Market Views 30 November 2011

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Announcements

Introducing market-juice!
Adrian's Market Views notes has a new identity and a whole suite or services.
You can now view market-juice online, @ market-juice.blogspot.com
You can also follow market-juice on Facebook and Twitter
This is the soft-launch of market-juice. Look forward to your feedback ☺


Ideas

Macro
S&P downgrades 7 major US banks after a review of its rating system
Comment: Do note that nothing at the banks have changed. The rating methodology is what has changed. Let's see if the other agencies follow suit

Rubber
GMG Rights start trading today
Comment: Please contact me if you have so that I can keep you updated on the situation and any arbitrage opportunities

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

Market Views 29 November 2011

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Announcements

Introducing market-juice!
Adrian's Market Views notes has a new identity and a whole suite or services.
You can now view market-juice online, @ market-juice.blogspot.com
You can also follow market-juice on Facebook and Twitter
This is the soft-launch of market-juice. Look forward to your feedback ☺


Ideas

China Property
In October the number of cities posting a drop in prices doubled from September. Property sales dropped 24% m-o-m and 14% from a year earlier.
Comment: Note in the market is that the bigger developers will be the one getting hurt due to their high inventory. Further, because of the related bank lending, banks may be affected as well. The chain effect may be of a greater extent and not easily quantified as of now

Singapore Property
The monthly Singapore Residential Price Index (SRPI) showed that prices of non-landed private homes climbed 0.9% in October 2011, reversing a 3-month trend of zero or negative growth.
Comment: Considering the situation with China property, one can reasonably expect our property market to be negatively affected as well. Would stay away from any property-related investments from developer stocks to REITs to physical property

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

Market Views 28 November 2011

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Announcements

Introducing market-juice!
Adrian's Market Views notes has a new identity and a whole suite or services.
You can now view market-juice online, @ market-juice.blogspot.com
You can also follow market-juice on Facebook and Twitter
This is the soft-launch of market-juice. Look forward to your feedback ☺


Ideas

Macro
The IMF is preparing a 600b euro (US$794b) loan for Italy in case the country’s debt crisis worsens, La Stampa (an Italian newspaper) reported, without saying where it got the information. US stock futures and the EUR surged after the news
Comment: Such unverified "noise" can be dangerous. Markets may surge very short-term and tumble back later in the day when there is further verification of authencity of information. Only trade on such information if you are prepared to exit intraday when the situation turns around. To get the quickest update on this, please call me
Property
Capitaland (C31) continues to bet on China with 30k residential units in the pipeline in as of 2011
Comment: Considering the not so positive situation of the Chinese developers themselves, this may not have been the best of moves Cland has taken. This may account for the decline in their share price amid the current situation when we compare them with Kland and Citydev

Update 930am
Sakari (AJ1) may see some negative sentiments, after the collapse of the public Kutai Karanegara suspension bridge over the Mahakam River on Saturday. While Co has announced that at this point in time, no formal exports of the damage have been confirmed, and they are currently still ascertaining the impact on its Jembayan operations. Production is for now still continuing as usual in Jembayan.
Note that any disruption to the transportation of Jembayan coals could potentially weigh on 4Q11 results, with Jembayan currently contributing abt 85.2% of grp’s total sales vol, based on 3Q11 results

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

the Juice weekly vol. 1

EDITOR'S NOTE

Volume 1 of the Juice weekly is here on the soft launch of market-juice.

In this weekly note, we shall be covering all the Juice in charts, banters, news and anything noteworthy in the markets.
Do give us your feedback to help us improve this note to you.
Have a great weekend!


FEATURE

Chart of the week

In our first edition, we shall look at one of the leading benchmark indices of the world, the S&P 500

S&P Daily Candlesticks

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S&P Weekly Candlesticks

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We shall do our charting covering the following factors:
Candles: Dark candle momentum may be set to continue both on the Daily and Weekly
Moving Averages: MAs on the Daily have since give a -ve cross while on the Weekly there seems to be hope for another rebound
Oscillators (RSI and Stochastics): Daily oscillators are oversold while Weekly
Ichimoku Overlay: Price action is trading under the could, -ve signs both on the Daily and Weekly. Chikou Span has had a negative cross which may be set to continue as well

Some basics on the Ichimoku Overlay:
Tenkan Sen (Similar to Shorter term moving average)
Kijun Sen (Similar to Longer term moving average)
Ichimoku cloud (Support and resistance indicator)
Chikou Span (Lagging indicator)

Verdict: Market could have more weakness in the coming week while some strength remains in the coming month. As such, the probability of a large crash moving forward is relatively low while there exists a probability of a short-term bounce in the coming month. However, the strength of bounce may not be strong.

