Fear turning to uncertainty

 29 Jan 2022

Dear Fellow Investor,

Fear turning to uncertainty

Dow Jones trading on the NYSE reflecting near term uncertainty regarding potential monetary tightening which will impact markets world wide.

The US Federal Reserve met on Tuesday and Wednesday last week and the majority of analysts expected them to raise interest rates. The Dow was up over 500 points on Wednesday anticipating this event but it did not happen. A confusing statement was issued by Jerome Powell, the head of the Federal reserve with unclear guidance so the market gave up all its gains and closed lower. On Thursday price was almost unchanged with a negative bias. On Friday the market continued lower   but Apple and some other big names including Visa and Mastercard posted much better.

than expected earnings and the market reversed to close 564 points higher.  

This should benefit Asian markets next week and our high quality technology shares including Inari.  Inari is an Apple supplier and they have been effected by slow sales of IPhones. However; the earnings report Friday showed all financial metrics are improving including sales .

KL Tech Index

For the last 8 trading days the KLSE Technology Index has been consolidating showing support for technology related businesses. Notice the volume build up which confirms the support.  The strong US Dollar also supports these shares.

Nasdaq composite representing the US technology shares

Notice the positive reversal Friday of the Nasdaq index closing 417 points higher confirming the Dow Jones rally.  

Brent Crude continuous weekly chart showing a relentless bull trend.

This is positive for the Malaysian balance of trade as crude oil approaches USD 100 per barrel. It is also positive for Dialog and Wellcall our oil related shares.

My view is that US rates will be raised in March but only by a token amount say .025 and once the uncertainty is removed expect a bullish move higher. Biden and the Federal Reserve want easy money and low interest rates going into the November mid term elections.

Biden and CNN are also stoking war fears over the Ukraine . A war would be used to deflect the public away from his failed domestic policies and high inflation.  Biden, the UK and Nato could not defeat the goat herders in Afghanistan   so what chance would they have against the determined Russians fighting on their home ground ?  Thank God in a recent poll the US public is strongly against getting involved in the Ukraine conflict.

Best wishes to our Chinese friends and clients for a joyous and prosperous Chinese New Year
Bill