Sunday, July 31, 2016

comments on ak Saving money with good deals is common sense but...

https://singaporeanstocksinvestor.blogspot.sg/2016/07/saving-money-with-good-deals-is-common.html
https://www.blogger.com/comment.g?blogID=7944902213075756335&postID=51588254263444376&page=1

how about buying a property right now in July 2016 with a lump sum (via a loan with interest) and collect future rentals?
Question: If the supermarket told you that you could buy more of a special deal item but you could only collect one now and the rest on a monthly basis in future, would you bite?

Soros: General Theory of Reflexivity

by the way, reflexive is also a relation defined in mathematics.

https://next.ft.com/content/0ca06172-bfe9-11de-aed2-00144feab49a#axzz4AQ9nyngv
Reflexive feedback loops have not been rigorously analyzed and when I originally encountered them and tried to analyze them, I ran into various complications. The feedback loop is supposed to be a two-way connection between the participant’s views and the actual course of events. But what about a two-way connection between the participants’ views? And what about a solitary individual asking himself who he is and what he stands for and changing his behavior as a result of his reflections? In trying to resolve these difficulties I got so lost among the categories I created that one morning I couldn’t understand what I had written the night before. That’s when I gave up philosophy and devoted my efforts to making money.
To avoid that trap let me propose the following terminology. Let us distinguish between the objective and subjective aspects of reality. Thinking constitutes the subjective aspect, events the objective aspect. In other words, the subjective aspect covers what takes place in the minds of the participants, the objective aspect denotes what takes place in external reality. There is only one external reality but many different subjective views. Reflexivity can then connect any two or more aspects of reality, setting up two-way feedback loops between them. Exceptionally it may even occur with a single aspect of reality, as in the case of a solitary individual reflecting on his own identity. This may be described as “self-reflexivity.” We may then distinguish between two broad categories: reflexive relationships which connect the subjective aspects and reflexive events which involve the objective aspect. Marriage is a reflexive relationship; the Crash of 2008 was a reflexive event. When reality has no subjective aspect, there can be no reflexivity.
* * *
Feedback loops can be either negative or positive. Negative feedback brings the participants’ views and the actual situation closer together; positive feedback drives them further apart. In other words, a negative feedback process is self-correcting. It can go on forever and if there are no significant changes in external reality, it may eventually lead to an equilibrium where the participants’ views come to correspond to the actual state of affairs. That is what is supposed to happen in financial markets. So equilibrium, which is the central case in economics, turns out to be an extreme case of negative feedback, a limiting case in my conceptual framework.
By contrast, a positive feedback process is self-reinforcing. It cannot go on forever because eventually the participants’ views would become so far removed from objective reality that the participants would have to recognize them as unrealistic. Nor can the iterative process occur without any change in the actual state of affairs, because it is in the nature of positive feedback that it reinforces whatever tendency prevails in the real world. Instead of equilibrium, we are faced with a dynamic disequilibrium or what may be described as far-from-equilibrium conditions. Usually in far-from-equilibrium situations the divergence between perceptions and reality leads to a climax which sets in motion a positive feedback process in the opposite direction. Such initially self-reinforcing but eventually self-defeating boom-bust processes or bubbles are characteristic of financial markets, but they can also be found in other spheres. There, I call them fertile fallacies—interpretations of reality that are distorted, yet produce results which reinforce the distortion.

comments on smol Equities and Bonds can't be both right. Right?

long duration fixed income investors moving to short term to lower their risk in recent times. you can't change the spots on leopards, fixed income investors will always prefer fixed income. and then there's the positioning by funds too. when even the old and new bond kings go bearish on longer duration bonds, you know there is just one last attempt to hit the highs.
if you are confused by the above paragraph, I have posted some hastily written articles. or you can just google for the info.
some nice stuff there smol.
"With 30 year bonds yielding so low, in the days of old, short term treasuries will be yielding much higher to give an inverted yield curve."

