30 June 2019
Dear Fellow Investor,
On Thursday evening , I attended a symposium on futures and derivatives organized by Phillip Futures.
The guests were mainly trade people such as plantation owners and managers who were interested in hedging their production to protect against further downside in the CPO market.
The keynote speaker was Eric Norland, chief economist of the Chicago Mercantile Exchange. (CME)
He shared his macro perspective on world commodity markets and in particular the grain markets. He made the case that grain and oilseed markets worldwide are showing evidence of bottoming after a 6 year down cycle. Because of this he advised to avoid short hedges in CPO meaning that he does not see much downside from these current depressed levels.
High quality plantation counters also offer a good risk versus reward opportunity based on his analysis.
Eric also showed several interest rate charts as evidence of world economic slowdown. One showed a yield inversion in US treasury bonds which is a sign of possible world wide recession by 2020/ 2021.
With the globally coordinated monetary loosening expect the US Federal Reserve and other central banks to continually lower interest rates to stop a recession.
This could be inflationary and reverse the commodity down cycle.
He said higher gold prices are an early sign of possible inflation or even stagflation.
He commented on the trade war and the impact on the Chinese and US economies. I was surprised to learn that the impact is tiny despite the media hype.
For China the drop in GDP is about 0.1 %. For the US less than 0.2 %
He advised to be wary of the highly charged Western media who are biased against Trump. Trump has strong support from his middle class base and will probably win the 2020 election. Most Americans do not want socialism, ultra high taxes, increased social benefits and more government regulation and control of their lives which the opposition Democrats promote.
I did not produce a client letter yesterday because of the 10th annual Phillip Investment Conference.
I would like to thank all of you who came Saturday.
I appreciate your support and I hope you benefitted.
The anxious crowd of over 2500 guests were advised by some prominent fund managers who shared opportunities in the current environment. Most were cautious although one was promoting a small cap fund. .
Mr Ang Kok Heng, our CIO shared a valuable paper on strategy and how to approach investing. Personally I focus on quality dividend producing companies For the last 20 years it has worked for me. Shares go up and down but the dividends keep coming in.
Next week, I will continue to review our portfolio holdings including Well call and Dialog.
Invest well and grow your wealth
Bill
Critter of the week is the wolf. These are 4 wolf pups who are born with blue eyes that turn orange in a few months. This is from a new book Wolves by Tom Jackson. I ordered the book and will share more wolf photos when it arrives.
No comments:
Post a Comment