Wednesday, June 14, 2006
Interest rates rise factored in
There's more than one occasion where someone asked me to predict the market for the next month. Sorry I am not that person!
Well, there's no one that can predict the market like that. If that someone he says he can, you can tell him to stop all that Bullshit.
No one is 100% accurate, else he will make prefect profits. And he or she won't be spouting advise to you. Not even Warren Buffet can do a month by month prediction of the market going up or down. There's always factors like the weather, the turnout in Iran, the terrorists, the situation in Iraq, inflation.... there's a thousand and one factors. No one knows the future.
Ladies and Gentlemen, has the market has been fully factored interest rates rise and it's time to enter the market.
The CPI did give the indication of a rate rise.
The Dow, Nasdaq and the S&P did got boost despite that.
It's time to resume a little trading with caution.
For those with bigger risk appetites, time to look at commodities and energy sectors. For Singapore markets, look at SPC and Noble Group.
Noble Group has the most attractive PE in the whole commodities industry.
SPC has a super strong long term fundamentals. It also just discovered more oil wells in Indonesia.
I recommend a buy with SPC at 4.90 or lower
I recommend a buy with Noble Group at 0.96 or lower
For the more defensive sectors I recommend China Essence Group at 0.50 or lower. An extremely undervalued China Play.
CEssen makes the humble potato starch. What attracted me was fund managers buying in 7 million shares, 1 million shares eariler at around 0.63 plus and added another 6 million shares recently at around 0.50 cents a share. Note this is a long term hold share of holding for a holding time of at least 2 years. But at current valuations, it's worth a look.
For the US sectors, looking for valuation, ticker: COP offers good valuation. That is if you want to follow Buffet.
For my personal recommendation for the US stocks I recommend tickers CAM and VTS.
CAM: US$43.48
VTS: US$45.91
Both indirect oil plays. They provide services to the oil sectors and profits are less sensitive to oil prices fluctutations.
I conclude this BLOG entry.
Well, there's no one that can predict the market like that. If that someone he says he can, you can tell him to stop all that Bullshit.
No one is 100% accurate, else he will make prefect profits. And he or she won't be spouting advise to you. Not even Warren Buffet can do a month by month prediction of the market going up or down. There's always factors like the weather, the turnout in Iran, the terrorists, the situation in Iraq, inflation.... there's a thousand and one factors. No one knows the future.
Ladies and Gentlemen, has the market has been fully factored interest rates rise and it's time to enter the market.
The CPI did give the indication of a rate rise.
The Dow, Nasdaq and the S&P did got boost despite that.
It's time to resume a little trading with caution.
For those with bigger risk appetites, time to look at commodities and energy sectors. For Singapore markets, look at SPC and Noble Group.
Noble Group has the most attractive PE in the whole commodities industry.
SPC has a super strong long term fundamentals. It also just discovered more oil wells in Indonesia.
I recommend a buy with SPC at 4.90 or lower
I recommend a buy with Noble Group at 0.96 or lower
For the more defensive sectors I recommend China Essence Group at 0.50 or lower. An extremely undervalued China Play.
CEssen makes the humble potato starch. What attracted me was fund managers buying in 7 million shares, 1 million shares eariler at around 0.63 plus and added another 6 million shares recently at around 0.50 cents a share. Note this is a long term hold share of holding for a holding time of at least 2 years. But at current valuations, it's worth a look.
For the US sectors, looking for valuation, ticker: COP offers good valuation. That is if you want to follow Buffet.
For my personal recommendation for the US stocks I recommend tickers CAM and VTS.
CAM: US$43.48
VTS: US$45.91
Both indirect oil plays. They provide services to the oil sectors and profits are less sensitive to oil prices fluctutations.
I conclude this BLOG entry.
Monday, June 12, 2006
It all depends on the CPI
It all depends on Wednesday night 14th of June 2006.
That's the deciding factor on whether if the FED will raise interest rates. Well, I have long locked in my bet to TBills and have shift all my cash to Bonds. It's slow, but I am still making money. And surprise, surprise. Guess what I heard the analyst said today on Channel News Asia? They are recommending that people switch to Bonds.
