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

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

Postby winston » Sun Dec 30, 2018 1:55 pm

TOL @ Dec 30, 2018

January.jpg


New Money From The New Month

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

Therefore, I'm expecting at least one spike in the markets next week, unless the fund managers have already spent their Cash in advance, when the Dow surged > 1000 points.

Going forward, I'm expecting the US markets to slowly grind upwards for the following reasons:-
1. US Tax-Loss Selling would be over soon
2. PEG of Tech counters are more reasonable now
3. Feds have turned dovish
4. US-China Trade Truce
5. Commodity prices are relatively low, especially Oil
6. USD would probably weaken going forward

At the same time, I'm also reminding myself of the various risks out there:-
1. $600b pa of Liquidity would be withdrawn by the Feds in 2019
2. The Chinese economy has already slowed down
3. If the USD spikes up, it will affect the USD Loans in the Emerging Markets
4. With a chaotic White House, expect the unexpected
5. Sentiments are fragile
6. Businesses are not investing due to an unpredictable White House


Weekly Risk Management Progress Report:-
1. To Reduce Equities: No Progress (remained at 44% of Liquid Assets)
2. To Diversify From Asian Equities: No Progress (remained at 86%)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies

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


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

1. WTI Oil - Flat. US$45.12 from US$45.24 last week from US$52,23 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1283 from US$1263 from US$1242
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.45 from US$14.75 from US$14.70
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

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

6. Palladium - Higher; US$1185 from US$1176 from US$1173
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Lower; US$2442 from US$2538 from US$2521
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Flat; US$2.68 from US$2.69 from US$2.74
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1846 from US$1909 from US$1923
a. Sanctions on Rusal will remove 7% of world's supply

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

11. Cobalt; Lower; $25.17 ($55,500/t) from $25.40 ($56,000/t) from $25.06 ($55250/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2486 from 2417 last week from 2599 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 25504 from 25753 from 26095
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Sold 2/3 Rusal
g. Added to Tencent
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Lower. 2494 from 2516 from 2594
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3053 from 3060 from 3077
a. Resistance 3850
b. Added to HPL
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 20015 from 20166 from 21375
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1692 from 1670 from 1662
a. Bought Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


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

1. USD to JPY - JPY Stronger; 110.28 from 111.20 last week from 113.53 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0398 from 3.0447 from 3.0418
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7043 from 0.7094 from 0.7165
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9622 from 0.9721 from 0.9861
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9251 from 2.9587 from 3.0006
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1453 from 1.1404 from 1.1295
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8311 from 7.8284 from 7.8174
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1529 from 4.1721 from 4.1855
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3662 from 1.3702 from 1.3762
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8776 from 6.9068 from 6.9025
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2698 from 1.2656 from 1.2594
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2735 from 5.2806 from 5.2720

13. Dollar Index - USD Weaker; 96.40 from 96.66 from 97.55
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

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

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

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

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

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

Malaysian Properties
1. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
2. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Lower; 2.72% from 2.79% last week from 2.88% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.52% from 2.66% from 2.73%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 33.54 from 33.40 from 34.70

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 81.04 from 80.63 from 83.51

Baltic Dry Index - Lower; 1271 from 1318 from 1365; Low 290; High 2330 (2013)


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


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

Postby winston » Sun Jan 06, 2019 3:51 pm

TOL @ Jan 6, 2019

buy_sell_hold.jpg


Buy, Sell or Hold?

It's been another volatile week and I'm beginning to think that a lot of the participants would like to leave the market.

Therefore, any rallies should probably be sold. And I'm no longer confident that any plunge should now be bought (unless the valuation is very compelling).

Anyway, I'm still not expecting any recession in 2019 so it's probably still safe to be in the markets until around July 2019. However, things can go downhill very quickly so it's best to be a bit nimble.

As everyone around me is very negative on the markets, it's timely to see what could be the catalyst for the markets to move higher:-
1. US Earnings season is coming up
2. End of US-Trade Dispute
3. US$1t infrastructure program
4. Dovish Fed
5. QE in China

From the above, I do not really have the conviction to be more aggresive in my trades. Therefore, it's probably a "Hold" for now with some profit-taking whenever there's a strong rally.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (41% from 44% of Liquid Assets last week)
2. To Diversify From Asian Equities: Progress (85% from 86% last week)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies


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


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

1. WTI Oil - Higher. US$47.90 from US$45.12 last week from US$45.24 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1293 from US$1283 from US$1263
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.77 from US$15.45 from US$14.75
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$806 from US$790 from US$790
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher; US$1202 from US$1185 from US$1176 from US$1173
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2489 from US$2442 from US$2538
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.61 from US$2.68 from US$2.69
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1877 from US$1846 from US$1909
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.50 from US$28.60 from US$28.60
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $25.17 ($55,500/t) from $25.17 ($55,500/t) from $25.40 ($56,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2486 from 2417 last week from 2599 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 25626 from 25504 from 25753
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Traded Rusal (0486)
c. Traded CNOOC (0883)
d. Traded Sands China (1928)
e. Sold Guoco (0053)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2515 from 2494 from 2516
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3059 from 3053 from 3060
a. Resistance 3850
b. Added to Genting Singapore
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 19562 from 20015 from 20166
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1670 from 1692 from 1670
a. Traded Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Dec 7)

1. USD to JPY - JPY Stronger; 108.02 from 110.28 last week from 111.20 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0349 from 3.0398 from 3.0447
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Flat; 0.7044 from 0.7043 from 0.7094
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9589 from 0.9622 from 0.9721
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9102 from 2.9251 from 2.9587
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1404 from 1.1453 from 1.1404
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8338 from 7.8311 from 7.8284
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.1316 from 4.1529 from 4.1721
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3614 from 1.3662 from 1.3702
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.8648 from 6.8776 from 6.9068
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2670 from 1.2698 from 1.2656
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2316 from 5.2735 from 5.2806

13. Dollar Index - USD Weaker; 96.21 from 96.40 from 96.66
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Lower; 2.59% from 2.72% last week from 2.79% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.42% from 2.52% from 2.66%

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


JNK (SPDR Barclays High Yield Bond ETF) - Flat; 33.56 from 33.54 from 33.40
HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Flat; 81.03 from 81.04 from 80.63

Baltic Dry Index - Lower; 1267 from 1271 from 1318; Low 290; High 2330 (2013)


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


Please Note:-

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

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User avatar
winston
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Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jan 13, 2019 8:52 am

TOL @ Jan 13, 2019

FoMo.jpg


Fear Of Missing Out (FOMO)?

The markets have been rising for the past week and I'm starting to get calls from my friends who have missed the rally and want to chase it now.

My diplomatic reply to them, is that I think that it's still a "Trading Market", so it's time to take some small profits instead of chasing it (especially after it has risen about 10% to 15%).

Anyway, they are also a good gauge of the sentiments out there and it's telling me that it's time to lighten my exposure to Equities.

Consequently, I've been selling and my exposure to Equities is now about 32% of my Liquid Assets (from about 41% last week).

