November 2015 In Review, December Preview

November is my busiest month of the year because of birthdays for my daughter, my mother and myself. It is also my anniversary month – Lucy and I have been married for 23 years now. But it wasn’t that busy that I couldn’t get away for a week with Lucy to South Korea for our first ever Autumn anywhere in the world.

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Strange that we even bumped into a familiar face on Nami Island …. ?!?

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On 16 November, I had the highlight of my year when I had a 1-on-1 private coaching session with my swim idol and much revered Senpai, Shinji Takeuchi.

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The man is the master of the Total Immersion swimming technique and is the most graceful swimmer I have ever known. It was a privilege and honour to have had time with the man. Check out his technique … I have to make that my style.

On 14 November, PTT81 completed their Tutorial over two weekends. This was an enthusiastic bunch of traders with many questions that kept me busy and got me knackered after each session. Loved it!

PTT81

Like I said, it was a busy month. And the market was even busier!

MARKET MATTERS

After a really surprising bull run in October, November finished in “blah” fashion. Much of the anticipated “Black Friday” rally fell flat as the sales numbers failed to impress.

The DOW closed out the month below the year’s open and is threatening to break below its 200DSMA again.

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Although US growth seems stable, 2.0 %, the GDI only grew by 1.09% between Q2 and Q3 this year. This has been a consistent trend over the last few quarters. And if one needed more signs of liquidity drying up, you don’t need to look further than Treasuries.

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Since the middle of this year, more and more liquidity has been evaporating from the money markets presumably because of the general growing fear of an economic failure being just around the corner. The USD has risen largely because of a flight to quality and bond yields have been rising on the shorter term bonds as a sign of investors displaying doubt in risk.

In spite of the seemingly hawkish state of the US economy, things are actually looking up for the markets in December with the ECB planning another round of stimulus and the Yuan being added to the basket of reserve currencies.  Janet Yellen is expected to raise the Fed Fund Rate this month and this will surely spike the Dollar higher even after its meteoric rise of the last months. The effect of a stronger Dollar will have a diverse effect of US businesses in the short term but if the US returns to the Buy-Based economy it is supposed to be, a strong USD should benefit corporations more than Unicorn companies.

Singapore registered its 12th straight month in Deflation in November.

Singapore consumer prices dropped 0.8 percent year-on-year in October of 2015 from a 0.6 percent decline in the previous month and missing market consensus. A faster decline in cost of housing & utilities offset a slower drop in cost of transport while prices of food remained steady. Yet, core inflation rose 0.3 percent year-on-year, following a 0.6 percent rise in September.

As a reminder, you’d have to go back to 1986/1987 for a longer period of deflation that lasted fourteen months. As it stands now, these 12 months surpasses the previous longest time of deflation (11 months) during 1998 to 1999.

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Singapore initially posted a preliminary 0.1% growth which was revised upward three weeks later to 1.9% q/q. How this was possible still boggles me when Services, Manufacturing, Transports, Constant Prices and Housing all contracted.

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Volumes still remain poor, revenues are even poorer and the markets are struggling to finish the year above the open. If you thought 2015 was a rough year, come back in a month for the year-end summary because I have really bearish news for you going into 2016.

December Preview

December 2015 has 21 full trading sessions, one half-day session (24th) and one trading holiday (25th). December is the second of the market’s three best consecutive months between November and January and is the last trading month of quarter four and the year.

December is famous for its Santa Claus Rally that traditionally begins three to five days before Christmas and ends three days after the New Year. However, when we don’t get a Santa Claus Rally, it usually means that the following year is going to be weak or extremely volatile.

December Trivia

Key Economic Dates

Commodities

SUMMARY

So comes the end of the year. At the start of this year, I wrote;

Let’s not forget that we’ve started 2015 on the back of some foreboding prophecies … no sell-off in May 2014, terrible Black Friday numbers and now, no Santa Claus Rally … all signs that 2015 is going to be a rough and tough year. The last time we had these prophecies all lined up perfectly was in January of 2006 and January of 2007. I reckon you’ll know the significance of those years ….. This is going to be a tricky 2015 starting with a tricky January. Unlike last year, I suspect the first half of the year will be rocky and extremely volatile but the second half from September onward should see the market return to normalcy.

Looks like I got that call spot on. So if the market has returned to normalcy with September being bearish as always and October being the Bear Killer month it usually is, we should see December get back to rallying ways … unless Yellen has something to say about it.

Be well and have a happy holiday season ahead!

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