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Fri, 23rd June 2017

Anirudh Sethi Report

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Archives of “June 2, 2017” Day

US crude oil price to average $53.52 per barrel in 2017

So say the results of latest Reuters poll 2 June

  • vs $57.24 in prev poll in April
  • 2018 $57.24 vs $59.23 prev
  • Brent crude ave price $55.57 in 2017 vs $57.04 prev
  • 2018 $59.63 vs $61.46 prev

34 economists polled

Reduced expectations (weakest of 2017 so far) but still seems very toppish to me.

I bet there’s a few traders who would love to see prices up there again.

Currently $47.14 and $49.33

 

Nikkei 225 closes up +1.6% at 20,177.28

Positive tones as USDJPY remains underpinned 2 June

  • high 20239.81
  • low 19967.00
  • Topix +1.64% at 1612.20
  • USDJPY 111.62 going nowhere in a hurry still

Expect sellers into 111.80 then larger at 112.00. Demand into 111.50, 111.30 and 111.00

Australia’s S&P/ASX200 closes up +0.92% at 5791.20

 

As US retreats, EU and China seek climate leadership at summit

China and the European Union will seek on Friday to save a global pact against climate change from which U.S. President Donald Trump said he will withdraw.

As China emerges as Europe’s unlikely global partner on areas from free trade to security, Premier Li Keqiang will meet top EU officials at a summit in Brussels that will also address North Korea’s missile tests and global steel overcapacity.

 Speaking in Berlin, Li underlined strong support for the 2015 Paris climate change accord from China, which overtook the United States as the world’s biggest emitter of greenhouse gases in 2007.

“China will stand by its responsibilities on climate change,” he told reporters after meeting German Chancellor Angela Merkel and before flying on to Brussels.

In a statement backed by all 28 EU states, the European Union and China will commit to full implementation of the Paris Climate Agreement, EU and Chinese officials said.

The joint statement, the first between the China and the EU, commits to cutting back on fossil fuels, developing more green technology and helping raise $100 billion a year by 2020 to help poorer countries cut their emissions.

Chinese crude steel production hits monthly record

China’s steel output is picking up pace due to greater infrastructure investment and the crackdown on illegal production, creating worries for the global steel market and stoking uncertainty about President Xi Jinping’s efforts to bring the country’s overcapacity to heel.

Crude steel production in China hit back-to-back monthly records in March and April. In March, production rose 1.8% over the previous month to 71.99 million tons, and in April it shot up 4.9% to 72.78 million tons, according to the National Bureau of Statistics of China. The April figure is a pace of 2.42 million tons per day, or 885 million tons a year, and would represent an increase of 77 million tons from 2016, besting South Korea’s production of 69 million tons.

 Strong investment was the biggest factor. From January to April, infrastructure investment soared 23.3% compared with a year earlier, and real estate development investment climbed 9.3%. Both fields require a lot of steel. The Communist Party’s National Congress, where new leadership is appointed, is approaching in the fall and regional leaders are trying to bolster their reputations by boosting national gross domestic product.

Another factor is the crackdown on production that melts scrap and remolds it. Such steel is illegal due to environmental and other reasons but rural areas have continued to produce it. Yearly capacity is estimated at 100 million tons and output at 30 million tons. Starting last year the Chinese government began closing down such facilities, even going so far as revealing the officials of the offending regional governments. It is possible that crude steel is making up for that reduction.

Currently, Chinese steel exports are falling due to high domestic consumption. Until April, exports had fallen year on year for nine straight months. Price differences between rebar, steel plate and other product types have varied widely. Prices over that span were about 20-70% higher than the same period a year earlier, but have come down 10-20% from the most recent peak in March.

Concerns about the global steel market are mounting in Europe, Japan and the U.S. The Chinese government has tightened money over worries about a real estate bubble, and many believe the country’s economy will slow in the second half of the year. If China begins cheap steel exports again, steelmakers in developed nations may suffer.

The 7-Trading Rules

Here are the rules – they are not unique or new. They are time tested and successful investor approved. Like Mom’s chicken soup for a cold – the rules are the rules. If you follow them you succeed – if you don’t, you don’t.

1) Sell Losers Short: Let Winners Run:

It seems like a simple thing to do but when it comes down to it the average investor sells their winners and keeps their losers hoping they will come back to even.

2) Buy Cheap And Sell Expensive:

You haggle, negotiate and shop extensively for the best deals on cars and flat screen televisions. However, you will pay any price for a stock because someone on television told you too. Insist on making investments when you are getting a “good deal” on it. If it isn’t – it isn’t, don’t try and come up with an excuse to justify overpaying for an investment. In the long run – overpaying will end in misery.

3) This Time Is Never Different:

As much as our emotions and psychological makeup want to always hope and pray for the best – this time is never different than the past. History may not repeat exactly but it surely rhymes awfully well.

4) Be Patient:

As with item number 2; there is never a rush to make an investment and there is NOTHING WRONG with sitting on cash until a good deal, a real bargain, comes along. Being patient is not only a virtue – it is a good way to keep yourself out of trouble.

5) Turn Off The Television:

Any good investment is NEVER dictated by day to day movements of the market which is merely nothing more than noise. If you have done your homework, made a good investment at a good price and have confirmed your analysis to correct – then the day to day market actions will have little, if any, bearing on the longer-term success of your investment. The only thing you achieve by watching the television from one minute to the next is increasing your blood pressure.

6) Risk Is Not Equal To Your Return:

Taking RISK in an investment or strategy is not equivalent to how much money you will make. It only relates to the permanent loss of capital that will be incurred when you are wrong. Invest conservatively and grow your money over time with the LEAST amount of risk possible.

7) Go Against The Herd:

The populous is generally right in the middle of a move up in the markets but they are seldom right at major turning points. When everyone agrees on the direction of the market due to any given set of reasons – generally something else happens. However, this also cedes to points 2) and 4); in order to buy something cheap or sell something at the best price – you are generally buying when everyone is selling and selling when everyone else is buying.

These are the rules. They are simple and impossible to follow for most. However, if you can incorporate them you will succeed in your investment goals in the long run. You most likely WILL NOT outperform the markets on the way up but you will not lose as much on the way down. This is important because it is much easier to replace a lost opportunity in investing – it is impossible to replace lost capital.

As an investor, it is simply your job to step away from your “emotions” for a moment and look objectively at the market around you. Is it currently dominated by “greed” or “fear?” Your long-term returns will depend greatly not only on how you answer that question, but how you manage the inherent risk.

 
 

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham

 

(Overnight oil headline) – Russia’s eco min says can live forever at $40 Oil

Russia’s Economy Minister Maxim Oreshkin in a Bloomberg interview on the sidelines of the St. Petersburg International Economic Forum on Thursday

OPEC “has not failed at all” in its attempt to drive oil prices up
“We are targeting tighter short-term end of the curve”
From a Russian economy perspective, the key assumption on which all Russian monetary and fiscal policies are based is oil at US$40
Russia is not as dependent on the price of oil as it was five or ten years ago
We are actually ready to live forever at oil prices $40 or below

Overnight US Market : A hat trick on the major indices today. S&P, Nasdaq and Dow close at record levels

S&P up 0.76%. Nasdaq up 0.78%. Dow up 0.65%

The major indices in the US are all closing at record levels….
  • The S&P closed up 18.26 or +0.76% at 2430.06, That is the high for the day
  • The Nasdaq closed up 48.312 points or 0.78% at 6246.82. The high ticked to 6247.07.
  • The Dow closed up 135.53 points or +0.65% at 21144.18. That is the high for the day.