King of Internet of Things- Xiaomi

We could still remember the first exposure to Xiaomi was by ordering online their smartphones many years ago. They managed to create a cult branding as most of their smartphones are sold within minutes during those days. It is not surprising as they have most of the features of an iPhone but yet is trading at a fifth of their price.

 

Source: Xiaomi Homepage 

Xiaomi has since evolved from the early days and has now in their product catalogue, a mind-boggling amount of household appliances and gadgets, on top of their smartphone range. The household appliances are connected to the Mi Home and the data analytics from the usage of the products would be Xiaomi's edge compared to their competitors.

The more prominent products in their line-up will be smartphones, smartwatches, robot vacuum cleaners, smart tv, fridge, air-conditioners, laptops and washing machines. Their products are in more than 80 markets.

Xiaomi's vision is not to make huge profits from the sale of hardware as they have explicitly stated they would not surpass a net profit margin of 5%.

With their good value and quality products, they hope to link all the devices to their ecosystem, they would then be able to monetize from the strength of their ecosystem.

This strategy is similar to Gillette selling the shaver cheaply and earning huge margins from the sale of blades.

Here is the link for the full article:

https://thebigfatwhale.com/king-of-internet-of-things-xiaomi/

 

Riding the Recovery of the Construction Sector- Hock Lian Seng

With Covid 19 causing huge disruption to the economy, the construction sector was especially affected given the migrant workers' high infection rate. But, things are starting to look brighter, with the government getting things back to normalcy. With the live with the covid directive, most migrant workers will be able to go back to work as long as they get vaccinated. 

 

Given the BCA guidance, things are starting to be turning up based on the contracts awarded. You could find the latest Building and Construction Authority forecast appended below. This could be due to pent up demand, given news of BTO delays. Moreover, the government's initiative to boost up infrastructure spending to jumpstart the economy post covid would also provide a further tailwind.

 

 

Source: BCA Media Release Jan 2021

 

Giving some context, the total contracts awarded in 2019 was in the region of 33 billion. The general forecasted contracts from 2014 to 2019 was also higher than the current forecasted contract values for the next few years.

 

But, things are moving rapidly and any forecast could be derailed or even surpassed. Nonetheless, one thing is for sure, the figures are likely going to be higher than 2020 which bear the full brunt of the pandemic.

 

Also, the trump card would be the contracts for Changi Airport Terminal 5 and the Integrated Resorts expansion, which have been excluded from the forecast.

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https://thebigfatwhale.com/riding-the-recovery-in-the-construction-sector-hock-lian-seng/

Riding The Commodities Boom- Wilmar

Contributed By: The Big Fat Whale

There has been recent talk about an inflationary spike and pressure on the overall economy. Commodities prices have been creeping up. This phenomenon is not surprising given the huge money press at work and it is still running on full steam- Biden's recent 2 trillion infrastructure bill was passed.

The current US debt is at 28 trillion dollars. We touched on the Fiat Money symptom in our article supporting Silver as a hedge against hyperinflation.

Source: Dow Jones Commodities Index- spglobal.com

Looking at the charts, the commodities prices have been on a steady ascent since mid-2020.

Looking around us, there have been new policies to increase wages of security guards to 3500 dollars by 2028. This is equivalent to or more than a fresh graduate pay in today's term. We can still remember our starting pay when we graduated ages ago was just 1800-2000 dollars.

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https://thebigfatwhale.com/riding-the-commodities-boom-wilmar/

 

6 Indicators to Gauge if S&P 500 is Peaking

Contributed By: The Big Fat Whale

The market has been on a tear ever since its huge 35% correction in March 2020- S&P index drop from 3400 to 2200- due to the Covid 19 pandemic. It has more than doubled from the bottom to its current level at 4650. 

So what's the outlook ahead?

Is it on a never-ending trajectory to the moon?

We will be looking at 6 indicators and the chart of S&P to give us some indication if things are getting way too hot that will lead to the imminent meltdown.

The power of the Fed printing machine has worked wonders. But is the market getting too complacent?

 

Buffet Indicator

 

Source: www.currentmarketvaluation.com

The Buffett Indicator is defined as the value of a country's publicly traded stocks divided by its gross national product. The greatest investor of our lifetime, Warren Buffet, have used this indicator to assist him to gauge where the valuation of the market stands at any moment in time. 

We are now way off the charts and looks excessively overvalued. If the market just reverts to the historical trendline, it could easily be a 50% correction. 

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https://thebigfatwhale.com/a-look-into-6-indicators-to-gauge-if-the-market-is-peaking/ 

Fed's Latest Move- Demise of ARKK and Innovation Stocks?

Contributed by: TheBigFatWhale

With the latest move by the Fed, where they are looking to have 3 interest rate hikes in 2022 and into reducing their balance sheet, growth stocks have not been faring well. The move by Fed is a move towards a monetary tightening policy that will drain the exodus of liquidity that has been pumped into the economy since early 2020. 

Source: Tradingeconomics.com- Fed Balance Sheet

The Fed Balance sheet has more than doubled since 2020 which is a worrying sign that things are going out of control. Therefore, the indication by Fed to reduce their balance sheet is a sound and prudent move provided they are really serious about doing it. We touch on our previous article about the 6 indicators to gauge if the S&P 500 is peaking with the Fed Balance sheet as one of our concerns.

With a potential stoppage of easy money, the prospects for growth stocks could be bleak. Most of the growth or innovation stocks run on the theory that they would be wildly profitable once they are able to scale. Moreover, it is the vision for the future and it will disrupt the whole way things are done. 

Click Here to Read More:

https://thebigfatwhale.com/feds-latest-move-demise-of-arkk-and-innovation-stocks-quick-thoughts/