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Bottlenecks To Ease With Xmas Coming?

Tony Nash gave the BFM 89.9: The Morning Run his thoughts on how the sooner-than-expected Fed rate hikes could affect global markets. Will inflation derail hastening of the tapering talk? How does crude oil look like in the next few months? As the Christmas season is coming, how much of a concern supply chains will be for the consumers and the economy? When the Fed begins normalizing rates, which currencies will be vulnerable if or when this happens?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/bottlenecks-to-ease-with-xmas-coming on November 25, 2021.

 

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Show Notes

 

SM: BFM 89.9 good morning. You are listening to the Morning Run. I’m Shazana Mokhtar together with Khoo Hsu Chuang and Philip See. It’s 9:07 in the morning. Thursday, the 25 November. If we look at how the US markets closed yesterday, the Dow was down marginally by 0.3%. The S&P 500 was up 0.2%. Nasdaq was also up 0.4%. So for some thoughts on where international markets are headed, we have with us on the line Tony Nash, CEO of Complete Intelligence. Good morning, Tony. So the Fed minutes revealed that the pace of tapering may be hastened, while macro data points from personal spending to job data suggest that the US economy is in quite the sweet spot, but will inflation derail this?

 

TN: Yeah. There was a statement from one of the Fed governors today talking about that inflation is not transitory in their mind or could potentially not be transitory in their mind. That’s a real danger to people who are thinking that we’re really in a sweet spot right now because it could mean Fed intervention, meaning tightening sooner than many people had counted on. So I think people had counted on some sort of intervention, maybe in Q2, but it may be happening sooner. That would have a real impact on the dollar. The dollar would strengthen, and that would have a real impact on emerging markets all around Asia, all around Africa. People would feel it in a big way where there is US dollar debt.

 

KHC: We are seeing that strengthening US dollar in our currency now. But I just want to get your perspective on crude oil because various countries from the US to China are now tapping into their strategic crude reserves to alleviate the present energy crisis. But if you look at crude now, it’s not really being responsive, right to these actions?

 

TN: Right? That’s right. So what the US agreed to release is about two and a half days of consumption. Not much. The releases agreed in the UK and India, for example, were really token releases. They weren’t really major portions of their consumption. So these countries are kind of giving a nod to the Biden administration, but they’re not really alleviating the supply concerns that are spiking prices. So it really has been a dud for the White House. It’s been kind of an embarrassment because crude prices haven’t fallen, really. They fell initially, but they really came back after the release announcement was absorbed.

 

PS: Yeah. Tony, that trickling in oil supply releases from the US government hasn’t done much to alleviate the supply concerns. Gas prices in America have been on a massive uptrend as well, just in terms of inflation and not being as transitory as people expected, as we enter Christmas season, how much of a concern is it for consumers as well as the economy?

 

TN: It’s a real concern. I have to tell you, I’ve driven halfway across the US for our Thanksgiving holiday, which is tomorrow morning. It’s Thursday here, and we’ve seen a lot of trucks with cargoes on US roads, and I make this drive pretty regularly. So it seems like a lot more on roads than I normally see. So that’s good in terms of the domestic supply chain.

 

I think it’s the international supply chain that is really concerning, and we still have those backups in the Port of Long Beach. That is the real main constraint for supply chains in the US. So I don’t think we’re going to see major disruptions outside of other ports. But through Long Beach, we definitely see issues.

 

The semiconductor supply chain is the main impact for, say, electronics and automobiles in the US. We did see semi manufacturers start to produce more auto related semiconductors, say mid-Q3 and into Q4. We should start to see those automotive supply chains, the semiconductor dependent issues and automotive supply chains alleviate, probably in Q1. So that will help.

 

But for the Christmas season, I’m not sure that there’s a whole lot that’s going to help with electronics and say automobiles.

 

PS: Yeah, Tony with JPowell still back and still in the fair chair in terms of his reappointment. And he does hike rates earlier than expected to address inflationary concerns. How much of a dangerous is to slowing down the economy in America and as  the rest of the world.

 

TN: Sure, it is a risk in America. I think it’s really hard to hire people in the US right now. There’s a lot of job switching happening and people haven’t come back into the workforce. We lost about 5 million people in the workforce in the US through the Covid period. So that’s a real issue. Anything that raises the cost of doing business is problematic for the US and will inhibit growth. The main problem in the US is that the environment right now, it continues to crush small companies. It’s very difficult for small companies. And while it may seem that small companies don’t matter that much, they are the main employer in the US and the main growth engine in the US. And the Biden administration hasn’t helped this with a lot of their policies. Their policies have been very favorable toward big companies. If the Fed pushes inflation, it will make borrowing a little bit harder. I’m sorry if the Fed pushes the interest rate, it’ll make borrowing a little bit harder. But the collapsing, say, the tapering of the Fed balance sheet will have a bigger impact on liquidity in the US.