I'm also quite bearish on the markets based on the following:-
1. There's a global doom and no smart business would now be expanding
2. A US-China Trade Truce is no longer that big a deal anymore
3. China is slowing down very quickly
4. Europe is imploding eg. France, Italy, UK, Greece etc.
5. The US is stagnating on a chaotic White House, government shutdown etc.
6. It's expected that the Feds will only raise rates twice in 2019

Therefore, it's probably time to hunker down and "Wait and See".

I could be wrong and if the markets does take off due to the "FOMO", then it's a good chance for me to further pare down my exposure to Equities.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (32% from 41%% of Liquid Assets last week)
2. To Diversify From Asian Equities: Worse (88% from 85% last week)
3. To Buy Inverse ETFs and Puts - No Progress (no trade)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies

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


Commodities: Risk-On (Data from Commodities Live on Jan 11)

1. WTI Oil - Higher. US$52.80 from US$47.90 last week from US$45.12 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Flat. US$1292 from US$1293 from US$1283
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Flat. US$15.73 from US$15.77 from US$15.45
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$829 from US$806 from US$790
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. Strong demand from vehicles destroyed by Hurricanes (1m cars)
j. 70% of supply is from South Africa

6. Palladium - Higher; US$1287 from US$1202 from US$1185
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2530 from US$2489 from US$2442
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.66 from US$2.61 from US$2.68
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1865 from US$1877 from US$1846
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.90 from US$28.50 from US$28.60
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $19.05 ($42,000/t) from $25.17 ($55,500/t) from $25.17 ($55,500/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2596 from 2486 last week from 2417 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. Sold Facebook (FB)
c. Sold Shell (RDS.A)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 26667 vfrom 25626 from 25504
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Sold Sands China (1928)
c. Sold Galaxy (0027)
d. Sold 1/2 Tencent (0700)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2554 from 2515 from 2494
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3199 from 3059 from 3053
a. Resistance 3850
b. Sold Genting Singapore
c. Sold some Hotel Properties Limited (I dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20360 from 19562 from 20015
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1683 from 1670 from 1692
a. Sold Genting Malaysia
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Dec 7)

1. USD to JPY - JPY Weaker; 108.31 from 108.02 last week from 110.28 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0303 from 3.0349 from 3.0398
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7229 from 0.7044 from 0.7043
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9763 from 0.9589 from 0.9622
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9580 from 2.9102 from 2.9251
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1523 from 1.1404 from 1.1453
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8415 from 7.8338 from 7.8311
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.0920 from 4.1316 from 4.1529
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3506 from 1.3614 from 1.3662
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.7389 from 6.8648 from 6.8776
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2769 from 1.2670 from 1.2698
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2255 from 5.2316 from 5.2735

13. Dollar Index - USD Weaker; 95.36 from 96.21 from 96.40
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Higher; 2.71% from 2.59% last week from 2.72% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.54% from 2.42% from 2.52%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 34.95 from 33.56 from 33.54
HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 84.16 from 81.03 from 81.04 from 80.63

Baltic Dry Index - Lower; 1189 from 1267 from 1271; Low 290; High 2330 (2013)


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


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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jan 20, 2019 4:10 pm

TOL @ Jan 20, 2019

TIME-TO-SELL.jpg


Selling Into The Rally

The markets have been grinding higher for the past few weeks and the "experts" are now asking you to buy again.

These "experts" seemed to have forgotten the following:-

1. The US-China Trade Truce is temporary and will probably surface in another form over the next two years (until the US Presidential Election). This is due to the different values of the two countries.

2. A temporary halt in interest rates hike does not mean that you do not need to service the record debts out there.

3. The Central Banksters printed US$17t in 2008 to end the GFC. Can they print another US$17t going forward?

4. With a global doom out there, every country is now slowing down.

5. With a chaotic and inconsistent White House, no smart business would be expanding aggressively over the next two years.

6. Geopolitical issues includes Iran, North Korea, Syria, Ukraine, South China Sea etc.


My position has not change from last week. I think that the time to buy was when everyone was panicking, a few weeks ago.

Now that things have gone up about 10% to 15%, it's time to sell and not chase the rally despite what the "experts" are saying.

And where were these "experts" when the market was crashing a few weeks ago?


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (21% from 32% of Liquid Assets last week)
2. To Diversify From Asian Equities: Progress (87% from 88% last week)
3. To Buy Inverse ETFs and Puts - Progress (Bought EDZ and LABD)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies

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


Commodities: Risk-On (Data from Commodities Live on Jan 20)

1. WTI Oil - Higher. US$53.73 from US$52.80 last week from US$47.90 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1281 from US$1292 from US$1293
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.36 from US$15.73 from US$15.77 from US$15.45
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$800 from US$829 from US$806
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1337 from US$1287 from US$1202
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2645 from US$2530 from US$2489
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.71 from US$2.66 from US$2.61
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1886 from US$1865 from US$1877
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.85 from US$28.90 from US$28.50
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $17.24 ($38,000/t) from $19.05 ($42,000/t) from $25.17 ($55,500/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2671 from 2596 last week from 2486 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. Bought EDZ (Inverse Emerging Markets 3x)
c. Traded LABD (Inverse Biotech 3x)
d. Sold Nvidia (NVDA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 27091 from 26667 from 25626
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Added to Rusal (0486)
c. Sold Tencent (0700)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2596 from 2554 from 2515
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold 2/3 A50 ETF listed in HK
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3224 from 3199 from 3059
a. Resistance 3850
b. Sold some Hotel Properties Limited (Dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20666 from 20360 from 19562
a. Forward PE 13
b. Support 19000; Resistance 25000
c. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1692 from 1683 from 1670
a. Bought MUI
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com on Dec 20)

1. USD to JPY - JPY Weaker; 109.77 from 108.31 last week from 108.02 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0195 from 3.0303 from 3.0349
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7169 from 0.7229 from 0.7044
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Flat. 0.9762 from 0.9763 from 0.9589
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9476 from 2.9580 from 2.9102
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1365 from 1.1523 from 1.1404
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8426 from 7.8415 from 7.8338
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1117 from 4.0920 from 4.1316
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3638 from 1.3506 from 1.3614
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.7759 from 6.7389 from 6.8648
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2874 from 1.2769 from 1.2670
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.2935 from 5.2255 from 5.2316

13. Dollar Index - USD Stronger; 96.34 from 95.36 from 96.21
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Higher; 2.78% from 2.71% last week from 2.59% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.61% from 2.54% from 2.42%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.07 from 34.95 from 33.56

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 84.50 from 84.16 from 81.03

Baltic Dry Index - Lower; 1112 from 1189 from 1267; Low 290; High 2330 (2013)


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


Please Note:-

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

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

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page
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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Jan 27, 2019 8:09 am

TOL @ Jan 27, 2019

Dry Powder.jpg


Keeping Your Powder Dry?

The markets have been grinding higher for the past month and some of my friends have been talking about how they are missing out on this rally.