Do note that the above is just technical analysis. A more comprehensive analysis will require fundamental valuation of index components and also the analysis of market behaviour (based on psychology instead of charts). And this is beyond the scope of this section.


Banter
These points are excerpts from a coffee shop discussion with an interest-rate swap dealer:

1) Banks are increasing lending rates and tightening credit limits. They seem to be reducing risk
2) This is not normal as banks would want to lend more if interest rates can be increased. They will make more money getting more interest on their lending. Reducing credit limits are contradicting
3) Highly leveraged individuals or businesses may be more badly affected

Comment: A rather bleak and depressing discussion. The effects of which may only be felt towards the middle of 2012. As for now, let's enjoy the ride in the markets while keeping tabs to conserve for the future

Market Views 25 November 2011

ANNOUNCEMENTS

NYSE has a half day on Friday

IDEAS

Macro
German Chancellor Angela Merkel again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the debt crisis. Euro bonds are “not needed and not appropriate,” Merkel said at a press conference. She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.”
Comment: First there is not enough interest in German bonds, now this. It is political why German will not accept a common EU bond. Again, markets do not view this in positive light as can be seen from the slide in the EURUSD and also the EU markets

Hungary lost its investment-grade rating at Moody’s Investors Service after 15yrs as the Cabinet seeks IMF help to boost confidence in the EU’s most-indebted eastern member. The foreign- and local-currency bond ratings were cut one step to Ba1, the highest junk-level score, from Baa3, the company said today in a statement. Moody’s, which awarded Hungary its investment grade in 1996, assigned a negative outlook. The country is rated the lowest investment grade at S&P and Fitch Ratings.
Comment: Not unexpected from the most-indebt member. S&P and Fitch are likely to downgrade also. Negative outlook means there is a chance of further downgrade. But this may not put too much pressure on the markets unlike the point above

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

Market Banter

Below is an abstract from a conversation with a fellow equity sales trader:

when buyer come into the mkt later for rebound, they wont bother to q
u will see mkt run up v fast again like the last 2 rebounds
if it is really a bear flag like u say, on the next rebound there wont be a breakout
but if it is like what i m thinking, there may be a breakout
u must understand most money in the mkt now is long US treasuries
underweight equities
when risk taking returns, the short covering will force asset allocation to shift
that can churn and drive up the mkt v fast
and we dun care if it is sustainable cos if we r trader, we cannot hold
the other possibility is risk adversion increase so greatly in the next few days that there is a major selloff cos of panic. everytime at this kind of times, we will see all the indicators pointing to it (oversold chart that can break lower, bad news, fund outflows)
but then, what are the chances?
now the last thing they can sell off is US treasuries first if the mkt is v bad. the equity mkts will lag the treasury mkt cos they got more treasuries to sell
so when i see huge outflow in treasuries, i will be scared. then i will say "sell everything"

Market Views 24 November 2011

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ANNOUNCEMENTS

Do take note that today is Thanksgiving Day in the US. US markets are closed on Thursday and have a half day on Friday

IDEAS

Macro
Germany failed to receive sufficient bids at a debt sale, adding to concern Europe’s crisis is worsening and driving away investors from risky assets.
Comment: Germany is considered the safest country in the Euro-zone and government debt is the safest investable asset other than keeping cash itself. If not enough investors are willing to buy German debt, it just goes to show how risk adverse the market is

Flow data suggests
1) More interest in cash than anything else (from the movement in Currencies)
2) There is ONLY interest in buying US Treasuries and not other Fixed Income instruments
3) Negative flows have begun to show in Equities across the world
Comment: We can see where this is going. Previously, we have hypothesized that there may be a switch flows to other asset classes as markets move sideways. However, the situation of Buy USD and Buy US Treasuries seem to be the theme as investors seek to protect their money at least until year's end. Currently there is also a significant -ve flow is AUD while the Australian stock market still sees +ve flow. Investors with a more global outlook may seek to go short on Australian stocks as flows may reverse in-line with the rest of the globe

Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements

Market Views 23 November 2011

Market Views 22 November 2011

Market Views 21 November 2011