Daniel Mankani "DynamicTrader – Trend Trading Dynamics" Trading for a living, systematically profiting from longer term trends.

22May/160

Demographic Trends – Changes Of Population Growth Determines Millennial Generation.

The global economy and finances are all about growth (increasing flow) and not about equilibrium (stock).  The ultimate driver of growing economies and finance has been millenniums of population growth.  A growing quantity of people has meant more buyers, more consumers, more demand.  So, if the growth or flow of demand is waning...that should matter...a lot.  Like entering an ice age after 10,000 years of warm.  The expected response to something like that would be all out.  Not a surprise that 4 decades of central bank mandated interest rate cuts have been used to incent a decelerating base of consumer growth to debts untold.  It's all in a vain attempt to maintain centrally determined rates of growth far above what rising population, jobs, wages, and savings can sustain.

QUANTITY of GROWTH

Take a gander at the chart below, annual global population growth from 1950 to present and the OECD population growth estimations through 2050.  You might notice a...HEAD AND SHOULDERS pattern!!!  1988 was the head of annual global population growth...1973 was the left shoulder and 2012 was the right shoulder.{ZH}
Annual-Global-Population-1951-2050-a
But what if the OECD and their future estimates are wrong???  The chart below is annual population growth (in total) vs. the annual growth of the under 45yr/old global population.  The base of population growth (young) has caved in and only been masked by the 45+yr/olds living a decade or two longer than their parents.  However, this extension of lifespans vs. the previous generation is a one off.  The current young are not likely to live decades longer again than the current generation.  Simply put, we have significant population longevity among the wealth and rapidly waning population growth most everywhere except the very poorest.  As you may have noticed, it's a night and day difference.
Annual-Global-Population-1951-2050-b
The chart below is the ultimate visual of stabilizing global population of young vs. globally swelling elderly populations.  What was a 9-1 ratio of babies (0-4yrs/old) per 75+yr/olds in 1950 has become a 2.7-1 ratio in 2016...and estimated to be a 1-1 ratio by 2050.  The global growth of young has essentially ceased but the growth of old is skyrocketing.
Global-Population-0-5-yrs-2-75_yr_olds

QUALITY of GROWTH

Where the growth is coming from broken down.  The chart below is global population growth split out among wealthy OECD, aspiring BRIICS (Brazil, Russia, India, Indonesia, China, S. Africa), and the RoW (rest of the world).  From an economic standpoint, the sources of quality growth are slowing and lesser sources unable to replace this loss.  Simply put, those with income, savings, and access to credit are able to consume significantly more than those without.
Annual-Global-Population-Growth-Consumer-types-a
A focus solely on the population growth of those under 45yrs/old removes the confusion of the older generations living far longer.  Below, as of 2016 all net under 45yr/old net population growth is among the poor RoW as all growth has ceased among the OECD and BRIICS.  Among the RoW, the majority of all younger population growth is Africa.  The same Africa where 1/3 of the nations have average incomes below that of Haiti.  Africa is not an engine of consumptive growth.
Annual-Global-Population-Growth-millions-types-b
The chart below is a simple multiplication of under 45yr/old annual population growth by average GDP per capita (capability to consume).  One look at that chart, and the implementation of NIRP & ZIRP plus the global debt bomb should be no surprise. The collapse of growth has been underway for decades and central bankers and central planners are willing to do anything to maintain the appearance of "growth".
Annual-Global-Population-Growth-gdp-per-capita-c

Quality of Growth Really Matters 

The final charts below show the impact of quality (income, savings, and especially access to and utilization of credit) over quantity of population growth.  The chart is a breakdown of oil consumption by the wealthy 1.3 billion OECD residents, 3.8 billion persons of China-India-Africa, and the 2 billion "Rest of the World".
world_oil-Consumption
The chart below highlights the impact of rising wages but particularly (in China's case) the impact of rising credit / debt) in pushing Chinese oil consumption so far in advance of India or Africa over the same time frame.  Quantity + "quality" of credit growth.
world_oil-Consumption-india-china-africa
And a close up on China's rapidly slowing quantity of adult population growth vs. the equally rapid escalation of debt in place of population growth...and the impact to maintain China's "growth".  This sort of growth, particularly credit creation, is likely not reproducible in India or Africa (thank goodness for India and Africa).
china-core-population
And below, another view of China's decelerating growth among its adult population (and as of 2018, outright declining adult population) and the only answer to maintain "growth" has been debt on an unprecedented scale.  What happens in China and globally as China's depopulation sets in...for decades....is unknowable.
China-Annual
DT Conclusion: Central banks are throwing everything; they can, to defray the coming onslaught of economic depression and hope by doing so, they can at least lessen the economic pain and burden that comes with it, And since we are in times of historical monetary precedence, unlike anything seen before, the coming downturn will run much deeper, simply cause the system that is set up on continued inflating measures is like a balloon, that can only continue to grow, till bust.
This is what we call bubble and we all know how that ends, most importantly, this pattern can only continue till the time the growth in global population is also in tandem, once population growth starts to subside, the world becomes Japan. Stay tuned, invest wisely, we are currently in round two of the global currency wars.