Their "Fear Of Missing Out" (FOMO) attitude is very strong. And I'm sure that the Fund Managers are also not so happy if they have been sitting on an under-weighted position.

So will the market continue to grind higher on this FOMO atmosphere? And what could be the catalyst for it eg. US Earnings, US-China Trade Truce, US Government Shutdown Settlement, Dovish Central Banksters etc.?

Intuitively, I think that they market can still be grinding higher but I will not be buying unless I happened to stumble upon a Conviction Buy.

I'm prepared to miss out on the rally as I think that the Risk-Reward now does not justify a high exposure to Equities at this point in time.

There are just too many risks out there, not to mentioned the self-inflicted injuries eg. US Government Shutdown, Brexit, Trade Wars etc.

I may need to hunker down for another two years, until the next US Presidential Election or the next Crash, whichever comes first.

In the meantime, I will continue to manage my risk accordingly and to reduce my exposure to Equities. Hopefully, I would be smart enough to have sold everything before the next crash.

On the horizon, we have the following:-
a. Jan 28: Rusal (0486) to be taken off sanctions list. Foreign brokers and Fund Managers can then buy thereafter.
b. Jan 30 & 31: US-China Trade Discussions
c. Feb 1: New Money From the New Month
d. Feb 4 to 8: China closed for CNY. Wouldn't the Chinese Traders be selling their HK and China counters by the end of next week?


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (18% from 21% of Liquid Assets last week)
2. To Diversify From Asian Equities: Progress (85% from 87% last week)
3. To Buy Inverse ETFs and Puts - Progress (Bought EDZ)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies
5. To reduce the number of counters from the current 21 to about 10

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


Commodities: Risk-On (Data from Commodities Live on Jan 25)

1. WTI Oil - Lower. US$53.26 from US$53.73 last week from US$52.80 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1291 from US$1281 from US$1292
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.58 from US$15.36 from US$15.73
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$816 from US$800 from US$829
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Lower; US$1297 from US$1337 from US$1287
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2650 from US$2645 from US$2530
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Flat; US$2.70 from US$2.71 from US$2.66
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1898 from US$1886 from US$1865
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$29.00 from US$28.85 from US$28.90
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $16.33 ($36,000/t) from $17.24 ($38,000/t) from $19.05 ($42,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Lower. 2665 from 2671 last week from 2596 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 27569 from 27091 from 26667
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Traded Rusal (0486)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2602 from 2596 from 2554
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities -Lower; 3202 from 3224 from 3199
a. Resistance 3850
b. Sold some more HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20774 from 20666 from 20360
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1701 from 1692 from 1683
a. Bought Genting Berhad
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com on Dec 20)

1. USD to JPY - JPY Flat; 109.79 from 109.77 last week from 108.31 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0427 from 3.0195 from 3.0303
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7105 from 0.7169 from 0.7229
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9642 from 0.9762 from 0.9763
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.9335 from 2.9476 from 2.9580
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1335 from 1.1365 from 1.1523
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8463 from 7.8426 from 7.8415
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.1283 from 4.1117 from 4.0920
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3570 from 1.3638 from 1.3506
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.7627 from 6.7759 from 6.7389
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.3079 from 1.2874 from 1.2769
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.4000 from 5.2935 from 5.2255

13. Dollar Index - USD Stronger; 96.38 from 96.34 from 95.36
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Lower; 2.74% from 2.78% last week from 2.71% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.58% from 2.61% from 2.54%

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


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 34.97 from 35.07 from 34.95

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 84.20 from 84.50 from 84.16

Baltic Dry Index - Lower; 939 from 1112 from 1189; Low 290; High 2330 (2013)


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


Please Note:-

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viewtopic.php?f=26&t=3168

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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Feb 03, 2019 4:02 pm

TOL @ Feb 3, 2019

pricing.jpg


Too High To Buy; Not High Enough To Sell

The markets have been grinding higher again and the FOMO attitude is very strong.

What is holding off a torrent of buying in Asia, is the CNY holidays, where the markets would be shut for a week in China, 3.5 days in HK and 2.5 days in Malaysia and Singapore.

And before I'm also swept away by the mini euphoria, I need to remind myself to try to separate the Facts from the Impressions:-

1. China is slowing. However, the optimists are saying that the Chinese government still can print money to stimulate the economy eg. Tax Cut, Xiong An, RRR cuts, Interest Rates Cut, Property Curbs Cut etc.

2. A US-China trade truce is priced in. However, if the US also removes the existing 10% tariffs then that could be a small catalyst for the markets to move a bit higher.

3. The US Shutdown is only temporary. We shall see whether "The Idiot" will look for a face-saving way out of it on Feb 15. If you dont know who's the big idiot, just google "Idiot".

4. US Earnings is a mirage. Some counters are rising because they have managed to beat the low expectations. And if you are chasing the counters because of this reason, then maybe you have not paid enough tuition fees in the markets.

5. Powell Put. What has happened over the past month that quickly changed the mind of Powell from a semi-hawk to a dove? Is it because of the tweets by "The Idiot"? Or is it because of the mini stock market crash in December? And at this rate, how is he able to have a cushion of "3% cut in interest rates" and "a war chest of about US$2t", to be used in the next recession?

6. Europe is on fire. Bad Debts, Brexit, Yellow Vests, Terrorism, Refugees etc. What can save Europe over the next few years ?

7. Geopolitical Issues waiting to explode. Venezeula, Iran, Syria, Ukraine, South China Sea etc.

In view of the above, my position has not really changed from last week. "Risk Management" is still my top priority and I'm using this rally to raise some Cash whenever possible and to reduce my exposure to Equities.

IMO, I think that the markets are probably "too high to buy but not high enough to sell".


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (14% from 18% of Liquid Assets last week. It was about 44% a month ago).
2. To Diversify From Asian Equities: Progress (82% from 85% last week)
3. To Buy Inverse ETFs and Puts - Progress (Bought EDZ)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies
5. To reduce the number of counters to 10: No Progress (still at 20 counters)

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


Commodities: Risk-On (Data from Commodities Live on Feb 01)

1. WTI Oil - Higher. US$53.56 from US$53.26 last week from US$53.73 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1324 from US$1291 from US$1281
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.95 from US$15.58 from US$15.36
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$825 from US$816 from US$800
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1316 from US$1297 from US$1337
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Higher; US$2716 from US$2650 from US$2645
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.76 from US$2.70 from US$2.71
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Lower; US$1891 from US$1898 from US$1886
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.90 from US$29.00 from US$28.85
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 35 existing plants; Building 21; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Nuclear Treaty - US pulling out
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Flat; $16.33 ($36,000/t) from $16.33 ($36,000/t) from $17.24 ($38,000/t) from $19.05 ($42,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2707 from 2665 last week from 2671 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 27931 from 27569 from 27091
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Sold Rusal (0486)
c. Sold Brilliance China (1114)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2618 from 2602 from 2596
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities -Lower; 3189 from 3202 from 3224 from 3199
a. Resistance 3850
b. Sold some HK Land
c. Sold some more HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20788 from 20774 from 20666
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1684 from 1701 from 1692
a. Sold Genting Berhad
b. Sold some MUI
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On (Data from XE.com on Dec 20)

