Tue, 28th June 2016

Anirudh Sethi Report


Archives of “stock” Tag

Apple ‘conservative’ on orders, says key supplier ASE

ASE Chief Operating Officer Tien Wu, left, listens to Joseph Tung, the company’s chief financial officer. (Photo by Cheng Ting-Fang)

Advanced Semiconductor Engineering, the world’s biggest chip assembler and tester, on Tuesday said Apple is being more conservative in placing orders compared with a year ago, while Chinese smartphone brands are trying to grab market share despite softening demand.

“The big client in the U.S. is a little more conservative when placing orders this year,” said Tien Wu, ASE’s chief operating officer, ahead of the company’s annual shareholder meeting. Apple is ASE’s  biggest customer, contributing 31.2% of the company’s revenue of 283.3 New Taiwan dollars ($8.73 billion) in 2015.

“In the smartphone market, meanwhile, other players besides Apple are more aggressive regarding booking chips this year,” Wu said. But, he added, “I don’t think anybody is overly aggressive this year, so I don’t think there would be any serious inventory correction issue similar to last year.” 

Wu said sales would improve quarter by quarter in 2016, although he declined to say whether demand for the second half of the year and the full year would be stronger or weaker compared with last year.

The $555 Trillion Derivatives Debt Implosion Is About to Begin

The next crisis is here.

The BREXIT or British exit from the EU is this crisis’ Bear Stearns: an unexpected situation that Central Banks will go all out to sweep under the rug.

Whether or not they will succeed remains to be seen. But what has started cannot be undone.

For seven years, the Central Banks have maintained the illusion that all is well. Meanwhile, global leverage has exploded to record highs, with the bond bubble now a staggering $100 trillion in size.

To top it off, over $10 trillion of this is sporting negative yields in nominal terms. Indeed, globally bond yields are at levels not seen since the BRONZE AGE.

The Brexit is just the first jolt to this house of cards. It won’t be the last. Spain, Italy and other EU problem countries will soon be lining up to renegotiate their debt levels with the EU.

At that point it’s GAME OVER.

Globally over $500 trillion in derivatives trade based on bond yields.

Jason Zweig’s Rules for Investing

1. Take the Global View: Use a spreadsheet to track your total net worth — not day-to-day price fluctuations.

2. Hope for the best, but expect the worst: Brace for disaster via diversification and learning market history. Expect good investments to do poorly from time to time. Don’t allow temporary under-performance or disaster to cause you to panic.

3. Investigate, then invest: Study companies’ financial statement, mutual funds’ prospectus, and advisors’ background. Do your homework!

4. Never say always: Never put more than 10% of your net worth into any one investment.

5. Know what you don’t know: Don’t believe you know everything. Look across different time periods; ask what might make an investment go down.

6. The past is not prologue: Investors buy low sell high! They don’t buy something merely because it is trending higher.

7. Weigh what they say: Ask any forecaster for their complete track record of predictions. Before deploying a strategy, gather objective evidence of its performance.

8. If it sounds too good to be true, it probably is: High Return + Low Risk + Short Time = Fraud.

9. Costs are killers: Trading costs can equal 1%; Mutual fund fees are another 1-2%; If middlemen take 3-5% of your cash, its a huge drag on returns.

10. Eggs go splat: Never put all your eggs in one basket; diversify across U.S., Foreign stocks, bonds and cash. Never fill your 401(k) with employee company stock.

ALERT- A Wake Up Call For International Stocks

Perpetually under-performing international equity markets are testing critical support.

With the selloff in the U.S. stock market this week, it is easy for domestic investors to lose sight of one thing: it could be a lot worse. As in, one could be heavily exposed to international markets and subject to the disproportionate damage that has afflicted many of those markets for almost a decade now. For example, let’s look at the performance ratio between the MSCI Europe Australia & Far East Index, a.k.a., the “EAFE”, versus the S&P 500. After topping out in late 2007, the ratio has been on a relentless decline. And in the past few days, the ratio has dropped to a fresh all-time low, yet again.


This chart is just a reminder of 2 things. First, international equity markets have severely under-performed the U.S. for some time now, largely due to the terrific run in U.S. stocks. Secondly, while the trend will eventually reverse, it shows no sign of doing so imminently.

China ETF Tumbles After MSCI Snubs China For 2nd Time, Delays Inclusion In Emerging Market Index

While nowhere near comparable to the euphoria from last year, when hopes that China would be included in the MSCI emerging market index led to a tremendous rally in Chinese stocks on expectations of substantial inflows once asset managers had to allocate funds to China…

… today’s silver lining for the US bulls, and certainly China mainland investors, was the expectation that after having snubbed China last year, MSCI would at least include it today.

Alas no such luck, because moments ago Bloomberg reports that…

Peru stocks remain in MSCI EM indices

Peruvian economic and bourse officials can finally lean back and relax. On Tuesday, MSCI ratified the Andean stock exchange’s status as an emerging market for equities.

Since August last year the country has been on the verge of being demoted from the flagship EM index to a frontier market

The index provider’s concern was that only three stocks in its Peru equity universe -Buenaventura, Credicorp, Southern Copper- met its liquidity and free float requirements, the minimum number to be eligible for its EM index. MSCI’s EM is tracked by an estimated $1.5tn.