abe and kuroda playing pingpong. neither wants to be responsible.
seriously, time is running out for these deflationary markets.
time to bring on the fiscal spending bazooka.
else it's not just changes in the monetary policy environments,
it's the change in public political sentiments!
"Let's see whether Japan got the guts to be the first country to experiment with "helicopter money" this week."

half the bonds out there in the DM world are negative yielding.
"11 trillions of sovereign bonds globally are now in negative yield. Who owns these bonds? "

nice. correlations work.... until they don't. a nice example is the recent decoupling between oil and us equities.
"Corelation between asset classes change all the time. During GFC, asset classes that have low co-relation become highly co-related. I think not all bonds are created equal."

devaluation of renminbi. right now, it's businesses and asset plays, not just properties.
"You think why rich mainland Chinese are bidding up properties in Canada, Australia, HK, and Singapore?"

how soon? no idea. is there coordination between CBs? no idea.
"Now, when the music stop and central bank start to drain the water back, which glasses will be emptied first and which glass will not be completely emptied?"

haha. a standard idea sold to people who don't know what to do.
"All these years, I've been told to hold both bonds and equities to take advantage when either asset class drops."

nope. SGD is extremely teng (tough to chew) at the moment still. but other currencies are dropping.
"But what am I suppose to do now when both are rising? Both are rising due to increase liquidity cause by QE right? Does this mean that the value of my cash holdings will fall due to inflation?"

is that a leading question? lol
" In that case, am I suppose to buy some precious metal to protect the value?"

what do you think of that, TI?
" Or will it be better to get some ETF to ride on the liquidity wave? Wouldn't this QE bubble burst anytime? It's doesn't make sense to keep printing when it's not back by any assets except our confidence in the paper right?"

that's your reaction? so funny lol and no, i am not making fun of you.
"Why are there so much considerations? Not passive at all leh! 我被骗了"

i imagine it is tough. the risk is so high.
"I tell you, it cannot be fun to be money managers working for pension funds or insurance companies right now.How to secure the "promised" income for your pensioners and policy holders when 10 year US treasury is yielding below 2%???"

somemore still got people recommending crowd funding leh. I see the 13.5% yield on Epicentre for \$1m and I go huh? why the management of Epicentre do this? do they need it? what's their vested stake? somemore got so many promoters woh. what are they earning?
"3) Small time newbie "ah longs" losing their money in peer-to-peer lending..."

they go by tranches. the ones where yields are guaranteed means they already bought them. and if the prices go up, they sell to lock in the promised yields and get some float. It's really the mark to market ones that are scary.
by my reckoning, some 'accredited investors' are going to get some real accreditations.
"If it's institutions then quite cham, can't worm their way out of the "promised guaranteed plus chop capital protected with variable bonus interest else my banking hall let you burn" investment that they have sold to their clients, without fearing that these investments will go up in smoke IF the party ends (honestly I think few really knows which direction the market will trend now right?)."

so long ago. such a dangerous time then.
"In the past, where need to invest. Just save put in the bank double digit interest compound. Where got all the rubbish of 5-6% return portfolio per year that we are all shouting now from our portfolio. "

they charge, bank run, lower reserve, unlawful. so they also forced to find yield. else unprofitable, bank selloff. see european banks. it's fun so far.
"Then now negative interest which is the central bank preventing commercial bank to hold money but instead lend it all out. Bank will never charge consumer negative interest. "

I always maintained bonds have the same risk as stocks.
risk is defined as permanent loss of capital.
the volatility is different, that's all.
"" Don’t forget that bond prices crashed in late 2008, and many stopped paying dividends."

lol are you positioned?
"In investing, its all about positioning - before the event happens."

don't like that. lol
they doing their best already.
I don't know about their market knowledge of all these current batch.
(LHL and tharman are really smart people though.)
but they did put in their heart. even upped the CPF RA rates via a tiered system.
I just hope they are not eating into reserves again. (I am a miser.)
and not squeezing juice out of the GIC rock.
forcing people an impossible target sometimes result in disasterous consequences.
"Those of us who worked in corporate and experienced a top management change would appreciate.Promises made by the previous management to you become words written on water :("

nice.
"Just look at ASEAN - how many are run by the military in the background? So far so good? That's because we have a BIG STICK!"

gan en
"If I look at Taiwan and HK for the past 10 years; and Japan for the past 30 years... I am just grateful how life has turned out for me and my family."

