TOL @ Mar 08, 2020
Time For "Preservation Of Capital"?
The US markets continued it's volatility this week, while the markets in China continued it's uptrend.
In times like this, where there is "irrational fear" and "inaccurate data", it's better to step aside to see how things develop.
Markets tend to go in a certain direction until there's a bigger opposite force, to first slow it's momentum and then subsequently change it's direction.
The markets will probably be choppy for a while with a downward bias, until the Central Banksters announce a coordinated move, to address the problem.
It's very likely that the Central Banksters and Plunge Protection Teams (PPT), would be doing the following soon if they have not already done so:-
1. Lowering of interest rates to about zero
2. Printing of money to buy bonds, to lower interest rates to about zero
3. Printing of money to buy ETFs, as in Japan
4. Manipulate the indices by pushing up a handful of stocks (6 stocks in the US, 3 stocks in HK etc)
5. Ban Short-Selling
6. Announce various stimulus programs eg. infrastructure programs, "helicopter money" (as in HK where everyone is getting HK$10,000), tax credits etc.
In view of the above, it may not be a good idea to bet against the Central Banksters at this point in time.
However, if there's some euphoria again, probably on the announcement of some of the above programs, I may buy some Inverse ETFs to trade.
Anyway, my gut feeling at this time is to preserve some capital.
Weekly Risk Management Progress Report:-
1. To Monitor NET Exposure To Equities (Long Less Shorts):- Neutral (29% from 33% last week, of Liquid Assets)
Goal: 5% exposure to Equities before the next crash / recession (2021?); Maximum 40%;
2. To Diversify From Asian Equities: Progress (69% from 72% last week):
Goal: To reduce percentage of Asian Equities to around 50%
3. To Buy Inverse ETFs and Puts before the Crash: No Trade
Goal: To have a sizable short position going into the next crash / recession
4. To Increase "USD/HKD/Gold" - No progress. (Around 26%).
Goal: To be in the safe havens before next recession; (HKD may be repegged)
5. To Reduce Number Of Counters: Progress (23 from 24 last week)
Goal: To focus on about 20 counters from 4 countries, with heavier weightings
6. To Minimize Industry / Sector Risk / Country Risk
a. Heavy exposure to Asian Based Equities
Goal: To diversify across various Sectors, Countries and 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: 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; 8 (Safe 1: PE15; Danger 10) PE S&P, Nadsaq; Revenue; USD; Tax Reform; Deregulation
7. Geopolitical Issues: 8 (Peaceful: 1; War: 10) - Iran; South China Sea; Europe; Russia; Saudi Arabia; Iran;
Total: 52 out of 70 (74%); (Safe: 60%; Danger: 85%)
Commodities: Risk on (Data from Commodities Live on Feb 22 @ 10.00 PM)
1. WTI Oil - Lower. US$41.61 from US$53.44 last week from US$52.23 two weeks ago;
Support: US$43; US$34; Resistance: US$75, US$105;
viewtopic.php?f=33&t=9249&p=231235#p231235
2. Gold - Higher. US$1674 from US$1646 from US$1586;
Support: $1240; $1150; $1050; Resistance: $1575; $1775; $1830;
viewtopic.php?f=33&t=8845&p=231236#p231236
3. Copper - Lower; US$2.55 from US$2.60 from US$2.60;
viewtopic.php?f=33&t=5598&p=231237#p231237
Equities - Risk-Off (Data as of Saturday every week)
1. US Equities - Lower. 2972 from 3338 last week from 3380 two weeks ago;
a. Support: 2750; 2320; Resistance: PE 21;
b. No Trade
viewtopic.php?f=11&t=7643&start=200
2. HK Equities - Flat. 26139 from 26130 from 27309;
a. Support: 25500, 24500, 23500; 22000;
b. Resistance: 29000; 31600;
c. No Trade
htttp:/investideas.net/forum/viewtopic.php?f=10&t=7470&start=120
3. Shanghai Equities - Higher; 3035 from 2880 from 3040;
a. Support: 2450; Resistance 3300; 3600
b. No Trade
viewtopic.php?f=10&t=7190&start=210
4. Spore Equities - Lower; 2970 from 3011 from 3181;
a. Resistance 3850
b. Sold Keppel Pacific Oak Reit
c. Sold Manulife US Reit
viewtopic.php?f=10&t=6828&start=b110
5. Japan Equities - Lower. 20750 from 21143 from 23387;
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; 1483 from 1531 from 1544;
a. Sold MYEG
viewtopic.php?f=10&t=6292&start=30
Currencies - Mixed (Data from XE.com on Mar 6 @ 3.45 PM)
1. USD to JPY - JPY Stronger; 105.91 from 108.75 last week from 111.56 two weeks ago;
a. 52 week range is 76 to 126
b. Aging Population
c. High Debt Ratio
d. No Longer a Safe Haven because of Covid-19 ?