Officials where concerned this could have spurred an outpouring of capital outflows, and started to implement reforms to avoid the downgrade, such as a capital gains tax exemption. Peru’s finance ministry said in statement that Lima’s capital market is working on increasing its liquidity levels and attracting more companies.

Good call, because as MSCI warned in its own statement:

The MSCI Peru Index will remain in the MSCI Emerging Markets Index. However, MSCI highlighted that it will proceed with the reclassification of Peru to Frontier Markets status in the event that the MSCI Peru Index falls short of the minimum requirement for Emerging Markets that the index contains at least three constituents.

The decision comes days after Peru elected a former Wall Street banker as its next president.

Time for MSCI to Back China Shares, Local Officials Say

Days before Morgan Stanley Capital International decides whether Chinese shares are fit for inclusion in a key index, local securities regulators said it is time to endorse the world’s second-biggest stock market.

A Chinese market regulator and a Shanghai Stock Exchange official used appearances on Sunday at a prominent Shanghai financial conference, Lujiazui Forum, to stress reasons why they think MSCI should include yuan-denominated class-A Chinese shares in its Emerging Markets Index.

The U.S. based index firm is expected to announce Tuesday afternoon in New York whether Chinese stocks qualify—a decision likely to influence investment strategies by global fund managers who control $1.5 trillion in assets. A year ago, MSCI deferred inclusion, and days later a sizzling rally in Chinese stocks ended with a devastating tailspin that seemed to affirm to some global investors the markets lack of preparedness.

“Theoretically if an international index is without this big market, it is incomplete,” said Qi Bin, director-general of international affairs for the China Securities Regulatory Commission, the nation’s stock regulatory agency.

A Shanghai Stock Exchange executive vice president, Que Bo, said, “We pay close attention to MSCI’s decision.”

These 13-cent stamps beat the U.S. stock market

Are stocks always the best long-term investment?

Maybe not.

When some obscure Hawaiian stamps from 1851 go up for auction later this month, they are expected to fetch from $50,000 to $75,000 each.

And if they do, that will mean they have almost certainly been a better financial investment — probably a much better investment — over the past 165 years than the U.S. stock market.

The 13-cent so-called “Missionaries” were used by Christian missionaries in the Hawaiian islands to send letters home. At the time, Hawaii was an independent kingdom. The Associated Press reports that the stamps are part of a 77-stamp collection being sold by Bill Gross, the bond market guru. Ten such “Missionaries” in near-mint condition are being sold.

If the stamps sell for $50,000 each, that will represent a compound annual return of 8.1% over the initial 13-cent purchase price. If the stamps sell for $75,000, you can raise that to 8.4%.

Overnight US Market :Dow closed down 20 points

The S&P 500, haunted by angst over weak global growth and a steep drop in government bond yields as some investors look for safer investments, cutting its early losses Thursday and ended down 0.2% after a three-day assault on an all-time high that failed to result in a new record.

After coming within 10 points of a record Wednesday, the Standard & Poor’s 500 lost about 4 points to 2115.48, still below its May 2015 record high of 2130.82.

The Dow Jones industrial average ended down 20 points, or 0.1% and is back below the 18,000 level. The Nasdaq composite fell 0.3%.

In a sign of rising angst among investors, the 10-year Treasury note yield in the U.S. at 1.68% Thursday fell to its lowest levels since the stock market lows back in February. And the 10-year government bond in Germany hit a fresh record low yield of 0.034% earlier in the session. The drop in bond yields is signaling that some investors are concerned about the ongoing weakness in the global economy.

Also weighing on stocks is a rise in the value of the U.S. dollar, which is putting pressure on commodities, such as oil. U.S.-produced crude fell 1.4% to $50.49 per barrel. U.S. oil topped $51 a barrel yesterday, which marked an eleven-month high.

Stocks were lower in Europe, with the broad Stoxx Europe 600 was off about 1%.

14 Meaningless Phrases -You Will Always Hear on Blue Channels

  1. The easy money has been made

When to use it: Any time a market or stock has already gone up a lot.BLUE CHANNELS IN INDIA

Why it’s smart-sounding: It implies wise, prudent caution. It implies that you bought or recommended the stock a long time ago, before the easy money was made (and are therefore smart). It suggests that there might be further upside but that there might also be future downside, because the stock is “due for a correction” (another smart-sounding meaningless phrase that you can use all the time). It does not commit you to any specific recommendation or prediction. It protects you from all possible outcomes: If the stock drops, you can say “as I said…” If the stock goes up, you can say “as I said…”

Why it’s meaningless: It’s a statement of the obvious. It’s a description of what has happened, not what will happen. It requires no special insights or powers of analysis. It tells you nothing that you don’t already know. Also, it’s not true: The money that has been made was likely in no way “easy.” Buying stocks that are rising steadily is a lot “easier” than buying stocks that the market has left for dead (because everyone thinks you’re stupid to buy stocks that no one else wants to buy.)

2.I’m cautiously optimistic.