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Cold Front on Oil Prices?

Tony Nash is back in the Morning Run, hosted by BFM 89.9, as he points out the crude oil price and how long to expect the rally, considering factors like weather, demand, and supply. Tony also mentioned about a potential pullback and snap and how you can better be prepared for it. Should you continue buying tech stocks or move elsewhere? Also, they discussed crops and where the prices are going this year.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/cold-front-on-oil-prices on February 18, 2021.

 

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BFM Description

 

Tony Nash from Complete Intelligence, from freezing Texas, shares with us the current supply constraints in the US impacting oil prices in the short- and medium-term.

 

Produced by: Mike Gong

 

Presented by: Philip See, Wong Shou Ning

 

 

Show Notes

 

WSN: For some color on where global markets are heading, we have in the line with us Tony Nash, CEO of Complete Intelligence. Tony, are you freezing out there in Texas?

 

TN: Yes, we are. We haven’t had it this cold air for decades. So it’s it’s been a really interesting week.

 

WSN: That has had an impact on oil prices. Bloomberg showing Brent crude at $64 per barrel, WTI at $61 per barrel. So how badly impacted our energy markets at the moment? Where do you think oil prices are going?

 

TN: A lot of this is very short term. What you’re not seeing that the traders really pay attention to right now is that a lot of refineries are closed because of weather and they’re starting to close for annual maintenance. There’s this presumption that there’s a demand pull, which we’re not really seeing from anywhere in the world right now, and that the winter storm issues will pull energy prices. But again, the fact is the refineries that would take this stuff are closed. We expect this to be short lived. This is an extension of a crude price rally that we saw that we expected to come in Jan, it’s lasted into February and we really don’t expect this to have a lot of legs to it.

 

PS: What do you think the outlook looks like then for the mid-term like quarter to quarter three?

 

TN: We would see 10 to 20 percent off of this price? We don’t necessarily think that this is a sustainable level short of some sort of supply cuts. But the weather in Texas, for example, we’re going to be kind of in normal weather ranges in two days. What we’ve seen this week and the close down, as we’ve seen this week, it’ll take people a couple of days, maybe a week at most to get things back on line. So this perceived supply shortage will be back on line fairly soon.

 

WSN: How about yields on U.S. 10 year bonds? Because they’ve hit a new high one year high. What what is that trying to tell this? What a market try to tell us?

 

TN: U.S. is trying to raise money and they’re willing to pay more for it. I think that is is really it. I think there is a growing fear that equity markets are as high as they’ll get. We’ve started to see more of that tension come in into chatter over the last few days. People are willing to pay to get out of markets, to park their money in debt.

 

So I’m sure it helps the U.S. as they’re raising more money for stimulus and for operations. But as we creep up to four thousand, that is just unimaginable for a lot of people. And it’s not as if we are doing better as an economy than we were in 2019 or the first quarter of 2020. This is built on stimulus, as we’ve talked about before. It’s built on central bank activity.

 

And you can only stretch that so far before things have to snap. We’ll see some of these things that are at double and triple and quadruple kind of the standard multiples. And P is the only way to measure this stuff. But we’ll see things that are really, really stretched, snap into a more reasonable region. But it’ll happen any time tomorrow, three weeks from now, a month from now, whatever. It’ll just happen. It’ll happen any time. And it’s best to be prepared for it.

 

PS: So are you expecting some pullback eventually? Right. What is the tipping point where investors will essentially do that exodus or flock to U.S. Treasuries then?

 

TN: One of the tipping points is going to be the resolution of stimulus. I’ve been saying for weeks that stimulus will not be what the administration wants it to be. There are such high expectations put on that stimulus right now and they’re not going to get it. They’ll get a lot of it, but they’re not going to get all of it. Expectations are sky high. And when it doesn’t hit, I think that will be one of the catalysts.

 

But there are other things like when the crude price starts to fall because this supply constraint isn’t there anymore. These sorts of things, these things add up and then they snowball and and then you start to see markets really, really take a dove. We’re not necessarily calling for a 2008 generational type of decline in markets. It’s just a bit of a pullback so that people can just say, “OK, wait a minute, let’s check, take stock how businesses are doing. Take a look at our investments and our allocation and then reallocate.” That’s really what it’s about.

 

WSN: Where would you relocate to and what are the safe haven assets? Because almost every asset class on a year to date basis is up. Right. And maybe except for Google, which is down six percent on the year today.

 

TN: What you’re likely going to see is a pretty serious rotation out of technology where people have focused on because of the work from home activities. This may not be immediate, but I think you’ll see a rotation out of a lot of the work from home stuff as people start real life again and you’ll see people move into. This is not really my the basis of our outlook. But you may see more of a regional move into things like tourism.

 

These things have just taken real hits. A lot of them have had speculative rises, some of the cruise lines. But some of them are still way down. All of this depends on gradual normalization. But I can tell you, Americans are really tired of being locked in, really tired of not socializing. And some of these things are going to have to start up again.

 

PS: What about not all out commodities then, like agriculture and precious metals?

 

TN: We had some real pressure. And part of the reason of that pressure was because there was a perception that a lot of the Chinese corn crop didn’t come in last year. But a lot of the drought was outside of that zone. Some of that pressure was alleviated.

 

But still, we’re seeing some pressure on wheat right now in the U.S. It really all depends on how much the current cold snap impacts the output later in the year or the ability to plant. Right now it’s not terrible.

 

Until we start seeing real demand come back in entertaining and in consumption and these sorts of things, we’re not going to see a major demand pull on food because people are already buying their standard cook at home type of things right now as they’ve rebuilt their behaviors over the last year. We’ll see that change. But unless we see a drought or unless we see an issue in a high consumption part of the world, we’re not necessarily going to see a boom in those places.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets and saying that, hey, oil prices are going to come under pressure probably in the next two to three months, because this is not really driven by real demand, is just probably weather patterns which are going to normalize anyway in Texas in a few days.

 

PS: He also made a point about oil, where this, I think, a slight surge in prices is actually a short term because supply is going to get back on quite soon.

 

WSN: Yeah, but other interesting news is actually the ongoing saga of big tech versus Australia, because it looks like Facebook has defied Australia’s push to make big pay for news by banning the sharing of content on its platform in the country. And this is the most far reaching restriction is ever placed on any publisher in any part of the world.

 

PS: So the extreme step to remove Australian news came as Google separately struck a global deal with Rupert Murdoch’s News Corp diffusing a long running dispute between the two companies. The dramatically different approaches could mark a pivotal moment for the media industry, which had hoped Australia’s tough regulatory approach would help reset its terms of trade with Google and Facebook worldwide.

 

WSN: So the moves by Google and Facebook came on the day Australia begin debating laws that would force big online platforms to license news. Now Facebook’s action will have a global impact. Under the provisions, news from Australian publishers will be blocked on the platform for all Facebook users, regardless of where they are based. The Australian government said it will continue to engage with Facebook. Press ahead with legislating the code, Canberra also warned that withdrawing news from Facebook’s platform in Australia could dent its credibility with users.

While this is quite big stuff. Actually, yes.

 

PS: Yes. I mean, Australia wasn’t the first country to, you know, get into this spat. I think you really was in having discussions. And France and Spain already had deals with a lot of with Google and Facebook with respect to media purchase. But it’s a question about publishers.

 

WSN: Yeah, I mean, at the end of the day, right. We do know media companies are suffering. Right. Álex has come under pressure. Subscriber growth has come down. How a media company is going to generate the revenue. So in the past, all these big tech companies, the argument was that they got to earn super normal above what is the what super normal profits without paying the likes of the media companies because they were using these media companies content to their benefit.

