The world has woken to the news that public enemy number 1 (well at least the US enemy number 1) - Osama Bin Laden - has been killed in a mansion in Pakistan in a joint special forces attack. It has been almost 10 years since that fateful day since September 11th and you can understand the relief in the US that this fight has been "won".
The cynic in me suggests that this news probably puts paid to Donald Trumps presidential ambitions.... All he could produce was a birth certificate of sorts for Barack Obama....
... no wonder Obama thought he probably was justified in taking a dig at the property billionaire in the press conference yesterday.
So what does this mean for markets and trading?
- I gotta fess up. Friday's spike in Gold burnt me and I was stopped out there.
- Still in with my short oil from $125 and long US$ / short Japanese Yen trade
In my head I had suspected a bit more of a "patriot rally" in terms of the US dollar but lets wait it out. The yen is weakening and as the rest of global markets digest the news, there might be a bit more enthusiasm for the trade.
Oil at $125 is in my humble opinion overbought and being driven by this commodity bubble and being held up unnaturally high with social tensions in places like Libya, Syria, Egypt etc. But there is nothing new in these areas to suggest that this kind of price is justified, especially with economic data suggesting the economy is staggering.
I do agree with the early analysis from STRATFOR that this probably means that the US can hasten its departure from Afghanistan. While the US has made a lot of noise about its humanitarian support / obligations to the region, the fight has been going on for 9 and a half years and Americans are tired of this battle. Since the initial "shock and awe" they've been left fighting for a country which is politically and economically worthless.
With the US elections around the corner, it will do a lot for popularity ratings to show US soldiers packing their bags and heading home to their loved ones. US soldiers departing the Middle East will invariably be good publicity in the near-term.
So for now I'll stay short oil and long the dollar... counter-intuitive maybe but its probably about time the world started to settle down for a bit and put this chapter behind us.
Showing posts with label Oil. Show all posts
Showing posts with label Oil. Show all posts
Sunday, May 1, 2011
Monday, December 27, 2010
Sasol, the Nasdaq and the Dollar
So we are slowly sliding out of an interesting 2010 and treading with some trepidation into 2011. Markets are interesting at the moment... I wouldn't say tough because I'm still happy being long for the simple reason that there is a sea of liquidity out there desperately seeking places to be parked. I think it is pretty obvious that people are not going to make (or even protect) money by leaving it in the bank.
I have three active trades on the go at the moment:
Sasol
I like this share. Good dividend payer, growth prospects, trades at a discount to its peers and hell its been largely unloved in 2010 despite oil now heading for $100 a barrel. The company started the year at R290 a share and up until September it didn't go anywhere but in the last couple of weeks its been slowly
gaining some momentum and looks like it wants to push aboe R340 a share.
Call me a cynic but the company is widely held by domestic asset managers and I wouldn't be surprised if this stock starts getting some serious media attention in the early half of 2011 as they try and ramp up their portfolios. Sasol also recently announced a $1bn investment in a Canadian project and a lot of its other Gas to Liquids (GTL) plants are coming on line and pushing up production volumes.
All signs are there that Sasol is kicking up a gear so I am comfortable being long Sasol at R335.
The Nasdaq
Technology stocks have been out of favour in the US for a while now but there is lot going for them. The last couple of quarters have been good for telecomms and tech stocks with many indicating share buybacks and dividends were on the cards. I stand under correction but I think Intel has lifted its dividend in each of the last five years.
US companies have sat with alot of cash on their balance sheets over the last two years and at some point they are going to look to deploy that capital. That means investing in new technology, PCs, semi-conductors etc. A Nasdaq at 2600 doesn't seem to be too risky in my books.
The Dollar
Considering how I got smacked around by US currency over the last six months I probably need my head read but here's my logic:
- The US is coming out of recession
- AIG, Bank of America and Citigroup are repaying their debts
- The emerging market story is interesting but it has meant that many of the US companies are offering some seriously good value. I wouldn't be surprised if demand for US assets starts to rise as institutional investors start realising that they get better value for their money in the US rather than directly ploughing money into emerging markets?
I thought about it a bit and decided to go long dollar, short yen. There is some uncertainty in Asia with the Korean spat so I wonder if the basket of Asian currencies might come under some selling pressure?
Let's see how those play out over the next few weeks.... Happy Xmas and New Year folks
I have three active trades on the go at the moment:
Sasol
I like this share. Good dividend payer, growth prospects, trades at a discount to its peers and hell its been largely unloved in 2010 despite oil now heading for $100 a barrel. The company started the year at R290 a share and up until September it didn't go anywhere but in the last couple of weeks its been slowly
gaining some momentum and looks like it wants to push aboe R340 a share.
