Market sentiment by Daniel Loh:
There are 2 talking points in Wallstreet recently.
1) QE tapering
The first is of course the well debated QE tapering. It does seem like Wallstreet has accepted that tapering is a fact going to happen this year. The question is by how much. I foresee expectation to be priced into the market by the decision date on the 17th September! I think the extend of the tapering will be the focal point. A minor adjustment might in fact be a catalyst for the market going forward rather than a market panic. And of course, a major adjustment will cause the market to tumble too.
Given Ben Bernanke's way of handling the stock market, I predict that if there is a taper, only a minor adjustment is on the cards this time round. Ben Bernanke is one who knows how to handle market expectations. I think for the first round of tapering, he won't vote for a market panic. A first time trial minor adjustment to let the market adjust to the tapering will be the perfect choice. After the market accepts and adapts, then a bigger 2nd round cut is on the way, and HOPEFULLY after Bernanke leaves. Bernanke then can hold his head high, leaving a legacy name as the FED chairman who brings the stock market from a low to an all time high.
2) 10 year treasury yield
The second talking point is the 10 year treasury yield. Recently, we know that the yield rate is rising. It is rising to a 2 year high and is still climbing. This is causing a panic all across the world. We think that from now on, the yield should be on a long term uptrend. US dollar should be on a long term uptrend. All major currencies should suffer. That is the reason why Asean recently has a currency panic. Ringgit, Thai Baht, Peso and Rupiah are all on a decline against the US dollars. They are especially vulnerable because of the larger account deficit. In fact a lot of the countries in the world are suffering.
The Indian rupee and Aussie dollar have both fallen nearly 15 percent against the US dollar over the past three months, Indonesia's rupiah, the Brazilian real are down 10 percent, the Turkish lira over 5 percent.
The world world is trying to adjust to a stronger US economy, a stronger US dollar and a rising interest rate. Not easy as USD has been weak for years, but I think we will and this currency panic will end.
This process of adjustment needs time as we are accustomed to a weak US dollar and a low US interest rate environment. We do think that this currency panic should be over once traders accept this rising yield fact. It should. There is no need to panic given a good US economy.
Singapore Market
We do think that Singapore has reached a region of supports. 3000-3100 is always the region we hope to accumulate some singapore stocks. We mentioned it on radio recently too. Do not invest all at one go, but a portion of your funds. We expect a strong support at 3000. Anything below that is angbao to us.
However picking stocks in this seemingly lifeless environment is never an easy task. Good technical and fundamental skillsets are needed.
1) QE tapering
The first is of course the well debated QE tapering. It does seem like Wallstreet has accepted that tapering is a fact going to happen this year. The question is by how much. I foresee expectation to be priced into the market by the decision date on the 17th September! I think the extend of the tapering will be the focal point. A minor adjustment might in fact be a catalyst for the market going forward rather than a market panic. And of course, a major adjustment will cause the market to tumble too.
Given Ben Bernanke's way of handling the stock market, I predict that if there is a taper, only a minor adjustment is on the cards this time round. Ben Bernanke is one who knows how to handle market expectations. I think for the first round of tapering, he won't vote for a market panic. A first time trial minor adjustment to let the market adjust to the tapering will be the perfect choice. After the market accepts and adapts, then a bigger 2nd round cut is on the way, and HOPEFULLY after Bernanke leaves. Bernanke then can hold his head high, leaving a legacy name as the FED chairman who brings the stock market from a low to an all time high.
2) 10 year treasury yield
The second talking point is the 10 year treasury yield. Recently, we know that the yield rate is rising. It is rising to a 2 year high and is still climbing. This is causing a panic all across the world. We think that from now on, the yield should be on a long term uptrend. US dollar should be on a long term uptrend. All major currencies should suffer. That is the reason why Asean recently has a currency panic. Ringgit, Thai Baht, Peso and Rupiah are all on a decline against the US dollars. They are especially vulnerable because of the larger account deficit. In fact a lot of the countries in the world are suffering.
The Indian rupee and Aussie dollar have both fallen nearly 15 percent against the US dollar over the past three months, Indonesia's rupiah, the Brazilian real are down 10 percent, the Turkish lira over 5 percent.
The world world is trying to adjust to a stronger US economy, a stronger US dollar and a rising interest rate. Not easy as USD has been weak for years, but I think we will and this currency panic will end.
This process of adjustment needs time as we are accustomed to a weak US dollar and a low US interest rate environment. We do think that this currency panic should be over once traders accept this rising yield fact. It should. There is no need to panic given a good US economy.
Singapore Market
We do think that Singapore has reached a region of supports. 3000-3100 is always the region we hope to accumulate some singapore stocks. We mentioned it on radio recently too. Do not invest all at one go, but a portion of your funds. We expect a strong support at 3000. Anything below that is angbao to us.
However picking stocks in this seemingly lifeless environment is never an easy task. Good technical and fundamental skillsets are needed.
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