Iran produces oil India consumes oil

http://www.bloomberg.com/news/articles/2016-07-28/biggest-oil-market-embraces-iran-once-again-as-asia-imports-jump

At the biggest oil market in the world, crude from Iran is back in vogue.
The Persian Gulf state boosted exports to major oil consumers in Asia during the first half of this year, after international sanctions that restricted its supplies were eased in January. Japan’s purchases increased 28 percent, India bought 63 percent more, South Korea’s imports more than doubled while shipments into China gained 2.5 percent during the six months, government and shipping data compiled by Bloomberg show.
The increase in cargoes to Asia shows Iran is having some success in meeting its pledge to prioritize regaining market share it lost in the region due to the sanctions over its nuclear program. The nation, which was OPEC’s second-biggest producer before the international measure choked off its supplies, defied skeptics with a 25 percent surge in production so far in 2016 and aims to reach an eight-year high for daily output of 4 million barrels by the end of the year.
India, forecast by the IEA to be the second-biggest oil consumer, boosted purchases from Iran to about 338,000 barrels a day during January to June from almost 207,000 barrels in the same period a year earlier, according to shipping data obtained by Bloomberg. Shipments to South Korea, the fourth-largest user in the region, jumped 123 percent to about 265,000 barrels a day, data from Korea National Oil Corp. show. Top Asian consumer China bought 603,000 barrels daily.

Friday, July 29, 2016

IMF independent evaluation Office says IMF kelong?

time for AIIB?
The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the Fund to rescue their own rich currency union and banking system.
The three main bail-outs for Greece, Portugal, and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000 percent of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the Fund between 2011 and 2014.
The report said the whole approach to the eurozone was characterised by “groupthink” and intellectual capture. They had no fall-back plans on how to tackle a systemic crisis in the eurozone – or how to deal with the politics of a multinational currency union – because they had ruled out any possibility that it could happen.
“Before the launch of the euro, the IMF’s public statements tended to emphasize the advantages of the common currency, “ it said. Some staff members warned that the design of the euro was fundamentally flawed but they were overruled.

all yields expectancy cannot be detached from their historical context

https://www.blogger.com/comment.g?blogID=7944902213075756335&postID=6824834642423612669

I find it amusing? bemusing? when an investor sets a level of dividend yield they expect/prefer to see.
don't read this as negative.
i would invite the reader/investor to take a look at the historical dividend yields of amazon which also recently just jumped 50% off Feb 2016 lows. or look at the average dividend yields of US companies from 1950s til now.
then I will say I expect 10% bond yields just to entice you to go "huh?"
and end with "all yields expectancy cannot be detached from their historical context."

The Richest Man in History - Mansa Musa

http://www.barrons.com/articles/who-was-the-richest-person-who-ever-lived-1469247020?mod=bol-ampush

So while we cannot translate Mansa Musa’s wealth into modern terms with any specificity, Forbes Magazine’s researchers had no hesitation in calling him the richest man who ever lived, and ballparked his modern-day net worth at \$400 billion.

Monday, July 25, 2016

The Bond King Gundlach on Brexit and since then

http://www.barrons.com/articles/jeffrey-gundlach-on-stocks-trump-and-gold-1468036872
dated 11th July 2016

Despite your risk aversion, you like emerging market bonds. What is the story there?
It is a dollar play. The weaker dollar has been very good for emerging market debt, which is up 12% year to date. We expect the dollar will continue to be weak. For the past year or so, maybe even longer, there has been an incredible correlation between the probability that the Fed is going to hike interest rates and the value of the dollar. The probability of a rate hike is pinned to the ground right now. The market says there is almost zero chance the Fed will raise interest rates through November of this year. The dollar is going to have a hard time, despite the fact that it has been strong recently on the Brexit upset.

