Skip to main content

Reassessing The Investing Paradigm

So, can oil derail everything?

[socolata-scha1+(16).jpg]

Obama and other leaders are careful and cautious in not wanting to send in the military (once again), but its oil we are talking of, and many of the global democracies would like to see Gadaffi out of Libya, its their chance. Obama would not like to be trigger happy, something if Dick Cheney was in power, he would have sent troops to Libya already. Maybe he is waiting for more countries to "support him in a military operation" because he certainly won't want the US to take the lead again. If much of Europe agrees to do so, we could see a "coalition of armies" which will make any infiltration more a "collective like effort" than a US one. EU faces a massive problem as there will be plenty of displaced people rushing to all of Europe as refugees, which will take a toll on their feeble recover with the additional social cost to their systems.

Key members of OPEC, including Saudi Arabia, Kuwait, the United Arab Emirates and Nigeria, are lifting oil output to push back oil prices, which have soared during the unrest in the Arab states, Tuesday media reports said. The move would address global concerns that the unrest in the Arab nations might interrupt global oil supplies, as well as worries that higher oil prices might send inflation soaring or depress economic growth, reports said. In particular, a production increase at the Organization of the Petroleum Exporting Countries would about make up the shortfall in supplies out of Libya, which is currently wracked by a civil war, reports said. Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah told reporters Tuesday that OPEC was in talks about increasing production but hadn't yet decided to do so.


The bulk of the OPEC members are also in the same pattern of domestic unrest, and its in their interest to NOT let oil price surge because further climbs will derail the recovery in the US and Europe, making the latter group more prone to military action - something the majority of OPEC big boys do not want to see happening. If it happens to Libya, it would encourage the dissidents in their own countries even more. So, we have OPEC there looking out for ways to ensure oil does not get too high. Expect OPEC to increase production release soon if Libyan crisis continues.

Britain and France said they were seeking U.N. authority for a no-fly zone over Libya, as Muammar Gaddafi's warplanes counter-attacked against rebels and aid officials said a million people were in need. Rebels swiftly rejected an olive branch offered by an associate of Gaddafi, and fighting escalated around a key oil port. The aging autocrat warned that if he fell thousands of refugees would "invade Europe." With civilians surrounded by forces loyal to Gaddafi in two western towns, Misrata and Zawiyah, fears grew of a rising humanitarian crisis if the fighting continued. U.N. aid coordinator Valerie Amos said more than a million people fleeing or inside the country needed humanitarian aid.

The United States and its NATO allies edged closer Monday to formulating a military response to the escalating violence in Libya as the alliance boosted surveillance flights over the country and the Obama administration signaled it might be willing to help arm Gadhafi's opponents. Europe, meanwhile, kick-started international efforts to impose a no-fly zone. What this all means is that OPEC will have to act soon to buy time.

[socolata-scha1+(2).jpg]

These are the options:
a) Gadaffi admits defeat, everything is well again, markets rise
b) Gadaffi hangs on by killing more Libyans daily, the human casualty will prompt the US and NATO allies to act with strong global support, once they move in, we can expect a swift demise for Gadaffi, markets rise
c) OPEC acts to lower price of oil which may delay the US and NATO from military action, but the morality of not acting when civilians are being massacred will force the hand of the US and NATO. How soon? I say, Gadaffi has less than 1 week to surrender, either way, markets should rise soon

[socolata-scha1.jpg]

I think the global markets have over reacted on the downside because we are really talking of oil in the $105-110 range. Yes, it will hurt some industries more but its not debilitating so. Remember we were there at $125-135 sometime back, how bad was it then? The above picture would point to a speedy resolution one way or another. I would side towards the optimistic bunch of investors willing to go long now.

Comments

M said…
Could it be that QE was not factor in where it could lead to this? More money is flowing and speculating in the market than before.

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.


My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.


I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.


My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.


Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:






























p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far



http://malaysiafinance.blogspot.my/2016/12/bank-negara-may-have-switched-on-bull.html


I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…