http://seekingalpha.com/article/264409-total-the-perfect-safe-haven
During our morning calls we spend time analyzing a certain headline and dissecting it. We addressed the following questions today to the article mentioned above:
Questions:
1. Do you think the end of QE2 will also be the end of upward trend we are seeing recently? Why?
2. How are speculators speculating about Greek and Irish defaults? Do you think they are betting on the right thing? (You don't have to answer why)
3. Do you think the continuing growth in countries like Golden Brics will push the oil price higher?
4. Do you think the current prices and situations on energy will support the opinion in the article saying companies like TOT is good for long-term investors?
5. What are the Williams %R and the Fast Stochastic data?
6. Overall, do you think TOT, as described in the article, is a "perfect safe haven" for investors? Why?
A very brief outline of what each of us stated to the questions above is listed below. This certainly isn't the complete description of our call:
1. Do you think the end of QE2 will also be the end of upward trend we are seeing recently? Why?
Yes, I do believe that the end of QE2 will cause the current rally to fizzle away. The low bond yields and the high stock prices are blessed by the ample amounts of money that was injected into the economy by the Fed via QE2 in 2010. Unfortunately, I don't believe that the market rally will be able to sustain itself once QE2 ends and the market is fully handed off to the private sector.
2. How are speculators speculating about Greek and Irish defaults? Do you think they are betting on the right thing? (You don't have to answer why)
A very brief outline of what each of us stated to the questions above is listed below. This certainly isn't the complete description of our call:
1. Do you think the end of QE2 will also be the end of upward trend we are seeing recently? Why?
Yes, I do believe that the end of QE2 will cause the current rally to fizzle away. The low bond yields and the high stock prices are blessed by the ample amounts of money that was injected into the economy by the Fed via QE2 in 2010. Unfortunately, I don't believe that the market rally will be able to sustain itself once QE2 ends and the market is fully handed off to the private sector.
2. How are speculators speculating about Greek and Irish defaults? Do you think they are betting on the right thing? (You don't have to answer why)
I dont think they are speculating
I think there is a serious probability of Ireland and Greece defaulting on their loans. Even though the EU government bailed them out, they dont seem to be doing any good at the moment. Credit is still frozen, unemployment is high and Debt is at the highest rate ever. Once the EU starts doing better and the other countries ask for their money back in order to prosper from the higher returns(which we expect to be coming at the end of this year), things will get rough.
3. Do you think the continuing growth in countries like Golden Brics will push the oil price higher?
Yes, I think oil prices will be further driven upwards by the needs from emerging markets. Even the BP Statistical Review of World Energy in 2009 June had showed that, for the first time, total oil demand in the emerging markets now outstrips the West. That's an important milestone, based on which, some analysts even claimed, “… It means the Western world can slump but global oil prices can stay ‘fundamentally’ strong.”
The BRICS countries - originally Brazil, Russia, India, and China, and now South Africa - have turned out to be a source of global economic development. The BRICS account for over 20 pc of global GDP – the same share as the US, the world's largest crude importer. Between 2000 and 2010, BRICS GDP grew by an incredible 92.7 percent, compared to a global GDP growth of just 32 percent, with industrialized economies having a very modest 15.5 percent. Over the next few years, the BRICS share of global commerce, along with that of all the other emerging markets, continues to rise sharply. In each of these fast-industrializing, energy-hungry societies, per capita oil use will continue to crank up from its current base. That's why global crude demand may still soar over the medium-term, even if Western growth is at the recovery stage.
Resources: http://www.chinadaily.com.cn/cndy/2011-04/14/content_12322993.html
4. Do you think the current prices and situations on energy will support the opinion in the article saying companies like TOT is good for long-term investors?
I do not think so because energy is overrated. I feel that once Qe2 is done with, there were will not be inflationary pressure which is causing the upward movement in the prices. With more stability in the dollar, there will be not be much volatility as we see in the commodities market today. As for the unrest in the middle east - it is short lived and the situation seems to be easing. There is growing demand from the emerging markets but that is not what is driving the prices of energy up. I rather think it is the inflationary pressure. Moreover the core CPI does not include the commodities in inflation prediction and with housing making up majority of the core CPI - when do we really know if there is inflation or not? If that be the case, will a long term bet on TOT be justified?
5. What are the Williams %R and the Fast Stochastic data?
a. The difference - Williams %R is a momentum indicator that is the inverse of the Fast Stochastic Oscillator. While Williams %R, reflects the level of the close relative to the highest high for the look-back period; the Stochastic Oscillator reflects the level of the close relative to the lowest low.
