Macroeconomy Archives - Page 5 of 8

Real Market Crisis or Just Fear?

Posted on March 5, 2020 Written by Dr Tee (Ein55)

I just talk to my sister in LA, confirming California people (richest state of USA, about 1/3 national wealth if remember correctly) also feel fearful now of Coronavirus.

Last 1 week of global stock market correction was a reflection of such initial global fear. China, “leader” of Coronavirus crisis is on the way of recovery (estimated duration of 6 months from Dec 2019 to May 2020). For other countries in the world, there is lagging effect, eg Singapore started first Coronavirus case in late Jan, may end about 1 month after China. For US and Europe, there could be another 1 month lagging, so hot summer would be just nice if following similar exit pattern of SARS, cousin of Coronavirus.

Question is Australia and NZ would be winter then in Jun-Aug, if the global spreading could not end by Jun, it may become seasonal flu every 6 months, worst during cold winter when temperature is colder, most people would stay indoor, higher chances of close contacts for infection.

Singapore by right is a hot tropical country but due to artificial mini winter or autumn (aircon room), the condition is much worse than neighbouring countries of Malaysia and Indonesia along the equator.

Health crisis is usually more fear than actual harm. If the deadly virus may kill all human, then stock market is not important anymore. If not, it means the stock market will always recover when crisis or more precisely, the fear is over.

I read news that some people are worry of “Corona” beer as name is close to “Corona” virus. So, what is real crisis (fact-based harm) or just a fear due to ignorance? Remember, stock market is made of mass with all types of investors: smart, ordinary, ignorant, etc.

However, fear can be deadly. Corona beer belongs to AB InBev (NYSE, BUD), same company which owns Budweiser, share price fell about 40% over the past 1 month when global Coronavirus condition gets worse. AB InBev is the world largest brewery, also a giant beer stock. The fear of stock market and “Corona” has created an artificial crisis on this stock. Crisis is Opportunity if business fundamental is not much affected while the share prices falling.

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Filed Under: Macroeconomy, Personal Analysis, Stock Market Tagged: crisis, market fear

Evolution of Bear Market

Posted on March 5, 2020 Written by Dr Tee (Ein55)

Mini bear (short term downtrend) and mini bull (short term uptrend) usually would take turn in uncertain markets until a major trend (longer term trend) is confirmed.

As of now, US short term stock market is losing short term momentum with S&P500 below intermediate support of 3000 points (was a critical resistance before that). The current global stock market correction of about 10% has reflected the initial fear of Coronavirus, similar to Asian stock market 5-8% correction during lunar new year in late Jan to reflect the initial fear of China Coronavirus condition.

Currently it is still fear driven stock market correction but when the real economy is affected with longer period of pandemic (over 6-12 months) with manufacturing supply chain broken, reduced spending globally (less tourists, less shoppers, less spending), then the big bear will not be too far as it would be fundamental driven (country economy will fall and many business which depends on consumers would be less profitable or even making losses), share prices would be bearish for over 6-12 months, worse if coupled with falling of stock market from high optimism.

Therefore, whenever stock prices up or down, evaluate if it is fear or fundamental driven. Coronavirus crisis so far on stock market is still fear driven but having potential to be fundamental driven when dragging too long.

New virus (stock market is at mercy of Coronavirus):

-> initial spreading, initial fear, stock fall 10%

-> more spreading (pandemic), more fear, stock fall 20%

-> quarterly economy falls, more fear, stock fall 30%

-> yearly economy falls, great fear, stock fall 50%

-> continue the downtrend circle of stock <—> economy until Low optimism at L3 to L4 (world level)

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Filed Under: Macroeconomy, Stock Market Tagged: bear market, global financial crisis

Global Stock & Coronavirus Analysis (Updated 5 Mar 2020)

Posted on March 5, 2020 Written by Dr Tee (Ein55)

– World vs SG

world and Singapore Coronavirus daily update

– China vs World Outside China

Here are a few main conclusions on Coronavirus with additional analysis on world outside China (due to serious outbreak in South Korea, Iran, Italy and emerging potential in the rest of the world).

1) China

China started first in Dec 2019, also the first country to reach 99% peak (daily new cases is less than 1% of total) by end of Feb 2020, aligned with earlier Technical Analysis projection with bi-linear model.

