Wednesday, September 28, 2016

The Future of Singapore Transport 2016

I just read this piece of news from Today. Amazing.

$5 to get to anywhere!

So, what's the catch?
  1. Advance booking (30mins in advance, or by 10pm the night before) 
  2. Share ride with others
  3. Designated pick up locations (within 300m)
The additional limitations because it is in it's initial phase are that location and timings are limited, but of course, as with all businesses, if they are successful, they are planning to increase the coverage and also operation timing.

Personally, I think that this is quite ambitious, but I am definitely rooting for them. I use Android, so unfortunately, I am unable to try their service. 

I've always thought that Beeline was an interesting idea. Maybe with the increased awareness of SWAT, Beeline would also get a boost and we can see more of these novel modes of transport options become more readily available to commuters with a general increase in adoption.

I still feel that the gap between a regular public transport commuter (BMW - bus, MRT and walk) and being a private car owner is huge.

I have mentioned that Uber/Grab and other taxi alternatives do come in nicely in between, but I feel like it's slightly on the premium side because it's essentially just leveraging on technology to decrease the matching and idle time of traditional taxis.

The introduction of UberPool and GrabHitch is really a game changer because it allows increase utility and efficiency of transport vehicles, especially when commuters have routes that overlap. Of course, while being less comfortable (private), it is cheaper, as it should be.

I feel that Beeline and SWAT are coming in slightly below UberPool / GrabHitch to offer many multiple riders who have a lot of route overlap, but also want more convenience than public transport and are willing to pay more for it. Their pricing is also obviously cheaper than UberPool and GrabHitch, so I think that my infographic is pretty accurate.

I ranked bus on the most extreme end of the spectrum because.... standing in a crowded bus sucks ass way more than standing in a crowded train. Gotta compare apples to apples, yeah?

Public transport should focus on being cheap, no-frills and connective. Leave the extras and premiums for the private market to figure out. I think that the government is doing a good job allowing a rather free play on this (at least, seemingly).

Honestly, the emergence of transport alternatives is a GOOD thing, especially for people that take public transport. Firstly, taxes from everybody still goes into transport infrastructure and public transport. However, if there are less riders on buses and MRT because they have moved up into other transport options, that alleviates the strain on the system, but that also transports less bodies in your chosen mode of transportation. Less commuters on buses and trains = more comfortable ride for those remaining. 

I think that there is a healthy group of people who would be willing to pay more for a transport option more premium than public transport, but are way too far off from wanting to own, operate and maintain a private car. I think these new ideas really will help change the way that Singaporeans choose to travel.

My personal vision for the future is self-driving TAXIS (note: not cars, which I personally would like to see have insane COE price tags on them), 24/7 public transport and safe, segregated lanes for PMD (e-scooters, bikes, etc). In my personal vision for the future, I don't own a car, but I'm more than satisfied with all the transport options available to me.

The future is so exciting, isn't it?

Tuesday, September 27, 2016

Singapore Savings Bond: Aug, Sep 2016 Review, Nov 2016 Preview

All right, I missed the previous month because it was just a horrible issue and I don't think people bothered to apply for it, but I'm updating for this month because I've just enough time to squeeze in this post.

First up is the update of the subscription of the previous issues. As previously mentioned, the SSB will probably have $300 million available to be issued every month of 2016. While it is a HUGE drop from the $1,200 million that they were offering in 2015, the SSB take up rate has been... pathetic, so it makes sense to cut down on the total offer to boost up the fill rate. It looks a look less sad now.

The Aug 2016 SSB came in at 9% which is within expectations. However, the Sep 2016 SSB had a drastic drop to just 5.6% uptake. Why? It's a no brainer, the yield for the Sep issue is horribly low. For 10 years, you only get back returns of 1.75%. Looking at the yields of the Oct 2016, I wouldn't be surprised if we punch in a final number for the fill rate to be closer to 5% than 9%.

This month, there is no the yield curve inversion. The MAS rates continues to show strong levels of prediction to the actual SSB issue, confirming the relationship that we have identified. I might stop showing this table in the future unless we have a month with a yield curve inversion, because of intervention is rather obvious when it happens. But when it doesn't, it follows the relationship very well, with less than 1% margin of error for 83% of the time.

Moving onto the next SSB, we use the same old-fashioned method of looking up the data from MAS and constructing the table below. As a refresher, the current month's rates are used as a proxy for the issue in 2 months time (For example: Sep 2016 rates are used for the Nov 2016 issue). Also, if you are in the first 3/4 of the current month, you application this month is for the bond that is too be issued on the 1st of next month (For example: Sep 2016 applicants will receive the Oct 2016 issue). I hope this clears up some of the confusion people have regarding the names of the issues.

I would hazard a guess of 0.78 / 0.82 / 1.30 / 1.79 as the final yields for the Nov issue.

This upcoming issue looks set to be one of the worst ever SSB issued on record. 10 year yields have collapsed from 2.78% in Nov 2015 by almost 100bps in just a year! 5 year yields have also collapsed 80bps. However, the more interesting thing is that the 1 year yield will be pushing under 0.8% for the first time ever.

I'm not trying to predict the future, but lower long term yields is a sign that investors are more gloomy and dim about the future, hence the willingness to accept lower and lower rates for such a long time. Holding next month's issue for 10 years is the same as holding last year's Nov issue for just 7 years.