 

So some countries like Australia and even if you try to kind of diffuse the situation and have, I suppose maybe in their mind, a fairer playing field. But the Google deal nonetheless, if you look at it, the Google deal with News Corp announced on Wednesday goes beyond the Australian market, extending to Murdoch’s titles such as The Wall Street Journal and The New York Post in the U.S. and The Times and the Sun in the UK. No other news publisher has reached a single deal with Google across multiple countries.

 

Now, critics say the deal would benefit News Corp. rather than the rest of the news industry.

 

PS: Yes, well, we’ve been talking about the price. And since you looking at Google’s valuation, I suspect Google’s to be the winner because they have just really this unique access to this quality content. So. So why not?

 

WSN: Well, they’ve pledged so far to spend one billion over the years on buying news content and reach agreements with publishers in about a dozen countries.

 

But we’ll be watching this space because we do a media outlet.

 

But up next, we’ll be discussing the recently announced national unity blueprint. Stay tuned for that. BFM eighty nine point nine.

 

Thank you for listening to this podcast. To find full great interviews, go to PFM Goodbye or find us on iTunes, BFM eighty nine point nine. That is the station.

 

Categories
Podcasts

American Carnage

In this Morning Run BFM podcast episode, Tony Nash justifies his pessimistic outlook of the US political environment on markets and the transition of the Reddit Army into a full-blown populist movement. Will this be a common theme in the US markets? And what does he mean about the 97% correlation between Bitcoin and gun sales?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/american-carnage on February 4, 2021.

 

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Show Notes

 

WSN: To find out where global markets are heading, we have on the line with us Tony Nash, CEO of Complete Intelligence. Let’s have this little bit of discussion. Will the tussle between the populous investors and institutional shareholders lead to any real structural change in the way Wall Street behaves? Do you think this is going to be a common phenomenon?

 

TN: I do. I don’t think we’ll see much change politically because the funds themselves are very large donors for politicians. There really isn’t an incentive for politicians and regulators to change things. But the populism that we’ve seen in U.S. politics over the last four to six years or even 10 years, it’s growing into financial markets and people are really angry with Wall Street. They’re really angry with bailouts for funds and for banks.

 

This type of populist activism and distributing investment are going to continue and it’ll get more aggressive if the government doesn’t respond or if the funds respond aggressively and arrogantly. This could turn into an aggressive political movement. The funds and the regulators have to be really careful here.

 

PS: You really hit the nail on the head because if you see the backlash, you see the right wing with Ted Cruz, Alexandria Ocasio-Cortez on the left, both asking for investigations and reviews to this. Do you think the US government and the politics of both sides will be able to reconcile and find a solution to regulate, monitor this?

 

TN: They may have an “investigation.” I think nothing will happen. Again, these funds have deep pockets. They invest a lot of money, either directly or indirectly through shadow organizations and corrupt means. So zero will happen on this. Unless there is dramatic…

 

You guys have heard of Antifa in Malaysia, right? If Wall Street needs turned into an Antifa-like organization, and had violent protests, then maybe we would see some results. But there is absolutely no way short of violence in the streets that the US government… You will have Ted Cruz, you will have AOC talk about this. But this government will not respond to this because it’s in their interest to defend these funds.

 

PS: Tony, I’m gobsmacked. In just last month, we had an insurrection and impeachment and inauguration in the space of two weeks. Isn’t that like a big paradigm shift in the politics? Don’t you see any changes there?

 

TN: Here’s what I learned today and I’ll get to your point in just a second. There is a 97% correlation between the sale of guns and the price of Bitcoin in the U.S.. What does that tell us? It tells us there is an absolute lack of trust in institutions. People can’t trust law enforcement. They can’t trust politics. They can’t trust the central bank. Americans feel like they just can’t trust institutions. So they’re investing in Bitcoin and they’re buying guns. So there is a real frustration among Americans. They just absolutely don’t trust the government.

 

WSN: That’s an interesting point, Tony. But on the flip side, if I look at Biden’s administration. Let’s talk about his stimulus plans, because originally the target was a $1.9 trillion plan. But I think that’s probably likely to be scaled down, especially with the vaccination rollout. So what do your gut feel in terms of what the figure will be?

 

TN: The administration, unfortunately, has lost a lot of credibility because they two million or 20 million vaccines over the past week. They’ve come in saying that they had a better plan and then they’ve actually lost 20 million vaccines. This is supposed to be a Covid relief bill with more money for vaccines and more money to address Covid. But they can’t manage the resources they have today. People are really frustrated with that as this stupid $600 they’ve been promising for six months. Nobody even wants it now. People are so frustrated over this whole thing.

 

So will it be scaled back? Probably. You have Republicans in the Senate especially, who are being really stupid politically by pushing back on this. And you have Democrats who are pushing for stupid spending programs. Again, there is frustration. This is not just in Texas. This is across the country. Americans are so upset with government and so frustrated that they just want something passed and they want the least damage possible. They know it’s going to be a dumb bill. They know there’s going to be pork and they know there’s going to be corruption, but they want the least damage possible done with this.

 

WSN: But if I look at markets, it doesn’t seem like, you know, that that there’s any negativity or disappointment, right? Yeah. Because we are looking at, you know, the index also NASDAQ closed to an all time high. So are you saying that markets are reflecting this or, you know, there’s just too much optimism in terms of forward earnings?

 

TN: No, the markets are reflecting a bet on the central bank. They’re betting on the stimulus coming from the bill, passing through consumers and passing through businesses. And they’re betting on the the bailouts for different industries, on a weaker dollar, on a lot of things. That’s what they’re betting on. They’re not betting on earnings or on corporate health.

 

We suspect that the stimulus won’t be as strong as many had hoped and the central bank won’t be as accommodating as many hope and that there will be a pullback. We think there’s going to be something this quarter in terms of a pullback. But again, nobody is betting on companies or sectors.

 

WSN: All right. Thank you for your time. That was Tony Nash of Complete Intelligence, giving us his views on where global markets are heading and in particular on the U.S. government.

 

Some interesting points. Right Philip?

 

PS: I’m kind of lost for words for that. He really is pushing for this decade implosion of the once vaunted American institution.

 

WSN: He’s saying that there’s a lot of dissatisfaction with regards to the roll out of the stimulus plan. That it is very, very delayed. And people just like, hurry up, just sign the bill and  hand out those 600 U.S. dollar checks. The longer you wait after a while, people just don’t seem to care about it.

 

But when I look at the markets, I’m somewhat still conflicted because I’m not in total agreement with him. I think markets are pricing in vaccine optimism. And on the back of that, there will be some corporate earnings, especially when you come to the tech companies. So is the whole of America unhappy? Well, we do know from the way the vote, is a very divided nation.

Categories
Podcasts

Rotating Permanently into Cyclicals

In this Morning Run BFM episode, Tony Nash shares his views where equities are heading now that the 2020 Election has concluded. Will the new administration reverse China policies by Trump? Also, what is the implication to the world exports with a weaker USD and stronger CNY? Lastly on oil: what is its future? Will the rally continue? Does it have enough support?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/rotating-permanently-into-cyclicals on January 7, 2021.

 

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❗️ Discover how Complete Intelligence can help your company be more profitable with AI and ML technologies. Book a demo here.

 

BFM Description

 

With a blue wave in Georgia, what does this mean for the US economy and equity market? Tony Nash, CEO of Complete Intelligence, tells us that the rotational play is now here to stay while giving us his view on oil prices.

 

Produced by: Mike Gong

 

Presented by: Lyn Mak, Wong Shou Ning

 

 

Show Notes

 

WSN: Joining us on the line for his take on where markets are headed is Tony Nash, CEO of Complete Intelligence. Equity and currency markets were waiting for the Georgia election results, which have just come out. Given that outcome, where the Democrats have won, where do you see U.S. equities heading?

