Crypto – next move is government’s
August 7, 2021 Leave a comment
Will Governments displace, disrupt or just takeover digital currency?
https://amp.ft.com/content/14b0fc81-ac17-4436-89ac-09d71c15d2af
The Delicate Game of Interest Rates & Inflation
August 6, 2021 Leave a comment
Brazil lifts interest rates by 1% to 5.25%. It’s seen as its most aggressive move since 2016.
2 weeks ago, Russia, (another commodity reliant economy) hiked rates too.
It looks like both central banks are trying to curb inflationary pressures. Rising commodity prices are a notable contributor.
Invariably, rising inflation will send government bond yields higher.
Why are the central banks in other commodity sensitive economies such as Australia and Canada still holding interest rates around the 0.50% mark?
Are the Bank of Canada and the Reserve Bank of Australia foolishly towing the same line as other Western economies?
The British, German and French economies are vastly different.
This may turn out to be a perilous policy error.
Are the BOC and RBA not entirely politically independent?
Can it be that the Russian Central Bank is acting for the good of the economy and citizens or is it because Putin doesn’t need to worry about being re-elected and Scott Morrison does?
Or perhaps it’s because the Household Debt to GDP for Russian’s and Brazilians is 22% and 37% respectively,
while in Canada it’s 113% and Australia’s is a world topping 123% ????
August 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
My views on the AUD/USD…..
August 4, 2021 Leave a comment
The AUD/USD (currently 0.7400) is seeing its short-term (2-6 weeks) downtrend waning and weakening.
A move higher to 0.7550 is now expected.
Once I see a test of 0.7550, I expect a move lower to 0.7300 region as the AUD/USD, over the Medium Term (3-8 months) is still in clear downtrend.
Failure to hold 0.7290 suggests a move to the 0.7020 mark, with 0.7250 and 0.7150 being stops along the way down.
Keep in mind, the main game is for a lower AUD (versus the USD) and any uptick by a penny or so, is merely a chance to buy some more USD.
August 4, 2021
by Rob Zdravevski
rob@karriasset.com.au
Coffee and O.J. tank
August 3, 2021 Leave a comment
As featured in my latest weekly edition on Macro Extremes, Coffee and Orange Juice were touching ‘weekly’ Overbought ‘extremes’……
These commodities have declined 14% and 10% respectively over the past 4 trading sessions.
It’s not easy calling a reversal in trend but when prices rally sharply and somewhat parabolically, probability of a decline or mean reversion increases.
It does help tell you one thing…..be careful initiating a Long when ‘weekly’ Overbought extremes are being registered.
August 3, 2021
by Rob Zdravevski
rob@karriasset.com.au
Macro Extremes (week ending July 30, 2021)
August 1, 2021 Leave a comment
The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.
Extremes “above” the Mean (at least 2.5 standard deviations)
USD/KRW (signifying a weaker Korean Won)
Overbought (RSI > 70)
Tin (for the 14th week)
Gasoil
Heating Oil
Gasoline
Hot Rolled Coil Steel
Natural Gas
Coffee
Orange Juice
the CRB Index
Switzerland’s SMI equity index (for the 7th week)
Australia’s ASX 200
Amsterdam’s AEX index
France’s CAC-40 index
and the Stockholm, Copenhagen and Helsinki equity indices.
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
Nil
Assets (securities) within my immediate universe which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;
Extremes “below” the Mean (at least 2.5 standard deviations)
the U.S. Government 10 year bond yields,
the U.K., Chinese, Korean and Swedish 10’s,
AUD/JPY (signifying a strong Yen versus a weaker AUD),
the Hang Seng Index,
the Hang Seng China Enterprises Index
and the Shanghai Composite.
Oversold (RSI < 30)
Nil
The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)
Nil
Notes & Ideas:
The decliners included Iron Ore (15%), Coffee (5%) following last weeks 17% rise), Natural Gas (3.6%), Orange Juice (3.2%), the Hang Seng Index (6%) and the Shanghai Composite (4.3%).
Advancers were dominated by commodities where Brent and WTI Crude, Cocoa, Tin, Gasoil & Gasoline all rose 2% for the week. Aluminium climbed 3.7%, Hot Rolled Coiled Steel soared 6% and Heating Oil & Wheat advanced 3%.
The U.S. 10 year bond yield fell albeit muted when compared to the past month’s action. The yield fell from 1.28% to 1.23%.