since then

How much lower could yields on Treasury bonds go? Could we see a 1% yield?
We just passed the all-time low on the 10-year yield of 1.39%, which we saw in July 2012. It is no surprise the 10-year has been strong after Brexit. I’m not at all convinced that we are going to see much lower yields in the U.S. But even if we do, you’re talking about a de minimis profit. Even if the 10-year yield drops another percentage point, how much will you make? Less than 10%. There are better ways to speculate.

since then
Such as?
Gold miners have a very high probability—if you bought them today and were disciplined—of making 10%. One of the things driving markets lower is a declining belief in—and enthusiasm for—central-planning authorities and the political establishment. In this environment, gold is a safe asset. There’s an 80% chance of making 10% in gold; the probability of a 10% gain on Treasuries is 20% at best. I’ve never seen a worse risk-reward setup.

since then

That doesn’t make for a very exciting portfolio.
Our portfolios are high-quality bonds, gold, and some cash. People say, “What kind of portfolio is that?” I say it’s one that is outperforming everybody else’s. I mean, bonds are up more than 5%, gold is up substantially this year [28%], and gold miners have had over a 100% gain. This is a year when it hasn’t been that tough to earn 10% with a portfolio. Most people think this is a dead-money portfolio. They’ve got it wrong. The dead-money portfolio is the S&P 500.

since then

Water ETFs

Since being pointed to it by Michael Burry and seeing the rise of Utes the past few months in US equities, we take a look at water etfs.

Yahoo sold to Verizon, what a discount?

Verizon Communications Inc. will announce its plans to buy Yahoo! Inc. for about \$4.8 billion on Monday, according to a person with direct knowledge of the situation.
The takeover is expected to be announced before the market opens, the person said, asking not to be identified because the information isn’t public. The deal includes Yahoo real estate assets, while intellectual property assets are expected to be sold separately, the person said.
Yahoo will keep its stakes in Alibaba Group Holding Ltd. and Yahoo Japan Corp.

Sunday, July 24, 2016

Leverage for the Long Run

wow. just wow.

Table 6: Unleveraged Buy and Hold versus Unleveraged Moving Average Timing(October 1928 – October 2015)
When the stock market is in an uptrend (above its Moving Average), conditions favor leverage as volatility declines and there are more positive streaks in performance. When the stock market is in a downtrend (below its Moving Average), the opposite is true as volatility tends to rise.
We found that being exposed to equities with leverage in an uptrend and rotating into risk-free Treasury bills in a downtrend can lead to significant outperformance over time. For investors and traders seeking a destination with higher returns who are willing to take more risk at the right time, systematic leverage for the long run is one way of moving there, on average.

Saturday, July 23, 2016

some thoughts on state of the economy july 2016

my comments on http://www.rolfsuey.com/2016/07/rolfs-view-of-world-and-singapores.html?showComment=1469282420004#c4607529419692918754

a lot of stress build up. when you see more and more incidents of shootings and vehicular attacks, it means the stress is so tremendous to push people over a threshold.
average citizens in developed markets DM are favouring changes.
brexit occurred and recent polls show once you conduct it anonymous, you have more preferring trump. not so inconceivable anymore.
"Donald Trump as President of US today is no longer a myth compares to a year ago as he has officially accepted the Republican party presidential nomination."
I fear the past 20 years had been an unprecedented confluence of factors favouring Singapore's GDP growth and incomes.
Moving forward, i fear that is about to come to an end.

"Turning the attention to Singapore, the last ten years or so had been an economic fairy tale for Singapore. Don't believe? "
I prefer https://secure.mas.gov.sg/msb-xml/Report.aspx?tableSetID=I&tableID=I.1

yes and attitudes towards immigration has shifted since 2011.
not unlike DM.
and I think the average singaporean is actually overpaid though there are some fundamental communications skills the average singaporean has that is above their global peers in the region.

