Federal Reserve guided by world central banks and economies

Looks like Yellen's latest showing is indicating a consensus of sorts with world central banks. It looks likely to me, there won't be any major movements on the Feds' part until Dec 2016. The rest is just posturing.

To be expanded.....

Faces of the Three Lawmen 三大法人的真面目

Nowadays, a lot of volume in a lot of developed markets are not really the individual retail investors (散戶) but rather from the institutional investors.

I chanced upon the following from cmoney.tw and decided to record/share it here:

所謂三大法人其實就是『外資』、『投信』、『自營商』。

• 「外資」：泛指台灣以外的資金的外國機構投資者。
• 「投信」：投資信託股份有限公司的簡稱，
• 「自營商」：經過政府認可的證券公司，用自己的錢和證交所直接買賣。

very soon, it is will be more like this.

I have my own personal thoughts on who are the biggest stakeholders in business equity in the world. If the mood takes, I will share again.

Singapore Government committed to develop as LNG trading Hub

my comment from Rolf Suey:

my uneducated guess is the tankers bubble unlikely to burst and it is inconsequential at best. real money was mostly from upstream capex and currently midstream pipelies and downstream distribution. with that in mind, I watch LNG with interest. the market is smaller and SG wanted to be a bigger part of its pricing (currently very fragmented). 

see http://www.bloomberg.com/news/articles/2016-01-25/sgx-seeks-to-break-lng-s-price-link-to-oil-with-singapore-sling 

http://www.straitstimes.com/opinion/the-geopolitics-of-a-world-awash-in-oil 

http://www.straitstimes.com/business/companies-markets/government-committed-to-develop-singapore-as-lng-trading-hub-teo-eng 

I only wonder if it is more politically/survival motivated - https://www.ema.gov.sg/Piped_Natural_Gas_and_Liquefied_Natural_Gas.aspx

Some cut and paste for my own reference from the above links:

He added that he hopes the Singapore SGX LNG Index Group (SLInG), a weekly index based on the submissions from international LNG players who offer their assessment of LNG prices this end, will "evolve to be the Asian LNG price over time". The index, launched by the Energy Market Company in September, now comprises about 20 players. At the same time, the long-term drivers for LNG "remain valid", said Mr Teo. "While we have seen subdued Asia demand because of slower economic growth, there is a growing desire for cleaner air and environment in Asia." In Singapore, for instance, the Singapore LNG Terminal began commercial operations in May 2013, while the Energy Market Authority announced in May this year the shortlisting of four companies to supply Singapore with LNG, he noted. The Government "remains committed to growing LNG as an alternative fuel source and to develop Singapore into a LNG trading hub", said Mr Teo.


Today, there is growing attention paid to the prospects of the US as an LNG exporter influencing prices in Asia and Europe. The shift occurred because of the unexpected emergence of unconventional oil and gas production in North America, especially as Saudi Arabia did not reduce its oil production to stabilise prices at relatively high levels.
The building of LNG terminals in Singapore will enable Singapore to benefit from price differentials in the Asian, European and North American gas markets. When the first LNG terminal began operations in 2013, Singapore was no longer dependent only on piped natural gas from Indonesia and Malaysia.
Nevertheless, the critical point is that the presence of increasing sources of supply is likely to result in energy prices stabilising at lower levels for the next decade compared to the last 10 years, provided there is no major political upheaval which disrupts energy markets.


Natural gas can be supercooled and liquefied to transport it on tankers between areas difficult to link by pipeline. LNG traded in Asia -- where sellers such as Qatar and Indonesia ship fuel to buyers including Japan or China -- has traditionally been pegged to crude prices. That’s because the region lacks a benchmark similar to Henry Hub in the U.S., which the country’s burgeoning LNG exporters use in sales contracts.

“When Singapore talks about being a pricing hub, it is talking more about being a physical hub for gas where as a buyer and seller you can put gas in and take gas out,” Gavin Thompson, Wood Mackenzie’s vice president for China and Northeast Asia gas and power, said in an interview. “That price for the physical commodity is then priced into the short-term spot and long-term contracts, potentially the same way Henry Hub is priced into long-term LNG contracts.”


“Given the nascent stage of market development for LNG, the majority, if not all” of the new contracts will be traded over the counter and cleared by SGX, Lily Chia, the company’s head of product management for commodities, said in an e-mail. The exchange sees SLInG -- shorthand for its FOB Singapore SGX LNG Index Group-- as a pricing tool for traders, financial institutions and power companies, she said.