The 10’s remain bound in a larger range but we watch it broader capital markets could become explosive is the 10’s break decisively either below 1.25% or above 1.65%.
No cryptocurrencies registered any Extreme readings.
And lastly, Bitcoin is trading 193% above its 200 Week Moving Average, which is notably higher than last week’s 145% reading and certainly lower when compared to its 466% peak in mid-April 2021.
August 1, 2021
by Rob Zdravevski
rob@karriasset.com.au
Perspective and Hypocrisy
July 30, 2021 1 Comment
What is the big deal with the Chinese government’s recent directives stymying technology or education firms?
During the 2010’s, the U.S. Department of Education either forced the closure or change of ownership, sued or ended accreditation or recognition of ‘education providers’ such as DeVry Education Group (now Adtalem Global Education), ITT Educational Services, Corinthian Colleges and Apollo Education (which was taken private at $10 per share, compared to its high of $89/share in 2009).
For example, then Californian attorney-general, Kamala Harris led the charge in suing Corinthian (leading to their demise in 2016 when she won her judgement) for predatory practices of mounting and leaving students in crippling debt……much like China’s concerns today.
In addition, didn’t the U.S. government force the break-up of AT&T and Microsoft?
And I wonder……aren’t Google, Facebook, Microsoft, Apple etc, some type of pseudo-government agencies ?
or at least, at their behest or influence?
Between all the congressional hearings and testimonies and the ‘cloud’ of anti-trust undertakings, a little perspective is required to the current Chinese news.
After all, it is not a far-fetched idea that Amazon is forced to ‘spin-off’ its AWS division.
The hypocrisy of western governments doesn’t seemed to be recognised by their own selves. They apply a host of restrictions, rules and bans too.
Perhaps China is entering its own Progressive Era and the U.S. may have its own 2.0 version?
July 30, 2021
by Rob Zdravevski
rob@karriasset.com.au
Alternatives to chemical based plastic
July 28, 2021 Leave a comment
PLA’s and PHA’s is a technology which interests me greatly. 2 stocks listed in this article feature amongst some client portfolios.
Take your pick – Thorium or Uranium
July 28, 2021 Leave a comment
While I have hinted that I am bullish on nuclear energy and uranium……I have been an avid watcher of thorium which has been seen as a nascent alternative but in truth it has existed for some time. Its evolution has been retarded for a host of political and capitalist reasons.
An extract from this article says, “China has some of the world’s largest reserves of thorium, a silvery metal with weak radioactivity. By some calculations it has enough to meet the country’s energy needs for at least 20,000 years. By contrast, China has some of the lowest uranium reserves of any nuclear-capable country”.
https://www.neimagazine.com/news/newschina-moves-forward-with-thorium-molten-salt-reactor-8919220
Who bothers to read a prospectus?
July 28, 2021 Leave a comment
Whether this is a harbinger is another matter.
Robinhood is about allow its equity to be publicly traded.
As I harp on about ‘doing your research’, notice that 73 pages (of the 400) in the prospectus is dedicated to ‘Risk Factors’
https://www.sec.gov/Archives/edgar/data/1783879/000162828021013318/robinhoods-1.htm
July 29, 2021
by Rob Zdravevski
rob@karriasset.com.au
Stock-picking over Indexing
July 28, 2021 Leave a comment
I am (and have been) positioning portfolios for rising inflation.
Because of this view, I think certain sectors will perform better than others (see sector rotation) and as a function of my business, my focus is picking the better companies to be invested in.
This is dominated by placing an emphasis on the ‘risk’ part of an attractive risk/reward opportunity.
In other words, try to take the least possible risk while seeking an adequate return and picking the stocks with tailwinds should take care of the rest.
In turn, due to many reasons (including a large overweight to technology), I think broad-based index tracking ETF’s (and the indices themselves) will be poor performers in the coming years.
It’ll be evident which money managers are index huggers.
I’m not being dangerous nor a maverick but I can’t help observe that in the asset management industry, all that a fund manager needs to do is, make sure their performance is similar and close to the rest of the sheep.
It’s safer staying with the flock…..you get to keep your job, retain assets and keep the gravy train chugging along.
I dare to say, that diversification certainly helps you achieve one common thing…….it’s that you are able to lose less money than others.
July 29, 2021
by Rob Zdravevski
rob@karriasset.com.au
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