viewtopic.php?f=32&t=4205&start=180
2. SGD to MYR - SGD Stronger; 3.0233 from 3.0216 from 2,9963;
viewtopic.php?f=32&t=136&start=110
3. AUD to USD - AUD Stronger; 0.6624 from 0.6507 from 0.6629;
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; 0.9167 from 0.9080 from 0.9268;
a. The range is 0.98 (2016) to 1.36 (2012)
5. AUD to MYR - AUD Stronger; 2.7710 from 2.7435 from 2.7770;
a. The range is 2.20 (2008) to 3.41 (2017)
6. EUR to USD - EUR Stronger. 1.1229 from 1.0992 from 1.0843;
viewtopic.php?f=32&t=5523&start=100
7. USD to HKD - HKD Stronger. 7.7722 from 7.7932 from 7.7874;
a. USD Peg band: 7.75 to 7.85
b. When will they be removing the peg to the USD?
viewtopic.php?f=32&t=3529&start=40
8. USD to MYR:- MYR Weaker. 4.1839 from 4.2166 from 4.1901;
a. 52 Week Range is 3.27 to 4.54
b. Lowest: 4.885 (1998)
viewtopic.php?f=32&t=397&start=9
9. USD to SGD:- SGD Stronger; 1.3838 from 1.3952 from 1.3984;
a. High 1.70 (2004); Low 1.20 (2011)
b. Am uncomfortable holding the currency of a small country where a catatrophe can wipe them out; But Singapore has been managing it's finances well.
viewtopic.php?f=32&t=136&start=100
10. USD to CNY:- CNY Stronger; 6.9465 from 6.9836 from 7.0271;
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; 1.2974 from 1.2878 from 1.2958;
a. Brexit
viewtopic.php?f=32&t=333&start=80
12. GBP to MYR:- GBP Flat; 5.4284 from 5.4286 from 5.4294;
13. Dollar Index - USD Weaker; 96.52 from 98.42 from 99.26;
viewtopic.php?f=32&t=7616&start=60
Properties:-
1. China Properties:-
viewtopic.php?f=10&t=8150&start=140
2. HK Properties:-
viewtopic.php?f=10&t=7785&start=150
3. Singapore Properties:-
viewtopic.php?f=10&t=7750&start=210
4. Malaysian Properties:-
viewtopic.php?f=10&t=4220&start=200
Others
Market Sentiment - Complacent to Fear Of Missing Out (FOMO)?
viewtopic.php?f=16&t=9099&start=90
Headwinds:-
viewtopic.php?f=16&t=8930&p=231225#p231225
Tailwinds:-
viewtopic.php?f=16&t=8940&p=231226#p231226
Warning Signs:-
viewtopic.php?f=16&t=9909&p=231227#p231227
Risk Management:-
viewtopic.php?f=16&t=7547&p=231228#p231228
Yield on 10 Year US Treasuries - Lower; 0.82% from 1.22% last week from 1.47% two weeks ago
Yield on 2 Year Treasuries - Lower; 0.51% from 0.99% from 1.39%;
Interest Rates:-
a. About US$13t or about 1/3 of the world’s bonds have negative yields
viewtopic.php?f=16&t=7319&p=221670#p221670
JNK (SPDR Barclays High Yield Bond ETF) - Higher: 107.00 from 106.62 from 110.08;
HYG (iShares iBoxx $ High Yid Corp Bond ETF) - Higher; 86.02 from 85.69 from 88.33;
Baltic Dry Index - Higher; 599 from 529 from 480; 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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