In 2006, in a bid to diversify and secure the country’s energy sources, the Singapore government announced plans to build an LNG terminal that can be used to store LNG for local use and re-export the fuel to regional markets. The LNG terminal commenced operations on 7 May 2013. 

Price range to widen and swing wildly

From El-Erian:

On the way up, prices overshoot levels warranted by the exceptional funding that markets obtain.
On the way down, prices fall below what would otherwise prevail on the basis of fundamentals.
This behavior is likely to continue in the short-term, shifting the opportunities for higher monthly/quarterly returns away from conventional strategic long-term portfolio positioning and toward more short-term trading and volatility trades.
A constructive policy response would require a transition from the excessive reliance on central banks to a set of policies that reinvigorates growth engines, deals with aggregate demand imbalances, addresses excessive pockets of indebtedness and makes progress in completing regional and global economic/financial architectures (which also would counter the rise of political extremes on both sides of the Atlantic). If this approach were successful, range-bound trading would yield to genuinely higher financial asset prices that are firmly supported by strengthening fundamentals.

There is a genuine threat of prices falling below fundamentals. Tremendous oppportunities lurk over the horizon.

It is however, getting to the horizon that will test both our patience and skill.

Oil companies rolling over into the deep?

Rolfsuey.com concludes: 

Rolf’s Thoughts

If you ask me if oil price has already bottomed out, I seriously don’t know and will not predict! What I know is compare to last year, this is definitely a better time for entry into O&G stocks. Overall, I still think that oil price at $30 or even $40 is seriously not sustainable in the longer term.That said, while oil price directly impact Oil companies’ revenue and have a faster effect to her top and bottom lines, this is not the same for companies further down the supply chain. Even if oil price increases, Oil companies still need time to invest, and it is going to take time before new projects will be seen. This means many companies will see fundamental problems of lack of revenue and thinner margins.The recent rebound of share prices in tandem to oil price is supposedly just market reaction. Market in the short term at most times does not care about the fundamentals. So if you think that just because the Oil and Gas companies’ share prices have rebounded in the last two weeks, the companies are going to report strong figures in coming quarters?  Then I will beg to differ. I suspect, in terms of company performance, the worst have yet to come. Many people I know are still having their jobs intact having to finish the backlog project in 2016 and early 2017. The sentiments are not exactly that bad yet!

My comment in rolfsuey.com:

while the fed has been delaying the rate hike, the 'hot' money has been flowing from one place to another. this is the time for short time plays. I just got out of energy play the week before. didn't earn all of it. but did get some.
and this is what everyone should be doing for the forseeable future, i feel.

At this point in time, it does look as though it has hit near bottom, if not bottom. However, the sentiment has not yet proven to me to have fully turned.

Demand for energy is not increasing at the pace it used, in the US and in People's Republic of China. Another source of demand is needed: India.

As an investor also, the source of supply of crude is extremely crucial as it seems that there has been a changing trend in the supply for big energy consumers:

At the start of the decade, Russia supplied about 7 percent of total imports to China, compared to 20 percent supplied to China by Saudi Arabia. However, Russia has overtaken the Saudis as the largest supplier to China four times in 2015, which is significant because Saudi Arabia had lost the top spot only six times in the preceding five years, according to data from RBC Capital markets.

reuters reports:

Keen to play a bigger part in price creation, China plans to launch Shanghai crude futures. Other exchanges are also looking to capitalize on the change. "China is obviously keen to have an ever greater say in pricing. At the same time, Iran is returning to the market. Firms across Asia are looking at new ways of doing business and legacy arrangements are all under review," DME's Johnson said.

What this means is that we could potentially be at an inflexion point whereby:

1. the classical metrics for oil pricing is losing in significance, 

hence the loss of efficiency in capturing world trends (and an increase in scratching heads at matching fundamentals with prices in energy markets) though this will probably be years in the making.

2. will the glut in traditional supplies find trouble emptying? 

See the super oil tankers rolling in the deep. update: rolfsuey comments on tankers industry

3. the effect of Fed rate, USD value on oil prices and currency markets. 

"You see the relationship as the Fed makes noises about going ahead and raising again in April, that is going to give a boost to the dollar which had been selling off, therefore higher dollar prices drag down oil prices."
The stronger dollar also dampened demand for oil, while a report showing U.S. crude stockpiles soared to record highs for a sixth straight week, and triple what analysts had expected, rekindled worries of a glut and further pressured the commodity.