Credits to Chirs Hamilton via Hambone's Stuff blog,

26Jun/12Off

A week to Iran Sanctions, July 1st the Date.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8433528
EU to implement sanctions against Iran July 1 as planned
Brussels (Platts)--25Jun2012/1125 am EDT/1525 GMT

The EU's sanctions against Iran -- including a ban on oil imports and a ban on the provision of insurance for tankers shipping Iranian oil -- will come into force as planned on July 1, EU foreign ministers said Monday.

The Response, http://www.dailystar.com.lb/News/Middle-East/2012/Jun-26/178183-four-us-navy-minesweepers-arrive-in-the-gulf.ashx#axzz1yqTv4bak

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"They need the propping up of oil price, Russia has oil at 150$ on the barrel in its budget, with oil trading at almost half of that, and public dissent at historical highs, Russia needs high oil prices to quell any disharmony at home. A war is inevitable". -dtrader
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25Jun/12Off

Bearish forces at work!. Nifty 4500 on the cards?

Last year in Jan, near about 6300 on the Nifty, We advised a short, prior to doing so, our team visited Mumbai, saw the construction all over, saw the folly of the richest man in India with his tall billion dollar building as his home, and witnessed the hope in the AIR, "India Shining". All this presented a peak for the markets.

Efficiency in India is non present and as the euphoria of cheap money nears its end, Indians slowly realize the days of cheap money is over. In Economics its hard to see, how growth can be delivered by cheaper code writers that India Offers, or how this country could sustain itself on a global scale, from self sufficiency the country today is a net importer, its deficits are evidence on the Indian Rupee.

So after this trip on the day out, at the airport departure terminal, we headed to the smoking room of the airport. In Airports smoking room's, usually tips can be obtained on how the country looks in the eyes of departing travelers and more often than not, it's a worthy observation. A gentleman travelling back to the middle east asked us what we did. And we highlighted we made a quick study of the situation on the ground and believe that the up move of India is over, {we were short, a good size at 6000 areas}!.

This gentleman quickly became agitated and highlighted how the whole world was in Shit, including the middle east and how India will rise up to become a super power in the years ahead. We held back and gave him a grin and walked away. If it acts like a duck, quacks like a duck, then it is a duck.

Now if indeed we are right, how will it play out!

The debt exposures of the government and corporate's, which is hurting, especially those who borrowed FCCB's and in various foreign instruments will come to roost, devaluing the Indian Rupee even further, technically our charts indicate the region of 62-64 before any meaningful correction on the INR, while on the first phrase of devaluation the noise from government officials and verbal interventions will provide initial level support to the currency, but verbal interventions can only do so much.

Once additional momentum picks up to the downside and political dissents ramp up their voice on inflationary pressures, the stock markets will start to recognize and high frequency bots will be unable to continue providing the fake liquidity that is currently present, propping up markets is a strategy and belief shared by greenspan and bernanke, they believe higher stock valuations, provide a feel good factor and eventually reflect the true extend of the economy, this is indeed false.

India's RBI governor is also trying to act like them too, which will make Inflation easily accessible.

Their theory is flawed, it doesnt reflect anything near the true extend of the economy, in reality the economy is suffering, real estate values are held up as in stocks, due to the weaker rupee, which effectively makes the nifty trading at 4000 levels in real value terms, since the INR is almost 20% weaker than before.

Does anyone think, The same level of security and safe keeping as in gold, real estate or any other asset class that holds it value, than fiat currencies and shares will be in for a surprise.

The situation on the ground today is amplified ten times than 1991, as growth levels expanded to the upside, similarly their corrections and problems are also amplified. For those, who want to know better, are advised to take a look at Malaysia, Thailand, and Singapore (1997-2002) stock market charts vs Fx devaluations to reach their own conclusions on India.