"To further breakdown in the table below, you can see that the last 15 years growth of foreign labour from year 2000 to 2015 is actually higher than the 30 years period from 1970 to 2000.
Expectations of salary were barely in checked. Almost everyone think that they were underpaid due to the rising median income and of course, the rising cost of living too. Most wanted to assume managerial posts with higher than respectable salary. Yes, even those who had only freshly entered the workforce for a few years were having extremely high expectations.
"

increase in productivity leads counterintuitively to lower employment rates.
and thus lower mean income of the whole population.
leverage of easy money does not lead proportionately to income growth but rather asset prices inflation. Property is one area. Stocks is another.
"In reality, capabilities and work experiences lag behind salary increase. Yes, productivity increased but arguably in my opinion at a much slower rate compare to the eruptive growth of the economy caused by leverage of easy money and the influx of foreign labour. "

and the funny thing is that it CAN end safely but it depends on a lot of factors.
"Hence, the six to seven years of post GFC period had been an astoundingly and unusually successful one. "
I still think it was mainly the liquidity.
"In the main, it was China driving the world economy, constructing new apartments, roads, railways, irrigation, sewage systems, commercial centers etc largely driven by State-owned Enterprise (SOE). And this was of course fuelled by the cascade of debts pouring out from the central bank. In particular, the ballooning shadow banking which is the unregulated credit in nonbank entities within the country has been a specter!  "

this is just the hot money circulating. they will continue to flow around for a while, elevating country after country until CBs (central banks) either reach a conclusion of the NIRP or ZIRP is not working or they restart fiscal policies.
however, volume is dropping and VIX is low and fund managers are reducing their equity allocations so time will tell if they can entice money into the markets further or this is just baseless pricing without demand.
don't forget the stock market is still a market meaning supply and demand and all sorts of crazy bidding.
meanwhile, even while I wonder how long can it last, until the evidence states otherwise, I am staying bullish on us equities.
"
Dow is mid 18,000s today while in 2007 peak, it was only barely hitting 14,000 points. It is the same bull case for Nasdaq peaking at >5,000 points compared to the pre-crisis of 2,800 points.
Markets in Asia and Australia were slightly more modestly priced today due to the worries of China engine running out of steam having more than significant impact to regions here. This is especially after Black Monday in August 2015 when China surprised the world with the devaluation of their yuan.  "
http://www.rolfsuey.com/2016/07/rolfs-view-of-world-and-singapores.html?showComment=1469331891965#c5444657133568964044

helicopter money can successfully bring a country out of the doldrums in a short time for a short time, given their demographics and economy are in place (plugged into the world, growing skilled base - skills not education the way forward).
but it must not be blatant. blatant rapid monetary supply expansion rapidly leads to disillusionment of the monetary standard. ie. hyper inflation and flight to primitive/ancient standards of money.

"CBs still have lots of ammunition to stimulate the market - eg giving every household a cheque to spend! Still sometime before humans run out of solution."

we are in unchartered terrority.
dow crossing 20k is not by itself something to be alarmed.
http://shiohmekiah.blogspot.com/2016/07/leverage-for-long-run.html
it is the speed of sentiment osmosis and inflection point of sentiments.
every point in history, people can stay alarmed for long periods of time before something changes.
witness 2001-2007 and 2009 to today.

"The stock market is run by perceptions and not reality. If we already can have negative interest rate, Dow crossing 20k will not be jaw dropping! "

Cashflow is the most important thing - Li Ka Shing interview

• the world changes a lot: you are doing well now, doesn't mean you should be set in your ways.
• always be very careful with cashflow
• so you have the extra capital to get into any industry you want.
• cashflow is the most important thing.
• In development phase, don't forget about stability, in stability, don't forget about development.
• whatever industry I get into, I buy the books/publications about that industry.
• It got to the point, I was spending 20-30% of time in the factory and the rest thinking about what to do and planning for the future.
• Cheung Kong named after YangTze River.
• at 22, he seemed very humble but in his heart he was very arrogant, he said it is not good.
• Cheung Kong is named to remind him to stay humble to attract many 'streams' onto him.
• in company management use western management model with checks and balance.
• in internal philosophy, use the many useful parts of chinese Confuscian philosophy.