Culture - a clarification

I have, very early in my life, realised the difference having a distinct culture makes in a group of people. Very obviously, in an informal setting, you do not set it out upon 2 slabs of stone. 

Still articulating it, saying it out, defining the limits of what we do and what we do not do are very important in maintaining a cohesive, strong and focused group.

A very expansive instinctive imprecise semi-empirical discussion is found in Culture is Destiny: a conversation with Lee Kuan Yew.

I recall, being urged by the Singaporean government, as a youngster, to do well in mandarin and learn the chinese culture. Yet instead of the focus being on the language, I remember more vividly various speeches by the Singaporean government to pick up on the Chinese culture. Here, Chinese with a capital C, as in China, instead of the chinese worldwide ethnic group as a whole. 

Many people were flabbergasted: we have here, an admittedly multi-racial country whose government were openly perennially concerned with racial harmony and has a often enforced Sedition Act, urging one ethnic group to focus on its culture?

People around me were stumped, some condemned the open message, some questioned the absurdness of learning how to write chinese calligraphy, tea ceremony, chinese poems and so on.

The truth is: Singaporeans are always Pragmatists. and so are our government. So it had never been about the arts and other manifestations of human intellectual achievement regarded collectively as so eloquently put by the google definitions engine.

It had always been about connecting on a deeper consciousness with a group of people who were about to become the biggest significant population in the world.

Principles and firm lines you would not cross

Sometimes there are lines you would not cross and sometimes, there are things you must do.

Stolen from Ray Dalio's Principles (have a read, it's really good):

1) What are principles? Your values are what you consider important, literally what you “value.” Principles are what allow you to live a life consistent with those values. Principles connect your values to your actions; they are beacons that guide your actions, and help you successfully deal with the laws of reality. It is to your principles that you turn when you face hard choices. 

 2) Why are principles important? All successful people operate by principles that help them be successful. Without principles, you would be forced to react to circumstances that come at you without considering what you value most and how to make choices to get what you want. This would prevent you from making the most of your life. While operating without principles is bad for individuals, it is even worse for groups of individuals (such as companies) because it leads to people randomly bumping into each other without understanding their own values and how to behave in order to be consistent with those values. 

 3) Where do principles come from? Sometimes we forge our own principles and sometimes we accept others’ principles, or holistic packages of principles, such as religion and legal systems. While it isn’t necessarily a bad thing to use others’ principles—it’s difficult to come up with your own, and often much wisdom has gone into those already created—adopting pre-packaged principles without much thought exposes you to the risk of inconsistency with your true values. Holding incompatible principles can lead to conflict between values and actions—like the hypocrite who has claims to be of a religion yet behaves counter to its teachings. Your principles need to reflect values you really believe in.

4) Do you have principles that you live your life by? What are they? Your principles will determine your standards of behavior. When you enter into relationships with other people, your and their principles will determine how you interact. People who have shared values and principles get along. People who don’t will suffer through constant misunderstandings and conflicts with one another. Too often in relationships, people’s principles are unclear. Think about the people with whom you are closest. Are their values aligned with yours? What do you value most deeply?

 5) How well do you think they will work, and why? Those principles that are most valuable come from our own experiences and our reflections on those experiences. Every time we face hard choices, we refine our principles by asking ourselves difficult questions. For example, when our representatives in Washington are investigating whether various segments of society are behaving ethically, they are simultaneously grappling with questions such as, “Should the government punish people for bad ethics, or should it just write and enforce the laws?” Questions of this kind—in this case, about the nature of government—prompt thoughtful assessments of alternative approaches. These assessments in turn lead to principles that can be applied to similar occasions in the future. As another example, “I won’t steal” can be a principle to which you refer when the choice of whether or not to steal arises. But to be most effective, each principle must be consistent with your values, and this consistency demands that you ask: Why? Is the reason you won’t steal because you feel empathy for your potential victim? Is it because you fear getting caught? By asking such questions, we refine our understanding, and the development of our principles becomes better aligned with our core values. To be successful, you must make correct, tough choices. You must be able to “cut off a leg to save a life,” both on an individual level and, if you lead people, on a group level. And to be a great leader, it is important to remember that you will have to make these choices by understanding and caring for your people, not by following them.

Water the stuff of life

Nobody leaves without water. And worldwide, clean water is not a bountiful resource. Yet us Singaporeans have grown very accustomed to water on demand.