 

TN: We don’t see major upside for U.S. equities without significant short-term intervention by the Fed or by some stimulus or infrastructure package. Given where Congress is, I’m not sure that there would be the ability to get much through Congress so it would have to come from the Fed. It’s possible, but we see more the hard assets like gold and commodities. And then you see crypto currencies rising pretty fast as well. But the risk really with equities is to the downside more than to the upside.

 

WSN: But if we just look at last night’s flows, there was some rotation into cyclicals like banks and small caps with less fund flow into big tech, perhaps over concerns of increased litigation action against them. Do you think this will change into a more long-term kind of rotation?

 

TN: We’ve expected that for some time. That rotation is long overdue. But the Fed have enabled tech and crypto to have a longer run. That rotation has been put off a bit. So if now is the time, great. We would definitely welcome it. We’re just overexposed in certain sectors.

 

WSN: And meanwhile, last night, US 10-year treasuries top two percent. What does that tell us?

 

TN: The U.S. is having a harder time raising money? They need to pay a little bit more to get money. I don’t necessarily think it’s a harbinger of inflation. Although it’s possible with a weaker dollar. I would say higher import prices. Chinese yuan on the run, strengthening. You may have higher import prices, but people have been warning about inflation for years now and we just have not seen it register. I think it just means that that the U.S. Treasury has to pay more to raise money.

 

WSN: And with Biden coming in on January 20th as the next US president, I would like to see a reversal of Trump’s more adversarial policies with China?

 

TN: Biden will be very accommodating to China. I think you’ll see different parts of the House and the Senate not be happy about it. But he’ll be absolutely extremely accommodating. More accommodating than Obama was.

 

WSN: What impact do you think that might have on the U.S. economy? Because in the past there was some shift into more U.S. based manufacturing. Will that then reverse?

 

TN: With the USMCA, the NAFTA number two agreement, I think there’s more incentive for companies to have facilities in the NAFTA zone. China obviously is more expensive and with an appreciating CNY, that makes it more difficult to invest while you get less for your money in China. China is becoming an increasingly hard sell. That has been the case since 2017, 2018. It’s not going to turn back. Until there is a reciprocal and enforceable investment agreement in place with China, I think China is where it is. I don’t think you would see a mad rush of direct investment going to China.

 

WSN: What are your views in terms of where the U.S. dollar is hitting? Because you just mentioned that the Yen is likely to appreciate?

 

TN: It already has. The Chinese officials are becoming a little bit nervous about how strong CNY has become because it’ll put a real damper on their their ability to export. You have the Euro versus CNY weakening. You have the Dollar versus CNY weakening. It’s coming to a point where it could be somewhat problematic for China. So they will push to weaken their currency, maybe not immediately, but say in first quarter. As you see more stability, post Brexit with the new normal Europe. As you see more stability in the US with the new administration, I think you’ll see a bit of relative strengthening of those two currencies versus CNY.

 

WSN: And shifting our attention to one of the commodities: oil. Yesterday, Saudi Arabia’s cutting oil output while Russia is increasing theirs. What’s the rationale for this? And OPEC members then divide it on production quotas?

 

TN: OPEC members may verbally agree to things. Whether or not they comply with that has been a burden for OPEC for decades. So what they all want is more volume export and the prices is the real issue.

 

So I think there’s an intention to present mixed messages so that there’s uncertainty in the market so that we see Brent price that’s sustainably above 50 dollars. That is is good for OPEC. That’s good for some of the producers like Malaysia and Texas where I live. I think consumers, we don’t necessarily to expect to see a sustainably strong oil price because we don’t necessarily expect to see a dramatic recovery in 2021. But we don’t expect to see a dramatic recovery that would spike oil prices up to 70, 80 dollars.

 

WSN: Do you expect oil prices to be where it is, which is currently around 50 U.S. dollars per barrel for WTI?

 

TN: For six plus months, we’ve expected a spike in January. And we’ve been telling people since July, August that we would see a spike in oil prices in January. And this is exactly what our artificial intelligence platform has told us for quite a long time. So we’re seeing what we’ve expected. We’ve also expected a fall going into February. Like I said, this is great. This is very much in line with what we thought would happen. But we expect there to be some downside to this and downward pressure within the next 30 to 60 days.

 

WSN: All right. Thank you for your time. That was Tony Nesh, CEO of Complete Intelligence, giving us his views on where markets are heading. And it seems like it’s not surprising that there’s a bit of a market correction or at least a market rotational flow out of tech, which valuations have kind of hit all time high and some rotation into the cyclicals like banks and small caps. But I think his views on oil are pretty interesting that it’s you know, we are going to see maybe a bit of downside from here.

 

What will he take? Reasoning?

 

LM: I think his comments about particularly what we can expect out of a Biden administration were quite interesting because commentators now kind of are kind of split over how they believe Joe Biden will kind of stack up compared to Barack Obama once he is inaugurated as president of the U.S. And the idea of Joe Biden being more accommodating than Obama, particularly with Trump also still continuing his crackdowns on China. It’s almost enough to give you whiplash, isn’t it? Because once January 20 is rolls around, how much of Trump’s measures will be rolled back?

 

I mean, only recently he’s just signed an executive order as well, banning several Chinese payment apps over security concerns. So this affects eight payment apps and it’s supposed to take an IT take effect in 45 days after Trump has left office.

 

WSN: Yeah, and what’s interesting is these eight p.m. apps are very well known to include the likes of ADP, Tencent, Cucu and even WeChat P now in the executive order, said that these apps captures swaths of information, including sensitive, personally identifiable information and private information. Now, how much of this an impact will have is unclear, since it’s understood that the usage of these apps outside of China remains limited. For example, the ALP has roughly one billion users, but they are mostly in China.

 

However, it does have deals with merchants in the U.S. such as Walgreens, and claims to work with more than two hundred and fifty overseas partners. Now, separately, the New York Stock Exchange has made another U-turn on its earlier U-turn to delist three Chinese telecom companies, which be. Going round and round and round, yeah, it’s like a mini roundabout now, so and these three companies are China Mobile, China Telecom and China Unicom.

 

LM: So the NYSE first announced that it would delist the companies on New Year’s Eve before changing course four days later. And the delisting complies with Trump’s executive order banning investment in Chinese companies with purported ties to the military. So the exchange said its latest decision is based on new specific guidance received on Tuesday provided by the Treasury Department. Treasury Secretary Steve Mnuchin reportedly called the NYSE president, Stacie Cunningham, to voice his displeasure with the decision to allow these three companies to remain on the big board.

 

WSN: Well, I think this story will just get the plot will get thicker and thicker, and whether the roundabout will get bigger and bigger, we’ll just have to find out. But up next, we ask the question, what can you do to attract more foreign direct investment for us? Ross, the senior economist with Mark, will be joining us for that discussion. Stay tuned for that BFM eighty nine point nine.

 

Categories
Podcasts

Work-from-home stocks a defensive play in 2021?

In this BFM episode, Tony Nash explains the defensive play of the WFH company Keane and how it compares to other tech stocks like Tesla? Also, will the good days for the financial and energy stocks continue? And how about the outlook for Sterling as the Brexit deal is being ironed out? Will the Pound appreciate or decline? And why there seems to be a never-ending trade war against China — now recently with Vietnam and Malaysia imposing tariffs on the Chinese steel?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/work-from-home-stocks-a-defensive-play-in-2021 on December 24, 2020.

 

❗️ Check out more of our insights in featured in the CI Newsletter and QuickHit interviews with experts.

