Next Buying Signal for Stocks

The next buying indicator of a recovering economy is to see weakening of USD. The current strong usd is making exports in the U.S. less attractive. More inflow of usd can inject more funds into capital markets

Why is the weakening of USD?

• IMF bailout of Ukraine requires USD to be strong. However, bond holders refused to write down debts in Ukraine, thus may trigger a potential Fed rise of interest rates in December. (http://www.rferl.org/content/imf-gives-ukraine-loan-after-strong-start-reforms/27164015.html)
• September FOMC meeting, Fed decided to keep interest rates low. A higher interest rates may depress bond prices and trigger a selldown. USD will strengthen and China will benefit due to better export numbers. Will result in lesser export for U.S, thus decreasing employment rate.(http://www.theguardian.com/business/2015/sep/23/the-fed-must-ignore-accusations-of-dithering-over-interest-rates)
• Weakening of USD could be a result of QE 4, or a continued lower interest rates environment in order to boost bond prices, maintain inflation rate and maintain the stock market.

George Soros is short $1.1 billion in the S&P 500

Should we be afraid?

There are still no clear indication of when will the Fed raise interest rates and now George Soros is betting against the markets.
Source: http://www.marketwatch.com/story/george-soros-goes-short-with-mutual-funds-and-etfs-as-the-sp-500-goes-1400-days-without-a-10-correction-opines-lowriskmutualfundsnet-2015-06-18

Apart from shorting the markets, George Soros also calls for supplying of lethal arms to Ukraine and secret training in Romania to avoid direct NATO presence in Ukraine. In a release by hacker group CyberBerkut, it explained that George Soros collaborated with the US government with an intent win over Ukrainian assets if successful.
Source: http://www.mintpressnews.com/leaked-george-soros-puppet-master-behind-ukrainian-regime/206574/

Coincidently this month, George Soros also bought some speculative stocks like clinical-stage biotechs Juno Therapeutics (NASDAQ: JUNO  ), Kite Pharma (NASDAQ: KITE) and Sarepta Therapeutics (NASDAQ: SRPT).

He also bought communication technology company MaxLinear, Inc. (NYSE:MXL)

These stocks are mid to small cap stocks that are loss making with little or no debts in their balance sheets. It is indeed odd for him to make such acquisitions unless he is short of the markets or funds buying into these stocks, therefore fuelling a temporary rise in their share price to profit from a market correction.

Source:

• http://www.fool.com/investing/general/2015/05/31/billionaire-george-soros-just-bought-this-highly-s.aspx
• http://www.fool.com/investing/general/2015/05/24/uh-oh-billionaire-george-soros-just-stepped-on-ano.aspx
• http://www.insidermonkey.com/blog/soros-piling-up-maxlinear-inc-mxl-as-stocks-rally-continues-352117/

Jardine Cycle and Carriage: Why did it dilute share value

Jardine raised a $772 million through a rights issue to fund its previous acquisition of Siam City Cement. Why dilute so much share value because of a cement company?

The group structure as a whole, a lot of subsidiaries residing within the Jardine Group have property development businesses and thus, it makes good sense to acquire stakes in Thai's second largest cement maker.

Jardine Cycle and Carriage also owns 50% of Astra International in Indonesia. Its diversity in core business services are a key to managing costs better than other firms.

The dilution of share value will enable the Jardine group to better manage costs in the construction sector throughout its property development subsidiaries.

This rights issue could be due to an anticipation of a possible Fed's interest rate hike later this year, However, it also allows Jardine Cycle and Carriage to reduce costs on funding.

Source: http://www.dealstreetasia.com/stories/jardine-cycle-carriage-to-raise-772m-via-rights-issue-8063/

Why buying index is good

2 available index funds to buy in SGX

• STI ETF
• Nikko AM STI ETF

These indexes act as benchmarks to the Singapore stock exchange and hold a variety of stocks that mimics the performance of the Straits Times Index.

Diagram 1 below shows a list of stocks that Nikko is holding. The chart indicates a variety of sectors of stocks the fund represents, which is attractive because it is well diversified. A retail investor might not have enough funds to construct a portfolio like this, and therefore Nikko and STI ETF are good index funds to consider investing.

Diagram 1 (Nikko AM STI ETF)

Benefits of Index

• Well diversified portfolio
• Low management fees
• Easy to understand
• Safer than aggressive stock picking/trading

Alan Greenspan, an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006 shared his thoughts on investments "The best strategy for equity investment has always been: Buy and hold and forget it,” he said. “Once you start to try and trade the market – I don’t care how good you are, how smart you are — you will not beat an index fund."

Let's all look forward to index funds :)

What's behind IMF asking the Fed to delay interest rates hikes till 2016?

IMF had asked the Fed to delay interest rates hike till 2016. However, is there a reason behind this?

Source: http://money.cnn.com/2015/06/04/news/economy/imf-federal-reserve-rate-hike-2016/

Recently, George Soros, the legendary investor had called on the U.S to provide advanced weapons to aid Ukraine against a Russian aggression. However, Ukraine is broke and therefore if U.S were to go ahead to supply weapons, it will have to be financed through their own pockets.

George Soros advised the Ukrainian leadership to regain control of the markets, in which he could push for the Federal Reserve to extend  a $15 billion three months swap arrangement with the National Bank of Ukraine. Soros told Poroshenko that the IMF would need to come through with a $15 billion package, which was confident would lead the Fed to also come through with more money. This move would reassure the markets to avoid a panic.

Source:
http://english.pravda.ru/news/world/08-06-2015/130910-soros_usa_weapons_poroshenko-0/
http://www.marketoracle.co.uk/Article50995.html

Is this one of the factors that led to the IMF asking for a delay in interest rates hike?

Personal View
I think that with such big political intention out there, interest rates hike could be set for a delay till 2016. US weapons manufacturer will benefit from this. Equity markets in US will continue to rally in a low interest rates environment.

If the war situation between Russia and Ukraine tightened, oil price could go up as well. Inflation rates will not be spared as the cost of living increase around the world.

Investors who hold equities and properties will continue to ride the inflation wave. With so much outflow in US, investment in US treasury bonds may not bean attractive option.

The low ringgit in Malaysia is unusual because oil price recovered to $58-62 per barrel from previously a low of $40 a barrel, but yet the ringgit is not strengthening. There is more to be discovered on the weakening of the ringgit.

I'm heading to bed now, so i'll end my blog post here. Good night!

Indicators of a possible interest rates hike

There had been some speculation of Fed raising interest rates. There are some indicators to suggest that interest rates are indeed about to rise.

Below are some of the news to indicate rising interest rates

• Beware of Apple Bond Sales: Company Has Knack for Calling a Top
• Time to haul off and buy junk bonds

Is it a good time for REITs now?

A very small portion of my portfolio consists of REITs, which can be a stable asset to hold on to. A typical REIT can give you returns of up to 10% a year as dividends, which comparing to bank rate of 1% is pretty attractive. However, if you buy REITs when interest rates are high, you probably got a good discount for it. But as interest rates had remained low for a while, the price of REITs has inflated a bit. Risk of interest rates hike remains. Therefore now should be a time to wait at the sidelines for the media to blow up an interest rate hike issue for REITs to be attractive again.