Well, just two weeks ago, the analysts were all saying that this correction was healthy one. It seems that one week made all the difference.
As for me, I have long switched to bonds. Just check out my BLOG date entries. To those who reads this BLOG and followed my move, congrats on stopping losses, locking in profits and now making stable, slow but interesting profits.
Well, the market always factors in ahead of itself. Come Wednesday, once the CPI index gets announced, we will get volume. Up or down, I guarantee you that they will be movements. Cause it's the result of this index that will determine the Interest rate rise. And judging from Honorable Ben Bernanke's speech so far, it points to a interest rate rise.
The market is about 75 - 80% factored for interest rates. Which means there's still another 20% die-hards who believe there isn't going to be a rate rise.
Oil is still at approximately US$71.80 at this very moment. -
(Nymex price at 10.37pm. 12 Jun 06)
And the Fed has valid concerns on high oil prices. The Fed has just announce that productivity has yet to reach to it's full potential in it's role to control inflation. To me, that's just comforting the masses for the impending rate rise.
The fundamentals remains unchanged at the moment. Am holding onto bonds. As for equities, keep a look out them this wednesday night or thursday morning and thursday night. It's time to start bargain hunting for oil and commodity stocks that have taken a beating. There's real fundamental potential there and one should start looking for value stocks within these sectors. But don't dump in all your money in one shot. Use a portion to enter the market first.
And you have to hold should you decide to participate in equities.
Stay tuned to this BLOG for my next moves.
That's the deciding factor on whether if the FED will raise interest rates. Well, I have long locked in my bet to TBills and have shift all my cash to Bonds. It's slow, but I am still making money. And surprise, surprise. Guess what I heard the analyst said today on Channel News Asia? They are recommending that people switch to Bonds.
Well, just two weeks ago, the analysts were all saying that this correction was healthy one. It seems that one week made all the difference.
As for me, I have long switched to bonds. Just check out my BLOG date entries. To those who reads this BLOG and followed my move, congrats on stopping losses, locking in profits and now making stable, slow but interesting profits.
Well, the market always factors in ahead of itself. Come Wednesday, once the CPI index gets announced, we will get volume. Up or down, I guarantee you that they will be movements. Cause it's the result of this index that will determine the Interest rate rise. And judging from Honorable Ben Bernanke's speech so far, it points to a interest rate rise.
The market is about 75 - 80% factored for interest rates. Which means there's still another 20% die-hards who believe there isn't going to be a rate rise.
Oil is still at approximately US$71.80 at this very moment. -
(Nymex price at 10.37pm. 12 Jun 06)
And the Fed has valid concerns on high oil prices. The Fed has just announce that productivity has yet to reach to it's full potential in it's role to control inflation. To me, that's just comforting the masses for the impending rate rise.
The fundamentals remains unchanged at the moment. Am holding onto bonds. As for equities, keep a look out them this wednesday night or thursday morning and thursday night. It's time to start bargain hunting for oil and commodity stocks that have taken a beating. There's real fundamental potential there and one should start looking for value stocks within these sectors. But don't dump in all your money in one shot. Use a portion to enter the market first.
And you have to hold should you decide to participate in equities.
Stay tuned to this BLOG for my next moves.
Tuesday, May 30, 2006
The WhipSaw doesn't end
We are now in a volatile whipsaw phase and we won't see the end of it till perhaps after the Fed meeting on rising or holding interest rates. The fundamentals haven't change. (Please see my two previous post)
We should continue see a slowing US economy having trouble with imported inflation.
I don't like whipsawing markets with no direction. My sleep gets affected.
No point living your day to day worrying.
The US market is jittery now and there's a lack of good news to push the market upwards. For all those that have mutual funds, unit trusts or stocks, cash them out now and lock in the profits.
For those that have those funds but hasn't got a profit, you have a long hold ahead of you. Wait and see. If you have funds in excess and have holding power, you may now start averaging down a bit here and there.
Either that, if you don't feel like going out of the market, switch funds. That's what I did.
I recommend either:
Legg Mason Global Bond
Lion Capital Global Bond Fund Class A
The Legg Mason Global Bond has positions on the US treasury bills. Since my personal bet is that the Fed would raise interest to fight inflation this coming june, I have put my bet on this fund and on Treasury yields to go down.
