The Enigmatic David Bowie

Absolutely fabulous, always cool ... the morphing looks of DB over the years.

Great Food Find ... Steamed Fish @ 1990 Prices

Thanks to the market tanking and quite a horrible year for most, not to mention the oil prices ... its time we all tighten our belts. What a find, this place is hidden at the backlane, and when you see the shop, you don't really want to go there. But actually the owner is fanatical about cleanliness despite the look of the place. Its packed to the rafters all the time.

Specialty is their steamed fish with ginger, or rather river fish. I know some may not like river fish being steamed as they say you can taste the mud, seriously folks ... thats too atas.

Look at the bill ... two steamed fishes, a veggie dish plus taugeh dish and tea ... RM87.20!!! Food rating: 9/10. Ambience: 1/10. Value for money: 10/10.

LOCATION: (take note of the word "behind")
Behind - 91 Jalan Waras 3, Taman Connaught Cheras, Kuala Lumpur, 56000, Kuala Lumpur, WP Kuala Lumpur, 56000 (opens  for lunch and dinner)

Although they seem to have another branch but my friend insisted that the original god forsaken place is still tops.

18-20, Jalan 15A/142, 
Taman Orkid Desa,
56100 Cheras, KL.
Tel : 016-665 6331 
Operation Hours : 05:30PM - 10:00PM
Closed on every Wednesday

Let's Listen To What David Suzuki Has To Say

DAVID SUZUKI CRIES FOR HIS GRANDKIDS

David Suzuki, Founder of the David Suzuki Foundation

If I were to say that this 20 minutes interview was the best piece of radio I have heard for the longest, that would be short changing it. Thats because the subject matter is graver than religion. Its relevance greater than most of us would like to admit. Its humbling, even guilt-inducing at times because we can care more. I am still thinking how we can make the things he said more "actionable for normal people", its too safe to just nod and say that was great radio and content.

http://www.bfm.my/breakfast-grille-david-suzuki.html

Asset Class Performance As At 31 December 2014

I don't know about you but the recent calamity in the markets, caused by a massive drop in oil prices and to a lesser extent other commodities, plus a sharp rise in USD vis a vis most currencies ... kind of makes me mad. Why ... why is it that the US does not get punished for printing truckloads of currency, why their debts need not be serviced ... and when they have to raise rates, all the smaller nations get whacked.

US real estate investment trusts (REITs) led the performance race in December among the major asset classes, rising a healthy 1.9% in the final month of 2014. US REITs were also the top performer for the calendar year among the major asset classes.  For the rest of the field, returns in December were mostly flat to negative. The big loser last month and for 2014 as well: commodities. The US stock market was flat last month, although for year just passed US equities earned a respectable 12.6% (Russell 3000). That’s a comparatively soft gain relative to the stellar advance for US market in the last few years, but it’s above average in comparison with long-term results.

Meanwhile, portfolio diversification faced strong headwinds last month and for 2014 overall. The Global Market Index (an unmanaged benchmark that holds all the major asset classes in market-value weights) retreated 1.1% in December. For all of 2014, GMI earned a relatively soft 4.1% — a sharply lesser gain vs. 2013’s 14.2% advance.

GMI’s diminished performance last year is disappointing in the context of recent history, but the downsizing of return isn’t particularly surprising. Forward-looking risk-premia estimates for GMI have been in the neighborhood of 4.0% lately (see last month’s update, for instance). By contrast, GMI’s historical risk premiums have been running at roughly twice that pace in the last several years, based on the trailing three-year period. But as December’s numbers suggest, the wide gap between hefty profits in the rear view mirror and lean expectations for the future is closing. 

The implication: minting impressive returns with a passively managed multi-asset class strategy is going to get tougher in the foreseeable future. The solution for sidestepping softer results? The standard toolkit, of course — excelling in rebalancing and/or second-guessing Mr. Market’s asset allocation. In other words, generating a portfolio return that’s comparable to what we’ve seen over the past five years will probably require a higher dose of risk.

Greece Is The Word ...

Why the renewed talk of a Grexit from the eurozone?

Greek Prime Minister Antonis Samaras has called a snap election for January 25. Unfortunately for Mr Samaras, the narrow front-runner for the election is his opponent Alexis Tsipras, head of the leftist Syriza party. Mr Tsipras wants Greece to remain in the Eurozone, but he also wants parts of Greece's debt written off and austerity measures reduced. It's not certain whether the rest of the Eurozone - and in particular, Germany - will accept this. Greece could be forced to leave the Eurozone.

What would happen to Greece if it left the eurozone?

The scenarios range from mildly painful to catastrophic. At the very least, leaving the euro and writing off large amounts of debt would make Greece a pariah in international capital markets - who wants to lend money to a country that doesn't repay? Greece would be forced to reintroduce its old national currency, the drachma, and it would be a difficult transition from the euro. But Greece would again have its own currency and central bank and be able to directly steer its economy.