1. USD to JPY - JPY Stronger; 108.89 from 109.79 last week from 109.77 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0316 from 3.0427 from 3.0195
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7262 from 0.7105 from 0.7169
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9792 from 0.9642 from 0.9762
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9683 from 2.9335 from 2.9476
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1467 from 1.1335 from 1.1365 from 1.1523
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8473 from 7.8463 from 7.8426
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.0875 from 4.1283 from 4.1117
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3484 from 1.3570 from 1.3638
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.7328 from 6.7627 from 6.7759
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.3062 from 1.3079 from 1.2874
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.3393 from 5.4000 from 5.2935

13. Dollar Index - USD Weaker; 95.51 from 96.38 from 96.34
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

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

Yield on 10 Year US Treasuries - Lower; 2.63% from 2.74% last week from 2.78% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Lower; 2.46% from 2.58% from 2.61%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.35 from 34.97 from 35.07

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 85.11 from 84.20 from 84.50

Baltic Dry Index - Lower; 668 from 939 from 1112; Low 290; High 2330 (2013)


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


Please Note:-

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

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

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User avatar
winston
Billionaire Boss
 
Posts: 118528
Joined: Wed May 07, 2008 9:28 am

Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Feb 10, 2019 3:47 pm

TOL @ Feb 9, 2019

Psint.jpg


Watching Paint Dry?

The US markets have not been going anywhere for the past week. As for the Asian markets. most were closed for a few days for the CNY holidays. It has been boring watching the markets. It's as if you are watching paint dry.

Having said that, there were some pockets of excitement:-

1. Rusal (0486) jumped in HK when BoA gave them a Target Price of HK$5.50
viewtopic.php?f=40&t=5354&start=120

2. Electronic Arts (EA) jumped in the US, when they soft launched "Apex Legends" which attracted 10m registration in 3 days. Fortnite took 2 weeks to get to 10m players.
viewtopic.php?f=56&t=1371&start=20

3. There was also some action in Sapura in Malaysia.
viewtopic.php?f=78&t=6476&start=40

(I'm vested in all three above).

Again, my overall position has not changed from last week. I will probably sell into any rally and will only buy when the story is very convincing like Rusal, Electronic Arts and Sapura above.

On the horizon, we have the following:-
1. US Shutdown. I'm not expecting a US shutdown on Feb 15 but with a moron in the WH, anything can happen.
2. US-China Trade tensions. I'm also expecting the idiot to declare a big victory in the US-China Trade Friction just like for NAFTA. (What did he get from Mexico to pay for the wall?). Whatever happens, the damage has been done. China is slowing down and thereafter, the US will follow. I'm expecting a recession around 2021 if not earlier.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Worse (16% from 14% Liquid Assets last week); Maximum 35%
2. To Diversify From Asian Equities: Progress (75% from 82% last week); Maximum 50%
3. To Buy Inverse ETFs and Puts - Progress (Bought EDZ)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies
5. To reduce the number of counters to 10: No Progress (23 counters from 20 last week)

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


Commodities: Risk-Off (Data from Commodities Live on Feb 08)

1. WTI Oil - Lower. US$52.44 from US$53.56 last week from US$53.26 two weeks ago; Support: US$58; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; To cut 1m bpd in 2019?
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd (Jan 2019); Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd in 2019;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1318 from US$1324 from US$1291
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8 t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.84 from US$15.95 from US$15.58
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$801 from US$825 from US$816
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1369 from US$1316 from US$1297
a. Support: US$600; US$500; US$200; Resistance: US$900;
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 3% a year for next 4 years
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit; h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs

7. Zinc - Lower; US$2689 from US$2716 from US$2650
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.83 from US$2.76 from US$2.70
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Aluminium - Higher; US$1899 from US$1891 from US$1898
a. Sanctions on Rusal will remove 7% of world's supply

10. Uranium - Flat; US$28.90 from US$28.90 from US$29.00
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Apr 14, 2019: US requires 25% local production; Higher electricity cost
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $14.97 ($33,000/t) from $16.33 ($36,000/t) from $16.33 ($36,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2708 from 2707 last week from 2665 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. Bought Electronic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 27946 from 27931 from 27569
a. Support: 24500, 23500; Resistance: 28400; 31600;
b. Bought Rusal (0486)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Closed. 2619 from 2618 from 2602
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3202 from 3189 from 3202
a. Resistance 3850
b. Sold some HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Lower. 20333 from 20788 from 20774
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Higher; 1687 from 1684 from 1701
a. Bought Sapura Energy
b. Bought Sapura Energy Warrants
c. Sold some MUI
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com on Feb 8)

1. USD to JPY - JPY Weaker; 109.81 from 108.89 last week from 109.79 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0316 from 3.0427 from 3.0195
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7094 from 0.7262 from 0.7105
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9616 from 0.9792 from 0.9642
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.8871 from 2.9683 from 2.9335
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1338 from 1.1467 from 1.1335
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Stronger. 7.8464 from 7.8473 from 7.8463
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.0697 from 4.0875 from 4.1283
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3552 from 1.3484 from 1.3570
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.7446 from 6.7328 from 6.7627
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2947 from 1.3062 from 1.3079
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2689 from 5.3393 from 5.4000

13. Dollar Index - USD Stronger; 96.54 from 95.51 from 96.38
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Flat; 2.63% from 2.63% last week from 2.74% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Flat; 2.47% from 2.46% from 2.58%

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


JNK (SPDR Barclays High Yield Bond ETF) - Lower; 35.23 from 35.35 from 34.97

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Lower; 84.79 from 85.11 from 84.20

Baltic Dry Index - Lower; 601 from 668 from 939; Low 290; High 2330 (2013)


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


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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Feb 17, 2019 4:18 pm

TOL @ Feb 17, 2019

Buy.jpg


Do You Know Why You Are Buying?

The markets are strong and I'm still being asked by my friends about this counter or that counter.

Once in a while, I will ask them why are they buying and the following are some of their replies:-
1. US-China Trade Truce
2. Feds are no longer increasing rates
3. China will stimulate their economy
4. US Earnings are good
5. US Shutdown is over
6. Trumps upcoming US$1t infrastructure program

My not so diplomatic to them are as follows:-

1. The US-China Trade Truce is probably already priced in. However, if the current 10% tariffs is also removed, there could be a small spike. But isn't the damage already being done to the manufacturing sector in China? Isn't it naive thinking, to think that China's slowdown will not affect the US later?

2. The US Feds may have halted the rates rise temporarily but is has certainly not lower rates yet. The current record debts are being serviced at a higher interest rates now.

3. The more the China economy slows, the higher the belief that the Chinese government will stimulate their economy. If this "paper tiger" can really stimulate it's economy then they do not really need to "kow-tow" to the rude Americans in the trade talk, as face is so very important to them.