19Jun/12Off

Didn’t We Learn from Facebook? AutoTrader.com IPO Filing Shows Market Is as Sleazy as Ever

From Yahoo: Didn’t We Learn from Facebook? AutoTrader.com IPO Filing Shows Market Is as Sleazy as Ever

Just a month ago, Facebook (FB) was the ''poster child" for IPO reform. Its public debacle triggered countless lawsuits, Congressional probes and regulatory inquiries, and cast a cloud of doubt over Morgan Stanley (MS) - who brokered the deal, and the Nasdaq exchange (NDAQ) that botched an orderly open. It seems the only good thing being said about the Facebook IPO was that it just might mark a turning point for a deeply flawed system.
I hate to break it you, but it's not happening.New federal filings show that Autotrader.com is looking to become the first internet company to retest the waters of the IPO market since Facebook's May 18th debut. There's only one problem; six weeks ago AutoTrader insiders borrowed $400 million in order to turn around and pay themselves a one-time dividend in the same amount. I call it, cashing in before you cash out, while my co-host Jeff Macke is more blunt.

"There's nothing illegal about this, it's just kind of scummy," he says in the attached video. "They've made it a lesser company and immediately after doing so, they're pitching on to the public."

http://finance.yahoo.com/blogs/breakout/didn-t-learn-facebook-autotrader-com-ipo-filing-162815133.html

22Oct/08Off

FEAR GRIPS THE WORLD

These are the end days, the world is almost over and this may spell the end of the financial markets, mainly the stock markets for the world, investors who have lost money will not return ever! It’s a hopeless scenario! I am getting out!.

Scanning through various web forums, media channels and even the classifieds sections for real estate in traditional media are yelling, help me out here!, take my position!, I am losing money and I want you to lose some too.! But Caveat emptor! (Buyer beware)

Hello there! Hold on just yet. Haven’t we seen this move before!

In our book ”Technopreneurship – The Successful Entrepreneur in the New Economy”, Pearson Ed ISBN 0-13-046545-3, we had labeled, the first three chapters, The Greed, The (False) Hope and The Fear. The fourth chapter is called, The Opportunity, the start of a new dawn.

Fearful times just as this are actually the greatest opportunity for investors and it’s often referred to the changing of the guards. This collapse that we are currently witnessing had to happen and it has to be vengeful enough to liquidate the one’s on the Edge and trust me there are many; prices have to fall back to equilibrium to make it attractive enough for the new guards to venture in. These cycles are the greatest innovation of a market driven economy.

The book entails the three chapters and correctly labeled the cycles. The greed phrase was important and it just didn’t happen in Asia but the world over. To prove a point, here are the stats of the world’s tallest buildings and how they coincided with recessions there after.

Tallest Buildings of the world

Tallest Buildings of the world

This chart depicts of the tallest buildings in the world and has often coincided with major economic collapses and recessions. Its interesting to note;

1931 – Empire state building (The Great Depression)
1972-1973 World trade centre 1974 Sears Tower. (The 70’s Oil crisis)
1998-1999, Malaysia’s Twins/Shanghai’s JM Tower. (Asian Financial Crisis)
2003-2004 – HK – Two International Financial Centre / Taipei 101 (SARS)
2007-2008-2009- Under Construction. Shanghai WFC, Burj Dubai and Freedom Tower NY City.

All appeared in a timely fashion, where planning began just before the start of the crisis and completion occurring when the crisis is midway or near completion. For example the tallest building in Hong Kong, coincided with Hong Kong suffering the most during the ASIAN SARS crisis. Another interesting note, many mega projects planned in tandem with the greatest buildings of the world, hardly reach completion and if they ever do, they remain empty shells for years to come.

Mega Projects planned and under constructions.

Singapore has two major casinos under construction at the moment, there are reports of Las Vegas Sands in trouble at the moment and they being one of the bidders for the casino in Singapore.Dubai has the world palm islands under development and Burg Dubai, the Tallest Building in the world.

The correlation between these two markets is as follows. Both have no natural resources and are very much service oriented economies. Speculation was rife in both of these markets with highly leveraged transactions, Buyers requirements were simply, as low as 1-2% option money for a transaction and if delivery is taken, 10% and no money down till completion. Banks were lax in lending despite the values of underlying asset had already appreciated 300-500% from the last crisis (Singapore 2003 SARS / Dubai 2003 Iraq War). Both were eyeing to become the New Mecca of the world, with Dubai being at the epic-center of the oil kingdom and Singapore with its rhetoric of first world, cleanest, safest place in the world to do business, aptly called the Switzerland of Asia.

Just as the axe fell on rating agencies for not being prudent in the stock market, Banks are probably looking towards their respective property valuators in this scenario. There is still (false) hope prevalent in these markets and all that is required is, the local economy/stock market remains sideways for another two quarters and we shall see various sales liquidations coming to market.

While the stock market may see snap-back rallies from depressed levels, again its not a long term play as what most media channels predict, the excesses of the economy have to cleaned up for good, before chapter 4 unfolds.

Disclosure

  1. Our real estate fund has no position in any of these countries except in KLCC, Malaysia, we are long prime downtown properties with 100% tenancy.
  2. Our emerging markets equities fund, is long short term call options in India.