❗️ Discover how Complete Intelligence can help your company be more profitable with AI and ML technologies. Book a demo here.

 

BFM Description

 

As we head into 2021, will we see more work-from-home stocks being used as a defensive play? The Morning Run speaks to Tony Nash for his perspective on this, as well as his views on financials and energy stocks, the Sterling, and tit-for-tat trade wars.

Produced by: Mike Gong

 

Presented by: Roshan Kanesan, Wong Shou Ning

 

 

Show Notes

 

WSN: With volumes on U.S. equities drying up ahead of the holiday season, are you expecting investors to hit the sell button or to keep this whole positions over the period? Because the market’s somewhat a little bit more happy today, a little bit more green?

 

TN: I’m not sure, but I’m sure there is not a conviction either way right now. Investors aren’t really sure that they’re ready to pull the plug on things. People are waiting to see what’s going to happen with the stimulus funds. They’re waiting to see how smoothly the transition goes with the US government. They’re waiting to see how companies Q4 earnings come in. So in the next few weeks, aside from some commodities play, I’m not entirely convinced that we’ll see dramatic movements in one way or another.

 

WSN: And I’m just curious following up on that. So for the moment, it still seems that even though the Nasdaq corrected a little bit today, the work-from-home, Keane is here to stay as a defensive play?

 

TN: Sure, that is an effective play, but the benefits or the upside to that play is really questionable. The Nasdaq has over 40% this year. When you look at the valuation multiples on some of these tech companies like Tesla, you’re looking at over a thousand percentage. For some of the tech companies, you’re looking at fifty to 200 to revenue.

 

Some of these tech companies are being played out. That’s not to say they’re going to see necessarily downside. But the upside? I don’t believe it’s necessarily as high as it has been in 2020. We have these moments in markets where you see serious upside in different sectors and then it comes down for a bit. We’ve seen that in 2020. Are we going to see that in 2021? We’re not convinced. That maybe  possible. But we’ve seen some pretty hard closed down for people who’ve had their quickly transition to work from home. A lot of that valuation are largely played out.

 

WSN: If we look at the performance of the S&P 500, it was really the day for financials and also the energy stocks. Do you think these themes will continue into 2021?

 

TN: Certainly, that kind of stock are partly a result of the expectation of stimulus — whether that’s $600 to $2000 per person. There should be more transactional activity in terms of services with energy. There’s an expectation that people will start flying a bit more.

 

What’s positive is the expectation on a  margin within oil and gas firms as they refine their products. I think that’s a bit higher as the margins of the percentage go up as the normal values go up. We’ve been saying for several months that the oil prices will rise in the end of December and early Jan, and that’s playing out. We’ve expecting that for about six months. But we do expect crude prices to fall going into February. So while those margin plays are there now, we don’t expect that to be there at the end of Q1.

 

WSN: Moving to the UK, the Sterling appreciated this morning on the back of the news that Brexit deal might be ironed out. But where do you see the currency heading?

 

TN: We’ve expected the Sterling to weaken a bit by the immediacy of the news. But over time, we expect the Pound to re-appreciate because we really value the U.K. There’s a lot of wishful thinking within the EU that Britain would suffer as they exit the EU. We’ve done a lot of analysis on this over the last three years and there’s really just a lot of upsides for the U.K. to separate. That’s not a political view. That’s purely an economic view. We have expected the Pound to take a bit of a pounding in the short term. But we do expect it to re-appreciate as that separation gets in pace.

 

WSN: Malaysia and Vietnam, they recently placed higher tariffs on Chinese steel. And although unrelated, this comes after China imposed some additional duties on various Australian imports. Do you see this tit for tat tariffs going to continue to be the norm in 2021 and no end to it?

 

TN: We’ve been saying for a couple of years that we expect trade to turn from these fairly invisible activities like subsidy to non tariff barriers, which is really regulatory into direct tariffs. It’s like going back to 1980s pre-WTO where there’s more of a fiscal benefit for the country than the protectionist benefit in a non-tariff barrier regulation.

 

Many countries are a bit tapped out on subsidies, so they’re not necessarily going to be able to pay their industry as much to protect them. So they’re going to have tariffs to generate revenue. Specifically, the Chinese steel, there’s a global glut of Chinese steel, of the Hang Seng, for years. It wasn’t surprising that these tariffs have been levied because they have a little bit of it’s own steel industry. They’re protecting themselves from the glut of Chinese steel.

 

WSN: All right. Thank you for your time. And that was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets.

Categories
Podcasts

IPO Season Has US Investors Agog, Again

Tony Nash is back in the BFM podcast to break down what´s happening in the US Market with IPOs like Doordash and AirBNB selling at a higher price than expected. What´s up with the tech stocks? It´s obviously IPO season, and what should investors do. Should they buy? Also discussed is the current oil price rally to the high 40s. What is the expectation or forecast for oil in the last month of 2020 and the first quarter of 2021 for oil?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/ipo-season-has-us-investors-agog-again on December 10, 2020.

 

 

BFM Description

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

It’s IPO season again in America and Doordash is first out the, well, door with a pop and wallop, while Airbnb is next, also with a higher price range, like Doordash. Which of the debutantes will be a Buy and which a Sell? And whither oil prices?

 

 

Tony Nash, the CEO of Complete Intelligence, discusses.

 

 

Show Notes

 

 

WSN: On global markets, we got to the line with us tonight, the chief executive of Complete Intelligence to break it down for us. Tony, thanks for talking to us. Nasdaq closed in the red after a 10-day rally. What’s your view? Is this just a technical correction?

 

TN: Well, Nasdaq still up 36 percent year to date. Things are still pretty good with tech stocks. But it’s been a lot of retail investors so far this year focused on fang stocks. Part of this decline today may be related to the stimulus talks. There are a number of other things involved, but if there is more stimulus, we may see more investment, especially in tech stocks. If you remember, the tech rally started in Q2 of this year really on people investing via Robin Hood in small increments. There were other institutional and retail investors, but Robin Hood investors really led to a lot of the run ups in these tech stocks.

 

KHC: And I want to pivot this conversation to an IPO, which is closed last night. So Doordash it debuted with an 80 percent jump to close at $189 from an IPO price of 102. Does that make you a buyer?

 

TN: It makes me a wait-and-see-er. Tech stocks have done really well. Stocks like Palantir are up 200 percent or something since their IPO. A lot of people are looking at those as an opportunity, which is quite possible. But tech IPOs tend to settle shortly after. We saw this with Palantir for a few weeks after the IPO. It declined, then it meandered. And then it really only started coming up over the past couple of weeks.

 

Doordash seems to have risen very quickly. I think it’s really on hopes, unfortunately, that a lot of the work-from-home stuff continues. Without work-from-home orders or stay-at-home orders, it’s really hard to see Doordash continuing at these levels. I think with a somewhat normal return or return to normal, people start going out again. Some of the people would at least rather go out than order in.

 

KHC: The other IPO is Airbnb, which is supposed to be priced later today. Is this a name you’re excited about?

 

TN: Sure I am. What’s interesting about Airbnb is it’s been very resilient with Covid. We’ve seen long-term rentals via Airbnb. We’ve seen people travel using Airbnb. When travel starts up again in a big way, they benefit as well. So it’s a really interesting name for me. It depends on what were the prices and where it goes. But on the face of it, it’s a very interesting name.

 

WSN: Yeah, it really is IPO season, isn’t it, Tony? I mean, what’s driving the liquidity? Is it still a retail market, institutional or a bit of both?

 

TN: A lot of it is retail. The retail investors are looking for the quick upside. People are trying to close out the year with as much juice as they can. I think a lot of the institutions were in very early. They take quick profits and then they just wait and see what happens. But if you look at the distribution, the allocation of some of these recently IPO tech companies, it’s a lot of retail investors.

