rob zdravevski's blog

The Euro – 3 prescient buying moments

There have been 3 notable moments when to accumulate the Euro (vs USD) over the past 24 years.

The monthly chart below shows those Oversold moments which coincide with EUR/USD trading at least 15% below its 200 Month Moving Average.

Buying at these moments isn’t about resolve, being brave or ‘having the balls’….it’s about discipline and shutting out the noise around you that the sky is falling.

February 14, 2023
by Rob Zdravevski
rob@karriasset.com.au

The absence of thinking for yourself

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.”

— Peter Thiel

Yesterday it was announced that at some time during the past quarter, Berkshire Hathaway’s 13F had reduced its holding in Taiwan Semiconductor (TSM) by 86% (from the previous quarterly filing).

and so, yesterday TSM’s stock price fell 5%.

This is one example where many who reacted to this news failed to think for themselves.

February 16, 2023

Start-ups or established publicly listed?

Techcrunch published a graphic showing that 50% of investment returns from Venture Capital Funds are less than 1 times the capital invested AND that only 5% of returns resemble 3x.

Shares in Exxon are closing in on a 4x return over the past 30 months and Alcoa shares produced a 12x return in recent times.

February 13, 2023

by Rob Zdravevski

rob@karriasset.com.au

Macro Extremes (week ending February 10, 2023)

A weekly Macro, Cross Asset review of prices trading at extremes which may generate future investment ideas and opportunities.

The following assets (on a weekly timeframe) registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)

Russian 10 year government bond yield

Australian Coking Coal 

Nasdaq Composite and Nasdaq 100 Index

Overbought (RSI > 70)

German 2 year government bond yields

Cattle

Italy’s MIB equity index

The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Orange Juice

Extremes “below” the Mean (at least 2.5 standard deviations)

None

Oversold (RSI < 30)

U.S. 5 year yield minus U.S. 3 month bill yield spread

Natural Gas

Urea (U.S. Gulf) 

Urea (Middle East)

Baltic Dry Index

Rotterdam Coal

The Oversold Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

None

Notes & Ideas:

This week’s edition is complimented by referencing last week’s.

Those who exhibited ‘extremes’ then, aren’t now.

Equities were mostly flat. They were so benign that we saw many ‘inside weeks’.

Any notable losses were seen in the U.S. and Scandinavia.

Understandably, Turkish equities slumped (10%) during the week.

Although, the larger news is that the indices which appeared Overbought in last week’s are not, this week.

Amongst bonds, yields generally rose. The U.S. 2 year closed at its highest level since November 14, 2022.

In commodities, energy prices understandably bounced while precious metals eased with Lumber, Tin and Aluminium being the more notable decliners.

Natural Gas rose 4.3% for week. The probability of a positive week grew after the commodity completed its 7th consecutive losing week and simultaneously touched Oversold extremes…..

Speak of losing streaks, Urea (U.S. Gulf) has seen 9 consecutive losing weeks. To boot 13 of the last 14 weeks have been negative as have 18 of the last 21 weeks.

Palladium and Platinum prices have fallen 16% and 14% respectively over the past 5 weeks.

Dutch TTF Gas and Rotterdam delivered Coal finally mean reverted to their 200 week moving average, thus honouring a retracement of the extraordinary parabolic moves seen in 2021 and 2022.

The latter has tanked 51% in the past 10 weeks.

Platinum also performed the same mean reversion. Now watching for Brent Crude to do the same, which although rose 8% for the week, has generally traded sideways for 5 months as is the same price as September 19, 2022.

Softs are in no-man’s land.

Orange Juice has soared 22% in 2 weeks, Cattle is Overbought for the 17th consecutive week and Tin is no longer 2.5 standard deviations above its weekly mean.

The Japan Korea LNG Marker (JKM) touched its lowest price since August 30th, 2021.

Shipping Rates weakened further with the Baltic Dry Index notching up a 7 week losing streak.

And a positive is that Australian Coking Coal has risen 17% in the past 2 weeks and 41% over the past 7 weeks.

In currencies, it was a boring and listless week.

The larger advancers over the past week comprised of;

Australian Coking Coal 7.l%, Gasoil 2.1%, Heating Oil 3.2%, Natural Gas 4.3%, Orange Juice 4.5%, Gasoline 7.9%, CRB Index 2.4%, Brent Crude 8.4%, Rice 1.9%, Wheat 3.9% and Argentina’s MERVAL rose 5.1% (and 11% over the past 3 weeks)

The group of decliners included;

Aluminium (4.8%), Rotterdam Coal (4.7%), Baltic Dry Index (3.1%), JKM (2.9%), Lumber (16.1%), Tin (4.3%), Palladium (5.8%), Platinum (2.9%), Dutch TTF Gas (6.8%), Urea U.S. Gulf (6.5%), Urea Middle East (7.7%), Silver AUD & USD (1.5%), Oats (1.8%), KBW Banks (1.8%), HSCEI (3.5%), HSI (2.2%), Nasdaq Composite (2.4%), S&P MidCap 400 (2.6%), Nasdaq Biotech (2.6%), Nasdaq 100 (2.1%), S&P SmallCap 600 (3.6%), Helsinki (1.9%), Stockholm (4.1%), Russell 2000 (3.4%), Swiss SMI (1.9%), SOX (2.3%), Mexico (2.9%), DJ Transports (3.1%) and Istanbul’s BIST Index slumped 10.2% 

For reference, the S&P 500 fell 1.1%, the DJ Industrials eased 0.2%, Toronto’s TSX fell 0.7%, the ASX 200 declined 1.7% and the ASX Small Caps swooned 4%.

February 12, 2023

by Rob Zdravevski

rob@karriasset.com.au 

The wickedness of the rally in coal stocks

I had a difficult time reading the equity rally in the Australian coal companies such as Whitehaven and New Hope.

I appreciated them being the lowest cost producer of energy but I couldn’t wrap my head around their profit estimates….

let alone their soaring stock prices.

I never owned them and they weren’t on my radar…but if I had bought Whitehaven Coal around $1 per share in the 2nd half of 2020, I can imagine selling at $3.00 or $3.80.

Whilst not being flippant nor ungrateful about an imaginary 300% return……can you see the pain that would’ve been inflicted watching it rise to $10.

All of those of supposed profits are not the point….I couldn’t ‘get a read’ and understand it.

This is when it can ‘go without me’.

Although, I also knew not to chase it and subsequently enter a new position because if I couldn’t grasp the entry point, how could I read the potential exit?

Throughout the parabolic rise, I knew to stay away and still I think there is risk Whitehaven’s stock price can pullback to the $4 range.

February 12, 2023

by Rob Zdravevski

rob@karriasset.com.au