Mon, 30th May 2016

Anirudh Sethi Report


Archives of “price target” Tag

BOJ meeting Minutes released now

The Minutes from the BOJ October 31 meeting:

  • Many BOJ members said the BOJ to keep easing until inflation is stable
  • BOJ will check risks, make adjustments as needed
  • Japan economy continued to recover moderately
  • Many members said if downward pressure on prices remained there was a risk that the shift in deflation mindset could be delayed
  • Inflation to be around 1% for some time
  • Kuroda proposed additional easing
  • One member said if the BOJ had not expanded QE it could be seen as breaking its commitment to its price target
  • One member said expanded QE is sufficient to meet 2% price target in second half of 2015 fiscal year
  • One member said if price target in sight debate about exit strategy would be possible
  • BOJ should explain that QQE is open-ended
  • Some members said extra easing size should be as big as possible, need to avoid easing being seen as incremental
  • Some said the effects of more easing not worth the costs, saw maintaining previous policy as appropriate, said virtuous cycle was being maintained

Full text is here

JPMorgan’s Permabull Tom Lee Has Left The Firm

Perhaps it was his comments today that “a construction boom is coming… tune out the noise and enjoy the bull market” due to lower oil costs and improving weather; but it appears JPMorgan and the permabull are about to part company after 15 years:


It is unclear if Lee’s next career will be as waterboy for Ben Bernanke on his $250,000/speech global speech tour. What is, however, likely is that in his place JPM will simply unleash an algorithm that keeps raising JPM’s “official” S&P500 price target to 100 points above wherever the S&P may be at any given moment.

Ten questions to ask yourself before every trade

  1. Does this trade fit my chosen trading style? Whether it is:  swing trading, momentum, break out, trend following, reversion to the mean, or day trading? Does this trade fit into the parameters of who I am as a trader, or is it just based on my own fear or greed?

  2. How big of a position do I want to trade? How much capital am I going to risk? Am I limiting my risk to 1% or 2% of my trading capital? Knowing where my stop will be how big should my position size be to limit my risk?
  3. What are the odds of my risk of ruin based on my capital at risk?
  4. Why am I entering the trade here? What is the entry trigger to take the trade? Is this a quantified entry on my trading plan?
  5. How will I exit with a profit? A price target or trailing stop? Read More 

SBI-Hard To Judge Whether This Bank Is Even Functional

sbi2F1Q14 PAT of Rs32.4bn was supported by stable NIMs, high capital gains and lower provisions despite a sharp spike in NPLs (coverage fell). But,these are unsustainable, in our view. Higher costs and provisioning will make it tough to deliver headline earnings. Stay Underweight.F1Q14 headline earnings were better than MSE: PAT (-14% YoY) was 6% above on lower provisions. Core PPoP (adjusted for longevity-related pension costs) was

3% below our estimate. Impairments spiked to 7.5% of loans (annualized). Coverage fell to 51% from 57%.Average PAT over the next three quarters is unlikely to be materially >Rs20bn: This will be driven by weaker asset quality (51% coverage and huge impaired loan formation); likely fall in NIMs (falling spreads/LD ratio); rising opex and higher bond yields (MTM losses of ~Rs13bn according to management).

Balance sheet is weakening faster than expected:

Impaired loans rose to 8.6% of loans (7.7% last quarter),with deterioration across all sectors despite stable macro conditions in F1Q14. Given sluggish growth and rising rates, asset quality is likely to get worse. Low coverage at 51% of NPLs (even lower on impaired loans) will keep provisioning higher for longer. Impaired loans stock will keep rising as ability to write off NPLs will be limited – we now project 10% in FY14 and 11.5% FY15 (vs. 9.3% and 10.5% previously). Capital (common equity Tier 1 ratio) at 8.9% in this context is low. Read More 

BOJ Upgrades Views In 8 Out Of 9 Regions

The Bank of Japan Thursday raised its assessment of local economies in eight out of nine regions, adding to signs of a recovery in the country’s economy as solid domestic demand takes hold.

“Domestic demand has increased in its resilience on the back of an improvement in household and business sentiment, while overseas demand is heading toward a pickup,” the central bank said in its quarterly regional economic report.