• wears seiko, cheap watch (comparatively) so he doesn't have to be careful with a \$100K watch.
• his watch is 30min early.
• having money doesn't mean you will be happy but the reality is you can't do anything without money.
• view your charity as your own child and treat its assets apart from family assets.
• it is very important for people to have faith and religion.
• many wealthy people weighed down by mental stress.
• alway be industrious; the virtuous welcome onerous duties.
• seek improvement ceaselessly.
• tax companies extra 1% or 2%, poor people will benefit but important: no free lunches.
• education is primary purpose of his charity.
• 潮汕 has 17 million people but no university so he started Shantou University.
• happy person by nature, optimistic and driven.

• he has a share certificate: AIG shares 2007 share price USD72.97 total market cap USD 189 Bn. in 2008 share price USD 1.25 market cap only USD 16.76bn down 91%
• he doesn't want to damage AIG reputation but just a lesson to his children.
• the lesson from this share certificate: be very careful managing company & don't invest like gambling.

Greying population - getting worse first

greying populaiton - getting worse before getting way way better - time frame 20 years

Nintendo passing a few companies as Pokemon Go craziness hit the streets

Nintendo passing a few companies as Pokemon Go craziness hit the streets.

Thursday, July 21, 2016

La Nina bringing a cooler 2017

you may remember the heat of World Cup 2002 and your friends in Northern America may have been surprised by the heat of Winter 2016.

At the time, 1997 had ranked as the warmest year on record, and 1998 took the top spot on that list the year after. Following these two warm years, however, 1999 and 2000 were comparatively cooler, and are the coolest years of the past 19-year period of NOAA's records.
If La Niña doesn't offer us any big surprises, and we start off 2017 with a cool pattern in the tropical Pacific, next year will very likely be cooler than 2016, and global temperatures may even come in cooler than 2015 or 2014, if it turns out to be a strong pattern.

http://www.moneycontrol.com/news/current-affairs/monsoon-cheer-forecast-to-continue-as-la-nina-kicks-in_7072521.html

India is almost halfway through its four-month monsoon season and plentiful rains so far have lifted farmers' hopes of a revival in output and incomes after the El Nino weather phenomenon led to two straight years of drought.
Rains covered the whole of India on July 13 and are 2 percent above average since June 1, helping the steady planting of summer-sown crops such as sugarcane, cotton, rice and lentils. India's forecast of above-average rainfall needs to come to fruition if the country of 1.3 billion is to tame inflation and remain a net exporter of food products this year. The country's rain-fed farms account for nearly 15 percent of its USD 2 trillion economy and more than three fifths of the people making a living from agriculture.

Tuesday, July 19, 2016

Could this be time? - July 2016

when you see bonds dip into negative and return back, could this be time?

Thursday, July 14, 2016

Even german bunds turn negative yields

Germany on Wednesday became the second G7 nation after Japan to issue 10-year bonds with a negative yield, highlighting a willingness among investors to hold top-rated debt even as yields across the world collapse.
Germany’s 10-year government bond yield turned negative for the first time at an auction, fetching the lowest average yield on record for such paper at -0.05 percent.
Ten-year yields in Germany – the euro zone’s benchmark issuer – have been trading below zero percent in the secondary market for the past three weeks and hit a record low last week at around minus 0.20 percent.
The negative yield at Wednesday’s auction means investors buying the 10-year Bund and holding it to maturity would receive back less than they paid. That’s a trade-off many investors are willing to make to hold safe-haven German paper against the backdrop of global uncertainty, unprecedented monetary stimulus from the European Central Bank and a tepid inflation outlook.
“This auction is a symptom of what we’re seeing globally,” said Orlando Green, European fixed income strategist at Credit Agricole. “We are in a positive market environment for bonds right now and investors remain relatively long German Bunds.”
The coupon on the new German bond was zero percent for the first time, indicating investors are willing to miss out on annual interest payments to hold German bonds, considered one of the safest assets in the world.
A collapse in developed market borrowing costs has swept more than \$11 trillion worth of bonds globally into negative territory, a move that has gathered pace since last month’s decision by British voters to back leaving the European Union.