For the more risk averse, try the latter.
Lion Capital Global Bond Fund Class A.
It's majority stake is in Singapore. With this fund, it's a little more conservative. Bear in mind that the traditional tool to fight inflation in Singapore is strengthening the Singapore Dollar. The Lion Capital Global Bond Fund has a 60 % majority stake in Singapore, with a smattering of allocation elsewhere. It has a good conservative strategy. Even more conservative than Legg Mason Global Bond in my opinion. Both have reasonable allocations with low risk with Lion Capital bearing even less risk.
Alas, you may say that the growth is also slow with such funds.
So where should we go if we are the super high risk takers?
Well, take positions in Oil. Take gradual positions in the oil and gas sectors. Know that when you enter the oil markets now, you are taking a advantage on the recent drawback on oil stocks. You are betting on Nuclear Iran and Hurricanes hitting the Gulf of Mexico. Please note that these are speculative bets. No one knows the future and no knows exactly what the weather will be for the next few months.
Then why my advice on taking positions on oil you may ask?
That's because prices of oil companies have retreated despite risen oil prices. This signals an opportunity for the speculators that have the stomach for stocks. Plus it's the summer driving season in the US.
Place your bets.
That's all I have for advice for now.
Till then, invest wisely. Make money.
We should continue see a slowing US economy having trouble with imported inflation.
I don't like whipsawing markets with no direction. My sleep gets affected.
No point living your day to day worrying.
The US market is jittery now and there's a lack of good news to push the market upwards. For all those that have mutual funds, unit trusts or stocks, cash them out now and lock in the profits.
For those that have those funds but hasn't got a profit, you have a long hold ahead of you. Wait and see. If you have funds in excess and have holding power, you may now start averaging down a bit here and there.
Either that, if you don't feel like going out of the market, switch funds. That's what I did.
I recommend either:
Legg Mason Global Bond
Lion Capital Global Bond Fund Class A
The Legg Mason Global Bond has positions on the US treasury bills. Since my personal bet is that the Fed would raise interest to fight inflation this coming june, I have put my bet on this fund and on Treasury yields to go down.
For the more risk averse, try the latter.
Lion Capital Global Bond Fund Class A.
It's majority stake is in Singapore. With this fund, it's a little more conservative. Bear in mind that the traditional tool to fight inflation in Singapore is strengthening the Singapore Dollar. The Lion Capital Global Bond Fund has a 60 % majority stake in Singapore, with a smattering of allocation elsewhere. It has a good conservative strategy. Even more conservative than Legg Mason Global Bond in my opinion. Both have reasonable allocations with low risk with Lion Capital bearing even less risk.
Alas, you may say that the growth is also slow with such funds.
So where should we go if we are the super high risk takers?
Well, take positions in Oil. Take gradual positions in the oil and gas sectors. Know that when you enter the oil markets now, you are taking a advantage on the recent drawback on oil stocks. You are betting on Nuclear Iran and Hurricanes hitting the Gulf of Mexico. Please note that these are speculative bets. No one knows the future and no knows exactly what the weather will be for the next few months.
Then why my advice on taking positions on oil you may ask?
That's because prices of oil companies have retreated despite risen oil prices. This signals an opportunity for the speculators that have the stomach for stocks. Plus it's the summer driving season in the US.
Place your bets.
That's all I have for advice for now.
Till then, invest wisely. Make money.
Monday, May 22, 2006
The Oil and Commodity Problem
The date is 23 May 2006. The markets has been hit hard. And the economists and the analysts of the stock markets are all saying that the correction is healthy. The correction is good.
But the future to me isn't so good and this correction isn't all that healthy. But yes, one can profit from this when this storm is over. Provided one is smart enough to enter selective markets.
This correction is the beginning of a interest rates vs. commodity prices tug of war. (Please read also my mention this tug of war on my previous post.)
And the above is happening because of the inefficiencies in commodity production and the lack of investments for new supplies to be fed to new fast growing economies like China and India.
