Commentary on US Budget Woes

Commentary  
It has been a while since I wrote something and calls have been coming in to get a better grip of the situation. The lack of commentary over the last 2 weeks has been due to a lack of direction in the market and a penny fever that has been relatively irrational.  
 
The latest buzz today is the US budget woes. This seems like a rephrase of debt ceiling issues we have every year. The US government has not enough money to fund their continuing operations. Some programmes and some parts of government may have to shut down. A solution to this will bring us back to raising the debt ceiling again. And the saga continues. Like how it does every year since 2008.  
 
So, what is in it for us?  
First, remember market history, it tends to repeat itself. Tapering talks that have been stalled means that there is something right about US economic recovery. The debt issues are the opposite of this. There can be a day where debt woes make way for tapering talks again when market is on the upswing. So, buy on dips can be a strategy.  
Next, I hate to admit it but penny fever may be over, due to the effects of macro-economic news. Penny fever arose when there was no clear direction. Now, with macro influences, market has clearer direction (negative in the short term) so penny fever may subside.  
 
What can we look at if not for pennies?  
Every time macro news hits, blue-chip (especially index stocks) tend to be affected to a greater extent. Therefore consider sticking to “high-beta”. These are cyclical stocks like property stocks and industrials stocks like shipping. Banks can offer a good rebound too.  

Singapore Air passenger load factor improves, Blumont invests in Resource Generation, Ezra issues debt

Opportunities  
 
Singapore Air (C6L, $10.39) Aug. passenger load factor 82.4% vs 78.3%; Aug. overall load factor 69.1% vs 67.5%
Comments: SIA is still trading below book value (0.9235x P/B according to Bloomberg and 0.955x P/B according to Reuters). Previously, I have alerted everyone on SIA below $10 in the column. Keep this on your watchlist. Shipping and Aviation are industries worth looking into as they are in recovery phases. Yes, we may not see it yet but by the time recovery is clearer, prices would not be so cheap anymore.
 
Blumont Group (A33, $1.96) plans to invest A$21m-A$22m in Resource Generation
Comments: $3.3bil market cap and P/E of 245x according to Reuters.
 
Ezra Holdings (5DN, $1.295) issues S$25m 5% fixed rate notes due 2015.
Comments: Recent run up may spark profit-taking?
 
 
Commentary
 
Flows in Asian markets have been muted in the last few trading sessions. This suggests a quiet period and some profit-taking here and there.
Technically, charts on major indices are trading close to their downtrend resistance. A scenario that is possible is a false break and another leg down. This is a scenario that is worth keeping in mind in contrary to all the bullishness that says a breakout of these resistance lines will take the markets higher.
The bullish scenario is inconsistent with the flows at the moment so the chances of that happening, is not as high in my opinion.