2) Singapore

Singapore is unfortunately experiencing second wave (new clusters of infection), aligning with spreading in the rest of the world outside China (especially in South Korea, Iran, Italy and Japan). Need to monitor the second peak (new max daily cases) vs the first peak (was 9 cases for Singapore), if “higher high” is achieved, Singapore may be back to growing phase as there could be cross-infection among the countries (not limited to China or a few countries).

If Singapore follows similar pattern of China (especially non-Hubei region), there is a time lagging period of 1+ month after China, Singapore may reach 99% peak by end of Mar 2020 or in Apr 2020 (if second wave in world outside China is longer and more serious than expected).

3) World Outside China

Singapore now is dependent on the World (especially Outside China), therefore good condition in China does not help Singapore much. Currently the world (outside China) is still growing, despite there is a dip yesterday in daily cases but it is insufficient to establish a clear trend (need at least 1 week of downtrend without serious new outbreak in another country). Based on population, world ex China has 5X potential than in China, therefore if it becomes pandemic, there could be 5x more cases than in China (non-Hubei which is about 50% of China cases).

US is part of “World Outside China” category, relatively still not so serious at the moment (considering the population of US). However, trend of the rest of the world is growing with Coronavirus, even if “second wave” is trending down, there could be 3rd or 4th wave in any city or country as there is time lagging effect for Coronavirus to spread from 1 country to another country (eg. from China Wuhan to Singapore in 1-2 months, then to the rest of the world in 1-3 months).

It is still a good news to see China condition improves significantly over the past 1 month (with condition that we trust the data reported) as the rest of the world including Singapore would follow similar pattern in near future, just take extra few more months to end or at least control the health crisis (reaching 99% peak with less than 1% new daily cases).

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Thinking positively, world outside China (including Singapore) could follow the footstep of China, both for Coronavirus (uptrend and then downtrend) and stock market (correction for a few days during first week of fear, then up again). G7 includes US are taking pro-active actions to stimulate economy to prolong the current bull market (started since year 2009). For example, US Federal Reserve has started to cut interest rate further by 0.5%, despite US economy is still strong.

There is no need to worry as we could only control what’s within our capacity. This is true for Coronavirus, also valid for stock investment (eg. what stocks to buy, when to buy/sell is within one control but exactly when and what crisis may come is beyond the radar). We just need to take the right actions, then depend on the probability to give us the unfair advantage (eg. low chance to be infected, high probability of winning in stocks).

While taking precautionary measures for Coronavirus, learn to take calculated risk to invest in global giant stocks at discounted prices with this rare health crisis which is only a correction in global stock market at the moment. The main focus is on the next global financial crisis which could be the best opportunity for an investor.

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Filed Under: Macroeconomy, Personal Analysis, Stock Market Tagged: coronavirus, stock market

Singapore Budget 2020 vs Coronavirus (Updated 19 Feb 2020)

Posted on February 19, 2020 Written by Dr Tee (Ein55)

Singapore Budget 2020 is just announced, a balanced plan with both short term (eg. fighting Coronavirus crisis) and mid/long term (eg. retraining) goals. However, money is never enough, so the incentives is just a temporary relief. A country could only get stronger with higher productivity in higher value economy sectors.

Additional financial assistance is given to 5 main sectors affected by Coronavirus, eg. tourism, airline/cruise, transportation, F&B and retail, some business may have dropped more than 50% over the past 1 month.

Fear of Coronavirus is more harmful than its real risk (# death, so far 0 in Singapore) as people start to stay more at home, the sectors above would badly affected. However, this health crisis is likely to be a short term for a few months. Even it becomes an uncontrollable disease as seasonal flu, the fatality would drop significantly based on past experience of new viruses (eg. H1N1) due to build up of immune system within human with more infection. Human could “evolve” as well together with viruses, both have to co-exist in a balanced way of living.

Based on the latest daily # infected for Coronavirus, World (mainly China) is falling down below the critical 2000 “support” from Technical Analysis point of view, light at the end of tunnel to see a strong bearish signal with strong hope to reach a peak (not absolute peak but 95-99% of ultimate value) by end of Feb 2020, with conditions that data reported so is reliable and consistent without a second wave of infection (workforce back to work after lunar new year).

Singapore is still staying above the “support” of 2 daily cases, no clear signal of downtrend in # infected cases. However, the consistent downtrend in World (mainly China) cases is a strong lead to Singapore which is likely 1+ month behind China.

