IS SOROS PLAYING GOLD?

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IS SOROS PLAYING GOLD?

George Soros, the Hungarian/American billionaire investor/political activist is as controversial as they come. He became famous, and a lot richer, when he sold the Pound Sterling short in 1992 and received the title “The Man Who Broke The Bank of England”. He also contributed to the currency crisis of 1997 in South East Asia. And a few months ago, stated that the Chinese Yuan is overpriced and due for a correction.

More recently, Soros was in the news buying huge amounts of gold, including gold mining shares and gold futures. Yesterday, he sold off his gold holdings!  Is gold going down the drain?

Gold Price Chart gold.org

Possibly, but the market still seems to be bullish on gold. Not to mention that Russia and China have been stocking up huge quantities of gold for over a year now, to reduce their reliance on the US Dollar as reserve currency.

With the reluctance of the US Fed to raise interest rates, probably till the end of 2016 or even till Q1 2017, and with the world political tensions rising at an accelerating pace, one would expect gold to remain in demand as a safe haven.

Then, what is Soros doing selling gold? Profit taking? Possibly, but let us not forget that he is basically a trader and his forte is shorting. Traders have an itch to alternate between bullish and bearish positions, and the bigger and louder they are, the more likely they are to impact the market in their direction – even if only in the short term.

It may not be wrong in the short term, to follow closely in the steps of Soros, the Wizard, but hope he doesn’t veer unbeknownst to us.

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‘TIS THE SEASON, FOR CHINA BASHING

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‘TIS THE SEASON, FOR CHINA BASHING

While the Russian hunting season continues separately, China bashing has increased pari passu with the rise in military tensions in the South China Sea.

So far, the bashing has concentrated on media assassination by a continuous stream of news highlighting the negative or weak side of China – regardless whether it is true or not. This stream of false or biased news is passed from one news media to the other, as in a relay race, so as to ensure it is nonstop.

ECONOMIC DOLDRUMS?

One mass media organization recently wailed the deepening of China’s economic slowdown describing it as being in the “doldrums”. All this, because industrial output and retail sales were below expectations for July 2016. It attributed the poor showing to the difficulties China is facing in transforming its economy away from pure production. It then went on to name a number of other woeful results including Chinese cinema ticket sales. Continue reading “‘TIS THE SEASON, FOR CHINA BASHING”

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TO BE OR NOT TO BE – THE PALESTINIAN LAND CONFISCATION SAGA

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TO BE OR NOT TO BE – THE PALESTINIAN LAND CONFISCATION SAGA

Israel reminds me of Sylvester the pussy cat (Puddy Tat) cartoon. He can’t make up his mind whether to gobble up and eat Tweety, the bird, and get whacked on the head by the Little Old Lady’s broom, or wait until a more opportune time appears. In all events, he is set on eating Tweety, but the question is when? Answer: When he can get away with it!

Similarly, Israel, which is built on Palestinian land, keeps expanding by gobbling up and confiscating additional Palestinian properties. The rate of confiscation increases and decreases according to the mood of international public opinion, but more importantly, according to US political pressure. If it can get away with it, Israel will gobble up Palestinian land quite happily. But if US pressure bears upon it, it ceases in appearance, while in reality delaying until an appropriate window pops up. Continue reading “TO BE OR NOT TO BE – THE PALESTINIAN LAND CONFISCATION SAGA”

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E-COMMERCE IMPACTS TRADITIONAL RETAIL BUSINESS

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E-COMMERCE IMPACTS TRADITIONAL RETAIL BUSINESS

The war of attrition between e-commerce and traditional retailing business just got bloodier.

Macy’s, the famous US department store chain is closing down 100 stores, which represents 15% of its total stores. Other US retailers are also closing stores by the hundreds. Walmart, the biggest, will shut down 450 stores. So far this year, some 44,000 retail employees have been laid off. A good part of this is due to heavy competition from the Amazon e-commerce machine.

Walmart just paid US$ 3.3 Billion to buy jet.com, an aggressive e-commerce retailer, to counter Amazon and expand its e-commerce market share, which is presently at the US$ 12.5 Billion compared to Amazon’s US$ 80 Billion. (Walmart’s total sales are US$ 482 Billion).

This represents a structural change in the US market, which will, sooner or later, impact commercial real estate and pull it down. Ergo, don’t expect US commercial real estate booms in the foreseeable future.

However, real estate is a long-term investment and, as long as landlords curb their enthusiasm and greed, to accept a theoretically realistic return of 5%, they should weather the coming storm – provided they had bought their properties prudently, i.e. not paid top Dollar at the cycle peaks and with borrowed money.

As all US trends eventually spread throughout the world (usually over a 5 – 15 years’ span), it would be wise for the rest of the world to prepare for the conquest of e-commerce over traditional retail space.

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OPEC not very optimistic for 2017?

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OPEC not very optimistic for 2017?

Summary:
OPEC doesn’t seem overly optimistic on oil prices in 2017. While it sees demand rising slightly, but to a record of 95.41 million barrels per day (MBPD), it is worried that this Summer’s expected demand didn’t materialize and that refineries are overstocked and may not increase their demand for the rest of 2016.

Likely Beneficiaries:
Oil Refineries: theoretically, they can continue to get cheap crude and sell refined products at relatively much higher prices.
General Consumers: They will not see rise in driving cost or utilities costs, at least for some time.
Oil Importing Countries: Such as China, India, Europe and other countries dependent of imported oil.

Likely losers:
Oil Producers: Especially to whom oil export is their bread & Butter. The oil companies in general as well as countries such as Venezuela, Mexico, Nigeria and Iraq would be biggest losers. To a lesser extent, Iran and Russia would be hurt. As for the Gulf oil countries, they are still flush with cash and need a longer period of low oil prices to really feel the pain.

Timing:
Announcing a semi pessimistic forecast would not normally have been expected from OPEC. One would have expected them to try and talk-up the price through bullish forecasts. But, if they really wanted to raise prices, they would have cut back a little on their production, or announced that they intend to do so.

So what is a possible reason for such an announcement?

Around now is the time when the oil hedging for future 2017 prices takes place. Such announcements could have a dampening effect on the hedged prices, which would be negative to such countries, as Mexico, that rely substantially on hedging a big chunk of their annual oil production. Also, it would have a dampening effect on the Shale Oil producers who have used hedging to stay alive during the past two years.

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