Fund flows from bonds to stocks?

http://en.xinfinance.com/html/In_depth/2016/241462.shtml

Matthew believed that global capital is willing to invest in stock markets instead of bulk commodity markets like gold, mainly due to two factors. Firstly, compared to traditional hedge types including gold, the stock market has better liquidity which can meet the rapid cash-making requirement of these investors. Secondly, the central banks worldwide are arousing a new round of easing monetary policy, which will benefit the stock markets much more than bulk commodity investment types.

Lesser quantity of investable assets resulting in higher equities prices?

Larry Fink says:

• More outflows from mutual funds
• Recent rally caused by short covering
• Huge inflows in fixed-income meaning risk off
• Cash on sidelines
• Supply squeeze of investable assets (we saw some of this in REITs, HY bonds)

"I don't think we have enough evidence to justify these levels in the equity market at this moment," Fink said Thursday on CNBC's " Squawk Box ."
He said the recent rally has been supported by institutional investors covering shorts, or bets that stocks would fall, and not individual investors feeling bullish. "Since Brexit , we've seen ETF flows almost at record levels ... \$18 billion of inflows," Fink said.
"However, in the mutual fund area, we're continuing to see outflows." What that tells you is retail investors are pulling out, he said. "You're seeing institutions who were short going into Brexit ... all now rushing in to recalibrate their portfolios."
Besides the stock mutual fund outflows, Fink said he's been seeing huge inflows in fixed-income products. "So you're seeing a risk-off trade, as we call it, around the world."
"I would not be surprised — I'm not predicting it — if somebody told me the 10-year Treasury is at 75 basis points, I would not be surprised ," Fink said. There's also \$55 trillion in cash on the sidelines, he estimated. "You're seeing a massive reservoir of cash building up." Fink said extraordinary central bank asset purchases has been inflating stocks prices. "I don't think we should be at new [stock] highs," he said. "All the stock repurchases, you're seeing this reduction in investable assets."

Sunday, July 10, 2016

Markets: are we there yet? - 2016

Recently, it looks as though we are coming to a crucial point in the markets.

Both US Stocks (S&P 500) and Bonds (global government bonds) are at All Time Highs.

Normally, when you are worried, you divests your stocks into bonds, so risk off.
when you are greedy, you sell your bonds and buy more stocks, so risk on.

However, developed markets government bonds yields are at all time low while US stocks are at all time highs. This is compounded by the persistent devaluation of developed markets currencies (less Japan) by the actions of central banks. On the other hand, you have all time lows in commodities with agricultural lows, energy coming off an all time low and gold and silver seemingly resuming their climb from more than a decade ago after the recent 4-5 years bear.

Summing up, we know that generally that

for stocks,

Note of caution: in trending markets, they can trend for a long long time.

US equities at all time highs - July 2016

All time highs over a year

on decreasing volume until 8th July 2016 breakout

2nd longest bull market courtesy of bespoke

emerging markets vs US markets

what do you see?

Gold and silver becoming currency of choice amongst negative bond yields and devaluing currencies

Peter Boockvar saying gold and silver are due to loss of confidence in fiat currencies as a result of central bank actions and after a 4.5 years cyclical bear, the current bull market will take gold and silver much much higher.

I agree only to the movement of currency weightings towards gold and silver due to devaluation of fiat currencies.