Even after reaching peak, Coronavirus may take a few months to end as there may be cross-infection of those waiting for recovery and long incubation period (14 days).

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Filed Under: Macroeconomy, Personal Analysis, Stock Market Tagged: coronavirus, singapore budget

Technical Analysis with Level 1-4 Analysis for Coronavirus (Updated 17 Feb 2020) with Singapore Budget 2020

Posted on February 17, 2020 Written by Dr Tee (Ein55)

Similar to Technical Analysis for stock market, we may analyze the # infected cases as share prices but looking for bearish signal, eg downtrend or breaking below a critical support, eg 2000 cases for World (mainly China Hubei) or 2 cases for Singapore.

Latest Coronavirus data (16 Feb 2020) has 3 cases of # infected in Singapore, having good chance to come to “technical support” of 2 daily cases again but need to break below this number for a few days or even 1 week to establish a consistent downtrend. It is harder to analyze Singapore cases due to limited sample size (similar to a volatile penny stock, when base is a low number, up/down would create large % changes).

So, it is relatively more stable to analyze world # infected cases (still near to support of 2000 daily new cases but not yet breaking downward) which are more stable due to large sample size (so far consistently about 1000 times of # cases in Singapore). The mega trend of world could provide some leads to direction of Singapore cases in future.

For stock analysis, this is similar to Level Analysis (LA) or LOFTP strategies, Top-down analysis from World (Level 4) to Country (Level 3) to Sector (Level 2) to Individual Stock (Level 1). For Coronavirus:
Level 4 = World # infected
Level 3 = Respective Country # infected
Level 2 = Respective City # Infected (Singapore L2 = L3 due to small country = city)
Level 1 = Cluster / Group / Company of related cases (smallest unit to track # infected cases).
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Singapore Budget 2020 to be announced on 18 Feb 2020, ideally will serve multiple objectives for 3 different time frames (similar to stock investment: short term, mid term and long term):

1) Short-term (< 3 months): Coronavirus induced financial crisis, especially selected sectors.
2) Mid-term (<1 year): Stimulate Singapore economy which has been slowing down (even before Coronavirus outbreak)
3) Long-term (5-10 years): Create new opportunity for Singapore (restructuring of economy, training / investment in emerging technologies with higher economic values, etc)

Of course, politically, this would give 4th generation leaders, a chance to take the lead, making major decisions during potential crisis time. The results in short term, mid term and long term would translate into scores for voters to consider before next General Election, within 1+ year (latest by 15 Apr 2021). Balance in consideration for short term, mid term and long term would be a test on wisdom of leaders, whether to satisfy short term crisis needs or looking for long term growth or a balanced or average approach with sharing of resources to make most people satisfied but not excited.

Crisis could be an opportunity if the crisis could be resolved eventually with right decisions most of the time. It is true for all countries leaders, especially those most affected by the current Coronavirus: China, Singapore, Japan, Hong Kong, etc.
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Filed Under: Macroeconomy, Personal Analysis, Stock Market, Technical Analysis Tagged: coronavirus, singapore budget, technical analysis

Coronavirus and Stock Market (Updated 12 Feb 2020)

Posted on February 12, 2020 Written by Dr Tee (Ein55)

After the reversal of new daily cases of Coronavirus to downtrend from 5 Feb 2020, it still follows the bi-linear predictive model (see earlier video talk for details), continue to fall for both World and SG (not obvious in trend based on 1 day as sample size is smaller).

Similar to Technical Analysis, when a clearer reversal pattern is formed, if data reported is reliable, Coronavirus could reach its peak by end of Feb 2020, then fading away in 1-2 months. However, if there is a second or multiple peaks with significant surge in new daily cases, then the duration of Coronavirus may be prolonged by 1 month for each new peak of new daily cases. So, we need to monitor daily from now.

Coronavirus monitoring is as if short term stock trading, daily price day has to be analyzed to form a longer term trend analysis (weeks / months) for better consistency in results.

Bullish US (strong economy) + Bearish China (Coronavirus spreading + economy slow down) = Mild bullish global stock market.

Despite both countries have comparable world GDP contribution (US 24%, China 15%) but for stock market value, US contributes to more than 50% of world stock market cap, therefore impact of US is much stronger than China.