Call me a cynic but the company is widely held by domestic asset managers and I wouldn't be surprised if this stock starts getting some serious media attention in the early half of 2011 as they try and ramp up their portfolios. Sasol also recently announced a $1bn investment in a Canadian project and a lot of its other Gas to Liquids (GTL) plants are coming on line and pushing up production volumes.
All signs are there that Sasol is kicking up a gear so I am comfortable being long Sasol at R335.
The Nasdaq
Technology stocks have been out of favour in the US for a while now but there is lot going for them. The last couple of quarters have been good for telecomms and tech stocks with many indicating share buybacks and dividends were on the cards. I stand under correction but I think Intel has lifted its dividend in each of the last five years.
US companies have sat with alot of cash on their balance sheets over the last two years and at some point they are going to look to deploy that capital. That means investing in new technology, PCs, semi-conductors etc. A Nasdaq at 2600 doesn't seem to be too risky in my books.
The Dollar
Considering how I got smacked around by US currency over the last six months I probably need my head read but here's my logic:
- The US is coming out of recession
- AIG, Bank of America and Citigroup are repaying their debts
- The emerging market story is interesting but it has meant that many of the US companies are offering some seriously good value. I wouldn't be surprised if demand for US assets starts to rise as institutional investors start realising that they get better value for their money in the US rather than directly ploughing money into emerging markets?
I thought about it a bit and decided to go long dollar, short yen. There is some uncertainty in Asia with the Korean spat so I wonder if the basket of Asian currencies might come under some selling pressure?
Let's see how those play out over the next few weeks.... Happy Xmas and New Year folks
Sunday, October 11, 2009
Bits and bobs
Tough week - just when you think you have things figured out you get worked over....
Before I get into my post this week I have to post something from Paul Theron over at South African asset management firm Vestact which I thought rang so true:
Deadly financial plan
FINANCIAL planning is deadly boring. What is worse, most of the assumptions are wild guesses, like the rate of inflation, your date of death and returns on equities.
Blogger Carl Richards suggests that it might be better to forget all the thumb sucking and just focus on some of the things we can control, and then hope for the best.
So how’s this for a financial plan. (1) Save as much as you reasonably can; (2) Don’t lose money through risky or stupid investments; (3) Draw down no more than 4%-6% of your assets each year once you retire.
There you go, all sorted.
...... And here we monkeys are trying to time or beat the market with our "systems" and analysis!
Sometimes I think keeping it all nice and simple beats this whole trading lark ... and then I get it right and I feel like a genius for a couple of hours!
Things that occur to me:
I do remain bearish on some aspects of the global economy but there is some genuinely positive data coming through:
Before I get into my post this week I have to post something from Paul Theron over at South African asset management firm Vestact which I thought rang so true:
Deadly financial plan
FINANCIAL planning is deadly boring. What is worse, most of the assumptions are wild guesses, like the rate of inflation, your date of death and returns on equities.
Blogger Carl Richards suggests that it might be better to forget all the thumb sucking and just focus on some of the things we can control, and then hope for the best.
So how’s this for a financial plan. (1) Save as much as you reasonably can; (2) Don’t lose money through risky or stupid investments; (3) Draw down no more than 4%-6% of your assets each year once you retire.
There you go, all sorted.
...... And here we monkeys are trying to time or beat the market with our "systems" and analysis!
Sometimes I think keeping it all nice and simple beats this whole trading lark ... and then I get it right and I feel like a genius for a couple of hours!
Things that occur to me:
I do remain bearish on some aspects of the global economy but there is some genuinely positive data coming through:
- Sometimes we traders get nailed by short-term "noise" that we don't look at what is right in front of us. I took a look at these charts which plotted the Baltic Dry Index (BDI) against Gold, Oil etc etc and it makes for interesting reading - underlying shipping rates are on the up (solidly)
- These string of natural disasters intrigue me and I am surprised they have been given so little coverage by the financial media. There is likely to be a lot of government sponsored re-building which will need to take place here in the coming months. Would be interesting to know how this will impact supply and demand of commodities
- I still think there is tension with Iran and I don't see the oil price going South any time soon except perhaps against a rebound in the dollar (see below)
- While I have been shouted down on it by certain people - I still believe that Pakistan is a far bigger economic and security threat to the world than people are giving it credit for. For crying in a bucket they stormed a millitary base and held soldiers captive in one of the countries which has active nuclear armaments!
- I see Jim Rogers is calling Gold to $2300 over the next decade and oild somewhere between $150 - $200 as well but sounds like a lot of noise and very unspecific.
