SICkapore $ is a SELL!

I have already talked about Y SICKapore $ has to go down. Here is a recap:

SM Lee already told us that SICKapore cannot be more expensive than HungKees. But, SICKapore $ had already appreciated 25% against HungKees. Meaning SICKapore already 25% LESS competitive. How much longer can the SICKapore garment stand aside n see such eroding of competitiveness?

SICKapore is a SMALL island with NO natural resources. That is a FACT and NOone should dare to challenge such simple fact. The MAIN reason for such a big gain in SICKapore $ to ALL time high was because the garment want to counter the IMPORTED inflation. SICKapore IMPORT lots of stuff, esp. food. Garments all over the world will be more critical of the doubling and trippling of rice and other essentials and WILL bring them down. So, SICKapore should face less inflation pressure going forward.

US slowED, EU slowing, Chindia following to cool, SICKapore being a BERI OPEN economy will make OUTsized gain on the way UP and it will make OUTsized loss on the way DOWN as well.

The show MUST go on = INFLATION

Benny + Mr. SEX will continue to INFLATE the US housing assets in order to stablise the price. Given that with ALL their enormous efforts ALREADY done and housing prices still FELL, we could only imagine what it would have been had they NOT INFLATE so dramatically.

I believe they will CONTINUE to INFLATE till prices stop falling.

Jim Rogers was shouting on CNBC that Benny "was waving a flag that he wants INFLATION" Sorry, I think Benny NEEDs INFLATION NOT want, because there is NO way out!

A Tale of 2 OILies?

So much has been written about how biodiesel from OILY palms will deforest the world and create environmental disasters. Want to share a document I found on the web by greenergy. Pretty up to date also, data from as recent as 2006. http://www.greenergy.com/perspectives/Palm.pdf

ONLY 2% of ALL OILY palm is "expected" to go to biodiesel. Where are all the others going?? mostly FOOD!! others will go to soap and detergent and what not. OILY palm is actually good for your heart according to research done.

So, dear extreme environmentalists, do u want to EAT and stay alive? OR u don't want to EAT and let the rainforest thrive? hehehe.... pick your choice.

Wah... more dirt to dig up on OILY palms. Biodiesel is NOT the reason for the run up in OILY palm. SO much misconception! It is an added bonus but NOT the reason. Human population growth and higher disposal income is the reason lah. As long as human want to have sex and populate, as long as Benny and Mr. SEX continue to put employment before everything else, hehehe.... I stupid now expect OILY palm to stay buoyant. hehehe...

Money Trees Revisited

Grace brought our attention to OILY counters once again. So, I decided to dig deeper into the OILY palms! To my surprised, I found something new: 93% of all OILY palms goes to food processing! Biodiesel (a fuel that can be extracted from OILY palm) is INsignificant.

This struck me like lightning. It means that the run up of this OIL palms was due to food demand more than the much hyped alternative fuel demand. Also, from my research, Cheena is only consuming about 21kg per capita compared to HungKees of 44kg or so. I suspect India also quite low still. Meaning that 2 BILLION more people will still need quite a few more million tonnes of OILY palms.

All this talk about alternative fuel is not likely to happen so soon since at current OILY palms prices, biodiesel is a loss making business. Biodiesel is only feasible when OILY palms drop to US$700 (RM 2,200 at 3.15 FX). OR when price of BLACK OIL is much more expensive. This gets me thinking.... will BLACK oil go up to US$200 or more as some Leeches & Sexes (L&S) claims? I don't know when that will happen but I am quite sure that that price will be reached and breached some day, 50 years? 100 years later? I don't know, but I do know that hydrocarbon like BLACK OIL is limited in supply and one day it will be exhausted! BLACK oil is not renewable, unless u can wait for a few million years to use the carbon matters that u bury today... hahahaha.... so wat is the implication for OILY palm then?

Well, I suspect that OILY palm will be use to feed automobiles and humans after the BLACK oil is gone. hehehe... so many more automobiles are place on the roads everyday in Cheena and India. So many more hungry "mouths" to feed these OILY palm to.

