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

[winston]

TOL as of April 24, 2016

is-the-us-stock-market-crash-an-accident-waiting-to-happen-1-638.jpg

Waiting For The Crash ?

The markets have been grinding up for about 2 months.

So will it continue it's climb or will it topple over ?

Intuitively, I think that the markets will be hitting some resistance soon. Thereafter, it should correct, especially during this period of blackout for US Buybacks.

However, I do not think that there would be a crash. A 50% retracement ie. a 5% correction, is not unreasonable.

Anyway, the process of topping up could take some time and can really test your patience.

At the same time, I need to be mindful that I could be very wrong and that the market could really continue to grind higher, especially with the help of the Central Banksters.

And if that's the case, I would need to start thinking about putting some stop-losses for my short positions.

In addition, some "experts" are already saying that the weaker USD can contribute to better earnings next season.

In view of the differing opinions on the direction of the markets, I need to be very clear about my current objectives and priorities:-
1. "Risk Management" is more important than "Return on Investments"
2. If I'm to apply the 80/20 Rule here, my exposure to Risky Assets should not exceed 20%. For the time being, I have achieved this objective as my exposure to Equities is now only net 12% ( Long 16%, Short 4% )
3. However, I do have big positions in two companies out of 24 ( about 53% of my Equities portfolio ) and I will need to reduce their position size asap.
4. My exposure to the currencies of Emerging Markets & Commodity Countries, should also not exceed 20%. Unfortunately, my exposure to the MYR, SGD and AUD is now about 80% and that must be reduced asap.
5. Finally, I need to remind myself that markets do grind up like an escalator but when it goes down, it's like an elevator


Commodities:- Risk-On

1. Oil - Higher. US$44 from US$40 from US$40
a. Oil Production vs Demand: 96.5m bpd vs 95m bpd; Glut @ 1-1.5m bpd ? Reducing to 0.2m in 3Q ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 2m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 600,000 bpd by 3Q 2016

I will continue to stay away from Oil Services companies until 3Q or 4Q 2016

2. Gold - Lower. US$1234 from US$1236 from US$1240. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Platinum - Higher. US$1011 from US$987 from US$968

4. Silver - Higher. US$16.98 from US$16.26 from US$15.36. Range High: 49

5. Copper - Higher. US$2.26 from US$2.15 from US$2.09

6. Monitoring Commodities. It's cheap, hated, and maybe on an uptrend


Equities - Risk-On

1. US Equities - Higher. 2092 from 2081 from 2048. No Trade

2. HK Equities - Higher. 21467 from 21316 from 20364. Support 18050. Traded Ping An, Rexlot and 22997 Put Warrant

3. Shanghai Equities - Lower. 2959 from 3078 from 2985; Support at 2450; Traded A50 2823 in HK

4. Spore Equities - Higher. 2940 from 2922 from 2808. Added to DBXT S&P Short ETF

5. Japan Equities - Higher. 17572 from 16848 from 15821. No Trade

6. Malaysian Equities - Lower. 1718 from 1728 from 1718. No Trade. Buybacks by MAA

7. CRRC Warrants - Traded 65631, 65068, 66142 and 64257 in HK


Currencies- Risk-Off

1. USD to JPY - JPY Weaker. 112 from 109 from 108. The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.88 from 2.87 from 2.90

3. AUD to USD - AUD Flat. 0.77 from 0.77 from 0.76

4. AUD to SGD - AUD Weaker. 1.04 from 1.05 from 1.02. The 52 week range is 0.98 to 1.36

5. AUD to MYR - AUD Flat. 3.01 from 3.01 from 2.96

6. EUR to USD - EUR Weaker. 1.12 from 1.13 from 1.14. Not vested in EUR

7. USD to HKD - HKD Weaker. 7.7581 from 7.7557 from 7.7581. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Weaker. 3.91 from 3.90 from 3.92; 52 Week Range is 3.27 to 4.47

9. GBP to USD:- GBP Stronger. 1.44 from 1.42 from 1.41. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 95.11 from 94.70 from 94.24


Others

1. Sentiment - Euphoric ?

2. Headwinds - Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Plunging Commodities; Chinese Stocks Margin (300%; RMB 4t); Emerging Markets US Loans (US$6t); China's Corporate Debt (US$16t); US Oil Bad Debts (US$0.2t); US Students Loan (US$1.2t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK - Prices declined 11% since Sep 2015. Expecting 25% decline by end 2016. Hong Kong’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.

6. Yield on 10 Year US Treasuries - Higher. 1.89% from 1.75% from 1.72%. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 35.04 from 34.56 from 34.14


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of May 1, 2016

May.png

New Money Flowing From The New Month

Happy May !

It's a new month so new money would be flowing into the markets again. Therefore, the market should have at least one spike sometime early next week.

Whether the markets can stay up after that spike, would be another story.

I'm increasing my bets that the markets will be hitting resistance soon (if it's not already at the range top).

We are now in May and it's time for the big boys to go away for their summer holidays.

Anyway, I've been paring down my exposure to Equities as well as increasing my short bets.

I've also been diversifing my currency exposure away from the Commodity Countries & Emerging Markets.


Commodities:- Risk-On

1. Oil - Higher. US$46 from US$44 from US$40
a. Oil Production vs Demand: 96.5m bpd vs 95m bpd; Glut @ 1-1.5m bpd ? Reducing to 0.2m in 3Q ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 2m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016

Oil price is stabilizing but I will continue to stay away from Oil Services companies until at least 3Q 2016

2. Gold - Higher. US$1295 from US$1234 from US$1236. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Platinum - Higher. US$1080 from US$1011 from US$987

4. Silver - Higher. US$17.89 from US$16.98 from US$16.26. Range High: 49

5. Copper - Higher. US$2.28 from US$2.26 from US$2.15

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend.