- I am still long Sasol (probably short-term target of R310). The Rand to Dollar exchange rate has played havoc with this trade but it seems to have ground itself higher, despite the currency. Still think there is a bit more legs to this trade
- I get the sense that we might be about to see the dollar do a short-term bounce (which might tie give a boost to SOL). Yes it has been sold down hard but at some stage but when something is completely out of favour, it suddenly surprises. It is also still a "hard" currency and with many export dependant economies needing a strong dollar exchange rate, it might not be a bad idea to look at the USD recovering in the short-term
- I have put on some SMALL and TENTATIVE shorts on Gold as well on the back of a dollar revival
- The 10000 point Dow must be on the cards for this week
Thursday, October 1, 2009
Friday mumbles
After making a small profit on my short on the Top40 I closed out my position and the only open trade I now have open is a long on Sasol. At least the Rand is providing a bit of a handbrake at the moment and the oil price at $68.60 is "robust"
There is no question that the rising unemployment issues in places like the US remains a threat - you cannot have a jobless recovery - finished and klaar. Personally I think a lot of stocks will still come off over the next few months - particularly those with exposure to the consumer end of the market.
A couple of people commented that being long Sasol while shorting the TOp40 was surely counter-productive and in general that makes sense. But Sasol is cheap in comparison to its international peers.
At the moment Sasol is trading on a price to earnings (PE) multiple of say 10.5 (allowing for some currency).
In comparison the historical PE's of:
For sure Sasol is not Exxon or Chevron but when one considers the multiplier effect that a weaker rand could have on earnings and the great technology the company possesses, it would make sense to see Sasol pushing on from here.
But that's just my view so who knows.
It is not a very scientific method of analysing investor sentiment but I thought what was quite interesting was to take a look at the top headlines on CNN....
# Chicago, Rio lead race to host Olympics
# Key piece of human evolution revealed
# 1,100 dead in Indonesia quakes, U.N. says
# Ex-prosecutor says he lied about Polanski case
# Martin: Hollywood is clueless on Polanski
# CNNMoney: Dow plunges on economic reports
# Fortune: BofA CEO scores $53M retirement
# KSL: Elizabeth Smart says she was raped daily
# Vote now for 2009 CNN Hero of the Year
# Time: What Berlusconi's Obama jokes say
# Ticker: Republican sounds off on Polanski
# Boy, 11, wages fight against the N-word Video
# Stranger carries boy from burning building Video
# H1N1 vaccine on schedule, official says
# What if you ditched your car for a day?
# Kanye West's 'Fame Kills' tour meets swift end
# Sister upset about Mackenzie Phillips' book Video
# Poo power saves farmer $200,000 Video T-shirt
# CNN Wire: Jon Gosselin’s epiphany...
...... Yip sounds like people are REALLY worried about panic in the global economy this Friday.
There is no question that the rising unemployment issues in places like the US remains a threat - you cannot have a jobless recovery - finished and klaar. Personally I think a lot of stocks will still come off over the next few months - particularly those with exposure to the consumer end of the market.
A couple of people commented that being long Sasol while shorting the TOp40 was surely counter-productive and in general that makes sense. But Sasol is cheap in comparison to its international peers.
At the moment Sasol is trading on a price to earnings (PE) multiple of say 10.5 (allowing for some currency).
In comparison the historical PE's of:
- Exxon Mobil - 17 times
- Chevron - 15 times
- Royal Dutch Shell - 13 times
- BP - 13.9
- ConocoPhillips - 13
- Total - 9
For sure Sasol is not Exxon or Chevron but when one considers the multiplier effect that a weaker rand could have on earnings and the great technology the company possesses, it would make sense to see Sasol pushing on from here.
But that's just my view so who knows.
It is not a very scientific method of analysing investor sentiment but I thought what was quite interesting was to take a look at the top headlines on CNN....
# Chicago, Rio lead race to host Olympics
# Key piece of human evolution revealed
# 1,100 dead in Indonesia quakes, U.N. says
# Ex-prosecutor says he lied about Polanski case
# Martin: Hollywood is clueless on Polanski
# CNNMoney: Dow plunges on economic reports
# Fortune: BofA CEO scores $53M retirement
# KSL: Elizabeth Smart says she was raped daily
# Vote now for 2009 CNN Hero of the Year
# Time: What Berlusconi's Obama jokes say
# Ticker: Republican sounds off on Polanski
# Boy, 11, wages fight against the N-word Video
# Stranger carries boy from burning building Video
# H1N1 vaccine on schedule, official says
# What if you ditched your car for a day?
# Kanye West's 'Fame Kills' tour meets swift end
# Sister upset about Mackenzie Phillips' book Video
# Poo power saves farmer $200,000 Video T-shirt
# CNN Wire: Jon Gosselin’s epiphany...
...... Yip sounds like people are REALLY worried about panic in the global economy this Friday.
Monday, June 22, 2009
But but but....
A sea of red greets traders today with Asia kicking us off. Had a couple of overnight shorts in place on both the Hang Seng and Nikkei which I've cashed out... Still reckon there is more downside to this leg but nobody ever went broke taking a profit.