Then, the negative news all over the internet, deforestation. Many greenpeace of friends of earth, etc claims that the clearing of rainforest do more harm than the good of using OILY palm. hehehe... What I want to know is that when BLACK oil runs out, will these environmentalist ride bicycles and walk on feet to buy n carry things? IF they want to drive an automobile to reach their destinations, OILY palm is probably their best alternative. Because OIL palm is the most effective oil producer per hectare planted compared to soybean or corn. This brings me to the next question that has been bugging me in my mind. Y are the Ang Moh so against OIL palm growing in Malaysia (MY) and Indonesia (ID)???

Do you know that MY and ID together controlled over 85% of all OILY palm produced! Y? The climate just suitable lor. hehehe... They are probably afraid that after the middle east they have to deal with another group of islams! hehehe...

For wat is worth, I got back into some OILY palm today. hehehehe....

Markets want HIGHER rates

Mr. Spanny may find it quite a conundrum that mortgage rates are not coming down with such DRASTIC cut in FED funds rate. But, when has the market started to take orders from the regulators? It is normally the other way around - regulators (such as FED) taking orders from the markets. Since LIBOR and mortgage rates are not responding to the cuts, I suspect the markets are signaling to the regulators that they are missing the point (INFLATION) in their efforts to save the world by trying to prop up the employment rate. However, it should be noted that previous rate cuts, in the aftermath of 911, the markets DID respond. How come markets are not responding this time around? I would argue that in 911, inflation was NOT an issue. That was why the rate cuts achieved what the regulators want.

HIGHER market rates SHOULD discourage businesses to invest in low internal rate of returns projects, which in turn should lower the demand for commodities, which in turn should deflate the current boom in commodities prices. Current Market rate seems to be WANTING that scenario because it will lower future INFLATION. HOWEVER, in their effort to secure jobs for everyone, the central banGers are LOWERING rates.

Something is wrong! Policies are now set like a socialist economy! And these central banGers are all from the so call FREE capital markets of the world. Capitalists becoming more socialists, while the socialists/communists are becoming more like capitalists. They will meet somewhere in between.

But, if history is of any guide, central banGers usually give in to the markets demand. hehehe... I stupid for one expect much higher interest rate on my deposit with all the banGs. heheheh...

Get Rid of REITs

It is well known now that credit has been tighten. Property companies with high leverage are finding it hard to refinance, such as Centro Properties and Allco Reits. However, I was surprised to see some L&S still asking retailers to buy into Real Estate Investment Trusts (REITs).

MOST REITs are highly leverage on their balance sheet to generate "recurrent" income for the unit holders. Because they are so highly leverage, the change in financing costs will cut into their net profit margin significantly. Stock markets have correctly repriced REITs in recent months by slashing the share price. But, this doesn't mean that they won't keep falling. Stock markets may have priced in the interest expense part in chopping the net profit, but have they priced in the revenue part?

During recession times like the one in 1998 - 2000, Rental in most SICKapore properties FELL. YES! rental rate can fall when demand fell because of bankruptcy due to the recession. What makes u think that this won't happen again?

So, when would be a good time to accumulate REITs? I would feel more comfortable holding a BIG CAP REITs when it is trading way way below its NTA. Because this will give a good margin of safety. Looking through most of SICKapore listed REITs, I just can't find BIG capitalized REITs that are selling below NTA.

So, my conclusion is to stay away if u r not in. OR, sell off if you can afford to take the losses NOW!

Price of DISobedience

Looking back at various events, I find that markets have ignored authorities' warnings in MANY MANY instances and suffer from such disobediences! Followings are some examples:

2001: Tech bubbles: Mr. Spanny said stock markets are exuberance n a few months later, stock markets tumbled.

2006-2007: Mr. Spanny and Benny warned of credits too loose, risk is way too low and beri umcomfortble. Now in 2007 to 2008, subprime dent all markets.

There is still one warning that has fallen on deaf ears: OIL is well supplied, inventories are all in record levels. But, people still piling into them... hmmm.... are we going to see the same thing play out? disobedient boys n girls will get canned later?

Of course, there are political and so on reasons for the price premium of oil. but is it warranted? A bit of premium may be reasonable but 50%?? I don't know, time will tell us. OPEC has time and again tell us that the world market is WELL supplied. Do u want to take heed or ignore? The choice is yours.

You are welcome to add more tales of warnings NOT heeded and the players got burnt. Properties in SICKapore in 1993?