Quoting my favourite author Jim Rogers :
"Nobody has discovered a major oilfield in over 35 years. All the major oilfields are in decline," said Rogers. "Unless someone does something quickly, the price of oil is going to go a lot higher over the next decade."
(IMHO, it's the lack of refineries that can refine sour crude that's contributing to the problem.)
Mr. Jim Rogers depicted a similar scenario for metals.
"Nobody has opened any major mines anywhere in the world for many years and it takes a long time to bring new mines on stream," he said. "All the old mines are in the process of being depleted and demand is continuing to grow."
And growing it is!
India has just declared that in order to catch up with China, it will start investing in infrastructures! Roads to be widen, roads to be built, wires to be laid.
So while China has risen interest rates to curb runaway constructions of empty houses and shopping malls, India has stepped in to boost the need for commodities as she steps up domestic investments. And wider roads means more cars and more cars means more oil consumption.
Which brings us back to the question of inflation and interest rates.
Due to commodity inefficiencies and the economic expansions of Brazil, Russia, India and China, inflation is bound to happen.
And the Honorable Ben Bernanke has been assigned the task of fighting this inflation for the biggest economy in the world.
To raise or not to raise...... that's the question.
High petrol prices are now starting to reduce consumption growth and prices are still increasing due to high commodity prices. Energy cost will soon filter through to products and inflation will continue even while growth slows.
The Fed's Two Year Credit Tightening has cool down the housing market and this tightening has successfully reduce consumer's confidence. But at the same time, this hasn't stopped commodity prices from remaining on the high side. Oil prices and commodity prices has only dropped a little recently.
We are coming to a period of slowing growth coupled with over-inflation. In other words I foresee the beginning of a period where REAL wages and GDP narrows.
In my opinion Mr Bernanke is a person who cares for the little people. He cares for the average American citizen being able to afford to go about their day to day living. For this reason I am betting on TBills/Bonds.
But that's only for the time being. Come after June, I will consider shifting part of my funds to commodities. But for now, i am sitting happy in my TBills/Bonds and watch rates for them continue to spiral down.
But the future to me isn't so good and this correction isn't all that healthy. But yes, one can profit from this when this storm is over. Provided one is smart enough to enter selective markets.
This correction is the beginning of a interest rates vs. commodity prices tug of war. (Please read also my mention this tug of war on my previous post.)
And the above is happening because of the inefficiencies in commodity production and the lack of investments for new supplies to be fed to new fast growing economies like China and India.
Quoting my favourite author Jim Rogers :
"Nobody has discovered a major oilfield in over 35 years. All the major oilfields are in decline," said Rogers. "Unless someone does something quickly, the price of oil is going to go a lot higher over the next decade."
(IMHO, it's the lack of refineries that can refine sour crude that's contributing to the problem.)
Mr. Jim Rogers depicted a similar scenario for metals.
"Nobody has opened any major mines anywhere in the world for many years and it takes a long time to bring new mines on stream," he said. "All the old mines are in the process of being depleted and demand is continuing to grow."
And growing it is!
India has just declared that in order to catch up with China, it will start investing in infrastructures! Roads to be widen, roads to be built, wires to be laid.
So while China has risen interest rates to curb runaway constructions of empty houses and shopping malls, India has stepped in to boost the need for commodities as she steps up domestic investments. And wider roads means more cars and more cars means more oil consumption.
Which brings us back to the question of inflation and interest rates.
Due to commodity inefficiencies and the economic expansions of Brazil, Russia, India and China, inflation is bound to happen.
And the Honorable Ben Bernanke has been assigned the task of fighting this inflation for the biggest economy in the world.
To raise or not to raise...... that's the question.
High petrol prices are now starting to reduce consumption growth and prices are still increasing due to high commodity prices. Energy cost will soon filter through to products and inflation will continue even while growth slows.
The Fed's Two Year Credit Tightening has cool down the housing market and this tightening has successfully reduce consumer's confidence. But at the same time, this hasn't stopped commodity prices from remaining on the high side. Oil prices and commodity prices has only dropped a little recently.
We are coming to a period of slowing growth coupled with over-inflation. In other words I foresee the beginning of a period where REAL wages and GDP narrows.
