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Showing posts from June, 2008

Bear Factors & CFTC

Thanks to Friday's 106.91-point drop left the Dow Jones Industrial Average at 11346.51, down 19.9% from its October record, after it had fallen as low as 11297.99 during the day. At the day's low the Dow was down 20.2% from October. Investors typically consider a decline of 20% or more the mark of a bear market. The last bear market, which extended from January 2000 until October 2002 for the Dow, was accompanied by a mild recession.

The usual bear markets are due to one or more of these factors: inflated stock values, mounting inflation, rising interest rates or a recession. Inflated stock values - not really this time. Mounting inflation - yes for sure. Rising interest rates - not yet but will have to rise to fight off inflations in the coming months. Recession - despite the many wolf calls, a recession is not likely globally, even in the US.

Since 1960, the average bear market has lasted about 14 months and has taken stocks down about 31% before they hit bottom. The mildest b…

Essential Reading - When Markets Collide

If you are sick and tired of reading Warren Buffett or Ben Graham or even Peter Lynch, try this one. Mohamed El-Erian was the ex-fund manager of PIMCO's highly regarded emerging markets fund. He left to become president of Harvard Endowment for another highly successful tenure, where he managed US$35bn in endowment. Now he is back as co-CEO and co-chief investment officer of PIMCO. He spent 15 years at the International Money Fund, working on policy, capital market, and multilateral economics issues. In 2004, Fortune named him a member of its eight-person “Mutual Fund Dream Team.”

According to the McGrawHill byline: When Markets Collide is a timely alert to the fundamental changes taking place in today's global economic and financial systems--and a call to action for investors who may fall victim to misinterpreting important signals. While some have tended to view asset class mispricings as mere “noise,” this compelling book shows why they are important signals of opportuniti…

USD Millionaires, Where Are They?

NST: The country's poverty rate will increase from 3.7 per cent to 24.3 per cent if the poverty line is raised from the current RM800 to RM1,500 per household. Minister in the Prime Minister's Department Tan Sri Amirsham A. Aziz said the definition of the poverty line was a household income sufficient for basic necessities. It does not include luxury items. The basics are food, clothes and other expenses like rental, utilities, transport and communication, health, education and recreation.

On such an optimistic note, let's all have a look at the number of millionaire households globally. The definition of a millionaire household is homes with more than US$1m in net assets.

The absolute figures, number of millionaire households:
1) USA 4,585,000
2) Japan 830,000
3) UK 610,000
4) Germany 350,000
5) China 310,000
6) Italy 270,000
7) France 265,000
8) Taiwan 220,000
9) Switzerland 205,000
10) Brazil 190,000
11) Netherlands 145,000
12) Belgium 135,000
13) Australia 135,000
14) Spain 125,000

India's Insurmountable Oil Subsidy Problem

China have raised prices of gasoline, diesel oil, aviation kerosene and electricity by as much as 18%. China's new gasoline price is at about US$3.29 a gallon, and the diesel price is at US$3.08 a gallon. Despite price hike, break even price for refiners still far below market price (based on crude oil price of US$92 below market price pushes demand growth faster than in an undisturbed market.

Chinese fuel subsidy costs are lower than in some of its Asian counterparts on a GDP basis as it produces around one-half of its oil consumption. Subsidies distort demand. A more efficient way to protect people’s purchasing power would be to let prices increase and introduce direct, targeted subsidies for afflicted consumers like Korea has done, and which Malaysia is now trying to do.

China's total amount of implicit subsidies (financial support from the state budget and losses incurred by state companies) in 2007 was about US$27 billion, 0.8% of GDP. 2008 costs might be US$100 billion, or…

Remembering Eva Cassidy

Beautiful Eva died in 1996, from melanoma, the most deadly form of skin cancer. Her music was little-known during her 33 years of life, but today her soul-stirring voice is reaching people all over the world. For some fans, the pleasure of listening is enough. Others want to know more: "Who was this remarkable singer? Why haven't we heard of her before?
By Sherri DalphonseIt was the fall of 1996, and Eva Cassidy was dying. As she lay in bed in the Bowie home of her parents, musicians in a nearby studio were laying guitar, piano, and violin tracks on vocals Cassidy had recorded over the years. "After they'd finish, they'd come in and say, 'Eva, we just finished one of your songs—would you like to hear it?' " recalls friend Jackie Fletcher. "She had left so many incredible recordings."Her friends wanted to do something—anything—for Eva. They wanted to share with others a voice that had been little heard outside Washington. Fletcher sent ta…