Equities - Risk-Off

1. US Equities - Lower. 2065 from 2092 from 2081. Bought EDZ and SQQQ. Traded UVXY and LABD

2. HK Equities - Lower. 21067 from 21467 from 21316. Support 18050. No Trade

3. Shanghai Equities - Lower. 2938 from 2959 from 3078; Support at 2450; No Trade

4. Spore Equities - Lower. 2839 from 2940 from 2922. No Trade

5. Japan Equities - Lower. 16666 from 17572 from 16848. No Trade

6. Malaysian Equities - Lower. 1673 from 1718 from 1728. Traded Menang Warrants and MAA

7. CRRC Warrants - Traded 65214 and 65730 in HK


Currencies- Mixed

1. USD to JPY - JPY Stronger. 106 from 112 from 109. The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.91 from 2.88 from 2.87

3. AUD to USD - AUD Weaker. 0.76 from 0.77 from 0.77. RBA Meeting on May 3

4. AUD to SGD - AUD Weaker. 1.02 from 1.04 from 1.05. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Weaker. 2.98 from 3.01 from 3.01

6. EUR to USD - EUR Stronger. 1.14 from 1.12 from 1.13. Not vested in EUR

7. USD to HKD - HKD Stronger. 7.7571 from 7.7581 from 7.7557. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Flat. 3.91 from 3.91 from 3.90; 52 Week Range is 3.27 to 4.47

9. GBP to USD:- GBP Stronger. 1.46 from 1.44 from 1.42. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Weaker. 93.08 from 95.11 from 94.70


Others

1. Sentiment - Euphoric ?

2. Headwinds - Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Plunging Commodities; Chinese Stocks Margin (300%; RMB 4t); Emerging Markets US Loans (US$6t); China's Corporate Debt (US$16t); US Oil Bad Debts (US$0.2t); US Students Loan (US$1.2t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK - Prices declined 11% since Sep 2015. Expecting 25% decline by end 2016. Hong Kong’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015. Sixth consecutive month of decline in March, with housing supply expected to hit a record high over the next few years.

6. Yield on 10 Year US Treasuries - Lower. 1.83% from 1.89% from 1.75%. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Higher. 35.04 from 34.56 from 34.14


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of May 8, 2016

caution.jpg

Time For Caution ?

The markets have been quite weak over the past few days. So is it time to be more cautious ?

However, most fund managers are also quite cautious so this could end up as a "Trading Market" again, rather then a "Bear Market".

In addition, Cash levels are high, Sentiments are poor, the Central Banksters are getting desperate, the USD is dropping and Interest Rates are very low - all conditions for the market to not drop a lot suddenly.

Anyway, I have been trying to protect myself over the past few weeks while things have been calm:-
1. Reducing my exposure to Equities
2. Trading Short Positions (Biotech; Energy, S&P 500, Nasdaq and Emerging Markets)
3. Raising Cash
4. Checking my Position Size
5. Ensuring that my exposure to certain industries are not too excessive eg. Properties. That exposure could be in various forms eg. Physical properties, Shares in Property Companies, REITS etc. If the property market is hit, all of my exposures to that industry would be affected eg. Physical, Shares and REITS.
6. Diversifying my Currency Risk. Over the past few weeks, I have converted:-
a. SGD to AUD
b. MYR to USD
c. SGD to USD
d. AUD to MYR
7. Trading Volatility (VXX and UVXY)
8. Initiating some expsoure to some beaten down Commodities eg Coffee

At this point in time, I think that it's a Trading Market with a slight downward bias.


Commodities:- Risk-Off (Data as of Saturday every week )

1. Oil - Lower. US$45 from US$46 last week from US$44 (two weeks ago).
a. Current glut of 0.5m bpd ? Reducing to 0.2m in 3Q ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 2m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016

Oil prices are stabilizing but I will continue to stay away from Oil Services companies until 3Q 2016

2. Gold - Lower. US$1290 from US$1295 from US$1234. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Lower. US$17.50 from US$17.89 from US$16.98. Range High: 49

5. Copper - Lower. US$2.15 from US$2.28 from US$2.26

6. Coffee - $130, Vested in JO
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivizes export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now.


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

1. US Equities - Lower. 2057 from 2065 last week from 2092 (two weeks ago ). Bought JO (Coffee ETN); Traded UVXY (Volatility 3x)

2. HK Equities - Lower. 20110 from 21067 from 21467. Support 18050. No Trade

3. Shanghai Equities - Lower. 2913 rom 2938 from 2959; Support at 2450; No Trade

4. Spore Equities - Lower. 2731 from 2839 from 2940. No Trade

5. Japan Equities - Lower. 16107 from 16666 from 17572. No Trade

6. Malaysian Equities - Lower. 1649 from 1673 from 1718. Traded Menang Warrants and MAA

7. CRRC Warrants - Traded 66248, 65670 and 66267 in HK


Currencies- Risk-Off ( Data as of Saturday every week )
Note: I dont trade currencies. I only monitor them on a Weekly Basis to have a feel of where they are heading.

1. USD to JPY - JPY Weaker. 107 from 106 last week from 112 (two weeks ago). The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.94 from 2.91 from 2.88

3. AUD to USD - AUD Weaker. 0.74 from 0.76 from 0.77.

4. AUD to SGD - AUD Weaker. 1.00 from 1.02 from 1.04. The 52 week range is 0.98 to 1.36. Converted some SGD to AUD

5. AUD to MYR - AUD Weaker. 2.95 from 2.98 from 3.01

6. EUR to USD - EUR Flat. 1.14 from 1.14 from 1.12. Not vested in EUR

7. USD to HKD - HKD Weaker. 7.7609 from 7.7571 from 7.7581. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Weaker. 4.00 from 3.91 from 3.91; 52 Week Range is 3.27 to 4.47. Converted some MYR to USD

9. GBP to USD:- GBP Weaker. 1.44 from 1.46 from 1.44. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 93.89 from 93.08 from 95.11


Others

1. Sentiment - Euphoric ?

2. Headwinds - Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Plunging Commodities; Chinese Stocks Margin (300%; RMB 4t); Emerging Markets US Loans (US$6t); China's Corporate Debt (US$16t); US Oil Bad Debts (US$0.2t); US Students Loan (US$1.2t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK - Prices declined 11% since Sep 2015. Expecting 25% decline by end 2016. Hong Kong’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015. Sixth consecutive month of decline in March, with housing supply expected to hit a record high over the next few years.

