will not be investing in the EUR as I think that it's in a multi-year decline
7. USD to HKD - HKD Weaker. 7.7560 from 7.7555 from 7.7530. 52 week range is 7.7452 - 7.8296.
8. USD to MYR:- MYR Weaker. 4.080 from 4.030 from 4.0105; 52 Week Range is 3.27 to 4.47. Expecting the USD to rise against the MYR
9. USD to SGD:- 1.3595; Waiting to convert some SGD to USD.
10. GBP to USD:- GBP Stronger. 1.3295 from 1.3137 from 1.3075. Will not be investing in the GBP as I think that it's in a multi-year decline
11. CAD to USD:- CAD Flat; 0.7700 from 0.7701 from 0.7782. Expecting the USD to rise aginst the CAD as Oil is weak and the Bank of Canada is reducing interest rates
12. Dollar Index - USD Stronger. 95.84 from 95.57 from 94.51; If not the USD, then what currency ?
Others
1. Sentiment - Complacent ?
2. Headwinds - China Debts (US$23t); Chinese Local Government Debts (US$3t); China Bad Debts (US$1.5t ?); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Global Corporate Debt (US$51t); Global Derivatives (US$700t); StockMarket Cap/GDP(200%); Emerging Markets US Loans (US$6t); US$ Oil Bad Debts (US$0.2t /US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Italian NPLs (US$0.4t);
3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash on Sidelines (US$55t); Buybacks, QE - UK, Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t); Negative Yield Bonds (US$13t);
4. Risk Management:-
a. Global Diversification
b. Asset Class Diversification
c. Diversity of Industry & Company Exposure
d. Currency Hedging
e. Tactical Asset Allocation
f . Inverse ETFs and Put Warrants
5. Properties
a. Spore Properties
i) Luxury prices down 20% from 2012 peak and about 40% in Sentosa
ii) Private residential down 9% from 2013 peak
iii) About 24,000 private homes are sitting empty.
b. Malaysia Properties
i) Knight Frank: Supply of about 44,000 high end condos in KL as of 1H 2016
ii) Developers launching various incentive schemes eg. unemployment insurance, 10/90 scheme etc
iii) NAPIC: About 23% (19,000 of the 82,000 units) of residential and commercial properties launched in 1Q 2016 are not sold yet
c. China Properties
i) 4 years supply at Tier 3 & 4 cities
ii) About 13m vacant homes;
d. HK Properies
i) Prices have fallen 10% from the Sep 2015 peak
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
iv) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017 too
v) About 18,000 new units will be completed this year, part of a pipeline of 93,000 expected in the next three to four years.
vi) About 19,000 people left HK last year
e. London Properties
i) Countrywide: Prime central London will drop as much as 6% in 2016
6. Yield on 10 Year US Treasuries - Lower. 1.60% from 1.63% last week from 1.58% two weeks ago. Low 1.32%; High 2.69%
7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. US$13t or more than 1/4 of the world’s bonds now have negative yields. These money are constantly looking for a place to go.
8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 36.63 from 36.54 last week from 36.55 two weeks ago
The above is to help me crystallize my thinking. It's not a recommendation to Buy or Sell. Please do use the above comments at your own risk and please do feel free to provide me with your kind thoughts and comments
Please Note:-
Support the forum button- If you have benefited from the ideas in the forum but have not participated in the discussions, we would appreciate your kind support to defray the expenses of maintaining the forum.
Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.
Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page:-
search.php?search_id=active_topics
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It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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