Oil Majors - Comparative Stats

btw, my fellow blogger Seng is absolutely correct to insists that pages 81-165 of the 2007 annual report be made fully available on the website... I think other oil companies (the listed ones in particular) does that, so I doubt there are trade secrets you cannot reveal, maybe executive compensation information may be deemed sensitive, but hey, its a brave new world Merican, so let's get it all out there ... at least make my job in defending Petronas ass easier OK!

Petronas Malaysia

ROE - 2005: 38.5%; 2006: 41.6% ; 2007: 40.9%

Net profit - 2006: RM43.1bn (US$13.26bn) ; 2007: RM46.4bn (US$14.27bn)

ROE Of Majors
(Most Recent Year)
1) Royal Dutch Shell 24.06%
2) BP Plc 26%
3) Total SA 29.5%
4) Repsol YPF 17.9%
5) Statoil 33.23%
6) Lukoil 23.23%

Net Profits Of Majors (Most Recent Year US$)
1) Royal Dutch Shell 91.8bn
2) BP Plc 75.3bn
3) Total SA 56.4bn
4) Repsol YPF …

2v1g, Got Yours Yet?

After visiting a few cd shops for the last couple of days, I finally got the cd today at 1st Floor Bangsar Village 1. Its value for money at 39.90 considering its an audiophile pressed cd.

Since I only had listened to the previewed 6 songs, I was delighted to find the other songs were equally impressive. The great thing is playing the cd on a proper stereo, it really enhances the experience, especially Roger Wang's guitar. The two vocalists must be applauded for their sense of timing and tempo as they only have a guitar as backing.

The toughest song for Roger and the singers must be the last track, "we want us to be together", hard to play, harder to sing, harder still to sound good. Great effort.

My new favourite track, "sher fou / perhaps", refreshing take minus the wailing /screeching by the original singer.

Market Moving News & Developments?

Market Watch: While the economy is very weak, better times may be ahead, an economist with the Conference Board said Thursday on a report that the index of leading economic indicators rose slightly in May for a second straight month. The index, which attempts to forecast turning points in the economy, rose 0.1% in May, matching April's gain. "Latest data suggest the economy has not fallen into a contraction and may not undergo one in the second half of the year," said Ken Goldstein, labor economist at the Conference Board. "In fact, the economy might even begin to turn a corner early next year."

Market Watch: Weekly U.S. initial jobless claims dropped by 5,000 to 381,000 in the week ending June 14, a two-week low, the Labor Department reported Thursday. The four-week average of initial claims rose by 3,250 to 375,250. Continuing jobless claims fell to 3.06 million, the lowest since April, but still well above the year-ago level of 2.52 million.

Market Watch: Oil …

Oil Subsidy, The LATAM Experience

We have been so preoccupied with the drastic cutbacks in fuel price subsidy, we haven't paid sufficient attention to what's happening in other countries. Let's have a look at some countries in Latam, some are net oil exporters, some are net importers, some subsidise, some don't. Their report card tells quite a story.

Let's look at those a bit like Malaysia, namely Argentina and Colombia. Both are small net exporters of oil, around 300,000 barrels a day. The public in Argentina and Colombia pay US$1.04/l (RM3.38) and US$1.10/l (RM3.57) respectively. Both countries still subsidise fuel products for the people. Argentina spent US$11bn a year and is grappling with an inflation rate of 9%. While Colombia spends around US$3bn a year, and they have a more manageable inflation rate of 6.3%.