6. Yield on 10 Year US Treasuries - Lower. 1.77% from 1.83% last week from 1.89% (2 weeks ago). Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
d. RBA just cut interest rates by 25 bps to 1.75%

8. JNK (SPDR Barclays High Yield Bond ETF) - Weaker. 34.07 from 35.04 last week from 34.56 (2 weeks ago)


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of May 15, 2016

weak.jpg

Weaker Markets ?

The markets were quite weak last week.

So would the markets be heading lower from here ?

Intuitively, I think that the markets would be grinding lower from here.

There's not much catalyst on the horizon as US earnings season will be over soon. In addition, sentiments are quite weak and any spike in prices could be perceived as selling opportunity.

I'm also not sure whether Buybacks would be adequate to arrest the slide this round.

In view of the above, my conservative stance still remains and I think that it's safer to short the markets than to be long.


Commodities:- Risk-Off (Data as of Saturday)

1. Oil - Higher. US$46 from US$45 last week from US$46 two weeks ago
a. Current glut of 0.5m bpd ? Reducing to 0.2m in 3Q ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 2m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016

Oil prices are stabilizing but I will continue to stay away from Oil Services companies until 3Q 2016

2. Gold - Lower. US$1274 from US$1290 from US$1295. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Lower. US$17.13 from US$17.50 from US$17.89. Range High: 49

5. Copper - Lower. US$2.08 from US$2.15 from US$2.28

6. Coffee - $129 from $125,
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivizes export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now.


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

1. US Equities - Lower. 2047 from 2057 last week from 2092 two weeks ago. Bought FAZ ( Inverse Financials 3x), SPXS (Inverse S&P 500 3x ) and DBA (DB Agriculture ETF ); Traded UVXY (Volatility 3x); Sold SQQQ (Inverse Nasdaq 3x) and JO (Coffee ETN);

2. HK Equities - Lower. 19719 from 20110 from 21067. Support 18050. Bought Ping An

3. Shanghai Equities - Lower. 2827 from 2913 rom 2938; Support at 2450; Bought A50 (2823) listed in HK

4. Spore Equities - Higher. 2735 from 2731 from 2839. No Trade

5. Japan Equities - Higher. 16412 from 16107 from 16666. No Trade

6. Malaysian Equities - Lower. 1628 from 1649 from 1673. Traded Menang and Menang Warrants

7. CRRC Warrants - Traded 66455, 66559, 63165, 66587, in HK


Currencies- Risk-Off ( Data as of Saturday every week )
Note: I do not trade Currencies. I only monitor them on a Weekly Basis, to have a feel of where they are heading so that I can manage my Currency Risk better.

1. USD to JPY - JPY Weaker. 108.640 from 107.105 last week from 106 two weeks ago. The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.9398 from 2.938 from 2.91

3. AUD to USD - AUD Weaker. 0.7268 from 0.7367 from 0.76

4. AUD to SGD - AUD Weaker. 0.9972 from 1.0028 from 1.02. The 52 week range is 0.98 to 1.36. Converted some SGD to AUD

5. AUD to MYR - AUD Weaker. 2.9313 from 2.9316 from 2.9463

6. EUR to USD - EUR Weaker. 1.1308 from 1.1404 from 1.14. Not vested in EUR

7. USD to HKD - HKD Weaker. 7.7638 from 7.7609 from 7.7571. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Weaker. 4.0335 from 3.9995 from 3.91; 52 Week Range is 3.27 to 4.47. Converted some MYR to USD

9. GBP to USD:- GBP Weaker. 1.4359 from 1.443 from 1.46. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 94.61 from 93.89 from 93.08


Others

1. Sentiment - Confused ?

2. Headwinds - Demographics, China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Chinese Stocks Margin (300%; RMB 4t); Emerging Markets US Loans (US$6t); China's Corporate Debt (US$16t); US Oil Bad Debts (US$0.2t); Total Energy Debt (US$2.5t ); US Students Loan (US$1.2t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Lower. 1.70% from 1.77% last week from 1.83% 2 weeks ago. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 34.80 from 34.07 last week from 35.04 2 weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of May 22, 2016

accident.jpg

Accident Waiting To Happen ?

The US markets have been trending lower over the past few weeks.

However, it has been quite a difficult exercise trying to short it, as the decline is very little every week. In addition, there's the occasional "bear rally" to throw you off guard.

My frustration is also compounded as I can only use Inverse ETFs that are being traded in the US to short the markets. And they are being traded during my sleep-time here in Asia.

I still believe that the US markets is still on it's way down and it's an accident waiting to happen. Valuation are high, revenue growth is decreasing, raw material prices are increasing, high debt ratios etc

At the same time, I'm not expecting a crash. Probably a 5% correction as there's still plenty of cash floating around, ultra low interest rates, desperate Central Banksters, bearish hedge funds etc

Anyway, I have managed to raise some cash, lower my exposure to Equities as well as bought some Inverse ETFs, in anticipation of the correction.

However, I'm still quite worried about my Currency Risk as I still have not been able to diversify adequately from my MYR, SGD and AUD assets although I have made some small progress. I need to act soon as the USD is expected to rise in anticipation of the next rate hike which will probably lead to an outflow from Emerging Markets and Commodity Producing Countries.


Commodities:- Risk-Off (Data as of Saturday)

1. Oil - Higher. US$48.48 from US$46 last week from US$45 two weeks ago. Short Oil thru ERY.
a. Current glut of 0.5m bpd. Reducing to 0.2m in 3Q ? Balanced now due to the temporary disruptions in Canada and Nigeria?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 3.6m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd

Oil prices are stabilizing but I will continue to stay away from Oil Services companies until 3Q 2016.

2. Gold - Lower. US$1253 from US$1274 from US$1290. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Lower. US$16.55 from US$17.13 from US$17.50. Range High: 49. Not vested

4. Copper - Lower. US$2.06 from US$2.08 from US$2.15. Not vested

5. Coffee - Lower. US$124.70 from US$129 from US$125; Vested thru JO.
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now.