Still, the resulting turmoil could make Greece's economic position even worse than it currently is. The doomsday scenario is political unrest that could lead to civil war and a military coup.

What would happen to the European and world economies if Greece left the eurozone?

Europe's economic position is far better now than the crisis years of 2009 and 2010. German leader Angela Merkel has stated that she would be willing to accept a Grexit because the feeling is that the Eurozone would be able to hold together if Greece left. This would still be enormously expensive - costing billions of Euros - and financial markets worldwide would take a hit. American academic Barry Eichengreen said the impact of Greece leaving the euro would be "Lehman Brothers squared".

Previously, it was believed that if Greece wrote off their debt and left the euro, other troubled European economies - Portugal, Ireland, Spain, Italy - could follow. There is still a small chance this could happen. The implosion of the Eurozone would have dire consequences for the Europe and the world.

So how bad is Greece's economy?

Since 2008, the year the global financial crisis began, the economy has shrunk an astounding 25 per cent. If the Greek economy grew at 2 per cent a year, it would still take 13 years to get back to its 2008 size. 

Greece's debt as a proportion of GDP was 105.4 per cent in 2008. It soared to 171.3 per cent in 2012, shrunk to 156.9 per cent in 2013, but reached 174.9 per cent last year - higher than ever. Only Japan has worse debt. Greek unemployment is at 25 per cent. And because Greece has neither its own currency or central bank, it can't devalue the exchange rate or introduce monetary stimulus to improve its economy.

In short - the Greek economy is in terrible shape.

What do bond markets think about a Grexit?

Southern European bond yields have risen in recent days but are still very low, reflecting the belief that the fallout from a Grexit can be "ringfenced". Spain's 10-year yield touched a record-low 1.49 per cent on January 2 and is now at 1.60 percent. Italy's 10-year rate reached a record low 1.73 per cent on January 2 and is now at 1.83 per cent.

By contrast, the Greek 10-year yield has increased 41 basis points to 9.65 per cent. Despite the rise over the past weeks, it's still well below record high yields of more than 30 per cent hit in 2012.

  

What The Government Should Be Doing For Flood Victims

It looks pretty obvious that maybe not enough has been planned to mitigate the repercussions from the present floods' disaster. Some 200,000 have been affected, and possibly another 100,000 will be affected indirectly for those who might be dependent on the former group.

What needs to be done immediately:

a) Unit In Charge Of Logistics & Aid Distribution - self explanatory. Too many ketua kampungs acting as toll gates, preventing aid from reaching the victims.  Presently the kind of aid also changes accordingly. Many places do not need food but more so for cleaning products and medication. Right now, its a free for all. All good intentions are not properly directed, and a large portion may be wasted in the end.

b) Unit In Charge Of Infrastructure Rebuilding - A detailed study of whats immediate and whats medium term. The kind of funds needed and how to get them, and disburse projects asap.

c) Unit In Charge Debt Relief & Insurance - Many people have lost a lot of property and assets. If you have two cars under water, you are looking at RM30,000-RM50,000 in damages. Before you now it your monthly car and house payments are due again. The unit should be there to negotiate with all banks and insurance firms collectively. Maybe a grace period of one year could be given to those who apply.

d) Unit To Cater For SMEs and Companies - Looking into the after effects to companies as they are the backbone for people to rebuild lives. Without jobs, how are they going to rebuild their lives? Hence special assistance loans should be given on a case by case basis to alleviate the pain.

e) Unit To Cater For Planters and Farmers - Many crops and cultivation have been devastated. Similar to above.

This flood is a national disaster, not a leave your house and go back a couple of days later to clean up and things back to normal. Many who are middle class or lower middle class, suddenly find themselves below poverty line.

The government needs to stop playing politics and work with state governments as too many lives and livelihood are at stake. Remember, we do not have SAFETY NETS ... there is no unemployment insurance, and if you did not get extended coverages, you have lost your cars and your house needs a huge renovation loan. Not to mention those whose houses have been totally decimated as well.

Act now, act fast and decisively.

Things To Consider About Oil Prices In 2015

Let's be frank here, I did not think oil prices would plummet like it did. It is largely a black swan event which went past the estimates of a large majority of investors, experts and amateurs. So this is not anything profound, its just some important pointers that one should know going forward.

$50-60 for oil seems like soo... drastic, and it is for all players within the oil and gas arena. More so for economies that are highly dependent on oil revenue for a substantive part of their budget spending.