Big exporters include Mexico and Venezuela. They export some 1.4m barrels a day and 2m barrels a day respectively. Naturally fuel price is heavily subsidised and cheap. The public in Mex…

Lift Your Spirits, Pie Jesu

Last year we had the enchanting Connie Talbot. This year we have the unassuming 13 year old kid named Andrew Johnston. Open up your hearts and be touched by his voice. Remarkable to say the least. Click on the link for a bit of magic.

p/s photo: Shiho Hoshino

China Market Irregularities

The detention of Wang Yi, vice governor of China Development Bank and a former China Securities Regulatory Commission vice chairman, for his involvement in market irregularities may just be the tip of the iceberg. Wang, 52, is the first high-ranking executive of the regulators arm of the securities market to be detained, mainland papers reported. And his situation may well open the lid on a series of wrongdoings among listed companies and securities firms.
Wangs former secretary has been under investigation for his alleged involvement in bribery cases, while his brother Wang Lui was said to be deeply involved with the controversial Shanghai listing of Pacific Securities. News of his detention has also poured cold water on the market as Wang has established a good network in his years with the watchdog.p/s photo: Taksaon Pasukcharean Thaksarn

Useful Economic Info Nuggets

+ Indonesia's relatively limited oil price rise means that the government will still be vulnerable to further international price increases - the worst of both worlds, a rising deficit with higher retail prices and inflation.

+ Thailand has one of highest oil consumption/ GDP ratio of key Asian economies.

+ Rising Inflation: China, India, Taiwan, Singapore, Hong Kong, S.Korea, Indonesia, Thailand, Philippines, Malaysia; even worse, Inflation in double-digits: Vietnam, Pakistan, Sri Lanka, Bangladesh.

+ According to Asian Development Bank and World Bank, inflation is a bigger risk to Asia than U.S. slowdown; Commodity inflation may impact terms of trade for importers/exporters and feed into higher prices, wages.

+ Rising inflation (oil prices), monetary tightening, equity sell-off by foreign investors is causing downward pressure on Asian currencies; India, S.Korea, Thailand, Philippines, Indonesia already intervening in currency market to prevent large depreciation and the resulting…

Why So Many Female Photos????

Thanks to Rocky Bru's posting, there have been a number of fresh visitors to the site. To anticipate the first thing that pops into your minds, here's why:

I will probably have to repost this every other month, but its worth it. Strictly speaking, if I wanted to be a difficult a-hole, I will just say that its my blog - hence there is no need to explain or justify the pictures. But I will try to be nice so I will venture an answer:

I used to have to search for "intelligent photos" which somehow may relate to the topic of my posting, you can see from the first 2 years of postings. It was exhausting and not very fun at all. Posting has to have photos as its nicer to look at and more captivating.

Then I said to myself, its my blog, there is no need to look professional. Its all in the comments. If readers want to read it, they will read it. Why not put up photos I like to see. I am a very single hetrosexual guy. Hence I like pretty girls - or rather to look at them.

I don&#…

The Paulie & Benny Show - Fight Oil With Strong Dollar?

How many people actually make critical decisions in Washington? Definitely not Bush. Why aren't there more pressure on the CFTC to clamp down on the position limits issue? If you read between the lines, Paulson does not think speculators are to be blamed for the spike in oil price. Bernanke has been unusually quiet on the matter. Bush has been quiet because nobody has told him what to say on that matter.

Its significant that Paulson holds that view because that will point towards the mediation prescribed by Paulson and Bernanke. If it was me, you all know what I would have prescribed already.

Hence, the Paulie & Benny Show is prescribing the stronger dollar as the medication for curb oil prices.The US dollar just cnotched the biggest weekly gain against the Euro since 2005 and the biggest weekly rise against the Japanese yen since December 2004. Bernanke’s speech on Tuesday prompted the strong turnaround in USD sentiment; he said that US economic risks have diminished and he’s p…