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

1. US Equities - Lower. 2052 from 2047 last week from 2057 two weeks ago. Bought EDZ ( Inverse EM 3x ), ERY (Inverse Energy 3x ) and JO (Coffee ETN); Sold SPXS (Inverse S&P 3x ) and FAZ ( Inverse Financial 3x ); Traded UVXY (Volatility 3x) and LABD (Inverse Biotech 3x)

2. HK Equities - Higher. 19856 from 19719 from 20110. Support 18050. Sold Ping An. Traded Zhaojin and HKEX

3. Shanghai Equities - Flat. 2826 from 2827 from 2913; Support at 2450; Sold A50 2823 listed in HK

4. Spore Equities - Higher. 2765 from 2735 from 2731. No Trade

5. Japan Equities - Higher. 16736 from 16412 from 16107. No Trade

6. Malaysian Equities - Flat. 1629 from 1628 from 1649. No Trade



Currencies- Risk-Off ( Data as of Saturday every week )
Note: I do not trade Currencies. I only monitor them on a Weekly Basis, to have a feel of where they are heading so that I can manage my Currency Risk better.

1. USD to JPY - JPY Weaker. 110.14 from 108.640 last week from 107.105 two weeks ago. The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.951 from 2.940 from 2.938

3. AUD to USD - AUD Weaker. 0.7217 from 0.7268 from 0.7367

4. AUD to SGD - AUD Flat. 0.9971 from 0.9972 from 1.0028. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Stronger. 2.9426 from 2.9313 from 2.9316

6. EUR to USD - EUR Weaker. 1.1221 from 1.1308 from 1.1404. Not vested in EUR

7. USD to HKD - HKD Weaker. 7.7685 from 7.7638 from 7.7609. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Weaker. 4.077 from 4.0335 from 3.9995; 52 Week Range is 3.27 to 4.47. Converted some MYR to USD

9. GBP to USD:- GBP Stronger. 1.4509 from 1.4359 from 1.443. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 95.27 from 94.61 from 93.89; Third week of gain


Others

1. Sentiment - Confused ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); Chinese Stocks Margin (300%; RMB 4t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Demographics; Trump Presidency

3. Tailwinds - Low Interest Rates, Cash in US Corp (US$1.4t); Cash in Short-term Bonds, Buybacks, Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Lower. 1.84% from 1.70% last week from 1.77% two weeks ago. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 34.99 from 34.80 last week from 34.07 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of May 29, 2016

june.jpg

New Money From The New Month of June

It will be a new month soon and that means that new money would be flowing into the markets again. Therefore, we would probably see a spike in the markets next week. Thereafter, it remains to be seen whether the current rally is sustainable.

Anyway, there are a couple of issues on the horizon, which could affect the markets:-
1. June 06: Yellen speaking in Philadelphia
2. June 14-15: FOMC meeting
3. June 15: MSCI China Inclusion ?
4. June 16: Bank of Japan Meeting
5. June 23: Brexit vote
6. Mid June to June 30: 1H Window Dressing

In view of the above, I think that it's better to stay on the side-lines until early July.

Anyway, I have managed to reduce my exposure to Equities significantly. It's a quite a safe position to ride out any Volatility. All I need to do is to constantly remind myself, to refrain from buying any shallow dips, as I need to conserve my bullets for the Black Swan, which appears every 10 years or so.

The USD has also been strong for the past 4 weeks. That means that there's currently some headwind for Commodities, Commodity Countries, Commodity Currencies as well as Emerging Markets.


Commodities:- Risk-On (Data as of Saturday)

1. Oil - Higher. US$49.56 from US$48.48 last week from US$46 two weeks ago. Shorting Oil through ERY (Inverse Energy 3x )
a. Current glut of 0.5m bpd ? Reducing to 0.2m in 3Q ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran is supplying 2m bpd; Used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd

Oil prices are stabilizing but I will continue to stay away from Oil Services companies until 3Q 2016

2. Gold - Lower. US$1212 from US$1253 from US$1274. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Lower. US$16.25 from US$16.55 from US$17.13. Range High: 49

4. Copper - Higher. US$2.11 from US$2.06 from US$2.08

5. Coffee - Higher. US$130 from US$124.70 from US$129. Vested through JO (Coffee ETN )
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now.


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

1. US Equities - Higher. 2099 from 2052 last week from 2047 two weeks ago. Sold DBA (DB Agriculture ETF)

2. HK Equities - Higher. 20577 from 19856 from 19719. Support 18050. Bought Tingyi.

3. Shanghai Equities - Lower. 2821 from 2826 from 2827; Support at 2450; No Trade. Expecting the MSCI Inclusion to be a non-issue.

4. Spore Equities - Higher. 2803 from 2765 from 2735. No Trade

5. Japan Equities - Higher. 16835 from 16736 from 16412. No Trade

6. Malaysian Equities - Higher. 1637 from 1629 from 1628. Traded Menang Warrants



Currencies- Risk-Off ( Data as of Saturday every week )
Note: I do not trade Currencies. I only monitor them on a Weekly Basis, to have a feel of where they are heading so that I can manage my Currency Risk better.

1. USD to JPY - JPY Weaker. 110.23 from 110.14 last week from 108.640 two weeks ago. The 52 week range is 76 to 126

2. SGD to MYR - SGD Stronger. 2.965 from 2.951 from 2.940

3. AUD to USD - AUD Weaker. 0.7185 from 0.7217 from 0.7268

4. AUD to SGD - AUD Weaker. 0.9915 from 0.9971 from 0.9972. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Weaker. 2.9397 from 2.9426 from 2.9313

6. EUR to USD - EUR Weaker. 1.1115 from 1.1221 from 1.1308. Not vested in EUR

7. USD to HKD - HKD Stronger. 7.7669 from 7.7685 from 7.7638. 52 week range is 7.7452 - 7.8296. When will they be re-pegging the HKD at a lower rate to the USD ?