 

KHC: With virus cases rising in the states, it’s almost certain that the FDA will authorize the emergency use of the vaccine today. So this brings back the question, do you think that the stimulus package that everyone is waiting or expecting, will they still be in the quantum of 908 billion or would it actually be downsized?

 

TN: I think it’ll be around the current level. The problem is, this is something that should have happened two months ago. And you’ve seen over the past two months, the U.S. economy really start to stall and sputter out. The employment picture is looking grimmer. The demand picture is looking a bit grimmer. If the U.S. wanted to keep things moving at the pace it had been in Q3, it really should have happened in late October. But it didn’t for political reasons.

 

And I think it’s really critical for these guys to come out with something before Christmas. The politicians look really stingy, like the real economy doesn’t affect them, which is true. And if they come out with something, they have the likelihood of looking like heroes before Christmas. So this is likely political theater so that they can build up some drama for a last minute agreement before the Christmas holiday.

 

WSN: Sliding over to oil, Tony, with crude inventories starting to build up, can prices break through the fifty dollar resistance level, do you think? And what are the catalysts needed to carry it across the threshold?

 

TN: Yeah, we think they can. So we’ve seen inventories build up. You know, they built up 15 million barrels over the past week, which is quite a lot well ahead of expectations. But, you know, we’ve expected oil to cross the 50 dollar mark in January, late December or in January. When we started saying this a few months ago, people really pushed back on this. We said we saw a spike in January in the crude price. And so we still believe that. NYNEX crude is trading at forty seven dollars right now. So even with the supply glut right now, we’re still seeing a forty seven dollar WTI price. So we think we’ll see high 40s, low 50s by January. Brent, of course, will be slightly higher than that. So we think breaking through fifty dollars is quite likely, especially at the start of Q1.

 

WSN: Hey, Tony, thanks so much for your time with us. Tony Nash, the chief executive of Complete Intelligence. And just to make a couple of remarks. And while we just discussed with him. The higher oil prices go, obviously the better it is for Malaysia because we are generally an oil country. West Texas is at 46, 47 right now is about 49 dollars, definitely, too.

 

He also talked about the Doordash  and how he’s waiting to see Doordash. The numbers are not huge. They’ve only got like five million subscribers and they charged off the food guys 30 percent commissions to just deliver the stuff.

 

WSN: It’s not like they’ve had a choppy fiscal quarterly performance some months at some quarters up, some quarters down. And, you know what is so it’s so frothy. I mean, they nearly double the reference price on IPO day itself, already increased from two bucks, 100 to close 182 crazy, crazy days.

 

KHC: Well, I think, you know, at the end of the day, what is causing this one is that tech seems to be, you know, the darling darling on Wall Street. That’s when the second is that that clearly there still is a lot of cheap money flowing everywhere and nowhere to go.

 

WSN: Yeah, of course. Tony was talking about the Robinho traders, right?

 

KHC: Yeah. So as long as interest rates remain close to zero, I think people are willing to watch. And I used the funds, all investors, you know, regardless of whatever valuation. So it doesn’t really matter what your valuations are anymore. Exactly. So even like for Airbnb, you don´t even talk about earnings, you’re talking about price to sales because there is no earnings.

 

WSN: OK, well, talking about tech Facebook, right. The U.S. Federal Trade Commission in 46 states, 46 states, that’s just fall short of the full 50 complimented America. They’ve all brought antitrust cases against Facebook and accusing the company of using the social media dominance to crush competition. They’re calling for penalties that include a forced breakup and they are accusing Facebook of conducting a years long course of anti-competitive conduct.

 

KHC: Well, in particular, the FTC highlighted the acquisitions of Instagram in 2012 and WhatsApp in 2014 as designed to neutralize any competition, because the argument is that they are a monopoly and they cut off services to squeeze rival developers. So the FTC said it was seeking a permanent injunction in federal court that could potentially require Facebook to unwind its Instagram and WhatsApp acquisitions. Now, if I looked I remember correctly this morning, Facebook closed down, I think, close to two point six percent based on this news. So it doesn’t seem like, you know, markets are really concerned about this. Or maybe the point is any dispute with the government takes forever and ever and ever so maybe for the moment, I think people are just shrugging it off.

Categories
Podcasts

What’s Supporting This Risk-On Market?

In this discussion with BFM 89.9, Tony Nash speaks about the Dow breaking past 30,000 and what’s supporting this risk-on marketing? Also discussed are the stuttering economic recovery in the US, Janet Yellen as Biden’s Treasury Secretary and what that could mean to the world economy, and whether oil has more legs to rally right now.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/whats-supporting-this-risk-on-market on November 26, 2020.

 

 

Show Notes

 

 

WSN: To help us make sense of where international markets are heading, we have with this Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now, it’s a bit confusing when it comes to markets because yesterday the Dow broke 30,000. But there’s a bit of correction this morning. So do you think this rally has legs? Is it a risk on or risk off for equities at the moment?

 

TN: Well, I think people really just took a breather today. I don’t necessarily think we’re seeing a fundamental shift or risk off environment. Equities are definitely a risk on environment, especially if you look at certain techs like Palantir. They were up almost 20 percent today. But, you know, when you look at things like the stimulus, we’ve had and the vaccine environment, you almost have a double accelerator environment where you’ve got this windfall of vaccines and all the same monetary and fiscal stimulus and potential new packages coming out. So there’s a lot of hope in these numbers. Valuations are really extended, assuming best case all around, which is what people do in situations like this. So it’s risk on at the moment, but we don’t necessarily expect this to be sustainable over a long period.

 

WSN: We look at the data that’s come out just on the eve of Thanksgiving, and it’s not positive at all because you’ve got higher unemployment claims and also weak consumer sentiment suggesting that the actual economic recovery may take longer than anticipated. So how do you reconcile all this with the actual market performance?

 

TN: What’s happening is we’ve had some state and local governments who are starting to shut things down again, worried that Covid will spread over Thanksgiving. And so, we get these legs to recovery coming and then the local, state and local bureaucrats who have absolutely no consequences to the decisions, they really kill economies that start coming back. And so Americans are really starting to push back and really starting to complain. So I think this is probably the last round of hard Covid lockdowns you’re seeing in different jurisdictions in the US because Americans are just fed up.

 

Maybe there may be something going into Christmas, but I doubt it. But I just don’t see much patience for this, because just as we have some sort of recovery coming, local governments come in and just suffocate any sort of recovery. So the jobless claims rising again. It’s more and more of the same where we have legs to recovery and then local governments come in and kill it.

 

I guess on a good note, orders for kind of good nondefense good rose almost one percent, which is pretty good news. It’s not terrible. They’re our collapsing consumer spending rose half a percent. So, again, it’s nothing to shout out, but at least we have growth there. So there is still positive news, but it’s slowing dramatically. And if these local government officials continue to suffocate local economies, we’re going to see things get much, much worse.

 

WSN: And what do you think about Janet Yellen as possible appointment as Treasury secretary? Do you think it’ll be good for markets.

 

TN: Markets like it. Some of the legislators like it. I think when she was the Fed secretary, she talked about fiscal stimulus not happening at the rate that it needed to happen. So if she’s a Treasury secretary, I think we can expect a big push for fiscal stimulus. We’ll see. My worry is, will the US become Japan with this kind of endless loop of debt being issued that then gets bought by the central bank? And there’s this circular economy that happens at the level that really doesn’t do much aside from a wash from the Treasury to the central bank. If that’s the case, then it could be problematic and it could be somewhat inflationary. But I just don’t think we’re going to see inflation here for at least a few years.