CPO Boost Due To Iowa Massive Floods / Saudi To Raise Output

WSJ: The effects of flooding in the Midwest are rippling across and beyond the Great Plains, striking at the ethanol industry, hog farmers, pork producers and even catfish farms as grain prices continue to soar.Cities in Iowa, Wisconsin, Illinois and Missouri sandbagged levees to keep them from bursting and urged residents to seek higher ground. River levels in some places have surpassed records set during a flood in 1993, considered the worst in recent history.The entire state of Iowa is experiencing flood conditions, according to the Army Corps of Engineers. In Cedar Rapids, population 124,000, a railroad bridge collapsed, 3,000 homes were evacuated and a downtown hospital had to be evacuated. Experts say Iowa's Cedar River could crest above 30 feet -- more than 10 feet higher than its crest of 19.27 feet in 1993. Heavy rains are expected to continue across the Midwest at least through Monday, though drier, sunnier weather is forecast next week.The flooding threatens to wipe out…

Potential Puncture In Oil Bubble

According to Shell Oil president John Hofmeister, the “proper” range for oil should be somewhere between US$35 - US$90 a barrel.Based on that statement and assuming it’s more or less accurate, what do you think we should make of the current oil price of US$130 - US$140 per barrel? How much of the spectacular rise in oil is due to speculation? That is important to determine as excessive speculation could basically drive prices much higher than its real demand-supply equilibrium.Open interest in WTI oil futures has been growing exponentially at 18% per annum since 2001, thanks to the entry of non-commercial players. The entry of more non-commercial players and speculators generally mean they would be on the long-side of the futures and options.Many reasons are being cited for the oil price boom – speculation, fundamentals, dollar weakness, fuel subsidies, inflation, low interest rates. All factors are playing a part at some time or another, with different factors dominating at various t…

Peak Of Oil Demand

Media has been plagued with articles on peaking of oil supply. Let's have a look at what some others say about the peaking of oil demand.But whats most important is with the fresh developments with CFTC, comments at the bottom.

TD: Overall, crude oil consumption growth so far in 2008 softened to a paltry 0.4%, in line with non-OPEC supply gains and well below overall total world production growth. OECD led the decline, with non-OECD demand growth to slacken further

Bespoke: Even with oil hitting record highs, China's oil imports during May reached their second highest levels on record

Unicredit: The increase in fuel prices in India, Pakistan, Indonesia, Malaysia will slow oil consumption growth only marginally since these countries account for only roughly 5% of global demand for oil. China may follow suit after the Olympics

Lehman: Market tends to conflate legitimate reasons for demand growth with what is likely a temporary spurt in recent demand for inventory related to Olympics…

1210-1220 Shopping List

Faber < $0.96

Dialog < $1.35

Parkson < $5.10
Bursa < $7.80
TMI < $6.90
Maybulk < $3.70
Sapuracrest < $1.35
KNM < $6.10

Opus < $0.94

Hap Seng Consolidated < $2.80

RCE Cap < $0.55
Evergreen < $1.40

Wah Seong < $2.14

Ranhill < $1.08

Kinsteel < $1.55
You will note that some are actually worth collecting already (as they have moved lower than these target prices) based on those target prices.

p/s photos; Lee Ji Woo & Miho Yoshioka

Two Ways To Ward Off Mozzies

This is another public service announcement. How to effectively ward off mozzies. This is especially relevant in light of the many of us who have been bitten by the dengue mozzies.

The first product highly recommended is a Korean disinfectant called FLOOR MASTER, it has a little label "y-slimz" on it. To my knowledge it is only available at Jaya Jusco. I think I am going to cause some hoarding and clear their shelves here. Floor Master has about 4 different solutions, pink, blue, lemon and green. They specialise in using non-toxic herbal remedies. The pink one is good at warding off ants and lipas. For mozzies, get the green bottle. It has tea tree oil. Its great against mozzies, cockroaches and ants as well. It has anti-bacterial quality. How it wards off mozzies, well, its all in the smell of citronella.

Just a small cap full for half a pail of water, mop and don't rinse, let it dry on its own. Works for up to 3 days, then mop again. Another way is to put the same into a…

2v1g - the songs

When you visit my site, you will hear the songs by 2v1g. Below is the commentary by the producer on the 6 songs previewed.