After rallying for 12 straight years and peaking in September 2011 at around \$1,900 per troy ounce, gold fell into a very lengthy bear market that I believe ended in December 2015 at \$1,050. The trigger for the end of the bear and the onset of the bull I attribute to a few things.First, we saw the slap in the face that some markets (particularly foreign exchange) gave the European Central Bank and the Bank of Japan in December and January when they seemed to have crossed the line in their monetary experiments. Second, slowing global economic growth and fear of everything has put off for possibly years the likelihood of another Federal Reserve rate hike.On Dec. 3, the ECB cut its deposit rate by another 10 basis points to -0.3 percent but instead of falling further, the euro actually rallied and European stocks fell, led by bank stocks that suffer from negative interest rates. Not one to learn a lesson, the ECB cut this rate again by another 10 basis points in March and the euro continued to rally. This is important because a weaker currency is a desired transmission mechanism for easing monetary policy.The Bank of Japan in January took its first step in the negative interest rate world by cutting its benchmark rate to -0.1 percent and the yen since has rallied to 100 yen to the dollar from 120 yen to the dollar – the exact opposite of the BoJ plans.The consequences are twofold: 1) Central bankers are beginning to lose control of the markets they are trying to influence and 2) Negative interest rates are a growing cancer on the global economy because it is an outright tax on capital, it is killing the European and Japanese banking systems and greatly damaging the existence of insurance companies and the return prospects of pension funds and savers. According to Fitch, we now have \$11.7 trillion worth of negative yielding bonds.What looks best against money that penalizes the holder? Gold and its little but more hyperactive sibling named silver. While yielding nothing and providing no cash flow, gold and silver are positive yielding assets compared to the penalty paid to holding trillions of dollars of negative yielding assets. We are truly living in a world of monetary mayhem where modern day central banking has embarked on an experiment that is now going haywire. I challenge anyone to find any section in any economic textbook that has ever been written in the history of the world that discusses the usefulness of negative interest rates. We are witnessing the culmination and likely end of the post 1971 global monetary regime when fiat currencies shed any and all ties to the price of gold. I am most confident that gold and silver will be the last currencies standing.The secular bull market in both (Gold and Silver) that began 15 years ago has resumed again after the 4 ½ year cyclical bear market and the behavior of central banks and what they are doing to their respective currencies is the main reason why. If I am correct, a new bull market usually takes assets to levels above the previous highs and thus I believe there is a further ways to go in the years to come.

Emerging markets Currencies going up vs USD

quite a number are commodity producers.

Where are the currencies going?

for acronyms, you can refer to currencies of the world.

CNY is dropping in value vs USD again.

some currencies vs USD

Where have the government bond yields gone?

swiss yields turned negative.

half the world turned negative

who's left?

Friday, July 8, 2016

Historical Bond Yields 1740 to 2010

I must have posted this before but couldn't find it. So here it is, for my easy reference and for you to ponder over.

Gold looks to be really high now

Although I had previously indicated my preference for gold, I should probably include a note of caution that gold is looking really high now.

Tuesday, July 5, 2016

Gold a most winning investment in 2016 so far

More than 100% year to date.

The more widely accepted currency (crypto doesn't count) other than Japanese Yen that is least subjected to central bank manipulations and negative interest rates.

I treated it as a speculative asset bubble and maybe that is a correction I should make.

"Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation."
- Druckenmiller

Japanese Yen - poor chaps just can't do anything to lower it!

Saturday, July 2, 2016

Difference between knowing the name and what it is

https://www.quora.com/What-does-Elon-Musk-mean-when-he-said-I-think-it%E2%80%99s-important-to-reason-from-first-principles-rather-than-by-analogy

The next Monday, when the fathers were all back at work, we kids were playing in a field. One kid says to me, "See that bird? What kind of bird is that?" I said, "I haven't the slightest idea what kind of a bird it is." He says, "It's a brown-throated thrush. Your father doesn't teach you anything!" But it was the opposite. He had already taught me: "See that bird?" he says. "It's a Spencer's warbler." (I knew he didn't know the real name.) "Well, in Italian, it's a Chutto Lapittida. In Portuguese, it's a Bom da Peida. In Chinese, it's a Chung-long-tah, and in Japanese, it's a Katano Tekeda. You can know the name of that bird in all the languages of the world, but when you're finished, you'll know absolutely nothing whatever about the bird. You'll only know about humans in different places, and what they call the bird. So let's look at the bird and see what it's doing-that's what counts." (I learned very early the difference between knowing the name of something and knowing something.)

— Source: Classic Richard Feynman - The Difference Between Knowing the Name of Something and Knowing Something