8. USD to MYR:- MYR Weaker. 4.0915 from 4.0770 from 4.0335; 52 Week Range is 3.27 to 4.47. Converted some MYR to USD

9. GBP to USD:- GBP Stronger. 1.4622 from 1.4509 from 1.4359. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 95.52 from 95.27 from 94.61; Fourth week of gain


Others

1. Sentiment - Euphoric ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); Chinese Stocks Margin (300%; RMB 4t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Demographics

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, Presidential Cycle; Low Oil Prices; QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties
a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.
b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy
c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;
d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Higher. 1.85% from 1.84% last week from 1.70% two weeks ago. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 35.27 from 34.99 last week from 34.80 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of June 5, 2016

Summer.jpg

Summer Douldrums ?

We are now heading into Summer in the Northern Hemisphere and the following are some of my random thoughts on the next few months:-

1. Weak global growth, Very low interest rates
2. US: High valuation, decreasing earnings, revenue and margins
3. US: Selling of US Assets by the Chinese, Arabs, Russians, Mexicans etc in anticipation of a Trump presidency in November
4. Europe: Refugees, Strikes, Riots, Terrorism, Greece etc.
5. China: Already blown away US$700b of their forex reserves. Once they blow away another US$500b to US$2.8t, the shorts will be going after them. Arrogant and Ignorant
6. Japan: The sun has already set here. The strong Yen is not helping either. When was the last time you bought some Japanese Good or Service ?
7. UK: The latest polls for Brexit is too close for comfort. The 10% possible gain (if Britain stays) versus a potential 25% loss (if there's Brexit), does not look like a good bet to me
6. Commodities: If there's a crash, Commodities (including Gold) will not be spared

The above is not pretty but that's the general consensus of what to expect over the next few months.

So what would come in above expectation where you would be able to make some money ? How about the following ?
1. Strong global growth leading to rising interest rates, which would be good for the banks and insurance companies
2. US: Technology and Biotech, can continue to defy gravity
3. Europe: No social unrest and Draghi can pull another rabbit from his empty hat
3. China: They would be able to maintain stability, rollover their massive debts and continue to fudge their statistics
4. Japan: Their three broken arrows can actually hit some targets

In view of the above, the better bet seems to be for weaker market over the next few months.

However, I think that the Black Swan would not appear so soon, as there's currently no risk out there, that's huge enough to create some fear in the market participants.

At this point in time, I'm betting that the markets will probably head lower, possibly after the 2Q Window Dressing period (mid July), if not earlier.

At the same time, I need to be also very mindful that sentiments are now quite negative and that most "experts" are also bearish. And under such conditions, markets do have a habit of grinding up when volumes are low with everyone being cautious.


Commodities:- Mixed (Data as of Saturday)

1. Oil - Lower. US$48.90 from US$49.56 last week from US$48.48 two weeks ago. Shorting Oil through ERY (Inverse Energy 3x). I need to be careful in case Oil continues to grind higher.
a. Current glut of 0.5m bpd is being reduced through disruptions
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; China consumes about 12% of world’s crude.
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco IPO in 2017/ 2018

2. Gold - Higher. US$1247 from US$1212 from US$1253. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Higher. US$16.44 from US$16.25 from US$16.55. Range High: 49

4. Copper - Higher. US$2.12 from US$2.11 from US$2.06

5. Coffee - Higher. US$127.10 from US$130 from US$124.70. Vested through JO (Coffee ETN). A high USD would not help.
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. The rise in the USD would not be positive for Commodities.


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

1. US Equities - Flat. 2099 from 2099 last week from 2052 two weeks ago. Bought EDZ (Emerging Markets Inverse 3x); Sold 1/2 JO (Coffee ETN); Regular readers would have noticed that I'm now spending more of my energy on the US markets than in the Asian markets.

2. HK Equities - Higher. 20947 from 20577 from 19856. Support 18050. Traded Dalian Wanda Commercial Properties. Expecting the HSI to weaken next week as the big boys have managed to get some Bear Puts suspended, all the way up to 21,000. No convincing story in HK over the past few months.

3. Shanghai Equities - Higher. 2939 from 2821 from 2826; Support at 2450; Expecting the MSCI Inclusion to be a non-issue. No Trade

4. Spore Equities - Higher. 2809 from 2803 from 2765. No Trade. Nothing exciting here for the past year.

5. Japan Equities - Lower. 16642 from 16835 from 16736. No Trade

6. Malaysian Equities - Flat. 1636 from 1637 from 1629. Added to MAA. Sold some Menang and all Menang Warrants.


Currencies- Risk-Off ( Data as of Saturday every week )

1. USD to JPY - JPY Stronger. 106.55 from 110.23 last week from 110.14 two weeks ago. The 52 week range is 76 to 126. Time to buy YCS ?

2. SGD to MYR - SGD Stronger. 2.965 from 2.951 from 2.940

3. AUD to USD - AUD Stronger. 0.7366 from 0.7185 from 0.7217

4. AUD to SGD - AUD Stronger. 0.9992 from 0.9915 from 0.9971. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Stronger. 3.0068 from 2.9397 from 2.9426. Waiting to convert some AUD back to MYR again.

6. EUR to USD - EUR Stronger. 1.1366 from 1.1115 from 1.1221. Not vested in the EUR

7. USD to HKD - HKD Weaker. 7.7678 from 7.7669 from 7.7685. 52 week range is 7.7452 - 7.8296.

8. USD to MYR:- MYR Stronger. 4.0820 from 4.0915 from 4.0770; 52 Week Range is 3.27 to 4.47. The MYR weakening and I need to quickly diversify away some of my MYR exposure.

9. GBP to USD:- GBP Weaker. 1.4515 from 1.4622 from 1.4509. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Weaker. 94.03 from 95.52 from 95.27; If not the USD, then what currency ?


Others

1. Sentiment - Confused ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); Chinese Stocks Margin (300%; RMB 4t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t); Declining Money Velocity; Stock-Market Cap/GDP (200%); Strong USD; Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Demographics; Trump Presidency

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties

a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.

b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy

c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;

d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Weaker. 1.70% from 1.85% last week from 1.84% two weeks ago. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Weaker. 35.13 from 35.27 last week from 34.99 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of June 12, 2016

plunging.jpg

Are the Markets Finally Falling ?