4. US Earnings may be good now but the forecasted future earnings are coming down. Some analyst are even now talking of an Earnings Recession going forward.

5. The US Shutdown may be over but that may not stop the idiot from self-inflicting more wounds to his country. How about some tariffs on European and Japanese cars? How about attacking Iran or Venezuela? etc. These self inflicted wounds will continue until the next Presidential election or until he's no longer around.

6 "The Idiot" seems to have a life mission of making a few enemies every day. And would that help in his US$1t Infrastructure program? I think that he would be lucky if he's not being impeached. Everyone in his Inner circle seems to be either jailed, arrested or waiting to be investigated.

So do you know why you are buying? And why are you buying now after it has gone up about 15% from Xmas Eve? So why were you not buying during the slump during Xmas Eve?


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (13% from 16% last week of Liquid Assets)
2. To Diversify From Asian Equities: Worse (78% from 75% last week)
3. To Buy Inverse ETFs and Puts - Progress (Bought EDZ)
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
- HKD may be repegged to a basket of currencies
5. To reduce the number of counters: Progress (15 counters from 23 last week)

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


Commodities: Risk-Off (Data from Commodities Live on Feb 15)

1. WTI Oil - Higher. US$54.70 from US$52.44 last week from US$53.56 two weeks ago; Support: US$43; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; Cut 500k
i. China: SPR reached 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd; russia -500k;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1320 from US$1318 from US$1324
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.65 from US$15.84 from US$15.95
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Lower; US$792 from US$801 from US$825
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1394 from US$1369 from US$1316
a. Support: US$930; US$500; US$200; Resistance: ?
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019

7. Zinc - Lower; US$2649 from US$2689 from US$2716
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Lower; US$2.81 from US$2.83 from US$2.76
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Uranium - Flat; US$28.75 from US$28.90 from US$28.90
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Apr 14, 2019: US requires 25% local production; Higher electricity cost
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $14.52 ($32,000/t) from $14.97 ($33,000/t) from $16.33 ($36,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2708 from 2707 last week from 2665 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. Traded Electronic Arts (EA)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Lower. 27901 from 27946 from 27931
a. Support: 24500, 23500; Resistance: 31600;
b. Sold Rusal (0486)
c. Sold MCC (1618)
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2682 from 2619 from 2618
a. Support: 2450; Resistance 2900; 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3240 from 3202 from 3189
a. Resistance 3850
b. Sold some HK Land
c. Sold some HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 20901 from 20333 from 20788
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No Trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Flat; 1689 from 1687 from 1684
a. Sold Sapura Energy
b. Sold Sapura Warrants
c. Sold MUI
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-Off (Data from XE.com on Feb 15)

1. USD to JPY - JPY Weaker; 110.78 from 109.81 last week rom 108.89 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0082 from 3.0316 from 3.0427
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Stronger; 0.7115 from 0.7094 from 0.7262
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Stronger. 0.9660 from 0.9616 from 0.9792
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Stronger. 2.9060 from 2.8871 from 2.9683
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Weaker. 1.1272 from 1.1338 from 1.1467
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8482 from 7.8464 from 7.8473
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0842 from 4.0697 from 4.0875
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Weaker; 1.3577 from 1.3552 from 1.3484
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Weaker; 6.7704 from 6.7446 from 6.7328
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Weaker; 1.2825 from 1.2947 from 1.3062
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Weaker; 5.2390 from 5.2689 from 5.3393

13. Dollar Index - USD Stronger; 97.11 from 96.54 from 95.51
viewtopic.php?f=32&t=7616&start=60


Others

Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

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

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Higher; 2.66% from 2.63% last week from 2.63% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.51% from 2.47% from 2.46%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.39 from 35.23 from 35.35

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.13 from 84.79 from 85.11

Baltic Dry Index - Higher; 628 from 601 from 668; Low 290; High 2330 (2013)


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


Please Note:-

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

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viewtopic.php?f=26&t=3168

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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Feb 24, 2019 9:11 am

TOL @ Feb 24, 2019

Upcoming Events.jpg


Upcoming Events

The markets have been grinding higher and I have been preparing for the various events that will be unfolding over the next few weeks.

1. Deployment Of Russian Missiles To Target US
Non-event until a few of them is actually being deployed in Latin-America. Maybe I should start looking at the "Offense" counters again.

2. Trump-Kim Meeting in Vietnam
Non-event until they start shouting at each other.

3. US-China Trade Truce
Already being priced. However, if there's a spike in the markets for whatever reason eg. the removal of the existing 10% tariffs, I will probably use the opportunity to sell some of my shares.

4. China NPC Meeting (Early March)
The Chinese markets are normally strong before any major political meeting. If the Chinese market does spike up around late February, I will sell some of my China shares into the rally.

5. US US$1t Infrastructure Program
Some of the material stocks have moved on anticipation of the program. Not sure I have an edge to make money in this area. However, I dont think US Housing is doing that well.

6. Malaysia: Infrastructure Program
ECRL and some other infra projects maybe restarted. It maybe good for some material and construction companies. Not sure I have an edge to make some money here. However, Malaysian Housing are not doing too well.

7. Malaysia: Oil and Oil Services Company
As oil prices have recovered a bit, some small Malaysian O&G companies have also being rallying. I do not have an edge here so I may not be participating much on this story.

The above are my preparation for the various upcoming events. As most market participant nowadays are also quite well informed, I will need to front-run them if I'm to make some money.

Do I really have that ability? Or am I underestimating my ability? Maybe the trick is to only play in the areas where you have a slight edge.

Finally, my position has not really changed from last week. I'm selling into any strength and will not be buying unless the story is a very convincing one.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (12% from 13% last week, of Liquid Assets);
Goal: Zero Equities before the next recession (2020-2021?)
2. To Diversify From Asian Equities: Progress (73% from 78% last week)
Goal: To reduce percentage of Asian Equities to 50%
3. To Buy Inverse ETFs and Puts - Worse (Sold EDZ); Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Goal: To be in safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters To 10: Worse (16 from 15 counters last week).
Goal: To focus on 5 to 10 counters only, that have convincing stories


Market Risk Indicators
1. Euphoria: 7 (Low: 1; High: 10) - FAANNG, ETFs; Margin Debts; SWFs; Central Banks; Fund Flows;
2. Credit Problems: 8 (Very Good: 1; Very Bad: 10) - Housing, Subprime Auto; Student Loans; Credit Cards; Junk Bonds; EM USD Loans;
3. Recession: 8 (Strong Economy: 1; Depression: 10) - GDP; Taxes; PMI; Housing; Auto; Retail; NAFTA; Trade War; 2019?;
4. Liquidity: 7 (Very Liquid: 1; Tight 10) - QE (Feds, ECB, BOJ, PBOC); Interest Rates; Rotation (Bonds); Asset Shrinkage 2018?; EM; Italy;
5. Inverted Yield: 7 (Low Inversion: 1; High Inversion: 10) - Rising Interest Rates; Slope; Inversion; US 10 Years < US 2 Years; Expecting 2019 to 2020
6. Valuation; 7 (Safe 1: PE15; Danger 10: PE30) - PE S&P 24, Nadsaq 26; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 7 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia
Total: 50 out of 70 (71%); (Safe: 50%; Danger: 80%)


