Jittery markets and extreme volatility

2 Oct 2021

Dear Fellow Investor,

Jittery markets and extreme volatility

I watched an interview of Marc Faber who runs a newsletter, the Boom Doom and Gloom report. His newsletter has a world wide audience and has made a lot of money for his subscribers. His main focus is on strategies to survive the irresponsible money printing of world central banks.  He recommends to underweight over valued US markets while focusing on undervalued Asian markets.  He feels value is offered in Singapore, Hong Kong, Thailand, Indonesia, Japan and Malaysian stock markets .  He likes established companies with pricing power as a hedge against rising inflation. Risks are reasonable if you can purchase at attractive valuations which are presently on offer. He recommends selected Asian reits.

Janet Yellen and a number of high officials testified Thursday to the US congress  about interest rates, inflation, the debt ceiling and the Afghan debacle. Yellen, as treasury secretary  suggested that a law should be passed to eliminate the debt ceiling so that the government can spend on any program it wants without having to consult congress. The US constitution  currently vests congress with the power to  spend so this shift of spending authority to  president Biden would open the flood gates of money printing.  A few seconds after she made this suggestion gold shot up USD 35 an ounce while  bitcoin took a 10 % jump. The Dow dropped 560 points as world markets followed down.

On Friday sanity prevailed as Yellen’s scheme would have no chance of becoming law and the Dow recovered most of Thursday’s losses.  Expect Asian market recovery next week.

We have the budget 2022  to be tabled in parliament on 29 October . Depending upon the market reaction it will give insight into the final quarter performance for 2021. Foreign funds have been slowly buying reversing months of selling. If they increase their buying this could boost the blue chip shares including banks, telcos and heavyweights.  The 4^th quarter is usually positive as window dressing by fund managers boosts the market. In addition,  reopening of businesses and a reduction in Covid infections will boost revenues for a wide cross section of the economy.  Travel restrictions are also being lifted and this will improve sentiment.

Take care

Bill

One of my clients alerted me about a major breakthrough to reduce the risk of Covid deaths/ infections. Shares of drug company Merck jumped 8 % on the news. Hopefully this will be made available in Malaysia if it gets approval by the FDA.

Oct 1 (Reuters) - An experimental antiviral pill developed by Merck & Co (MRK.N) could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19, according to data that experts hailed as a potential breakthrough in how the virus is treated.

If it gets authorization, molnupiravir, which is designed to introduce errors into the genetic code of the virus, would be the first oral antiviral medication for COVID-19.

Merck and partner Ridgeback Biotherapeutics said they plan to seek U.S. emergency use authorization for the pill as soon as possible and to make regulatory applications worldwide.

                        An easy to take pill rather than an injection