Big Picture

23 Oct 2021

Dear Fellow Investor,

The Big Picture

On Friday 3 US Federal Reserve governors and Chairman Powell  publicly announced on Bloomberg that they will not stop asset purchases or raise interest rates any time soon.  

On this news the Dow Jones made an all time high.

 Weekly Dow Jones closing at an all time high.

The Federal Reserve is an inflation creation machine and is creating billions of dollars which it funnels to central banks all over the world to dollarize the world and maintain high stock prices.

This is the real reason inflation in asset prices, energy, food, most commodities  and housing are increasing. Goldman Sachs forecasts inflation in the US will rise to 6 % in the next 3 months. Malaysia and Singapore being part of the world economy will be effected.   Property prices in Singapore are making new highs while CPO last week touched historical highs. Crude oil and natural gas are at 4 year highs which help government finances and indirectly support our and the Singapore economy.

Weekly continuous futures chart of Brent Crude Oil

This morning I attended a CIMB investment briefing by Mark Po on the Hong Kong and China market. He reported that the worst is over for the Evergrande collapse and the China government is bailing out the local property buyers.  while foreign bond holders may lose. There is a slowdown in the economy while crude oil prices and natural gas are steady. There is inflation in food prices as the Central Bank floods liquidity into the market . He forecasts stock market recovery based on low interest rates and the strong Renminbi. Valuations both in Hong Kong and China are at reasonable levels compared to Europe and the US. He recommends semiconductors,  military equipment makers, solar companies and electric cars.   

Locally we are getting back to normal. The banks and finance companies are well supported and they hold the key to recovery. Should Bank Negara raise interest rates this would be positive for banks.  While we wait we collect handsome dividends.  Our recovery shares should also benefit. They include Carlsburg, UP,  Heim, Dialog and Genting Malaysia.  In Singapore our holdings in SATS, OCBC  and Comfort Del Gro  are currently at low risk levels with potentially higher returns.

Take care,

Bill

Joe Biden’s hold on power is so weak it looks like he won’t get his corporate tax increases through congress.  This is a reason stocks are moving up .  Biden wants to raise corporate taxes to levels to match European levels which will kill businesses and slow the US economy.  He also wants to increase regulations to stifle innovation.  If it looks like he gets his way the Dow would be a few thousand points lower .