 

WSN: Meanwhile, does all look overbought to you at current prices? I mean, this morning, when I look at this Bloomberg screen is 45 U.S. dollars for the WTI delivery in January next year. Do you see any short term resistance? And what are the support levels we’re looking at?

 

TN: Right now, I think it’s because we’re seeing a lot of airline travel going into this Thanksgiving weekend. Airports here are packed. It’s the first time we’ve seen that in a long time since Covid. So people are a bit excited. I think jet fuel has been one of the main missing components for refined products in terms of demand. So I think there’s hope that maybe air travel is back, but I think that’s a bit early.

 

We really do expect some acceleration in the crude price in late December. And Jan, this is a bit early, but I don’t think this will last. Support prices, low 40s, 40 to something like that, which is right around where we’ve expected and where we’ve seen it. So things are a little bit ahead at the moment, but it’s not too far. We’re not seeing a six at all price, which we’re well ahead of demand.

Categories
Podcasts

BFM: Of Trade and Tech

In this discussion with BFM 89.9, Tony Nash shares views on the latest on trade and tech. How will the US-China trade relations look like under a Biden administration and what is China hoping to accomplish with the recent antitrust regulations on its tech giants? Also, is now a good time to rotate on cyclicals with the successful vaccine trials? And is it possible to have a double-dip recession?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/of-trade-and-tech on November 12, 2020.

 


BFM Description

 

What will US-China trade relations look like under a Biden administration? What is China hoping to accomplish with the recent antitrust regulations on its tech giants? We speak to Tony Nash, CEO of Complete Intelligence, on these and more.

Produced by: Mike Gong

 

Presented by: Lyn Mak, Wong Shou Ning

 

Show Notes

 

WSN: To help us make sense of this, we have on the line with us Tony Nash, CEO of Complete Intelligence. Biden has not outlined any concrete policy plans for the U.S. China trade relations. But do you think both countries will resolve some of the issues this time around, or will competing interests continue to dominate the narrative?

 

TN: I think it’s going to be hard. Obviously, the Biden family has deep ties to China, but I think the political environment in the U.S. isn’t really amenable to an easy fix. I know the foreign policy community in the U.S. really wants to just revert back to 2015, 2016, but the voters in the U.S. just won’t let that happen. So whether the administration likes it or not, they’re saddled with much of the positioning that the U.S. has taken over the last few years.

 

WSN: Now, what about China’s end game, you know, behind the new regulations targeting the tech sector? What are the potential impacts behind those changes, actually?

 

TN: Well, I think, you know, there’s nervousness both in the U.S. and China over the power of big tech. And I think China is nervous about the information that these tech companies are tracking, about the power they have over markets and behaviors. And I think they’re cracking down. There will be a perception that it will limit things in for Chinese companies in the short term. It certainly hurt the U.S. IPO and other things. But I think there’s a move globally to crack down on big tech. So I wouldn’t be surprised to see moves to crack down on big tech in the U.S. as well. It won’t happen until next year, probably. But there is a move globally and nervousness globally around a power that big tech has.

 

WSN: Yeah, but, Tony, if you look at the share price of big tech, especially in the U.S., so the likes of Facebook, there has been actually no change to the share price is still continues to do extremely well.

 

TN: Yeah, absolutely. But that is there are a number of factors that go into that. Part of that is Central Bank activity. Part of that is micro accounts and small investors moving into to these things. Part of that is a perception of things that may or may not happen within the next administration. So we look at Twitter, for example, it’s up 2.8 percent today. But, you know, there’s a lot happening that we believe there will be downside on that going into the end of the year.

 

So a number of things have changed with the expectation that we’ll have a vaccine relatively soon and that we’ll have continued stimulus and questions around where that stimulus will go. We can look at companies like Palantir, which are up, I don’t know, 60 percent since their IPO six weeks ago. So there are you know, that’s a twenty five billion dollar company now. It’s incredible. So, you know, there are companies like Facebook, Twitter, other companies that that there is a lot of nervousness about in the U.S., Google and so on.

 

And so I think what the Chinese government is doing and what the U.S. government is doing, although they’ll take different forms, I think they reflect similar concerns.

 

WSN: And, Tony, you did highlight the vaccine. So do you think now is a good time to rotate into cyclicals like aviation and banking? Is it too early?

 

TN: I think it’s a bit early. I think we you know, we had expected this stuff to come earlier, but I’m not necessarily we expect there to be a lot of excitement to going into January, but we’re afraid that we might have a false start going into the middle of Q2. So it’s probably a bit early to go in as aggressively as people have gone in. Obviously, it depends on expectations and the terms of their investment in a number of other things. But we would be really patient here. And, you know, we expect things to come a little bit later, although even a small opening is very exciting at this point.

 

WSN: Yeah, but related to this, Tony, is the fact that Covid-19 cases, especially in the U.S., are increasing every day and it’s the same case in Europe. So I see a new elford, the alphabet being used to describe the economy, a W, which is on the back of a face of a double dip recession. Do you think that’s a possibility?

 

TN: I think it’s a possibility. But I you know, at least in America, I don’t go to Europe. I haven’t been there for a year. But at least in America, most people aren’t really worried about Covid anymore. They just want to move on. And what people are worried about is hospitalization and death. They’re not actually worried about the virus itself. So the incidence is a bit of in the eyes of, you know, a number of people who I talk to, the incidence of Covid is less concerning than the hospitalizations and deaths. And so the number that people are really keeping an eye on is the hospitalizations and deaths, not necessarily the broad incidence number, which may or may not show may or may not have an impact. It’s really when things get hospitalizations and death. And so the treatment of Covid has taken huge strides in the past six months.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on the US economy, whether it’s as a possibility for a double dip recession, which he thinks is highly unlikely because it’s not the number of Covid cases, but unfortunately, the number of deaths and hospitalizations.

 

LM: Yeah, Tony’s a little also a little bit more cautious when it comes to whether or not it’s time to rotate into cyclicals. Right. Because we have seen a lot of excitement, even as he points out, a lot of excitement going into other stocks as we have seen news of vaccines coming out of Pfizer and an optimism vaccine, optimism has started to creep up again that we might see something by early next year. So he’s of the opinion that it’s going to that the rise in cyclicals is going to come a little bit later. So it means he’s going to hold off for the time being.

Categories
Podcasts

Markets Pause As Wells, BOFA Miss And Stimulus Remain Distant

In this discussion with BFM 89.9, Tony Nash shares views on the recent bank earnings, update on Brexit and why it’s stalled, the future of Hong Kong and how vaccine news play for markets.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/markets-pause-as-wells-bofa-miss-and-stimulus-remain-distant on October 15, 2020.

 


BFM Description

 

The diminishing likelihood of stimulus and poor bank earnings have paused stock markets for now, as electioneering ramps up ahead of November polls, according to Tony Nash, CEO of Complete Intelligence, who discusses bank earnings, market expectations as well as Brexit.

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

Show Notes

 

KHC: On the line with us now is Tony of Complete Intelligence for some clarity on markets. Tony, thanks for talking to us. Now, obviously, the Wells Fargo, Bank of America, Goldman Sachs have all reported results so far. What is your take on the financial sector earnings thus far?

 

TN: Goldman obviously reported really well, Bank of America is down five percent. There was a huge disappointment there. Could get worse. A lot of that had to do with these penalties that were levied several weeks ago. But it looks like the investment banks are doing much better than the consumer banks. And until we get a next round of stimulus and we start to see money moving into the accounts of those guys who are unemployed, which is not a small number in the US, I think consumer banks will continue to suffer.

 

KHC: On that particular issue of the impasse in terms of a stimulus being introduced before elections, what is the biggest deterrent to consensus being reached on that front?

