December 2016 In Review, January 2017 Preview

2017 Calender on the red cubes

In a blink of an eye, another year has passed. That effectively completes 10 years of professionally teaching finance and economics under AKLTG’s roof and 12 years of teaching altogether. Now 2017 opens a new door of opportunities for me.

But before we move forward, a quick look back at 2016 and I am not sorry to see it go. I lost a few friends, a couple of my graduates and a whole bunch of celebrity icons that I grew up with in the past year. When I look back on the year, I find very few things that made me smile compared to the many things that upset me. There were some high points like my vacations to Switzerland and Spain along with some joyful moments like having both my kids pass and attain their driver’s license. But all in all, it was a challenging year.

We were warned before it began that 2016 in numerology made the number ‘9’ which signifies ending or closure. Nine is a finishing number, and represents the end of a cycle. But with endings come new beginnings. 2016 was a very karmic year. It was a time that we received the karma from the good or the bad we have done. It was a chance to end something once and for all. Some thing in your life had to come to an end. Now this doesn’t have to be a bad thing. Endings can be good. Nine is also the number of the humanitarian. That means 2016 is a year of completion, rest and forgiveness.

2017 will be a One. One is a number of beginning. 2017 bids us all to start something brand new, something that expresses our uniqueness, that uses our leadership abilities, that opens us to new perspectives. 2017 as a One year is a time to think and act independently. It’s also a year to put leadership abilities and unique talents to use in the wider world, to practice cooperating without losing individuality. The number One is the maestro, the director of activities and events. One is a number about beginnings and new initiatives of all kinds.

So, Goodbye 2016 and I pray we don’t have another year like this for a long long time. Hello 2017 and bring on the changes!

But before we embark on a new year and new ventures, a vacation was in order and this year, the family and I went to Spain!

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As always, we brought back many memories and moments that we will treasure for the rest of our lives. Like the one time we get to be in Naboo, home of Padmé Amidala to do something we’ve always wanted to do …

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TUTORIAL MATTERS

On 11 December, PTTMY34 wound up their two weekends of the Bootcamp to complete the year’s compilation of classes.

PTTMY34

And what a wonderful batch it was too. The energy was amazing and kept be going in spite of being unwell and suffering a nagging cough. Keep up the energy and enthusiasm, MY34. We’ve got a lot more work in store!

I still find it hard to fathom that what started out as a hobby has turned into such an overwhelming success that a total of 133 batches (87 in Singapore, 34 in Kuala Lumpur, 12 in Jakarta and 5 in Penang … less batches 04 and 44) have been completed in the ten years I have been teaching professionally. The Tutorial has come a long, long way to where it is today which is more complete than I could have imagined ten years ago.

For 2017, the Pattern Trader will be moving on to newer and bigger things. There will be significant changes made through the first half of the year that will will make the Tutorial and its Tools more complete and way more effective than it has ever been. These are exciting times for the Pattern Trader.

MARKET MATTERS

DOW YTD

As you can see, the year for the most part was flat as hell. Between April and the start of November, both the DOW and S&P500 struggled to make gains. It wasn’t until the election period and the Trump win that the market really made significant gains. The other talking point for the year was Brexit that saw a major drop in the markets between 23 and 27 June.

GBP:USDThe drop on the GBP against the USD has not recovered since and seems set to take a further drop if the US continues to hike its rates in 2017.

Against the SGD, the GBP closed the year out at 1.7836 when it was trading above 2.00 for almost three years before Brexit.

So what’s next for the great American economy under the reign of a new and controversial president with a government that has as much experience in running a country as the president has – which is nothing really – and can they make America great again?

The general American population seems to be rueing the fact that Trump is the new Commander-In-Chief but the market seems to like the idea a lot. With the cabinet he has put together, it would seem like Wall Street has done it again by getting a leader that will see the market make another great leap upwards in spite of already being overbought and overvalued in most areas.

Its economy is still buoyant with much headroom to expand into. Almost every aspect of its economy (save manufacturing) has been serving healthy numbers especially Employment. Unemployment fell to 4.6% in November 2016 from 4.9 percent in the previous month. It was the lowest jobless rate since August 2007. Even Janet Yellen’s plans to bring up the Inflation Rate to 2% has seen it rise to 1.7%, the highest inflation rate since October 2014, mainly boosted by higher energy cost while food prices continued to fall.

WTITalking about energy prices, with so much that has happened, it is easy to forget that WTI was trading under $30p/b less than 12 months ago.

We shouldn’t forget that a lot of the world’s problems now are because of the low price of Crude Oil. And before we get too excited about Crude breaking higher, note that it closed out the year without breaking above $54p/b, a resistance level going back to December 2014. Crude has not breached that level since July 2015.

Given the current economic state of discussions between OPEC and the other oil producing economies, little has been accomplished to warrant higher highs on the black stuff especially when most of the participants are only interested in their individual bottom lines rather than the greater good. Seasonally, energy is coming into its best months between February and May. If there is a reason for oil to rally, it would be this seasonal run. However, keep an eye on the cold months of January and February that could change the mood of the energy trade.

SINGAPORE

The Little Red Dot is having a tough time. Job cuts amidst a slowing economy is slowly taking its toll on every level of business. The year began with cuts in the marine industries followed by the oil and energy sectors then the manufacturing sector. The banking sector then saw massive layoffs that put hundreds of investment bankers, traders and the like, out of work. Now the materials sector is taking the brunt of the slowdown.

SG Inflation

The inflation rate had been negative for 12 months coming into 2016 and its deflationary factor took a toll on the retail sector that saw many enterprises fold resulting in the empty stalls and shops in most of the malls in town today. As of November 2016, Singapore registered 24 straight months of Deflation and today sits at 0%, breaking the negative run on inflation.