Commodities: Risk-On (Data from Commodities Live on Feb 22)

1. WTI Oil - Higher. US$57.51 from US$54.70 last week from US$52.44 two weeks ago; Support: US$43; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; Cut 500k
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd; russia -500k;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline
viewtopic.php?f=33&t=7550&start=210

2. Gold - Higher. US$1326 from US$1320 from US$1318
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m; MV US$345b
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Higher. US$15.80 from US$15.65 from US$15.84
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$833 from US$792 from US$801
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1451 from US$1394 from US$1369
a. Support: US$930; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Higher; US$2703 from US$2649 from US$2689
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Higher; US$2.95 from US$2.81 from US$2.83
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Uranium - Flat; US$28.70 from US$28.75 from US$28.90
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Apr 14, 2019: US requires 25% local production; Higher electricity cost
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Lower; $14.06 ($31,000/t) from $14.52 ($32,000/t) from $14.97 ($33,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2793 from 2708 last week from 2707 two weeks ago
a. Support: 2320; Resistance: 3000; Fwd PE 16
b. Bought Electronic Arts (EA)
c. Bought Kraft Heinz (KHC)
d. Sold Baidu
e. Sold EDZ (Emerging Market Inverse 3x)
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Higher. 28816 from 27901 from 27946
a. Support: 24500, 23500; Resistance: 31600;
b. No trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2804 from 2682 from 2619
a. Support: 2450; Resistance 2900; 3300; 3600
b. No trade
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Higher; 3270 from 3240 from 3202
a. Resistance 3850
b. Bought Genting Singapore
c. Sold HK Land
d. Sold some HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
e. Sold Hutch Port
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21426 from 20901 from 20333
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Flat; 1721 from 1689 from 1687
a. No trade
viewtopic.php?f=10&t=6292&start=30


Currencies- Risk-On/b] (Data from XE.com on Feb 15)

1. USD to JPY - JPY Weaker; 110.87 from 110.78 last week from 109.81 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Stronger; 3.0134 from 3.0082 from 3.0316
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Weaker; 0.7111 from 0.7115 from 0.7094
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9622 from 0.9660 from 0.9616
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.8996 from 2.9060 from 2.8871
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1321 from 1.1272 from 1.1338
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Weaker. 7.8488 from 7.8482 from 7.8464
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Stronger. 4.0776 from 4.0842 from 4.0697
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3531 from 1.3577 from 1.3552
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.7203 from 6.7704 from 6.7446
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.2975 from 1.2825 from 1.2947
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.2907 from 5.2390 from 5.2689

13. Dollar Index - USD Weaker; 96.76 from 97.11 from 96.54
viewtopic.php?f=32&t=7616&start=60


[b]Others


Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016


Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Higher; 2.68% from 2.66% last week from 2.63% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Higher; 2.52% from 2.51% from 2.47%

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


JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.53 from 35.39 from 35.23

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.42 from 85.13 from 84.79

Baltic Dry Index - Higher; 630 from 628 from 601; Low 290; High 2330 (2013)


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


Please Note:-

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

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

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User avatar
winston
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Re: Winston's Investment Ideas 04 (Oct 15 - Jun 19)

Postby winston » Sun Mar 03, 2019 8:47 am

TOL @ Mar 03, 2019

Resistance.png


Approaching Resistance?

The markets have been grinder higher since X'Mas and I think that they would soon be approaching resistance.

On the S&P 500, I have the Resistance at 2820.

On the HK markets, I have it at around 29,000

On the horizon, the US-China Trade Agreement maybe a catalyst for a spike in the markets (if there's one).

So where do we go from here? Buy, Sell or Hold?

Intuitively, I think that it's more prudent to be taking any profits then to chase after a 15% to 20% rally.

As far as I'm concerned, nothing has really changed from X'mas.

Just because Powell says that he won't be increasing interest rates, it does not mean that earnings would be much better.

Just because there's a Trade Truce, it does not mean that the situation in China is getting better or that International Trade would not deteriorate. (Auto Tariffs are coming soon?).

Just because the Chinese market is strong before the NPC, it does not mean that it would remained strong after the NPC or the Xi-Trump meeting.

Just because the USD is weak (against EM), it does not mean that it would remain weak and that the huge USD loans of the EM are no longer an issue.

Therefore, my position remains the same from a few weeks ago. It's a good time to sell and I will not be buying unless it's a conviction story. When in doubt, I will be monitoring than buying first.


Weekly Risk Management Progress Report:-
1. To Reduce Equities: Progress (11% from 12% last week, of Liquid Assets);
Goal: Zero Equities before the next recession (2020-2021?)
2. To Diversify From Asian Equities: Progress (71% from 73% last week)
Goal: To reduce percentage of Asian Equities to 50%
3. To Buy Inverse ETFs and Puts - Waiting for "M" on charts.
Goal: To have a sizable short position going into the next recession
4. To Increase "USD/HKD/Gold" - No Progress ( at 28%)
Goal: To be in safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters To 8: Progress (11 from 15 counters last week).
Goal: To focus on only 5 to 10 counters that have convincing stories


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


Commodities: Mixed (Data from Commodities Live on March 01)

1. WTI Oil - Lower. US$57.37 from US$57.51 last week from US$54.70 two weeks ago; Support: US$43; US$34; Resistance: US$75, US$105
a. Trade Wars will reduce demand for Oil? -500k bpd?
b. Global Stockpiles: 2.5b barrels;
c. US SPR: 679m barrels (33 days); To sell 190m over 8 years.
d. US imports 8m bpd (Total demand of India and Japan combined);
e. China (4th largest producer; largest importer) - Reserve life: 10 to 6 years
f. China: Ban on Petrolchemical Cars in 5-10 years? Quotas?
g. IEA: Lowest amount of new discoveries; Supply shortage in 2020?
h. Saudi: Aramco's IPO 2021? -500k bpd in Dec; Cut 500k
i. China: SPR 51/90 days; 2019 imports to decrease?
j. Libya: -850k bpd; Brazil +200k bpd; Canada -325 bpd; Nigeria -300k bpd; Iraq -150k bpd; Kurdistan -350k bpd; US +1m bpd; russia -500k;
k. Venezeula: -1.2m bpd; Worst Case -2m bpd supply (50% cut by 2020)?
l. Iran: -0.7m bpd to -1.6m bpd by 1Q, 2019? 6 months exemption from Nov
m. Winter: lower demand for oil; Glut in US?
n. OPEC: Heavier Crude; More Processing;
o. US: Lighter Crude and Lower Sulphur; Glut in Gasoline
viewtopic.php?f=33&t=7550&start=210