 

TN: One of the biggest issues is that you have a lot of states, all of them that are Democrat states that are heavily indebted. So what the House majority leader is pushing is a bailout program for those Democrat states like California, New York, Illinois, that have have billions of dollars in debt that have been racked up over the last 10 or 20 years. What are typically Republican states typically have balanced budgets. It would effectively be the Republican states bailing out the Democrat states. It’s a problem here in the US.

 

The other item is the House majority leader, Nancy Pelosi, wants to give stimulus checks to illegal immigrants in the US. She wants to give a few thousand dollars to people who are in the US illegally. And the Republicans are saying, no, why would we do that? So those are two of the things that are really holding things up in terms of the stimulus plan. And it’s electioneering. Democrats want to give money to the party faithful in their heavily indebted blue states. And they also want to try to get some votes from the illegal aliens who aren’t legally allowed to vote. But they want to get some loyalty from those illegal immigrants who are in the US.

 

WSN: Another thing that seems to be having an impact on markets is vaccine news. So every time we hear of a vaccine trial feeding, markets correct. Is it possible at all to quantify how much of this is in the markets really in terms of optimism?

 

TN: Remember, in 2019, every day, whenever we needed a bump in markets, Trump would tweet, a trade deal is near. And then we finally had the phase one deal in December. It seems like whenever there’s a tweet or some news about a vaccine, it’s because a bump in markets is needed. There’s a lot of cynicism among traders about vaccine. Until we see something actually proven and actually in a market, you’re not going to see a real firm belief in the difference it can make. So it’s going to be at least Q1 or so before we see things deployed.

 

We don’t necessarily expect the benefits to happen until 2021. But the problem, at least here in the US, is that nobody wants to be the guinea pig. At least half of Americans surveyed don’t want to be the first one. They’re going to have to see some high-level politicians go in, roll up their sleeves, get the job and and really face the consequences, if there are any negative consequences, because a lot of Americans just aren’t believers and they’re really worried about the effects of it.

 

KHC: OK, switching to the UK, if the UK fails to negotiate a Brexit deadline deal today, how should investors position themselves? And would you recommend shorting sterling assets?

 

TN: I think it’s a possibility. I don’t know if I’d necessarily recommend it, because I think the status quo is baked in to expectations. We haven’t necessarily had a positive outlook to negotiations for two or three years now. I think the expectation is that things will continue to muddle through and markets will fold that end. So I don’t know. Outside of a very positive agreement for the UK, I don’t necessarily think there’s huge upside anywhere.

 

And outside of a very negative concession given by the UK, I don’t think there’s huge downside anywhere because the EU is just intransigent there. They’ve been embarrassed by this whole process. They don’t want to negotiate and they’re not moving at all. So I think we’re in the range of where things will be outside of a major announcement somewhere.

 

WSN: Looking at China yesterday or a few days ago, his speech has outlined a comprehensive vision of for Shenzhen. What does this mean for Hong Kong’s economic future? Do you see a bright, a bleak one for the city street?

 

TN: Hong Kong’s fate was sealed in 2014 with the demonstrations. And I’ve been saying this since twenty fifteen. At that time, the MDC and the folks in the central government were planning on other options for the activities that were happening in Hong Kong. What we saw with the announcement in Shenzhen yesterday was simply cementing Shenzhen’s place, the central city at the end of the PRD, right at the end of the Pearl River Delta.

 

And so Hong Kong is no longer the central location. It is a place to get hard currency. But it’s no longer an industrial location. I believe we’ll start to see financial services move to other places over the next ten years. Not an overnight activity, but it’s something that certainly the central government wants to happen.

 

KHC: OK, Tony, thanks so much for your time. That was Tony Nash of Complete Intelligence.

 

His comments in terms of of China also resonate because we’ve got certain diplomats, a top ranking government officials coming to the Asian region for a charm offensive, but also his comments on banks, a tale of two halves, really, consumer banks that well said Bank of America really failed to meet expectations. They did beat expectations, but they felt some way of sort of you and your performance numbers. But then the investment banks like Goldman Sachs have done really well because of the trading desks and the stimulus checks that were written in the third quarter.

 

WSN: Yeah, actually, 2020 is the reverse of 2008 during the great financial crisis. If you remember then American banks itself, all the investment banks. Right, because of the derivative losses in the books exposed to the shuffle in equity markets. But this time around, actually, the volatility has really helped them. So for a change, they’ve seen incredible jumps in trading investment income. But it’s the main street banks which are feeling the pinch. So, yes, there’s an increase in deposits for these banks.

 

But for the consumer banks, for the main street banks, nobody or less people are taking out loans, is less credit cut usage as a result. So, you know, no such not such good times for the consumer banks. Better for the. And bad guys out there.

 

KHC: Now, of course, and Morgan Stanley reports tomorrow we saw net interest margin set wells and Bank of America really being crushed as well. And not many, not many companies reporting earnings are giving outlook statements.

Categories
Podcasts

Is The Rally Ending?

Tony Nash joins BFM 89.9 The Business Station for another look at the global markets and to get a sense of whether this is the end of the bull run. Also discussed how September is expected to be a volatile month. Will there be a fiscal stimulus for small businesses? Will banks and other financial institution get the next round of stimulus? And how about the oil prices — where is it going?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/is-the-rally-ending on September 24, 2020.


BFM Description

 

Speculation is rife over whether US lawmakers will be able to come to agreement over a new stimulus package, as deadlines loom. Federal Reserve Chairman Jerome Powell also warned that more stimulus will be needed, and all the uncertainty took its toll on US equities overnight. To get a sense of whether this is the end of the bull run, we speak to Tony Nash, Chief Economist and CEO of Complete Intelligence.

 

Produced by: Mike Gong

 

Presented by: Roshan Kanesan, Lyn Mak, Noelle Lim

 

Show Notes

 

LM: BFM eighty nine point nine. You’re listening to the morning run with Lyn Mak, Roshan Kanesan and Noel Lim, 707 a.m. Thursday, the 24th of September. And in round about 15 minutes, we’re speaking with Paul McManis, chief enterprise business officer at Maxus, to discuss how companies can best adapt to a post covid-19 business environment. But before that, we’re taking a look at the markets.

 

RK: Well, the markets were in the red, actually. The Dow was down two percent. The S&P 500 was down two point four percent, and the Nasdaq was down two point seven percent. How did Asia do?

 

NL: Well, Nikkei index down point zero six percent. The Shanghai Composite was up 22 percent. Hang Seng marginally point one percent of the Cosby eight point zero three percent stay up point seven percent. The FBI. CIA, however, was down one point six percent. And I guess that’s on the back of some very important news at 12:00 p.m. yesterday.

 

RK: Yeah, it’ll be interesting to see how all these markets open today on the back of the US market closing.

 

LM: Absolutely. So for more on international markets this morning, we have Tony Nash’s chief economist and CEO of Complete Intelligence on the line with us this morning. Tony, thank you for joining us. Now, U.S. equities retreated sharply last night as Jerome Powell warned that more stimulus is needed. While it seems more likely that lawmakers will be able to agree to this. Is this the end of the rally and perhaps the reality check that market’s needs?

 

TN: Well, I don’t know if it’s the end of the rally, but I know we had a conversation on August twenty sixth. I think it was when I caution you guys that September would be a really rough month and very volatile. And I think we’re certainly in the middle of that. So how much further will it go? We think it has a little ways to go, but so we don’t necessarily think there’s a huge rally coming. But the caveat to that is stimulus.