 

SM: And if I could just touch on large US dollar debt and what happens to emerging markets when the Fed begins normalizing rates, which currencies do you see as going to be particularly vulnerable if or when this happens?

 

TN: Well, I think one that I’m really keeping an eye on is the Chinese Yuan because it’s a highly appreciated currency right now. And the Chinese government has kept the CNY strong so they can continue to import commodities and energy for the winter. And they’ll likely keep it strong through Chinese New Year. We expect CNY to really start to weaken, say, after Chinese New Year to help Chinese exporters. So winter we mostly pass. They want to help kind of push a Chinese export, so they’ll start to really devalue, seeing why probably end of Q1 early Q2.

We do see pressure, the Euro, as you’ve seen over the last three weeks, there’s been real pressure on the Euro as well. Other Asian currencies. We do think that there will be pressure on other Asian currencies. Sing Dollar will likely continue to stay pretty consistent. But we’ll see some pressure on other Asian currencies simply because of the US dollar pressure. The US dollar is something like 88% of transnational transactions. So the US dollar as a share of transnational transactions actually come up over the past two to three years. So there’s much more pressure with an appreciated dollar and it’s coming.

 

KHC: Just like the one. Tony, India Indian equities record high. Have you reached to speak considering PTM’s IPO failure?

 

TN: Yeah. I think there’s been a lot of excitement there, and I think it’s at least for now. I think it has I don’t think you can ever really claim that an equity market has hit its peak, but I think for now, a lot of the excitement is dissipated. It may come back in a month, it may come back in six months. But I think that momentum is really important. And as you see, failed IPOs, I think it’s really hard for equity investors to kind of get their mojo back.

 

SM: Tony, thank you so much as always for speaking to us and happy Thanksgiving to you and your family. That was Tony Nash, CEO of Complete Intelligence, giving us his thoughts on how the sooner-than-expected Fed rate hikes could affect global markets.

Categories
Podcasts

What’s Next For Crude Oil, Gold, And Cryptos?

As US and other markets decouple in terms of recovery trajectories, should investors adjust their portfolio? BFM spoke to Tony Nash, CEO of Complete Intelligence, on the major selldown of cryptocurrencies, as well as his thoughts on oil, gold, and inflation.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/whats-next-for-crude-oil-gold-and-cryptos on May 21, 2021.

 

❗️ 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.

 

Show Notes

 

RK: Well, choppy waters, to say the least. There is a little bit of a mixed day yesterday over in Asia. But right now, to talk more about global markets, we have Tony Nash CEO for Complete Intelligence for more insights here. Tony, good morning and thank you for joining us on the line. Now, it looks like the U.S. and other markets are beginning to decouple in terms of recovery trajectories. How do you think investors should allocate their portfolios according to this scenario?

 

TN: Well, obviously depends on the time, but I think that some action was taken yesterday in the U.S. around Fed comments as people were trying to decipher whether those comments were positive or negative. And today, I think they realized they were actually fairly dovish comments. So the U.S. is positioning itself to grow and other parts of the world say Europe and parts of Asia are still very conservative about opening until, you know, I think with the places that are being fairly conservative about opening, it really depends on investment, really depends on government assistance, monetary policy, you know, these sorts of things.

 

So investing in those markets depends on support that those companies are going to get and how how those investments will perform.

 

LM: Yeah, I’m just wondering, there has been increasing fears about inflation. Is that influencing or changing your views right now?

 

TN: Well, so, you know, we’re realizing that things like like lumber prices, which a lot of people talk about, that’s been a processing issue in sawmills. There’s a lot of raw lumber out there. Those prices in many cases are the same as they were like, say, 10 years ago. OK, it’s the process into their bottom and making issues in a number of other areas. One area that we’re keeping an eye on is crude oil, which I know is important later, of course.

 

And we’re not we don’t expect a dramatic rise in crude oil prices, partly because I still have six million barrels a day on the sidelines right now. So even if we saw a dramatic uptick in travel and other activity, power generation and so on, there’s spare capacity on the sidelines for a lot of countries to be holding down. So we don’t expect to see and short of having production cuts, we don’t expect to see dramatic oil price rises because that that supply will come on the market as needed.