2. Gold - Lower. US$1310 from US$1326 from US$1320
Support: $1150; $1050; Resistance: $1400
a. Global 33k tons; US 8k t; China 5k t; IMF 3k t; Germany 3k t
b. Electronics, Coins, Central Banks Reserve, Jewellery etc.
c. 250 oz of paper contract for every oz of physical gold holding on Comex
d. Output fell by 100 metric tons (3%), from 3,150 in 2015 to 3,050 in 2016
e. Demand increasing in Muslim countries as Gold is now a halal investment
f. Rising USD & Interest Rates, would not be good for gold
g. Gold only occupies 0.03% of US investments. In 1981, it was 8%
h: India Demand: Since 2010, down each year. 2017 (700t); 2020 (900t)
i. China Demand: Since 2013, decreased 33% from 940t to 630t last year
j. Global Demand: 2Q 2018: China +5%; India -8%;
k. Central Banks: +22% yoy; 33k tons; Russian, Turkey, Khazakhstan & India
l. U.S. government holds 260m ounces at book value of US$42m
m. China: Reserves 185m oz; 400m oz ground; Output decreased 6% yoy
n. Strong Selling by Gold ETFs
viewtopic.php?f=33&t=7589&p=202084#p202084

3. Silver - Lower. US$15.47 from US$15.80 from US$15.65
a. Support: US$16.10; US$15.20; Resistance: US$18.50; High: US$49
b. LED chips, Cell Phones, Nuclear Reactors, Photography, Solar Panels, RFID Chips, Semiconductors, Water Purification, Data Storage, Antibacterial products, Silver Coins, Jewelery
c. Demand: 1.2b ounces in 2015;
d. Supply: 0.9b ounces in 2015.
e. 4th year of deficit
f. 35% (7700 metric tons) for Electronics
g. 25% (5500 metric tons) for Bullions & Coins
h. India imports more Silver than the US
i. JPM has 67m ounces
j. High Gold/Siver Ratio: 50 t0 70; Currently 76, 50% higher than average
k, Production declining
l. Demand: 40% Investments / Speculation; 60% Industrial
m. About 1b ounces stored in China; 1 Year Production
n. How will US tariffs on Solar Panels affect silver prices?
viewtopic.php?f=33&t=7589&p=202084#p202084

4. Platinum - Higher; US$868 from US$833 from US$792
a. 28% for jewelry
b. 42% for diesel catalytic converters
c. Remainder for other industrial applications
d. Huge discount to Gold
e. Sixth year of deficit
f. 10 times more gold than platinum
g. Costlier to mine than gold as located deeper
h. Diesel cars losing market share
i. 70% of supply is from South Africa

6. Palladium - Higher; US$1487 from US$1451 from US$1394
a. Support: US$930; US$500; Resistance: $1600 (Citi)
b. Catalytic Converters (Petrol Cars), Electronics, Dentistry, Medicine, Hydrogen Purification, Chemicals, Groundwater Treatment, Jewelry and Fuel Cells
c. Auto industry consumes 80% of supply
d. Demand by Auto industry doubled in past 10 years
e. Growth Demand: 10% in 2019
f. Russia and South Africa produced 3/4 of the world's mined palladium supply.
g. 8th Annual supply deficit;
h. Vehicle: PALL; SPPP (Physical Platinum & Palladium)
i. US Auto Sales weak
j. China - Pollution Programs
k. Supply Deficit: 1m Ounces in 2019
l. Global Stockpiles: 10 to 18m ounces (2 Year Demand)
m. Julius Baer 2020 Target: $1000

7. Zinc - Higher; US$2798 from US$2703 from US$2649
a. Global Demand: +14% pa for past 4 years
b. Supply: 13.7 tons; Supply Deficit 1.2m tons;
b. Breakpoint: High US$4400 (2007); Low $1600 (Jan 2016)
d. Used to prevent rusting, zinc oxide (paints), brass (copper), coins, fertilizer
e. Zinc inventories at the LME have dropped to their lowest level since 2009
f. Vehicle: DB Base Metal (Zinc, Aluminum & Copper); MMG
viewtopic.php?f=33&t=367&start=208.

8. Copper - Flat; US$2.96 from US$2.95 from US$2.81
a. Higher inventories at LME
b. China - 50% of global consumption
c. China - Lower Power Grid demand
viewtopic.php?f=33&t=5598&p=215285#p215285

9. Uranium - Flat; US$28.00 from US$28.70 from US$28.75
a. Breakeven: US$40 per lb; Long-Term Contract - 2x Spot
b. Range: $20 (2005) to $136 (2008); 580% rise in two years
c. Global Supply: 158m lbs pa; 15% from decommisioned weapons
d. Global Demand: 190m lbs pa to 300m lbs pa (2030)
e. Stockpile: 1b lbs (till 2022?) ; Companies normally store 5 years supply
f. Japanese Demand: 3m lbs pa; Starting 21/54 reactors? Currently, only 9
g. No. of Nuclear plants: +8 pa for next 20 yrs, 440 to 595; Current 452
h. 56 new reactors being built; 481 planned;
i. China: 46 existing plants; Building 11; To build 177 more?
j. India: 22 existing nuclear plants; Building 5; To build 64 more?
k. 75% long-term contracts expiring between 2017-25
l. 200 European nuclear reactors will be shut down over the next 25 years
m. France: Reduce nuclear to 50% from 75% by 2025 and closure of 20
n. Apr 14, 2019: US requires 25% local production; Higher electricity cost
o. Kazakhtan reducing supply by 10% (40% of global production)
p. Competition: Natural Gas, Solar, Wind, Wave etc
q. US: Nuclear - 20% of electricity; 99/447 Plants; 25% drop by 2025; Two Year Moratorium on Closure
r. Supply: 50k tons; Demand: 68k tons; 2k tons enriched for weapons
s. 1b pounds to be purchased for long-term contracts over next 5-10 years
t. Average reactor needs around 650,000 pounds to run for a year
u. US: 100/420 reactors; Importing 95% uranium; Demand 50m lbs pa
v. Uranium from Sea Water; Viable at US$180/kg (US$80/lbs); Timing?
w. Glut at 15m pounds (23 reactors for 1 year)
x. Cameco mothballed McArthur River & Key Lake; 10% world's supply
y. Kazatomprom, world's second largest, cut production by 20% for 3 yrs
z. Russia banning export of Uranium?