Its probably unlikely that an "english" blog would highlight a Mandarin album. Asians in particular have this inferiority and stupid attitude. Especially those who are English educated. You'd find them across Asia, not just Malaysia. They would have no problems giving "foreign music" a listen, even though they do not understand the language - you'd find them giving a lot of leeway to appreciate Salif Keita's African lingo and music, or Laura Fygi's Latin songs, or German opera or Italian opera, or Tibetan esoteric music, or Korean music, needless to say Japanese music, Celtic fusions, Gregorian chants, and the very popular rainforest world music festival thingee ... you get my drift. Do they understand the language, generally no. I am not saying these music are worthless, far from it, I think we all should be open to appreciate …

Best Mandarin Album Ever? ... 2V1G

When I got this from a friend, I thought it was some software thing that she wanted to promote to me. Well guess what 2V1G... I hope it means 2 Voices and I Guitar... cause I immediately thought that it could be 2 Virgins and 1 Gigolo!!?? 2V1G is the brainchild of producer Leslie Loh and Chow Kam Leong. It is an acoustic trio that plays classic Mandarin love songs in a simple 2-voices 1-guitar format. Roger Wang (the Guitarist), Winnie Ho (the Vocalist) and Regine Tai (the Vocalist) combined to create a sound that is both refreshing and easy-listening.

Recorded using the legendary AKR C12VR microphone and mastered by Keith Yip from Hong Kong, the mastering engineer for HK Audiophile Diva, Susan Wong. Stop reading, click on the link below to enjoy the brilliant music, delivery... its acoustic heaven.

The CD is pressed in Hong Kong by Sony DADC, one of the top CD duplication factories in HK.
It is an imported CD, priced at the normal standard CD price of RM39.90. …

Sub-Prime Losses Overstated?

WSJ:A key measure of estimating the value of subprime mortgage-backed securities may be overstating potential losses of triple-A securities by more than 60%, according to the Bank for International Settlements, which puts its own estimate of such losses at US$73 billion.The BIS, often called the central bankers' central bank, has few formal banking duties but is a hub for economic and monetary research as well as for global policy makers. Its most recent quarterly report adds to growing criticism of a key measure of the subprime-mortgage market called the ABX.Launched more than two years ago by Markit Group Ltd., the ABX is an index that tracks the value of securities backed by subprime loans. ABX is based on credit-default swaps: actively traded instruments that insure against default on the securities.The index often is used by banks and other organizations as a proxy for the value of mortgage-backed securities. Echoing other concerns, the BIS says the ABX prices may be unreliab…

Oil Market Views & Updates

Jun 6: WTI crude oil for July delivery spiked US$10 to new all-time high $139.12/b on dollar weakness and Morgan Stanley forecast revision for oil to reach $150/b within a month. Near-dated crude oil futures move back into backwardation. Futures past April 2011 remain in contango.
Deutsche Bank, Lehman: Back in the double digits, forward prices had already reached point at which new supplies can be triggered. But now market at a point where higher prices won't generate more supply. For every US$100 million in new inflows, WTI prices increase by 1.6%.
Hussman: Contango implies commercial inventory to build up on stockpiling
New record price obliterates not only nominal high but inflation-adjusted high of US$100-111/b reached in 1981 (when Iran cut exports)
Schwab: We are not experiencing a demand shock. Lack of spare capacity to match supply disruptions exacerbates fear factor, driving speculation and frenzied hedging.
Thanks to fuel subsidies, real price not high enough to cut demand.

Short The Bugger At US$139 For Year End Delivery

US$139. Asset prices don’t rise indefinitely — but oil is surely testing that hypothesis. US$139, thats the second short squeeze in a couple of weeks. That, to me, is a sure sign of over-speculation on the long side. Thus, it makes brilliant mid term trading to take a 6 month dated put option on oil at US$139. The interplay suggests a peaking of buying frenzy. Just imagine the number of long positions taken up over the last few weeks. Now imagine who will be taking over these positions when these long players take their profits. A brief pullback to around US$122 a barrel early in the week fooled a few investors into thinking perhaps oil’s peak had passed. But oil exploded on Thursday and Friday, gaining a ridiculous 13% on the New York Mercantile Exchange in two days to trade at US$137.08. Every bubble in history had a good story. According to the IEA: Economic slowdown and high oil prices have continued to depress demand - global consumption forecast cut again by about 400,000 b/d f…