When it comes to water, Singapore may be a victim of its own success, says world renowned water expert Asit Biswas. Water supplies are drying up at an unprecedented rate. But with the authorities here so efficient at making such effects invisible at the turn of the tap, Singapore residents continue to take a free flow of fresh, clean water for granted, Professor Biswas believes. - See more at: http://ifonlysingaporeans.blogspot.sg/2016/03/singapores-water-success-has-h2o-expert.html#sthash.Ljvr5X9U.dpuf

It wasn't very long ago that water is not bountiful as it is now.

1950s & 1960s.  Singapore was hot.  There was no rain for a few months.  The government imposed water-rationing.  At about 8.00a.m, all taps in our flats were turned off.  There was no water!  We had to go to a pipe downstairs with a bucket and queued for water.  The water is for the day's use, as water will only come on at about 9.00p.m.  No bathing, no cooking, no flushing of toilets etc.  Unless you stock up water.  There is water in pails, pots, containers etc as my mother filled up every available container in the flat.  There were 9 of us then.  Every drop of water counts, so please don't waste water.
http://www.singaporememory.sg/contents/SMB-e6adf2f0-5bb0-4c20-84c5-2cf0034c080a
1970s.  Every family had to fill up pails and pots of water. We were not allowed to wash our hair on the rationing day.
http://www.singaporememory.sg/contents/SMB-4bee0485-16bd-42ae-a045-c96244dc645a

Interesting side note, Michael Burry of The Big Shorting of housing mortgages in the 2008 financial crisis fame is investing in water.

The last line of the movie, printed on a placard, is “Michael Burry is focusing all of his trading on one commodity: Water.” It sounds very ominous. Can you describe this position to me?
Fundamentally, I started looking at investments in water about 15 years ago. Fresh, clean water cannot be taken for granted. And it is not — water is political, and litigious. Transporting water is impractical for both political and physical reasons, so buying up water rights did not make a lot of sense to me, unless I was pursuing a greater fool theory of investment — which was not my intention. What became clear to me is that food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas. This is the method for redistributing water that is least contentious, and ultimately it can be profitable, which will ensure that this redistribution is sustainable. A bottle of wine takes over 400 bottles of water to produce — the water embedded in food is what I found interesting.
http://nymag.com/daily/intelligencer/2015/12/big-short-genius-says-another-crisis-is-coming.html#

Personal Opinion on US and China in March 2016

personal view comment in budgetbabe:

i agree the transition to internal consumption will take quite a while. one of the challenges is in overturning suspicious/skeptical/condescending domestic view of domestic products. meanwhile not all excess productive capacity can be converted into being internal consumption driven. So we are seeing unprecedented expansionistic outward investment by China into its immediate neighbouring regions, not to mention outright woo-ing and "stuffing of money into hands". While not underestimating the challenges the Chinese face in reforming their economy, I am not however underestimating the singlemindedness of the Chinese government in seeing through their goals. (neither are the majority of the Chinese population, nevermind their disappointment at the stock market measures undertaken by CSRC to date.)
Singapore's key competitive advantage, I feel, is reputation and city management. I fail to see how effective bilingualism is still as much as of a game changer as in our early days. Most of the advantage in higher education in our early nation building years has already been chipped away. 
While the government tries to promote smart nation as a multipronged strategy in raising technological entrepreneurship, solution to ageing population and as a supplement to our exports of infrastructural solutions (and fintech in gaining as much as of a foothold as possible in regional consciousness), active engagement in regional projects helmed by companies appointed by bilateral agreements is possibly crucial to buy time.
macroeconomic policies wise, the government has done very well with the various cooling measures in reducing debt and has bought a lot of people time and convinced quite a few to pay down on their debt. The current thought is no matter how much the developers whine, it will probably take a sustained US rate hike trajectory replacing the cooling measures for the government to unwind. (no property crisis, I am afraid for those looking to flip, just a regression of prices.)  

 

IN AN unprecedented shift, Chinese companies are on the cusp of investing more in the rest of the world than the world invests in China. This turning point in global capital flows could be reached "within two years", according to projections from the UNCTAD's World Investment Report released this week.

 

personal view comment in rolf suey:

Thank you for typing it out :)I watch Mr Dalio too.
"Remember asset class always outperforms cash! The only exception is during Depression."
agree! remember asset class does not always equals equities only.