Singapore is affected by both US and China, therefore the trends for stocks is sideways with moderate economy, close to 50% optimism, fair value.

During Coronavirus crisis time, demand for some commodities is increasing. Commodity market has been at low optimism for about 5 years, it is time to explore this area: Oil & Gas, Palm Oil, Mining, Agricultural, Precious Metals, etc.

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Filed Under: Macroeconomy, Stock Market, Uncategorized Tagged: coronavirus, stock market

When Growth Stocks are not Growing with Less Cashflow

Posted on February 10, 2020 Written by Dr Tee (Ein55)

Some growing companies (especially in China but also applied to all countries including Singapore) depend on operational cashflow (which depends on high populations with lower prices to create a network of customers) to expand and pay for expenses, eg. transportation, F&B, consumer products, etc. When this cashflow is disturbed (eg. few people spending or shopping due to serious Coronavirus), the business or sector would go into short term cashflow bottleneck, if dragged longer (eg more than 6-12 months), some which could not get the loan, may need to close down, declare bankruptcy.

So, growth company supported with strong assets (eg. property & cash) is more likely to last through the winter time, even without additional loan as asset could be converted into cash. Another close example is Oil & Gas sector crisis over the past 5+ years, most company could last for the first year of oil & gas crisis but then weak companies would start to close down due to weak assets with little cashflow (fewer customers), eventually game over. Mobile bike business is another recent example, burning money to expand but could not last long as debt is increasing faster than cashflow growth.

Cashflow to business is similar to blood to human body. Cash is similar to blood, need to circulate (cash to produce products / services, earning more cash in return) more a healthy body or company. Sometimes, blood transfusion (take loan) is required to sustain a weak business but if dragged too long, the company still cannot last or recover, investors have to suffer permanent loss.

Investor has to balance between growth investing (earning /cashflow), value investing (high asset, low liability, strong net asset value) to avoid possible business crisis which may end up a permanent loss (Hyflux could be another example). For a giant stock, crisis in share price is fine (due to fear), as long as business is still strong (either growing income/cash or strong asset). A growth stock may do well in normal time but it may go into real crisis under certain condition, therefore an investor has to evaluate risk vs opportunity.

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Filed Under: Macroeconomy, Stock Market Tagged: cashflow, growth stock

Keypoints on Coronavirus with Stock Market

Posted on February 4, 2020 Written by Dr Tee (Ein55)

Despite there are 6 new cases of coronavirus today in Singapore, all could be tracked, originally from China tourist group, before the total travel ban of China tourists to Singapore from 1 Feb 2020.

A few important keypoints:

1) The virus is transmitted within small group. So, avoid shake hands, talking in close distance or rubbing face (nose, mouth, eyes) would help to minimize the case.

2) Stay healthy is more important than feel stressful each day (affecting immune system when could not sleep well). Since coronavirus spreading or infecting is beyond our control, we just keep to the right habits, not to over-stress oneself, infected with depression even before the real virus.

3) Global stock market has accepted the fear over the past 1 month on this new virus, showing technical rebound in prices. In medium term (3-6 months), when real economy (quarterly GDP) and sector business (eg. tourism, hotel, F&B, transportation, manufacturing, etc) also show weaker fundamental, then there is an more room of downside, especially if the spreading of Coronavirus continues.

If Singapore has the first death case or uncontrolled spreading of virus to local people, then the crisis would become greater as people may be as fearful as during SARS time. Now the fear is still little, only 1 out of about 50 people wearing mask, after public sharing on no need to wear mask unnecessarily if not sick.

Light at the of tunnel will be waiting for effective vaccine or self-termination of virus around summer time (about 8 months if following SARS experience).

4) At the moment, this is just a minor crisis, not yet a lifetime opportunity as in global financial crisis (stock indices could drop more than 50%). Both investors and traders should monitor closely, minimize risks with exit plan and waiting for opportunities to buy low.

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Filed Under: Macroeconomy, Stock Market Tagged: coronavirus, keypoints, stock market

Stock Opportunity in Coronavirus Crisis

Posted on February 4, 2020 Written by Dr Tee (Ein55)

8% drop in China stock market yesterday seems significant but this is actually accumulation of 10 days of market fear since 24 Jan 2020 (eve of Chinese New Year).

Comparing with US S&P 500 and Singapore STI within the same period (about 3% correction), therefore additional correction due to fear of China coronavirus condition is about 8 – 3 = 5%.