Screen Shot 2016-12-31 at 10.28.29 PMWe’re not out of the woods yet.

Property prices continue to fall. For three straight years (12 quarters), Singapore’s residential property price index has fallen to 2010 levels with no clear sign of recovery on the horizon.

This comes amidst slowing consumer spending and a massive Households Debt-to-GDP at 61.1%, the highest level in the country’s history.

All this is going to pile up on The Red Dot’s woes in 2017 as it struggles against its neighbours who have tied in closely with China’s economic expansion plans. Singapore, it seems, have been left out of that equation. To make matters worse, China has taken offence to Singapore’s ties with Taiwan by confiscating nine military vehicles that were en route via Hong Kong. The Lions have made their firm political stand and will not be bullied by China. But what will this do for trade?

I have never been a big fan of China’s economic practices but I am not a fan of pissing them off either.

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Singapore’s market has already been in the doldrums since falling from its April 2015 highs. The STI has not registered a gain since August 2015 and has been broadly flat since December 2009.

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We’re in for a very rough 2017 and it won’t surprise me that growth contracts more than the -2% registered last quarter to put the Island State into its first full blown recession since the Sub-Prime.

JANUARY PREVIEW

January 2017 has 20 trading sessions and two holidays. January is usually a bullish month and is famous for its January Barometer prophecy – “As goes January, so goes the year”. This implies that if January closes with a gain, so should the rest of the year. But if January closes with a loss, we’re in for a tough year (although last year wasn’t).

Also watch for the “First Five Days” indicator that is as reliable as the January Barometer – if the first five sessions of the year finishes with a gain, the year is often bullish. If they lose, the year will likely be bearish.

January is the last month in the “Best Three Consecutive Months” in a trading year – November, December and January – that has seen the DOW make gains 15 of the last 22 years. However, the last three years going back to 2014 has seen January go down.

JANUARY TRIVIA

Key Economic Dates

Mon 02 Jan
• China Caixin Manufacturing PMI

Tue 03 Jan
• EU German Prelim CPI, Unemployment Change
• UK Manufacturing PMI
• US ISM Manufacturing PMI

Wed 04 Jan
• EU CPI Flash Estimate
• UK Construction PMI
• US FOMC Meeting Minutes
• China Caixin Services PMI

Thu 05 Jan
• UK Services PMI
• EU ECB Monetary Policy Meeting Accounts
• US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI
• Australia Trade balance

Fri 06 Jan
• US Non-Farm Employment Change, Unemployment Rate, Trade Balance, Factory Orders
• US FOMC Member Evans Speaks (12:15EST)

Sun 08 Jan
• Australia Building Approvals m/m
• China CPI and PPI

Wed 11 Jan
• UK Manufacturing Production m/m, Goods Trade balance

Fri 13 Jan
• US Core Retail Sales m/m, Retail Sales m/m, PPI, Consumer Sentiment

Mon 16 Jan
• China GDP, Industrial Production

Tue 17 Jan
• WEF (World Economic Forum) Annual Meetings
• UK CPI, PPI, RPI
• EU German ZEW Economic Sentiment
• US Empire State Manufacturing Index

Wed 18 Jan
• WEF Annual Meetings
• UK Unemployment Change, Average Earnings
• EU Final CPI y/y
• US CPI, Capacity Utilisation, Industrial Production
• Australia Employment Change, Unemployment Rate

Thu 19 Jan
• WEF Annual Meetings
• EU ECB Press Conference
• US Building Permits, Philly Fed Manufacturing Index, Housing Starts

Fri 20 Jan
• WEF Annual Meetings
• UK Retail Sales

Mon 23 Jan
• EU, French, German Flash Manufacturing PMI, Flash Services PMI, German Iso Business Climate

Tue 24 Jan
• US Existing Home Sales
• Australia CPI q/q, Trimmed Mean CPI q/q

Thu 26 Jan
• EU German Prelim CPI m/m, Spanish Unemployment Rate
• UK Prelim GDP q/q
• US New Home Sales
• Japan Household Spending y/y, Tokyo Core CPI y/y

Fri 27 Jan
• EU Spanish Flash GDP q/q, M3 Money Supply y/y
• US Durable Goods Orders m/m, Advance GDP Price Index q/q, Consumer Sentiment

Mon 30 Jan
• EU Spanish Flash CPI y/y
• US Core PCE Price Index m/m, Personal Spending m/m, Pending Home Sales
• Japan Monetary Policy Statement, BOJ Outlook Report, BOJ Policy Rate

Tue 31 Jan
• Japan BOJ Press Conference
• EU CPI and Core CPI Flash Estimate y/y, Prelim Flash GDP q/q,
• EU German Retail Sales m/m, German Unemployment Change
• US Chicago PMI, Consumer Confidence
• China Manufacturing PMI, Non-Manufacturing PMI

Commodities

SUMMARY

Next year is a year ending with the number seven. Years ending with 7 have a bad karma because history has proven so;

• 2007 (Sub-prime Mortgage Crisis)
• 1997 (Asian Financial Crisis)
• 1987 (Housing Bubble Recession)
• 1957 (DOW Triple Top)
• 1937 (Property Bubble and Credit Tightening)
• 1917 (Inflation – WWI)
• 1907 (Post San-Francisco Earthquake)

Given the way the Asian economies are going and how overbought the US economy is, it would be timely for the markets to take a break. I will be expecting a lot of volatility in 2017 and it won’t surprise me if ‘recession’ becomes the watchword for the year.

Now that the endings are done, we await new beginnings.

To all my readers, I wish you all a profitable and prosperous 2017. Stay safe, be wise and avoid taking that unnecessary risk if you don’t have to.

Happy Hunting Always!

HNY

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