 

RK: Right. And beyond crude, Tony, do you know crude oil in general is quite correlated to inflationary pressures and prices, but beyond crude oil, are you paying attention to any other commodities out there? Because, you know, we’re seeing a surge in all of them. Which ones particularly catch your eye?

 

TN: For industrial metals are the ones that have really rallied from, say, November or December through this month? What we expect is not pricing to continue to stay strong, but the rate of rise will will slow down.

 

OK, so we’ll continue, for example, to see high copper prices, but we don’t expect copper prices to rise at the same rate as they had been for the past five or six months. We see that across the board in a lot of commodities where we have seen really dramatic rises based on, you know, government spending, monetary policy and also uncertainty about the direction of the dollar when these things are positioned in or denominated in U.S. dollars. We’ve also seen over that same time, because it’s so going that in China we saw the Chinese renminbi appreciate pretty dramatically, which made the dollar denominated commodities really cheap.

 

And so there’s been accumulation of those commodities in China, whether it’s food or whether it’s industrial or metals. And we’ve seen that stuff accumulated in China because these things are really kind of pretty cheap for them in China in terms.

 

RK: And one more commodities. Want to get your views on here, Tony, is gold because it’s seen some strengthening over the last few weeks. In fact, you know, it was more towards the high single digits. Now it’s at the one percent range. Do you expect it to break into the green? And what kind of range do you expect for the year?

 

TN: You know, we do expect gold to continue to rise at least through August, August, September. We think that there’s kind of a sweet spot and people take a pause on, say, cryptocurrency. And as people look at some of these other metals and other commodities where the growth opportunity has slowed, we do expect attention to gold as well as kind of other inflation and currency risk type of focus will turn to gold as well. We expect there to rise through those then kind of a pause late Q3 and then we expect that to continue toward the end of the year.

So we’re not looking at a doubling of prices or looking at a know, low double digit type of price rises in.

 

LM: And Tony, twenty twenty one was supposed to be a bumper year for U.S. IPOs. Is it still buoyant or has sentiment turned more south?

 

TN: No, no, even seems like like Robin Hood starting to offer fractional IPO shares on their platform. So where IPO are typically restricted to a select few? We’re starting to see some things happen where where smaller investors are given opportunities in some of these IPO. So we do expect that to continue as long as investors are there to invest in IPO. And we don’t necessarily expect that that will taper off dramatically. We may see some hesitation if we see markets turn south in June, July, but we won’t necessarily see a dramatic taper off to the end of the year.

 

NL: So we have seen the major sell down of crypto currencies. How is the volatility affecting crypto companies like Coinbase and market confidence to gain legitimacy with institutional investors?

 

TN: Yeah, no doubt it’s hurting their credibility because cryptocurrency has kind of become a bit of a mockery over the past week or so, we assume on tweets and a number of other things. But I don’t necessarily believe that crypto currencies are a thing of the past. They haven’t been retired yet, but we do expect to see cryptocurrency is more regulation, more explicit regulation and kind of soft infrastructure around cryptocurrency like Coinbase that goes along with it. They’ll have the infrastructure to be able to help in that crypto investors who along with regulation and do just fine.

 

TN: So I don’t think crypto her dad the new not necessarily realize that they thought they may, but but I do think it’s still something that’s viable within the broad based interests.

 

RK: Thank you so much for your time this morning. That was Tony Nash, CEO of Complete Intelligence. And let’s take a quick look over at the coin prices right now. Bitcoin thing, a little bit of a recovery. It’s up two point six per cent now, forty one thousand dollars and on a year to date basis, up to forty one point six percent year to date, still far off from the 100 percent or 90 percent year to date gains we saw earlier this this year.

We take a look at Etha. It is now two thousand seven hundred and seventeen dollars, or seventy two thousand two hundred eighty dollars a coin up a little bit, point four percent year to date, up 275 percent.

 

NL: Yeah, very quickly as well. Taking a look at a piece of news, the first quarter of 2021 doesn’t appear to be working out in a week’s favor. According to the F.T., Quarterly losses almost quadrupled on year to over two billion dollars.

 

RK: We work not working. Yeah, that’s a headline in the making right there. The losses incurred as so far this year, three point two billion dollars in 2020. Revenue fell almost 50 percent on year from one point one billion to six hundred million dollars. And the company lost around 200000 customers from a year ago. And this, of course, all information, according to the Financial Times, because this is not a public listed company just yet. In fact, they’re looking to try and go public again later this year after their first failed attempt a year to be eighty nine point nine.

 

 

 

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.