The only thing I've got open now is a short on the Dow with a downward trend back in place as the rally fizzles out after the World Bank came out yesterday with some negative comments about future growth potential... which was in contrast to comments attributed to George Soros who said "The worst was behind us"
I am by no means a perma-bear and I think there are some nice value opportunities in the market at the moment - particularly in the South African market - but we need to appreciate how skittish investors are.
The bid by Xstrata for Anglo American gave the local market a bit of a boost but having chatted to a few people I get the sense that the bid is not going to get the support needed and if the "transaction premium" gets yanked out from Anglo then the JSE Top40 could take a smack.
Commodity futures are down as well. I thought there might be a bit more support for gold at 920 and oil at US$68 (particularly after its recent strength) but I guess next areas of interest for me are gold at around US$910 and oil at US$65.
(On that - I noticed an interesting story on Bloomberg about Japanese banks threatening to pull some funding from Venezuelan oil assets in response to non-payment and nationalisation threats... could this be a short term catalyst?)
Down still seems to be the only direction.
The only thing I've got open now is a short on the Dow with a downward trend back in place as the rally fizzles out after the World Bank came out yesterday with some negative comments about future growth potential... which was in contrast to comments attributed to George Soros who said "The worst was behind us"
I am by no means a perma-bear and I think there are some nice value opportunities in the market at the moment - particularly in the South African market - but we need to appreciate how skittish investors are.
The bid by Xstrata for Anglo American gave the local market a bit of a boost but having chatted to a few people I get the sense that the bid is not going to get the support needed and if the "transaction premium" gets yanked out from Anglo then the JSE Top40 could take a smack.
Commodity futures are down as well. I thought there might be a bit more support for gold at 920 and oil at US$68 (particularly after its recent strength) but I guess next areas of interest for me are gold at around US$910 and oil at US$65.
(On that - I noticed an interesting story on Bloomberg about Japanese banks threatening to pull some funding from Venezuelan oil assets in response to non-payment and nationalisation threats... could this be a short term catalyst?)
Down still seems to be the only direction.
Thursday, June 4, 2009
Friday trades
Only open trades at the moment are short copper and short platinum which I went into last night...
It all just looks a bit too toppish for me and expecting a bit of a commodities sell-off today.
Drifting in and out of oil at above 69.50 - think this has run a little too hard in the last few days - time for a breather.
Hard to call the markets with the BHP news giving a skew opening to the All Share... Will see..
It all just looks a bit too toppish for me and expecting a bit of a commodities sell-off today.
Drifting in and out of oil at above 69.50 - think this has run a little too hard in the last few days - time for a breather.
Hard to call the markets with the BHP news giving a skew opening to the All Share... Will see..
Monday, May 25, 2009
Interesting times
Monday was a bit of a non event as far as trading went - neither the US nor the UK were open for trading so global markets were battling for direction of any kind.
However I thought that maybe the Memorial Day holidays in the US may provide us with a short-term trading opportunity. The Americans are quite big on these big patriotic holidays and on more than one occasion I've seen these "Patriot Rallys" where US markets go up seemingly because of national sentiment.
Did a bit of a Google search on the subject - specifically relating to Memorial Day - and I came up with this link which made for good reading (particularly if you're a stats or quants guy).
Used Monday to position myself with a couple of short term long trading positions on the Dow, S&P, Oil, JSE All Share Index, Naspers, AngloGold and Sasol. Yeah yeah its a bog-roll long list of pozzies but I'm comfortable with the spread.
I wanted MTN as well yesterday morning but the merger talk with Bharti moved the price too early and I couldn't get the entry I wanted.
The Oil trade hasn't yet gone totally to plan and is bouncing around just above my stop-loss but there seems to be some support at above US$59.50 which is keeping me in the game.
I don't believe this will be a particularly sustainable rally but I guess we try and take the opportunities when they look like they are there and if there are short-term profits available then we take it off the table.
However I thought that maybe the Memorial Day holidays in the US may provide us with a short-term trading opportunity. The Americans are quite big on these big patriotic holidays and on more than one occasion I've seen these "Patriot Rallys" where US markets go up seemingly because of national sentiment.
Did a bit of a Google search on the subject - specifically relating to Memorial Day - and I came up with this link which made for good reading (particularly if you're a stats or quants guy).
Used Monday to position myself with a couple of short term long trading positions on the Dow, S&P, Oil, JSE All Share Index, Naspers, AngloGold and Sasol. Yeah yeah its a bog-roll long list of pozzies but I'm comfortable with the spread.
I wanted MTN as well yesterday morning but the merger talk with Bharti moved the price too early and I couldn't get the entry I wanted.
The Oil trade hasn't yet gone totally to plan and is bouncing around just above my stop-loss but there seems to be some support at above US$59.50 which is keeping me in the game.
I don't believe this will be a particularly sustainable rally but I guess we try and take the opportunities when they look like they are there and if there are short-term profits available then we take it off the table.
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