More countries may follow one another to ban travelling from China. Despite fatality rate outside China is very low (only 1 death) but Coronavirus continues to spread further in China, especially in Hubei with limited medical resources.

When one observes a potential crisis with unknown severity, it is safer to exit first as if a shorter investor/trader when there is a reversal signal for individual signal (eg. breaking below short term support or more than X% drop following the trading plan). It is never too late when stock market is recovering to enter again as a short term trader, avoiding buy low get lower for short term.

At the moment, this is just a minor crisis, not yet a lifetime opportunity as in global financial crisis (stock indices could drop more than 50%). Both investors and traders should monitor closely, minimize risks with exit plan and waiting for opportunities to buy low.

When global stock market are at high optimism (over 75%), it is relatively safer to adopt shorter term investing or trading strategies (eg. trend-following) as each month could have new variable in the market (eg. besides Coronavirus, now there is news of H1N1 and H5N1 in other places in China. Later there is US presidential election, as well as next episode of US-China trade war), having potential to trigger the next global financial crisis.

Crisis is Opportunity if one is prepared, eg waiting patiently for price of giant stocks to drop much lower value, having holding power for recovery.

Crisis is Crisis if one simply follows other people’s views (especially mass market), fearful and greedy at the same time, not considering own personality (eg. risk tolerance, reward expectation, holding power, etc).

Stock market is driven mainly by both business fundamental and market emotions (eg. fearful in last 1 month), requiring LO-FTP (Level/Optimism/Fundamental/Technical/Personal) Analysis + BE (Business/Economic) Analysis, integrated to aligned with own personality. More details in www.ein55.com

Filed Under: Macroeconomy, Stock Market Tagged: coronavirus, crisis is opportunity

Technical Analysis on Coronavirus and Stock

Posted on February 4, 2020 Written by Dr Tee (Ein55)

I just found this article published in the famous Lancet Journal which projected Wuhan could actually have over 75000 cases as of 25 Jan 2020 and the number would double each week. It has been about 1 week since then till now, so current projected number based on this model published in Lancet journal is over 150000, aligned with my projection in yesterday article for Hubei = 7153 x 16.7, about 120000 with simple statistical method.
https://www.facebook.com/ein55/posts/1223598294509417?__tn__=K-R

Besides investment, my profession is in modeling and simulation, therefore having interest to perform additional analysis with simplified methods which could be applied in investment and also many aspects in life, including coronavirus projection.

Despite the official # infected could be much less than actual, the data reported is still useful for trend analysis (similar to Technical Analysis in stock investment) as long as it is consistently reported each day. One could monitor the daily new # infected (was 2000, now increasing to 2500 daily, sign of spreading continues) and # death (stable around 40-50 daily). Currently, there is still no sign of slowing down, the growth in number is under mild acceleration mode (# new cases daily is increasing from 2000 to 2500, likely higher in next few days).

Using investing jargon, the virus is a “growth” virus. We need to monitor the growth rate and external factors (eg collaboration among different countries to minimize the spreading) to determine the possible reversal. Time is a factor. Similar to investment, one may buy an investing stock in crisis but does not have the holding power, may fail eventually, buy low sell lower. For patient infected, as long as immune system is strong (as if strong fundamental business), able to last through the winter time (period for natural recovery even if infected), one could recover naturally without medicine, having new immunity to resist future new virus (similar to stock, each breakout of resistance could become the next support for future crisis with falling in prices).

When new # infected and / or # death on current day is lower than yesterday, it is the first sign of deceleration (slower spreading) but # new cases will still continue until reaching 0 one day (no new case), only then it reaches a peak. Since there is typically 14 days of incubation period for virus, there will be time delay of 14 days from last patient to actual ending of this wave of spreading (until another outbreak again, could be a few years later, if someone never learns from mistake, mess up with wild animal again). For SARS, it takes about 8 months for it to disappear. For common flu, it becomes part of our life, taking turn to visit us each season. For coronavirus, it may end up as SARS (1 time or rare virus) or common flu (if spreading could not be controlled, human has to make peace with this new virus, when most people are affected, there will be natural immune system build up, fatality rate may drop to as low as common flu of 0.05%).

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Filed Under: Macroeconomy, Stock Market Tagged: coronavirus, technical analysis

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