In my opinion Mr Bernanke is a person who cares for the little people. He cares for the average American citizen being able to afford to go about their day to day living. For this reason I am betting on TBills/Bonds.
But that's only for the time being. Come after June, I will consider shifting part of my funds to commodities. But for now, i am sitting happy in my TBills/Bonds and watch rates for them continue to spiral down.
The Bets are ON the Ts
As mentioned I will be starting my own BLOG and I will be ending my YahooGroup advising on investing your money. So here it is!
BECT represents Bonds Equities Commodities TBills/Bonds. BECTBets the name of the BLOG is named after bets placed on any of these vehicles at any appropriate time within the MacroEconomic cycle.
This BLOG airs some of my views on the macro-economy, the Singapore economy or otherwise and discloses my trades and bets made with my money to members of the public.
My last recommendation if anyone remembers is, ExxonMobil. The biggest integrated oil and it has risen quite a bit since then.
It is good to note that Warren Buffet recently made his move on Ticker: COP. It's an oil company name ConocoPhillips. I missed out a year ago when I doubted Warren Buffet's move on Petrol China (Ticker: PTR.)
Now that PTR is at 111 dollars per share, I am still kicking myself for not following Warren Buffet's move. Will I enter COP? Well to be honest COP is dirt cheap. If anyone took a look at COP, one would find that it has one of the lowest PE ratios with the highest earnings per share amongst all her competitors. And COP has a good cash flow to boot! If you want to bet on it for the long term, it's a super valueplay! Warren is amazing as usual!
But I am moving out of stocks. For full disclosure, I am moving out of equities and company bonds altogether. So where is my next move? For your information, I have moved my funds to Treasury Bonds. Yes, it's the boring US treasury bonds where no one takes asecond look at.
Well, if you want to know why, read on...else you can just end the read here, since you already know where I will go next.
Well, you want to know why? Because I know the interest rates rise hasn't ended yet.
Why does the Fed raise interest rates?
Answer: Because it wants to control inflation.
And has inflation been curbed? Most people will find all sorts of ways to say "YES!", inflation is controlled and nerfed and US interestrates rise will stop at 5%. Well look around you. Look at fuel surcharge at the airports when you travel. Look at the pump price at your petrol station when you pay for your petrol. Look at the prices of copper, zinc, platinum and other metal prices. Why is your plate of char kway teow in Singapore going to 4 dollars a plate and may rise even further?
(P.S. even the LPG used to cook it has increased in price!)
Inflation is happening everywhere to everything. And it's hurting the common people's pockets!
Is there a real wage increase? NOPE. I don't see it.
And this is happening globally.
You have the Dow Jones at 11000 plus points. You have commodities and oil at record high prices. You have companies posting high profits. You will be blind to say we have no inflation and inflation has been curbed.
The Fed has the unpleasant responsibility to control inflation in such a way that it won't affect the growth of the businesses. (That can't happen)
And it raises interest rates as a tool to fight inflation.
To control inflation, oil prices must fall. Commodities or raw material prices mustfall. So there's a tug of war going on. And I am betting on the Fed to give another tug.
Why I won't enter ConnocoPhillips now?
OPEC has just declared that it doesn't understand why oil prices are so high when there's a surplus of oil in the market. And OPEC has just pledge to keep output unchanged. Meanwhile there's a healthy supply of oil stock pile in the US. That's why I adopt and see before I jump at oil. I don't understand why it's at 68! Plus, there's a gonna be a rise in rates at Fed's side to pull prices down to control inflation.
Any plus factors for oil such as hurricanes and an IRAN war hasn't even happen yet. I don't practise predict the weather and jumping the gun investing. I am more the facts on hand and a little technical analysis to boot kinda guy.
When interest rates rise, Corporate Bonds will fall, Equities will fall. Who wins? Well, take another look at my bet. I am betting on T-Bills and T-Bonds now.
Oil? Well, I want to invest in COP too. If you want to take the risk now, sure, go ahead. I am uncertain about the hurricanes and an IRAN war happening. Especially when they haven't happen yet. Using information off hand, I am certain that there's a surplus in oil and OPEC is maintaining current high outputs. Hey, I am fundamentals kind of guy. I am staying out of oil for a while.