The markets were quite weak on Friday.

Is that a technical dip since they have been so strong over the past few months? Or is it the start of a prolonged correction ?

Intuitively, I think that it's just a technical correction unless we get a new catalyst to push things much lower eg. Very Strong USD, June Rates Hike, Brexit, Natural Catastrophe, Geopolitical Event etc

Anyway, over the past few weeks, I've been raising some cash and trying to mitigate my Currency Risk.

My cash level is now at a comfortable level but my currency exposure to the "Emerging Markets" and "Commodity Countries", still needs to be improved further.

At the same time, I have also been buying some Inverse ETFs to protect myself.

Next week, we will have the FOMC Meeting, BoJ Meeting as well as the MSCI China Inclusion. I'm not expecting any surprises in all three events.

I think that it's now a "Wait & See' situation:-
1. If a new catalyst appears to push the market lower, I would have to quickly add to my Inverse ETFs and Put Warrants
2. If the market continues to grind lower, I will not be adding to my short positions. However, I wont be selling my existing short positions either.
3. If the market reverses and head higher, I may have to think about reducing some of my existing short positions as well as to raise additional cash.

Finally, we should be touching "Window Dressing" time soon. For this round, I think that "Window Dressing" would be quite muted as the markets have already been very strong over the past few months.


Commodities:- Mixed (Data as of Saturday)

1. Oil - Flat. US$48.88 from US$48.90 last week from US$49.56 two weeks ago. Shorting Oil through ERY (Inverse Energy 3x).
a. Current glut of 0.5m bpd is being reduced through disruptions
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018

2. Gold - Higher. US$1276 from US$1247 from US$1212. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Higher. US$17.33 from US$16.44 from US$16.25. Range High: 49

4. Copper - Lower. US$2.03 from US$2.12 from US$2.11

5. Coffee - Higher. US$136.95 from US$127.10 from US$130. Sold JO (Coffee ETN) as I think that the USD would be heading up.
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. The rise in the USD would not be positive for Commodities as Demand is quite muted.


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

1. US Equities - Lower. 2096 from 2099 last week from 2099 two weeks ago. Sold JO (Coffee ETN)

2. HK Equities - Higher. 21043 from 20947 from 20577. Support 18050, Resistance 21350. No Trade. No convincing story in HK over the past few months.

3. Shanghai Equities - Lower. 2927 from 2939 from 2821; Support at 2450; Expecting the MSCI Inclusion to be a non-issue. No Trade

4. Spore Equities - Higher. 2823 from 2809 from 2803. No Trade. Nothing exciting here for the past year.

5. Japan Equities - Lower. 16601 from 16642 from 16835. No Trade

6. Malaysian Equities - Higher. 1641 from 1636 from 1637. Sold some Menang


Currencies- Risk-Off ( Data as of Saturday every week )

1. USD to JPY - JPY Weaker. 106.94 from 106.55 last week from 110.23 two weeks ago. The 52 week range is 76 to 126.

2. SGD to MYR - SGD Stronger. 3.002 from 2.965 from 2.951

3. AUD to USD - AUD Stronger. 0.7376 from 0.7366 from 0.7185

4. AUD to SGD - AUD Stronger. 1.0033 from 0.9992 from 0.9915. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Stronger. 3.0117 from 3.0068 from 2.9397. Waiting to convert some AUD back to MYR again.

6. EUR to USD - EUR Weaker. 1.1253 from 1.1366 from 1.1115. Not vested in the EUR

7. USD to HKD - HKD Stronger. 7.7629 from 7.7678 from 7.7669. 52 week range is 7.7452 - 7.8296.

8. USD to MYR:- MYR Stronger. 4.0830 from 4.0820 from 4.0915; 52 Week Range is 3.27 to 4.47. The MYR weakening and I need to quickly diversify away some of my MYR exposure.

9. GBP to USD:- GBP Weaker. 1.4255 from 1.4515 from 1.4622. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Stronger. 94.57 from 94.03 from 95.52; If not the USD, then what currency ?


Others

1. Sentiment - Complacent ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties

a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.

b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy

c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;

d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Weaker. 1.64% from 1.70% last week from 1.85% two weeks ago. Low 1.64%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
d. South Korea cut interest rates by 25 bps to 1.25%
e. Russia cuts its benchmark rate by 50bps to 10.50 percent from 11.00 percent

8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 35.28 from 35.13 last week from 35.27 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of June 19, 2016

Brexit.jpg

Brexit ?

The whole world is waiting for the Brexit vote next week. It's as if the world will stop spinning if they do leave the EU.

To put things in perspective, even if they do vote to leave, it's not really "legally binding" but only an "advisory". In addition, it will also take a few more years to negotiate the new trade agreements etc.

However, a drop of about 10% cannot be ruled out if they do decide to leave.

Anyway, most people have already hedged their bets and it would probably be a non-event. In addition, the Central Banksters probably have something up their sleeve should there be a Brexit.

Coming back to investments, I have not been able to find any convincing story in HK, China, Singapore, Malaysia and the US for the past few months. Instead, I have been mostly trading Bull Calls and Bear Puts in HK, with the majority of my trades in the latter.

Whenever there's a strong rebound in the US markets, I would also buy some Inverse ETFs and Volatility ETNs. However, it does affect my sleep so I do not like to really trade the US markets unless very necessary.

I'm still worried about my Currency Risk but have not been able to find any opportunity to mitigate that risk over the past few weeks. Hopefully, Brexit will create some opportunity to reduce my currency exposure to the Emerging Markets and Commodity Countries.


Commodities:- Mixed (Data as of Saturday)

1. Oil - Lower. US$48.26 from US$48.88 last week from US$48.90 two weeks ago. Sold ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; Producing 2.3m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO

2. Gold - Higher. US$1302 from US$1276 from US$1247. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Higher. US$17.52 from US$17.33 from US$16.44. Range High: 49. Not vested

4. Copper - Higher. US$2.05 from US$2.03 from US$2.12. Not vested

5. Coffee - Higher. US$140.75 from US$136.95 from US$127.10. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. Any rise in the USD would not be positive for Commodities.


