Commodity Crackles : Let's Start With Oil
I noted that oil has not suffered more than 2 consecutive quarters of losses since 2003 and we managed to pull off a first with 1Q15 seeing another drop in prices.
WTI CRUDE QUARTERLY PRICES
We are not hearing of anyone suffering too badly with the price rout. The simple solution has been to pump more to make up for loss revenues which is what is happening with iron ore, coal and the rest.
And while the world is running out of oil storage, the CME has come up with an ingenious solution to allow us to trade OIL STORAGE FUTURES ! http://www.theglobeandmail.com//globe-investor/cme-group-launches-unprecedented-oil-storage-futures-contract/article23678700/?cmpid=rss1&click=sf_rob
Anything to make money huh ? And we bitch that too many Chinese high school dropouts are trading stocks ?
In inflation adjusted terms, oil is not doing that badly because we are only at 2008 levels which hark back to 2004 lows.
BLOOMBERG WTI CRUDE OIL INFLATION ADJUSTED SPOT PRICE
In price terms, commodities have suffered huge price drops in the past 12 months.
Note that Gold and metals have mostly beat the EUR and JPY.
I liked the chart of oil and put on some positions yesterday after viewing the monthly chart which looks like it could finally be at a base, bearing some similarities to the pattern in 2008.
WTI MONTHLY CANDLESTICKS
I also have an eye out for Coffee and Sugar, the 2 other commodities I am more familiar with. But let’s just start with oil and see if we can touch $55.
Good luck !
Hi Tradehaven,
Do you have an article on Vibrant Group’s bonds or any comments on their credit profile? Thanks!
Hiya,
Wisely not covered by anyone. I think Sabana REIT is linked to them, in a small way.
I went through my old posts and realised I did not write much about them at all. Must be self preservation instinct ! Notice I don’t say much about Aspial and family too ?
Only one I could find – https://tradehaven.me/2013/05/17/new-issue-review-freight-links-express-holdings-4y-sgd/
Thanks! Wow, doesn’t sound too positive. My journey of finding a medium term bond with YTM > 4% and a decent credit profile has been an arduous one. XD
Hey,
Why do you say that when there are so many bonds out there that present good value ? Perhaps you can share your reasons why you shortlisted Vibrant Group as a bond to consider for investment ?
In any case, you are welcomed to join the Tradehaven Investor Club (to be launched soon), a platform for discussing and sharing ideas.
Good luck !
Hi!
I started off with a list of bonds that the bank allowed leverage on (perhaps that’s why I’m limited!). The list was dominated with highly-leveraged property and oil companies. My preliminary shortlist includes Indian Oil, G8 Education, Ascendas India Trust, Hotel Properties Limited and Vibrant Group, etc. (most quoted with YTM < 4%). I'm also looking into a few names where leverage is not allowed (banker suggested Australian banks as well).
Vibrant was one of those quoted below par (and I'm sure there're very good reasons for this). Vibrant made my longlist because of its growth trend and also the fact that its chairman subscribed to the perps. However the fast-growing debt and recent net loss does make me a little wary.
I'm relatively new to bonds, so I'm trying to learn as much as possible before plunging in. Your website is extremely informative and I look forward to your new platform.
Hey,
Perhaps we can talk about leverage one day and I can share with you what I feel is the best way to capitalise on it.
Thanks for support and encouragement !!
Investing in bonds based on what your bank provides leverage on is almost like carrying a faulty grenade! The problem is two fold. (a) the banks interests and yours are never aligned and (b) having a leverage does not mean the underlying is a safer bond investment. Look at all the leverage offered by some banks on some local O&G plays and their recent problems! Where were the banks ??
I think it is easy to distance oneself from responsibility as time passes. Banks do have a duty of care to investors that lasts about 4 weeks in the primary market.
Hi!
Sure thing! Looking forward!