This month's issue and last month's issue are both bad, but next month's issue will be worse the entire front end. If you really want to buy some SSBs and are not sure when, it would be advisable to lock in your order today as opposed to waiting for next month's issue. But in all honesty, both issues are horrible and you're probably better off rolling fixed deposits.

Today is the last day of applications, which closes at 9pm. It can be done through ATMs or iBanking.

I would not be applying for this month's issue, and I'm 99% I will not be applying for next month's one as well.

If you really are looking for a low-risk savings-type of investment, you may want to consider the 5 year China Life Endowment Plan that has guaranteed 2.25% returns. It's almost a whopping 95bps of difference. Of course, you ought to be very very clear about your liquidity requirements before you purchase any product that has inflexible withdrawal terms. At the end of 5 years, the returns that you would get would be almost close to 75% higher than with the SSB. Their product closes 30 Nov or whenever it gets full, so just an FYI if you're looking for some pick up and don't have liquidity issues.

As much as I like the SSB, there are pros and cons to it, and the obvious con right now is its extremely low yield. It is likely to persist for a while. Let's all spend a moment to thank global central bankers for punishing savers and rewarding the gamblers in the casinos.

Sunday, September 25, 2016

Interesting News: The Failure of Obamacare

Don't look at me, look at Bloomberg.

The ACA is one of the worst government policies in the history of government policies.

No one can say that they didn't see this coming. It was already doomed to fail from the very beginning.

Truly affordable and quality healthcare in Singapore is really one of the things that I really enjoy about living in Singapore.

In a few days time, my new insurance coverage kicks in and I'll be doing an update on that. The premiums I'm paying are ridiculous. I heard about some of the insurance plans that my friends are forking out a few hundred dollars a month for and I just shake my head. Oh well. Look forward to that post once I get the confirmation of my insurance changes!

Friday, September 23, 2016

Bill Fleckenstein and Horseman Capital Speaks

One of the big fish that I really like is Bill Fleckenstein. Not only does he have a very unique and cool name, but I can follow his logic well and he has the (rare) ability to think outside of calendar year / quarterly / monthly performances. Because his main aim is to make money and not to lose money in the long run and he doesn't care about benchmark performances, he keeps things real and he plays it cool. I'd like to be that way as well.

The biggest mistake that the casual retail investor makes is trying to hit an annual target for investment returns. Few people would come out and say it, but investment returns are rarely as stable and smooth as people would have you believe. In fact, returns are usually lumpy. You don't get 8% a year, every year. The ability to think outside of those fixed time periods will help you take take advantage of one of the few things that the retail investor has an edge over professionals.

Do we get paid to sit in an office and read financial reports and news all day?
Do we have admin staff to do mind numbing data entry and to format data for us?
Do we have fancy computer algorithms to crunch data for us?

The only true advantage that we have is the lack of career risk. As our own portfolio managers, we have zero career risk because we don't need to fire ourselves, ever. Performed below benchmark over the last year? Oh well.

Putting pressure on yourself to perform well within arbitrary timeframes is really unnecessary and very unproductive.

Bill manages his fund without the usual constraints of investment managers and I like that he's aware, but unmoved by all the noise in the markets. Returns are nice and all, but REALIZED RETURNS is the only thing that matters at the end of the day.

Anyway, this is a nice interview where Bill just crushes it.

Moving on though, the infamous Horseman Capital speaks about "the best short in the world" (in their opinion) which is unsurprisingly Japanese banks. With negative interest rates, NIM is compressed and that is just killing off the main income for banks. Negative interest rates also promotes cash hoarding, and it doesn't take a genius to add 1+1 to figure out that plenty of Japanese are shunning banks and just keeping cold hard cash in personal safes at home. Throw in the declining population in certain areas and you have the perfect storm - less customers with less deposits with less interest. Now on top of that, add in a protected, high-cost, foreigner-unfriendly, locally focused businesses and you have structural problems with the economy that can't organically "grow" itself back to health. I wouldn't be surprised if NPLs start to go up when everything else starts going south.

Policy-wise, Japan is way too deep down the rabbit hole. They are pretty much exercising their nuclear options already, and the last thing to eventually come will be the devaluation of the yen. (but, I am expecting short-term appreciation because of the carry trade)

We're beyond the point of "if". It's only a matter of "when".

Thursday, September 22, 2016

Rate Hike Predictions for the next N meetings

This is how Yellen decides if its time to raise rates or not.

Just kidding, she looks at the S&P500.

Wow, no rate hike. Total shocker. Not.

What I wrote last year in April 2015 is STILL relevant today. Seriously, the Fed ain't every going to hike rates. And this cartoon just sums it up the best.

Honestly, if anyone really really thought that they were going to raise raise, I would think that they might be slightly delusional. The Fed has said that they would be raising rates for YEARS now.

This is an oldie, but a goldie. For more than 7 years now, the Fed has been giving "forward guidance" to raise rates. All in all, one rate hike.

But, oh wait, the next one is coming up VERY SOON. Yeah right. I wouldn't hold my breath for it.

US LT growth is collapsing every other meeting and now stands at a pitiful 1.7%-2.0% forecast. But of course, knowing the Fed and their ability at forecasting, you best be prepared for a number coming in well below that.

Perhaps the only person's view that I respect is Gundlach's. He did call out that this September will not be a hike.

But until anything interesting happens, I'm just sitting back on my itchy hands and watching this whole shit show from afar. It's tough not doing nothing, but thinking about all the risks that are just about everywhere, it's enough to scare me to remain focused and disciplined to my style and strategy.