11. Cobalt; Higher; $14.97 ($33,000/t) from $14.06 ($31,000/t) from $14.52 ($32,000/t); Low $10; High US$43
a. Electric Vehicles (8 kg), Smartphones (8 grams), Jet Engines; Gigafactories
b. Congo: Supplies >50% world's supply; Child Labor?
c. Demand: 8% to 10% pa
d. Shortage: 2022 and beyond
e. Cobalt Reduced EV is 5-10 years away? Musk: Reducing Cobalt in Tesla;
f. 2018: 1m EVs (10k tonnes); 2027: 27m ( 27m tonnes)
g. Glencore - stockpiling till June 2019 (radioactivity); 25% Global Supply
g. Target: 2018 - US$62,000/t; 2022 - US$44.000/t

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


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

1. US Equities - Higher. 2804 from 2793 last week from 2708 two weeks ago
a. Support: 2320; Resistance: 2820; 3000; Fwd PE 16
b. No Trade
viewtopic.php?f=11&t=7643&start=200

2. HK Equities - Flat. 28812 from 28816 from 27901
a. Support: 24500, 23500; Resistance: 29000; 31200; 31600;
b. Sold Bank of China
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120

3. Shanghai Equities - Higher. 2994 from 2804 from 2682
a. Support: 2450; Resistance 2900; 3300; 3600
b. Sold A50 ETF 2822 (Listed in HK)
viewtopic.php?f=10&t=7190&start=210

4. Spore Equities - Lower; 3220 from 3270 from 3240
a. Resistance 3850
b. Added to Genting Singapore
c. Sold Brook Cromptom
d. Sold some HPL (Dont understand why Wheelock is pulling out of 68 Holdings)
e. Sold Hotung
viewtopic.php?f=10&t=6828&start=b110

5. Japan Equities - Higher. 21603 from 21426 from 20901
a. Forward PE 13
b. Support 19000; Resistance 25000
c. BOJ owns > half government bonds and 75% of ETFs
d. No trade
viewtopic.php?f=10&t=7138&start=200

6. Malaysian Equities; Lower; 1701 from 1721 from 1689
a. No trade
viewtopic.php?f=10&t=6292&start=30


Currencies- Mixed[b] (Data from XE.com on March 01)

1. USD to JPY - JPY Weaker; 111.87 from 110.87 last week from 110.78 two weeks ago
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. Why is it a Safe Haven ?
e. Strong Yen will not be good for Exports and Japanese Equities
viewtopic.php?f=32&t=4205&start=180

2. SGD to MYR - SGD Weaker; 3.0126 from 3.0134 from 3.0082
viewtopic.php?f=32&t=136&start=110

3. AUD to USD - AUD Flat; 0.7108 from 0.7111 from 0.7115
a. The range is 0.70 (2016) to 1.10 (2011)
b. Commodity Currency
c. To diversify my AUD into what currency?
viewtopic.php?f=32&t=5256&start=130

4. AUD to SGD - AUD Weaker. 0.9613 from 0.9622 from 0.9660
a. The range is 0.98 (2016) to 1.36 (2012).
b. I would choose the AUD over the SGD

5. AUD to MYR - AUD Weaker. 2.8961 from 2.8996 from 2.9060
a. The range is 2.20 (2008) to 3.41 (2017)

6. EUR to USD - EUR Stronger. 1.1374 from 1.1321 from 1.1272
viewtopic.php?f=32&t=5523&start=100

7. USD to HKD - HKD Flat. 7.8487 from 7.8488 from 7.8482
a. 52 week range is 7.7452 - 7.8530
b. USD Peg band: 7.75 to 7.85
c. Will they remove the peg to the USD during the next crisis?
d. Will China ask HK to depeg from the USD?
viewtopic.php?f=32&t=3529&start=40

8. USD to MYR:- MYR Weaker. 4.0786 from 4.0776 from 4.0842
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9. USD to SGD:-

9. USD to SGD:- SGD Stronger; 1.3526 from 1.3531 from 1.3577
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country
viewtopic.php?f=32&t=136&start=100

10. USD to CNY:- CNY Stronger; 6.7048 from 6.7203 from 6.7704
a. When is the right time to buy some CNY? How?
viewtopic.php?f=32&t=7720&start=90

11. GBP to USD:- GBP Stronger; 1.3241 from 1.2975 from 1.2825
a. Brexit; Politics;
viewtopic.php?f=32&t=333&start=80

12. GBP to MYR:- GBP Stronger; 5.3953 from 5.2907 from 5.2390

13. Dollar Index - USD Weaker; 96.27 from 96.76 from 97.11
viewtopic.php?f=32&t=7616&start=60


[b]Others


Sentiment - Complacent?

Headwinds
a. Derivatives (US$700t);
b. Debts (US$237t, 318% GDP);
c. Corporate Debt (US$50t); US Corp Debts (US$9t)
d. Institutional Investors (US$0.5t)
e. ETFs AUM (US$3.4t)
f. Bitcoin (US$200b)
g. US Pension Short-Fall: US$385b
h. NPLs at European Banks: EUR$1t
i. China's Bond Market: US$12t (third largest)
j. Private Client Cash Levels as a % of Total Assets: Record Low (10.4%)
k. Institutional Investors: lowest levels of cash for past 8 years; 1/3 high in 2016

Tailwinds
a. Low Interest Rates
b. Cash Sidelines (US$50t)
c. QE US$18t: US (US$4.5t), ECB (US$3.7t), Japan (US$4.4t) & China (US$5.1t)
d. Negative Yield Bonds (US$6t from US$10t)
e. US Foreign Funds Repatriation (US$2.5t)
f. Cash US Corporations (US$1t)
g. Cash Japanese Corporations (US$2t)
h. Buybacks
i. US Household Net Worth (US$90t)
j. EM Consumption
k. Private Equities: US$600b Cash

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

HK Properties
a. Vacancy tax
b. 9000 vacant apartments
c. CLSA, UBS and Citi - Prices may drop 10% to 15% by end 2019
d. Rising Interest rates
e. Slowing Economy / Trade War
f. Depreciating Yuan
g. Weak Stock Markets
h. Justin Chiu (CK Asset): 10-20% drop; Outskirt Nanos (30% drop)

Spore Properties
a. 60,000 Units of Supply (7 years Supply of 6500 Homes per year )
b. Unsold residential units doubled to over 34,000 in 2018

Malaysian Properties
a. JPPH: Overhang - 30,115 units (2018) vs 20,304 (2017)
b. Overhang would be greater if Serviced Residence and SOHOs are included

China Properties
a. 20% of Urban Housing is vacant (65m homes)
b. In 2018, nationwide ASPs have climbed by 15% to a record high
c. Since 2015, Tier One cities have risen by 55%
d. Since 2015, Tier Two cities have risen by 35%
e. Government targeting annual increase of 7% to 10%

Yield on 10 Year US Treasuries - Higher; 2.73% from 2.68% last week from 2.66% two weeks ago
a. Resistance 3.3%

Yield on 2 Year Treasuries - Flat; 2.52% from 2.52% from 2.51%

Interest Rates:-
a. Expecting US Interest Rates to slowly rise over next 2 years
b. About US$9t or about 23% of the world’s bonds have negative yields
c. US Rate Hike: Two in 2019? One in 2020?
d. Argentina's Intertest Rate: 60%
e. Turkey's Interest Rate: 24%
f. Ukraine's Interest rate: 18%
viewtopic.php?f=16&t=7319&p=221670#p221670

JNK (SPDR Barclays High Yield Bond ETF) - Higher; 35.69 from 35.53 from 35.39

HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 85.74 from 85.42 from 85.13

Baltic Dry Index - Higher; 658 from 630 from 628; Low 290; High 2330 (2013)


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


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viewtopic.php?f=26&t=3168

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