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

1. US Equities - Lower. 2071 from 2096 last week from 2099 two weeks ago.
Sold UVXY (Volatility 3x); 1/2 EDZ (Inverse Emerging Market 3x) and ERY (Inverse Energy 3x),

2. HK Equities - Lower. 20170 from 21043 from 20947. Support at 20000 then 18050, Resistance 21350. No Trade. No convincing story in HK. Will probably avoid for a while.

3. Shanghai Equities - Lower. 2885 from 2927 from 2939; Support at 2450; Why buy when valuation is still high, even after a 40% drop? Will likely avoid for a few more years unless there's a very convincing catalyst.

4. Spore Equities - Lower. 2759 from 2823 from 2809. Nothing exciting for the past few months and will probably avoid for a few more months.

5. Japan Equities - Lower. 15600 from 16601 from 16642. No Trade. The Strong Yen will continue to hurt.

6. Malaysian Equities - Higher. 1624 from 1641 from 1636. Added to MAA


Currencies- Risk-Off ( Data as of Saturday every week )

1. USD to JPY - JPY Stronger. 104.17 from 106.94 last week from 106.55. The 52 week range is 76 to 126.

2. SGD to MYR - SGD Stronger. 3.0289 from 3.002 from 2.965

3. AUD to USD - AUD Stronger. 0.7394 from 0.7376 from 0.7366

4. AUD to SGD - AUD Weaker. 0.9981 from 1.0033 from 0.9992. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Stronger. 3.0232 from 3.0117 from 3.0068. Waiting to convert some AUD back to MYR again.

6. EUR to USD - EUR Stronger. 1.1276 from 1.1253 from 1.1366. Not vested in the EUR

7. USD to HKD - HKD Stronger. 7.7614 from 7.7629 from 7.7678. 52 week range is 7.7452 - 7.8296.

8. USD to MYR:- MYR Weaker. 4.0885 from 4.0830 from 4.0820; 52 Week Range is 3.27 to 4.47. The MYR weakening and I need to quickly diversify away some of my MYR exposure.

9. GBP to USD:- GBP Stronger. 1.4359 from 1.4255 from 1.4515. Monitoring the GBP; Brexit Vote on June 23, 2016

10. Dollar Index - USD Weaker. 94.21 from 94.57 from 94.03; If not the USD, then what currency ?


Others

1. Sentiment - Cautious ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties

a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.

b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy

c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;

d. HK
i) Prices have fallen 13 percent from last year’s peak. Expecting 25% decline by end 2016.
ii) HK’s home prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank predicts that prices will drop by 40% in the next 3 years, with a 20% decline this year.

6. Yield on 10 Year US Treasuries - Lower. 1.61% from 1.64% last week from 1.70% two weeks ago. Low 1.52%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields
d. South Korea cut interest rates by 25 bps to 1.25%
e. Russia cuts its benchmark rate by 50bps to 10.50 percent from 11.00 percent

8. JNK (SPDR Barclays High Yield Bond ETF) - Weaker. 34.95 from 35.28 last week from 35.13 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page

[winston]

TOL as of June 26, 2016

Brexit 1.jpg

Brexit !

The UK has voted to leave the EU and about US$2t have now vanished.

The bookies also supposedly lost GBP 300m. Wonder how much they made by shorting the GBP while they were accepting bets for Brexit? ( With only GBP 25,000, one can significantly influence the odds at the bookies ).

So where do we go from here ?

If I'm catching any falling knife, then I need to remind myself to not check the price too often after the purchase. If I do, I would probably end up selling for a small profit only, instead of getting the full 50% rebound.

The more important question is,"Whether this plunge would lead to a full blown bear market ?".

If not, then this is a good time to buy the dip. If yes, then I may want to hunker down or use any technical rebound to exit all my positions.

Intuitively, I think that it's a good buying opportunity. There's plenty of Cash around and they would be deployed soon.

There's also no "clear and present danger" to the markets. The 'experts" are projecting worst-case scenarios which could take take many years to materialise.

And in the meantime, the Central Banksters will probably be doing something.

Finally, I'm still worried about my Currency Risk. With Brexit now, the GBP and the EUR, may be in for a multi-year decline. I still have not found any alternative to the USD. BTW, this episode agian confirms that the USD, JPY and Gold, would always move in tandem.


Commodities:- Risk-On (Data as of Saturday)

1. Oil - Lower. US$47.57 from US$48.26 last week from US$48.88 two weeks ago. Sold ERY (Inverse Energy 3x).
a. Glut of 0.5m bpd is being reduced through disruptions; Rebalancing ?
b. Global Stockpiles: 3b barrels (66 days of consumption )
c. US Strategic Petroleum Reserve: 695m barrels out of max 727m barrels; To sell 8% to raise cash from 2018-23
d. Iran used to produce 4.2m bpd; Producing 2.3m bpd; It has 40m barrels in storage
e. Demand to grow by 0.5m to 1m bpd annually, mainly from Asia; India has overtaken China in consumption (400,000 bpd vs China's 320,000).
f. US Oil Capex: US$1t
g. US Supply expected to decrease by 700,000 bpd by 3Q 2016
h. Canadian Oil disruption - 1m bpd
i. Nigerian Oil disruption - 1m bpd
j. China (4th largest producer ) - The reserve life of China’s Big 3 oil companies has fallen off dramatically from over 10 years to about six.
k. Saudi Aramco's IPO in 2017/ 2018. Incentive for the Saudis to have high oil prices before the IPO

2. Gold - Higher. US$1319 from US$1302 from US$1276. Record US$1920. Vested.
a. There's 324 oz of paper contract for every oz of gold holdings on Comex
b. Output to fall by about 100 metric tons, from 3,150 in 2015 to 3,050 this year

3. Silver - Higher. US$17.77 from US$17.52 from US$17.33. Range High: 49. Not vested

4. Copper - Higher. US$2.11 from US$2.05 from US$2.03. Not vested

5. Coffee - Lower. US$134 from US$141 from US$137. Not vested
a. 100m Americans drink coffee daily
b. America imports US$4b of coffee daily
c. Rising consumption, especially in emerging markets, means global production will have to rise by an extra 40m to 50m bags of coffee in the next decade. That’s more than the entire crop of Brazil.
d. Current Production of 145m bags.
e. In 2030, demand expected to be around 200m bags
f. Arabica, which is grown in Brazil, is used in premium oulets eg. Starbucks and Illy. At risk from higher temperatures.
g. Robusta is grown in Vietnam and is more robust
h. Coffee prices are being dragged lower by a weaker Brazilian currency that incentivises export sales from the world’s top supplier.