In the previous report in April, the central bank raised its view of all nine regions. Read More 

Ten Questions to ask Yourself Before Every Trade

If you are just randomly trading what you like with no real underlying system, method or planning then unfortunately your odds of success in the long term are slim. Trading a winning methodology is what creates an edge in trading.

Consistently trading a robust system or methodology enables you to trade in a way that historically wins, controls risk, and does not bring your ego and your emotions into your trading in a destructive way.

Ten questions to ask yourself before every trade:

  1. Does this trade fit my chosen trading style? Whether it is:  swing trading, momentum, break out, trend following, reversion to the mean, or day trading?
  2. How big of a position do I want to trade? How much capital am I going to risk? Am I limiting my risk to 1% or 2% of my trading capital?
  3. What is my risk of ruin based on my capital at risk?
  4. Why am I entering the trade here? What is the trigger to trade?
  5. How will I exit with a profit? A price target or trailing stop? Read More 

There Are Sell-Orders Lurking That Could Send Gold All The Way To $850

Gold first entered a bear market in April, and the recent rout has seen the precious metal break below the $1,200 level this week.GOLD-MELTING-ASR

 Adam Grimes, CIO at Waverly Advisors told Business Insider that market participants have stop orders beyond visible support points in the market.

“[The sell off in mid-April] was quite likely driven by a cluster of these orders, and we believe that more are probably lurking lower,” he said.

A stop order is an order to sell a position if price fall to a certain level.

Here’s more from our conversation with Grimes. Read More 

G-20 Releases Statement On Japanese Devaluation

And just to add one more embarrassing detail for them, while section 4 discusses “Japan’s recent policy actions,” not only does Canada’s finance minister James Flaherty believe they “didn’t discuss the Japanese Yen,” but Japan’s Kuroda believes, comments on ‘misalignments’, “were not meant for the BoJ.”


 It seems “Forward Progress” is an important subliminal phrase…


Meeting of Finance Ministers and Central Bank Governors

Washington, 18-19 April 2013 Read More 

Asia Wrap

  • New BOJ head Kuroda spoke before the Japanese parliament today. He did not say anything of surprise to the markets, reiterating various points:
  • BOJ will do whatever it takes to end deflation
  • BOJ has not been buying enough in terms of size, type of asset
  • Will consider extending bond maturities – increasing purchases of long term bonds
  • Will consider scrapping banknote rule
  • Hard to set nominal GDP as policy target
  • Wants to Achieve BOJ’s 2% Price Target in Two Years
  • Kuroda will now appear before Japan parliament’s upper house on March 28
  • South Korea Q4 GDP revised lower to +0.3% q/q (vs. +0.4% expected)
  • Cyprus banks to remain closed until Thursday (28 March)
  • New Zealand February trade balance came in much above expectations at +414m (vs. -12m expected)
  • New Zealand February exports 3.91bn (vs. 3.55bn expected)
  • New Zealand February imports 3.49bn (vs. 3.58bn expected)
  • RBNZ said it is reviewing housing loan capital adequacy requirements
  • RBA Governor Glenn Stevens gave a speech today: “Financial Regulation:Australia in the Global Landscape”; there was nothing of relevance to monetary policy or FX Read More 

Vedanta Resources falls on bearish Société Générale note

The Indian-based mining company came under pressure after Société Générale argued the market underestimates the regulatory problems facing some of its businesses.

Abhi Shukla, an analyst at Société Générale, said: ” our analysis indicates that Vedanta’s Indian iron ore production is likely to be much lower going forward due to the imposition of production caps.”

He added: “We don’t see Vedanta obtaining a bauxite mining licence at Niyamagiri unless the Indian government substantially changes the Forest Rights Act 2006 [which is unlikely].”

Also, Mr Shukla said he does not expect a major turnaround in Vedanta’s power business despite a potential improvement in transmission capacity given coal shortages and low merchant power prices in India.

Another issue for Mr Shukla is he thinks the market is probably underestimating the tax rate and minority charge at the company given the complex nature of the operations. Read More