A look at the chart below show the budgeted price of oil for their "revenue estimates", blue was the price budgeted for 2014 and red is for 2015, both were WAY OFF ... something's got to give ...

a) A real correction or an aberration - The thing is on hindsight ... this 
correction is not an aberration but the last 5 years for oil prices to be around $100, now that was an aberration. The long term, 20-year average is, in today's money (adjusting for inflation), is more like $US60. It wasn't that long ago that the Organisation of the Petroleum Exporting Countries was targeting $US25 oil, which back then seemed a comparatively high price. 

b) The new normal, or the real normal - On hindsight again, the price upswing of oil coincided with two major developments. It started from $40 to above $100 over the last 5 years owing to China's so called unstable demand, China's unstoppable growth projections, and China's storage of oil to ward of excessive oil price increase; plus the easing of money supply from most developed nations affected by the subprime and Euro crisis. Hence if we are shifting to the new normal - the new normal has China struggling to post moderate growth, the new normal has seen China being over invested in many mines (commodities), the new normal is seeing a mismatch between demand and supply, the new normal has seen shale/fracking oil being a major contributor to the supply equation.

c) Supply brought on by high oil prices - Turn back the clock to 200 and price of oil is less than $30. The rise and rise of oil prices have caused large investments and spending in innovation and research, which brought forth much of the new supply. Its like a pendulum, you swing extreme on one side then you swing back to rebalance. In much the same vein as any new "innovation/ventures", e.g. the rise of internet, smartphones, online shopping, etc... every time there is a new "area", the investing community will throw money at it to speed up extraction of easy money till its no longer easy like now. These dishes of liquidity is deemed as necessary as it pools funds into innovation and new ideas, but will throw off excesses as well.

d) Contango looking bright - If someone were to examine future delivery for oil, the futures' prices is much higher thus leading many to conclude that a strong rebound is imminent. I believe this has more to do with remnants from players still fixated with oil prices at $80-$100. There is a strong inherent bias in the way we make estimates or guesstimates or even make prediction - its called "anchor & adjust", which in itself is usually useful but would preclude us or blinkered us in terms of our decision options. An example is that if we have seen oil trading at $80 for the past 2 years, if we were to hazard a guess for the price of oil 6 months down the road, we would anchor at $80 and adjust slightly up or down depending on our beliefs and knowledge of the subject matter, henceforth in that case most guesstimates would probably be around $70-$90. It would take gargantuan balls and chutzpah to call for oil prices to be at $60 or $110 6 months down the road.

Above was the daily production back in 2001 by countries. Just look at the current daily figures. Most economies' budget have probably increased multiple folds from 2001 to2014. Russia's pumping more today than in 2001 and is in a more severe position financially. While we have been fixated by shale oil from the USA, its not the culprit in the supply equation - the USA has been constant in its daily production back in 2001 and today. What has changed is the emergence of Canada (oil sands) and China, they were nowhere back in 2001.

	Country	Production (bbl/day)	Share of World %	Date of Information
—	World	84,951,200	100%	2014 est.[6]
1	Russia	10,053,800	13.80%	2013 est.
2	Saudi Arabia	9,693,200	13.09%	2013 est.
3	United States	7,441,200	12.23%	2013 est.[7]
4	China	4,372,000	5.15%	2014 est.
5	Canada	3,856,000	4.54%	2014 est.
6	Iran	3,518,000	4.14%	2014 est.
7	Iraq	3,400,000	3.75%	2013 est.
8	United Arab Emirates	3,087,000	3.32%	2013 est.
9	Venezuela	3,023,000	3.56%	2013 est.
10	Mexico	2,934,000	3.56%	2013 est.
11	Kuwait	2,682,000	2.96%	2013 est.
12	Brazil	2,633,000	3.05%	2013 est.
13	Nigeria	2,525,000	2.62%	2013 est.
14	Norway	1,998,000	2.79%	2013 est.
15	Algeria	1,885,000	2.52%	2013 est.
16	Angola	1,840,000	2.31%	2013 est.
17	Kazakhstan	1,635,000	1.83%	2013 est.
18	Qatar	1,631,000	1.44%	2013 est.
19	United Kingdom	1,099,000	1.78%	2011 est.
20	Colombia	1,011,992	0.97%	2013 est.
21	Azerbaijan	987,000	1.20%	2011 est.
22	Indonesia	982,900	1.66%
23	India	897,300	1.04%	2013 est.
25	Oman	890,500	0.95%	2013 est.
26	Argentina	796,300	0.93%	2013 est.
27	Libya	700,000	0.85%	2013 est.[8]
28	Egypt	680,500	0.80%	2013 est.
29	Malaysia	693,700	0.82%	2013 est.
30	Ecuador	485,700	0.58%	2013 est.

Hence in the current scenario, we have a loaded situation wherein most player have seen oil prices dropping 40% over the past 3 months. Thus at $60, most futures would see a strong bias on the upside as many believe they may have missed out on the big drop already. The chances, seemingly, is higher for it to go higher than lower from $60 in the next 3 to 6 months.

That is a huge fallacy in my view. Thats because if you think that, you are basing it largely on how oil has been trading for the past 4 years. However, as explained, this correction is taking out the excesses of easy money and depleted demand in light of rising output. In my view oil has a higher propensity to go to $40 than $70 over the next 3-6 months. I wish I will be wrong, I really do.