6. Monitoring Commodities. It's cheap, hated, cheap and maybe on an uptrend now. However, any rise in the USD, would not be positive for Commodities.


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

1. US Equities - Lower. 2037 from 2071 last week from 2096 two weeks ago. Bought Prudential (PUK) and Lloyd's Banking Group (LYG). Traded Barclay's (BCS)

2. HK Equities - Lower. 20259 from 20170 from 21043 from 20947. Support at 20000 then 18050, Resistance 21350. Bought AIA, Ping An, HSBC, China Resources Land and Standard Chartered

3. Shanghai Equities - Lower. 2854 from 2885 from 2927; Support at 2450; No trade

4. Spore Equities - Lower. 2735 from 2759 from 2823. Bought DBXT E50 ETF and DBXT Europe ETF. Sold some DBXT S&P Short ETF

5. Japan Equities - Lower. 14952 from 15600 from 16601. No Trade. The Strong Yen will continue to hurt.

6. Malaysian Equities - Higher. 1634 from 1624 from 1641. Sold 1/3 MAA


Currencies- Risk-Off ( Data as of Saturday every week )

1. USD to JPY - JPY Stronger. 102.26 from 104.17 last week from 106.94 two weeks ago. The 52 week range is 76 to 126.

2. SGD to MYR - SGD Weaker. 3.0256 from 3.0289 from 3.002

3. AUD to USD - AUD Stronger. 0.7476 from 0.7394 from 0.7376. Election on July 2nd

4. AUD to SGD - AUD Stronger. 1.0116 from 0.9981 from 1.0033. The 52 week range is 0.98 to 1.36.

5. AUD to MYR - AUD Stronger. 3.0609 from 3.0232 from 3.0117. Waiting to convert some AUD back to MYR again.

6. EUR to USD - EUR Weaker. 1.1118 from 1.1276 from 1.1253. Not vested in the EUR

7. USD to HKD - HKD Stronger. 7.7612 from 7.7614 from 7.7629. 52 week range is 7.7452 - 7.8296.

8. USD to MYR:- MYR Weaker. 4.0940 from 4.0885 from 4.0830; 52 Week Range is 3.27 to 4.47. The MYR weakening and I need to quickly diversify away some of my MYR exposure.

9. GBP to USD:- GBP Weaker. 1.3684 from 1.4359 from 1.4255. Monitoring the GBP. How low can it go ?

10. Dollar Index - USD Stronger. 95.45 from 94.21 from 94.57; If not the USD, then what currency ?


Others

1. Sentiment - Confused ?

2. Headwinds - China Debts (US$5t); Chinese Local Government Debts (US$3t); China Bad Debts (US$0.6t); US Unfunded Debts (US$170t); US Bank Debts (US$60t); Global Debts (US$200t); Fed Leverage (77:1); Global Derivatives (US$700t);
Stock-Market Cap/GDP (200%); Emerging Markets US Loans (US$6t); $US Oil Bad Debts (US$0.2t); Energy Debt (US$2.5t); US Students Loan (US$1.2t); Trump Presidency; Negative Yield Bonds (US$10t);

3. Tailwinds - Low Interest Rates, EM Consumption, Liquidity, Cash in US Corporations (US$1.4t); Cash in Short-term Bonds, Buybacks, QE - Europe, Japan & China; US Foreign Funds Repatriation (US$2t); Cash in Japanese Corp (US$2t);

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

5. Properties

a. Spore - Luxury prices down 20% from 2012 peak and about 40% in Sentosa. Private residential down 4%. About 24,000 private homes are sitting empty.

b. Malaysia - Savills said that there were +21,000 luxury condos priced above RM800 per sq ft in KL as of end-2014, representing a 21% yoy increase. Unsold properties +14% yoy

c. China - 4 years supply at Tier 3 & 4 cities; 13m vacant homes;

d. HK
i) Prices have fallen 13% from last year’s peak. Expecting 25% for 2016.
ii) Prices has surged almost 370% from their 2003 trough to their peak in Sep 2015.
iii) Housing supply expected to hit a record high over next few years.
iv) Deutsche Bank: To drop by 40% in the next 3 years, with a 20% decline this year.
v) Knight Frank: HK prices will decline 5% in the 12 months to March 2016.
vii) Knight Frank: HK prices have slid for 7 consecutive months by a cumulative 11%
viii) Knight Frank: HK Luxury segment to decline 5-10%; Mass market: 10% decline
ix) S&P: Property prices to fall 10-15% for 2016. Expecting prices to fall for 2017

6. Yield on 10 Year US Treasuries - Lower. 1.56% frpm 1.61% last week from 1.64% two weeks ago. Low 1.52%; High 2.69%

7. Interest Rates:-
a. Since Jan 1, 2015, about 24 Central Banks around the world have cut interest rates
b. I'm still expecting interest rates to remain low for quite a while more
c. $7 trillion, or more than a quarter of the world’s bonds now, have negative yields

8. JNK (SPDR Barclays High Yield Bond ETF) - Stronger. 35.10 from 34.95 last week from 35.28 two weeks ago


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

Please Note:-

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

Second Opinion - Please see the "Second Opinion" thread in the "Services for InvestIdeas Members" section, located just below the Miscellaneous Section.

Active Topics - Do you know that there's an "Active Topics" button? It's located on the top left hand corner of the Index Page