 

So if stimulus comes out this week from the U.S. Congress, which there has been a bill going through and there may be some reconciliation in in some of the committees to get some stimulus out, that could help. But I think the Fed I think what what the Fed has said is, you know, they’re out there doing their work. They’re getting loans out to larger companies. But really, fiscal stimulus has to take place for smaller companies until we have that.

 

I think markets are pretty upset.

 

RK: And if we take a look, sorry, OK. And as we take a look at some of the banks like HSBC and others, they’ve taken a bit of a beating from the Vincent report. Will this have a an impact on the rotation of play into the finance sector, do you think?

 

TN: I think it will certainly for those banks that have had issues around laundering money and other things, allegedly. Yeah, I think it’s a big problem because investors don’t want to invest in risk. There’s enough risk in their daily life. But for those banks who aren’t flagged, I think there’s a real opportunity for them. Unfortunately, the sector itself is having difficulties today. But you did see some movement in things like insurance and other things where you do see money moving in and looking at oil prices rising.

 

NL: U.S. oil inventories are keeping oil prices fairly subdued. Where do you see oil prices heading in the short term?

 

TN: We don’t see a lot of movement. You know, we see WTI in the high 30s, low 40s. We see Brent around the mid 40s. The problem is we just haven’t had that consumption rebound that’s needed to drive oil prices higher. There is a lot of discussion about a supply side issue going into the first half of next year that might push prices higher. I’m not entirely sure that that may happen. But even when we look at things like petrol prices, they’re probably 30 percent off of where they were a year ago.

 

And we really don’t expect that to change for six to 12 months.

 

LM: Thank you very much for speaking with us this morning, Tony. That was Tony Nash, chief economist and CEO of Complete Intelligence

Categories
News Articles

Time To Rotate

Tony Nash joins BFM 89.9 The Business Station for another look at the global markets particularly discussing the “Japanese equity market”. Is it the time to rotate into value or maybe it is a sign that the broader economy is recovering?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/time-to-rotate on August 26, 2020.


BFM Description

 

With technology stocks hitting all time highs, there has been some inflow into the finance and utilities sectors. We ask Tony Nash, CEO of Complete Intelligence if it is time to rotate into these names. We also ask his views on the Japanese equity market and if there is still money to be made with the change in leadership.

 

Produced by: Mike Gong

 

Presented by: Khoo Hsu Chuang, Wong Shou Ning

 

Show Notes

 

WSN: So far, deeper dive in global markets today. Joining us is Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now, last night, U.S. tech stocks will slump relatively while laggards like finance and utilities saw some inflows. So do you think this is the time to rotate into value and maybe a sign that the broader economy is recovering?

 

TN: I think it’s certainly a time to to that that that rotation is starting. I don’t necessarily think it’s in full swing yet, but but we’ve received signals for the past week or so that that rotation would start sort of seeing some of the techs off.

 

Today is not really all that surprising, given especially some of the Fed and Treasury statements over the past couple of weeks.

 

KHC: Yeah. So in terms of cyclical stocks, Tony, what is your point of view in terms of which sectors might benefit?

 

TN: Well, I think, you know, we’ve seen tech with companies like Nvidia, Tesla, and these guys have just had amazing gains over the past, say, four months. I think, you know, the rotation into some of the finance stocks, into some other more mainstream, broader market equities is likely. I think the indices are assuming that tech stays at elevated values. That rotation will only help the indices if tech comes off. Given the concentration of waiting within those stocks, it could really hurt some of the overall indices.

 

WSN: And, Tony, let’s focus on one of these, you know, super winners in the last few months. And it’s Tesla, right? They have a decision to sell five billion worth of shares. Is that smart or overly ambitious? Move now. And what more what kind of growth can we expect from this company?

 

TN: Well, the I think the the growth in the stock price is very different from the growth of the company, so Tesla’s trading at a PE ratio of almost 1200.

 

OK, the stock’s more than doubled since March. So, you know, the company itself isn’t doubling. You know, I think it has. I think what the management is doing is making a very smart decision to sell equity while they know the price is very high. So from a management perspective, I think that was a very smart decision. In terms of a buyers perspective, I’m not so sure it’s possible that Tesla stays at these elevated level. People have been trying to short Tesla for years and it just hasn’t worked.

 

So it’s possible there’s growth there and it’s possible they stay at these elevated levels.

 

WSN: So, Tony, are you a big fan of Tesla? This level…

 

TN: It’s hard not to be whether I’m a buyer, personally or not, I would hesitate here. But, gosh, you know, I think there are other places to look that are better value.

 

But it really, you know, part of it really all depends where the stimulus is going. So since the Treasury and Fed are intervening in markets, if they’re targeting specific equities or specific sectors, then you kind of have to follow that money.

 

And so it’s it all depends on how much further these things are going to run and where that stimulus is targeted.

 

KHC: OK, based on PMI data, most of Asia remains contractionary. But for China, of course. You know, Tony, in your opinion, why is recovery not yet forthcoming? And is there a main catalyst needed for manufacturing to take off?

 

TN: Yeah, I mean, look, in terms of manufacturing PMI, as you have Indonesia, Thailand, South Korea, Taiwan, you know, they’re all growing, which is great. Myanmar is actually growing faster than China.

 

But what we don’t have really is the demand pull. And that’s been a real problem. And, you know, we’ve been talking about that since February and we’ve been really worried about deflation. And, you know, what we see even in Southeast Asia is government intervention in markets is really what, propping up a lot of the activity. And I think, you know, the big question I have is, will we see steam come out of recovery in Asia in the same way we’ve started to see steam come out of recovery in the U.S.?

 

I think the answer is unfortunately, probably yes. And I think until the demand from both consumers and companies comes back and the fear of covid wanes, I think we’ve got some some volatility ahead.

 

We’re expecting some real trouble in September. I think it’s great that markets are doing well today, but we’re starting to see the the momentum really slow this month.

And without additional help from the Fed or PEOC or other folks, it really slows down. The problem is the efficacy of that support really deteriorates the more you add to the system.

 

WSN: And Tony, look at Japan, right?

 

I mean, are trading the equities. They are trading at a steep discount to their historical premiums. Do you see any value in yen based assets? After all, Warren Buffett himself just dipped his toes into it by six billion dollars worth of trading companies did. What do you think?

 

TN: Well, that’s the answer. I mean, it’s hard to it’s hard to bet against Buffett. He’s obviously seeing real value there. And I think the Japanese trading companies are really, really interesting because they’re you know, they’re a very good play right now. So is there a value? Sure. I think there’s value there. I think with Japan, a lot of the story is around productivity and automation. If if Japan can continue to raise its productivity through automation, I think it will be a very good play.

 

If that productivity and if the level of automation slows down, then it becomes questionable because everyone knows about the demographic story in Japan, but the economy continues to grow, which is really amazing.

 

WSN: So it seems like you’re quite a believer in that this can overcome some of the structural issues. But what about the fact that Abe has resigned for health reasons? Does it change at all the economic and monetary policies in Japan that might change your decision?

 

TN: Yeah, I think when someone like Abe steps down,  there’s always momentum. So it last for several months. The real question is, how long should the next leadership last? And is there enough structural stability to continue the momentum in Japan, meaning it’s not growing leaps and bounds, but it’s stable growth and it’s healthy growth. So I like Japan a lot. We have had reform under Abe. We have had structural reform under Abe. I think it’s much more healthy today than it was in 2011 or 2010. A lot’s been done.

 

Japan has the capability to continue to improve, but it all really depends. There are regional dynamics and there are domestic dynamics. But again, I think if demand regionally and globally doesn’t return, which is likely COVID induced, then I think Japan, like everywhere else, will have issues.

 

WSN: All right. Thank you for your time. That was Tony Nash of Complete Intelligence, speaking to us from Houston, Texas.