COP is cheap...but I just won't buy it now. I will buy COP. But now, it's just wait and see.
Good luck with all your bets. For now I am sticking to TBills and TBonds.
Signing off
Terence Ow
BECT represents Bonds Equities Commodities TBills/Bonds. BECTBets the name of the BLOG is named after bets placed on any of these vehicles at any appropriate time within the MacroEconomic cycle.
This BLOG airs some of my views on the macro-economy, the Singapore economy or otherwise and discloses my trades and bets made with my money to members of the public.
My last recommendation if anyone remembers is, ExxonMobil. The biggest integrated oil and it has risen quite a bit since then.
It is good to note that Warren Buffet recently made his move on Ticker: COP. It's an oil company name ConocoPhillips. I missed out a year ago when I doubted Warren Buffet's move on Petrol China (Ticker: PTR.)
Now that PTR is at 111 dollars per share, I am still kicking myself for not following Warren Buffet's move. Will I enter COP? Well to be honest COP is dirt cheap. If anyone took a look at COP, one would find that it has one of the lowest PE ratios with the highest earnings per share amongst all her competitors. And COP has a good cash flow to boot! If you want to bet on it for the long term, it's a super valueplay! Warren is amazing as usual!
But I am moving out of stocks. For full disclosure, I am moving out of equities and company bonds altogether. So where is my next move? For your information, I have moved my funds to Treasury Bonds. Yes, it's the boring US treasury bonds where no one takes asecond look at.
Well, if you want to know why, read on...else you can just end the read here, since you already know where I will go next.
Well, you want to know why? Because I know the interest rates rise hasn't ended yet.
Why does the Fed raise interest rates?
Answer: Because it wants to control inflation.
And has inflation been curbed? Most people will find all sorts of ways to say "YES!", inflation is controlled and nerfed and US interestrates rise will stop at 5%. Well look around you. Look at fuel surcharge at the airports when you travel. Look at the pump price at your petrol station when you pay for your petrol. Look at the prices of copper, zinc, platinum and other metal prices. Why is your plate of char kway teow in Singapore going to 4 dollars a plate and may rise even further?
(P.S. even the LPG used to cook it has increased in price!)
Inflation is happening everywhere to everything. And it's hurting the common people's pockets!
Is there a real wage increase? NOPE. I don't see it.
And this is happening globally.
You have the Dow Jones at 11000 plus points. You have commodities and oil at record high prices. You have companies posting high profits. You will be blind to say we have no inflation and inflation has been curbed.
The Fed has the unpleasant responsibility to control inflation in such a way that it won't affect the growth of the businesses. (That can't happen)
And it raises interest rates as a tool to fight inflation.
To control inflation, oil prices must fall. Commodities or raw material prices mustfall. So there's a tug of war going on. And I am betting on the Fed to give another tug.
Why I won't enter ConnocoPhillips now?
OPEC has just declared that it doesn't understand why oil prices are so high when there's a surplus of oil in the market. And OPEC has just pledge to keep output unchanged. Meanwhile there's a healthy supply of oil stock pile in the US. That's why I adopt and see before I jump at oil. I don't understand why it's at 68! Plus, there's a gonna be a rise in rates at Fed's side to pull prices down to control inflation.
Any plus factors for oil such as hurricanes and an IRAN war hasn't even happen yet. I don't practise predict the weather and jumping the gun investing. I am more the facts on hand and a little technical analysis to boot kinda guy.
When interest rates rise, Corporate Bonds will fall, Equities will fall. Who wins? Well, take another look at my bet. I am betting on T-Bills and T-Bonds now.
Oil? Well, I want to invest in COP too. If you want to take the risk now, sure, go ahead. I am uncertain about the hurricanes and an IRAN war happening. Especially when they haven't happen yet. Using information off hand, I am certain that there's a surplus in oil and OPEC is maintaining current high outputs. Hey, I am fundamentals kind of guy. I am staying out of oil for a while.
COP is cheap...but I just won't buy it now. I will buy COP. But now, it's just wait and see.
Good luck with all your bets. For now I am sticking to TBills and TBonds.
Signing off
Terence Ow