"China needs to restructure their economy which is a difficult thing to do, and they also have a balance of payment issues. (i.e. outflows).
LeadershipLeadership to manage it matters! According to Ray Dalio’s contact in China, he claimed that China has very capable people in leadership. But not the stock market handling recently. That is not capable. Dalio thinks that China leadership capability is equal to the best in the world.
Heart TransplantIt is like China is going through a Heart Transplant! You need to right execution but it is going to be fine in the long term after the operation but it weakens you. But you will get through it and be better than before."
just talking about this: http://sgbudgetbabe.blogspot.sg/2016/03/how-china-will-affect-singapores-stock.html?showComment=1458487781548#c6516583389311602402
"Next big move – QE3 or even Monetary policy 3 where money is put directly into the hands of spenders. "
I'm betting on fiscal policy. Bernie probably may not win but he may have helped putting part of the solution out there - http://www.businessinsider.com/bernie-sanders-spending-plans-would-radically-change-the-us-2015-7?IR=T&r=US&IR=T
Crumbling infrastructure in America - http://www.cnbc.com/2013/11/21/crisis-in-america-a-crumbling-infrastructure.html  

Chinese purchases of American assets

Anbang is one of the largest insurance groups in China, opened its first branch in 2004 and now has 3,000 branches in 31 provinces around China, serving more than 35 million clients.

In recent years, Anbang has been on a buying spree, acquiring–among other things–the Waldorf Astoria New York hotel for $1.95 billion last year as well as insurance companies in South Korea, Belgium and the Netherlands. Anbang also has agreed to buy U.S. insurer Fidelity & Guaranty Life for $1.57 billion and, on Sunday, a portfolio of U.S. luxury hotels in a deal valued by some media outlets at $6.5 billion.

source: http://blogs.wsj.com/briefly/2016/03/14/what-is-anbang-insurance-the-short-answer/

Positive Relationships makes you Happy

The clearest message that we get from this 75-year study is this: Good relationships keep us happier and healthier. Period. 

•  The first is that social connections are really good for us, and that loneliness kills. It turns out that people who are more socially connected to family, to friends, to community, are happier, they're physically healthier, and they live longer than people who are less well connected. And we know that you can be lonely in a crowd and you can be lonely in a marriage, so
• the second big lesson that we learned is that it's not just the number of friends you have, and it's not whether or not you're in a committed relationship, but it's the quality of your close relationships that matters.
•  And the third big lesson that we learned about relationships and our health is that good relationships don't just protect our bodies, they protect our brains. It turns out that being in a securely attached relationship to another person in your 80s is protective, that the people who are in relationships where they really feel they can count on the other person in times of need, those people's memories stay sharper longer.

Worried of missing the bottom?

Worried of missing the bottom?

Are you worried about missing the bottom of the market?

Good. Shows you are an optimistic person.

72,000 Singaporeans borrowing more than their annual salary

Date: For Parliament Sitting on 29 February 2016Name and Constituency of Member of ParliamentMs Foo Mee Har, MP, West Coast GRCQuestion:To ask the Prime Minister whether there has been a gradual easing of individual indebtedness as a result of MAS's imposition of the aggregated borrowing limit of 12 months' income.Answer by Mr Lawrence Wong, Minister for National Development on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in Charge of MAS: 1   MAS announced in April 2015 that the limit on the amount of unsecured credit that a borrower can take on across all financial institutions (FIs) would be phased-in over four years. The borrowing limit was set at an initial level of 24 times a borrower’s monthly income from 1 June 2015. This will be lowered progressively to 18 times from 1 June 2017 and 12 times from 1 June 2019.2   Since the introduction of the borrowing limit, the number of borrowers with unsecured debt exceeding 24 times of monthly income has approximately halved, from around 32,000 in February 2015 to around 17,000 in November 2015. This reduced number represents around 1% of all unsecured credit borrowers.3   The number of borrowers whose unsecured debt exceeds 12 times their monthly income has also dropped by about 14%, from around 84,000 borrowers in February 2015 to around 72,000 borrowers in November 2015. This reduced number makes up about 4% of all unsecured credit borrowers. 4   The vast majority of borrowers use credit prudently and are not affected by the aggregate borrowing limit. We encourage indebted borrowers to reduce their outstanding unsecured debts over time. They can seek help from their FIs or Credit Counselling Singapore, which can help work out repayment plans and offer various assistance schemes.

saving the Singaporean indebted.

4% is also a lot of people: 72,000!
hope some are not actually borrowing to survive.