%R = (Highest High - Close)/(Highest High - Lowest Low) * -100
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%R is multiplied by -100 correct the inversion and move the decimal.
b. he Fast Stochastic Oscillator and Williams %R produce the exact same lines, only the scaling is different.
c. Williams %R oscillates from 0 to -100. Readings from 0 to -20 are considered overbought. Readings from -80 to -100 are considered oversold. As for the look back period, the default setting for Williams %R is 14 periods, which can be days, weeks, months or an intraday timeframe.
d. Fast Stochastic Oscillator
%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
The Stochastic Oscillator "doesn't follow price, it doesn't follow volume or anything like that. It follows the speed or the momentum of price. Since, momentum changes direction before price - bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals.
6. Overall, do you think TOT, as described in the article, is a "perfect safe haven" for investors? Why?
It is and is not. The reason for saying this is because in investment an opportunity is a good one as soon as no body knows about it . Onc plenty of people discover it, it dose not decome and opportunity anymore. This what at least they tought us in bahavioral finance and it is to some extent true.
I think there is a serious probability of Ireland and Greece defaulting on their loans. Even though the EU government bailed them out, they dont seem to be doing any good at the moment. Credit is still frozen, unemployment is high and Debt is at the highest rate ever. Once the EU starts doing better and the other countries ask for their money back in order to prosper from the higher returns(which we expect to be coming at the end of this year), things will get rough.
3. Do you think the continuing growth in countries like Golden Brics will push the oil price higher?
Yes, I think oil prices will be further driven upwards by the needs from emerging markets. Even the BP Statistical Review of World Energy in 2009 June had showed that, for the first time, total oil demand in the emerging markets now outstrips the West. That's an important milestone, based on which, some analysts even claimed, “… It means the Western world can slump but global oil prices can stay ‘fundamentally’ strong.”
The BRICS countries - originally Brazil, Russia, India, and China, and now South Africa - have turned out to be a source of global economic development. The BRICS account for over 20 pc of global GDP – the same share as the US, the world's largest crude importer. Between 2000 and 2010, BRICS GDP grew by an incredible 92.7 percent, compared to a global GDP growth of just 32 percent, with industrialized economies having a very modest 15.5 percent. Over the next few years, the BRICS share of global commerce, along with that of all the other emerging markets, continues to rise sharply. In each of these fast-industrializing, energy-hungry societies, per capita oil use will continue to crank up from its current base. That's why global crude demand may still soar over the medium-term, even if Western growth is at the recovery stage.
Resources: http://www.chinadaily.com.cn/cndy/2011-04/14/content_12322993.html
4. Do you think the current prices and situations on energy will support the opinion in the article saying companies like TOT is good for long-term investors?
I do not think so because energy is overrated. I feel that once Qe2 is done with, there were will not be inflationary pressure which is causing the upward movement in the prices. With more stability in the dollar, there will be not be much volatility as we see in the commodities market today. As for the unrest in the middle east - it is short lived and the situation seems to be easing. There is growing demand from the emerging markets but that is not what is driving the prices of energy up. I rather think it is the inflationary pressure. Moreover the core CPI does not include the commodities in inflation prediction and with housing making up majority of the core CPI - when do we really know if there is inflation or not? If that be the case, will a long term bet on TOT be justified?
5. What are the Williams %R and the Fast Stochastic data?
a. The difference - Williams %R is a momentum indicator that is the inverse of the Fast Stochastic Oscillator. While Williams %R, reflects the level of the close relative to the highest high for the look-back period; the Stochastic Oscillator reflects the level of the close relative to the lowest low.
%R = (Highest High - Close)/(Highest High - Lowest Low) * -100
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%R is multiplied by -100 correct the inversion and move the decimal.
b. he Fast Stochastic Oscillator and Williams %R produce the exact same lines, only the scaling is different.
c. Williams %R oscillates from 0 to -100. Readings from 0 to -20 are considered overbought. Readings from -80 to -100 are considered oversold. As for the look back period, the default setting for Williams %R is 14 periods, which can be days, weeks, months or an intraday timeframe.
d. Fast Stochastic Oscillator
%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
The Stochastic Oscillator "doesn't follow price, it doesn't follow volume or anything like that. It follows the speed or the momentum of price. Since, momentum changes direction before price - bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals.
6. Overall, do you think TOT, as described in the article, is a "perfect safe haven" for investors? Why?
It is and is not. The reason for saying this is because in investment an opportunity is a good one as soon as no body knows about it . Onc plenty of people discover it, it dose not decome and opportunity anymore. This what at least they tought us in bahavioral finance and it is to some extent true.
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