Transport Sector, China and Asia-focused Research

Charles De Trenck

Thematic (Sector/Industry)

Is Gold breaking out?We are coming close to KISS moving average indicators suggesting some further critical breakdowns in equities relative to gold, while gold to oil in the last few trading sessions broke a record set in 1973, and in terms of volatility and “absolutes” oil has probably not been cheaper in real terms.We might not be facing the same order of problem as 2008 at this stage (with the GFC so fresh in our minds), but the price guides are herding us closer to a similar sell-off situation we last saw in 2008. Best not to trade shares and focus trading on volatility (VIX, VXX, etc.) while we keep looking for our long term accumulate opportunities that appear during panic sell-offs.  Gold remains a key portfolio counterweight. Continued evidence enclosed.

Is Gold breaking out?We are coming close to KISS moving average indicators suggesting some further critical breakdowns in equities relative to gold, while gold to oil in the last few trading sessions broke a record set in 1973, and in terms of volatility and “absolutes” oil has probably not been cheaper in real terms.We might not be facing the same order of problem as 2008 at this stage (with the GFC so fresh in our minds), but the price guides are herding us closer to a similar sell-off situation we last saw in 2008. Best not to trade shares and focus trading on volatility (VIX, VXX, etc.) while we keep looking for our long term accumulate opportunities that appear during panic sell-offs.  Gold remains a key portfolio counterweight. Continued evidence enclosed.

Are We Moving from Industrial Crisis to Financial Crisis? (2008 Being a Property to Financial Move)

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Seven years after the start of the global financial crisis in 2008, the supply-demand balance of the container shipping industry remains precarious. We expect this to continue in 2016 where imbalances at the trade route level and insufficient measures to reduce ship capacity will further accelerate freight rate reductions and industry losses. We expect 2016 to be dominated by continued weak global trade growth, sustained erosion in freight rates and weakened balance sheets – each unfavourable to a major recovery in share prices, in our view”

Seven years after the start of the global financial crisis in 2008, the supply-demand balance of the container shipping industry remains precarious. We expect this to continue in 2016 where imbalances at the trade route level and insufficient measures to reduce ship capacity will further accelerate freight rate reductions and industry losses. We expect 2016 to be dominated by continued weak global trade growth, sustained erosion in freight rates and weakened balance sheets – each unfavourable to a major recovery in share prices, in our view”

Container Shipping 2016 – Operators Facing Prisoner's Dilemma; Industry Could Lose USD 5bn in 2016

Based on a lot of long term data, and looking closely at daily patterns the nature of oversold oil becomes apparent. Were it not for China’s wasteful excesses, of course, we would not have had the level of painful upward then downward spikes in commodity prices over the last decade. And there is the issue of long term paying the piper for all the debt we have accumulated for the over-production.But further analysis of the S&amp;P 500/oil, S&amp;P 500/gold and Gold/oil speaks volumes on how to position portfolios and what risks to continue preparing for.  In addition to additional graphs and data tables I have included selected data downloads for further re-configuration.Oil is currently tied with 1973 for the cheapest it has been in our modern era.

Based on a lot of long term data, and looking closely at daily patterns the nature of oversold oil becomes apparent. Were it not for China’s wasteful excesses, of course, we would not have had the level of painful upward then downward spikes in commodity prices over the last decade. And there is the issue of long term paying the piper for all the debt we have accumulated for the over-production.But further analysis of the S&amp;P 500/oil, S&amp;P 500/gold and Gold/oil speaks volumes on how to position portfolios and what risks to continue preparing for.  In addition to additional graphs and data tables I have included selected data downloads for further re-configuration.Oil is currently tied with 1973 for the cheapest it has been in our modern era.

Oil Now Tied for Cheapest in 50+ Years Using Most Objective Metric (Graphs and Data Follow-Ons)

Stocks down on gloomy industry outlook<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/164/original/Leasing%20Perf.JPG?1453688159" class="editor-image img-responsive" data-smartkarma-image-id="5164"></figure> Source: Bloomberg, DMER<ul>
<li>Investors suffered massive wealth erosion in 2015, as share prices of container leasing companies tumbled through the year with stocks extending declines until the beginning of the new year. While the stocks of the three companies under our coverage – Textainer, TAL and CAI – more than halved, the two indices of S&amp;P 500 and Dow Jones Transportation contracted by just 1% and 18%, respectively.</li>
<li>
Container shipping and leasing companies…</li>
</ul>

 Stocks down on gloomy industry outlook Source: Bloomberg, DMER
Investors suffered massive wealth erosion in 2015, as share prices of container leasing companies tumbled through the year with stocks extending declines until the beginning of the new year. While the stocks of the three companies under our coverage – Textainer, TAL and CAI – more than halved, the two indices of S&amp;P 500 and Dow Jones Transportation contracted by just 1% and 18%, respectively.

Container shipping and leasing companies…


Container Leasing 2016 - Outlook Remains Placid

Expect bigger players with financial flexibility to grow inorganically<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/101/original/Gas%20Consol.JPG?1453260844" class="editor-image img-responsive" data-smartkarma-image-id="5101"></figure>  Source: Bloomberg, DMER• The VLGC market is highly fragmented as 54% vessel capacity is owned by small market players. We believe bigger players with financial flexibility will prefer to grow inorganically and establish their leadership in the sector. In our view, a wave of consolidation will be good for the sector as a whole because it will rationalise the vessel supply and bring efficiency in the pricing mechanism. • Lower…

Expect bigger players with financial flexibility to grow inorganically  Source: Bloomberg, DMER• The VLGC market is highly fragmented as 54% vessel capacity is owned by small market players. We believe bigger players with financial flexibility will prefer to grow inorganically and establish their leadership in the sector. In our view, a wave of consolidation will be good for the sector as a whole because it will rationalise the vessel supply and bring efficiency in the pricing mechanism. • Lower…

LPG Shipping - Consolidation Wave Set to Begin in the VLGC Sector?

United States

Caterpillar Inc. designs, manufactures and markets construction, mining and forestry machinery. The Company also manufactures engines  and other related parts for its equipment, and offers financing and insurance. Caterpillar distributes its products through a worldwide organization of dealers.

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Caterpillar Inc (CAT US)

Are We Moving from Industrial Crisis to Financial Crisis? (2008 Being a Property to Financial Move)

Is Gold breaking out?We are coming close to KISS moving average indicators suggesting some further critical breakdowns in equities relative to...

Charles De Trenck

Container Shipping 2016 – Operators Facing Prisoner's Dilemma; Industry Could Lose USD 5bn in 2016

Seven years after the start of the global financial crisis in 2008, the supply-demand balance of the container shipping industry remains...

Drewry Maritime Financial Research

Oil Now Tied for Cheapest in 50+ Years Using Most Objective Metric (Graphs and Data Follow-Ons)

Based on a lot of long term data, and looking closely at daily patterns the nature of oversold oil becomes apparent. Were it not for China’s...

Charles De Trenck

Container Leasing 2016 - Outlook Remains Placid

Stocks down on gloomy industry outlook Source: Bloomberg, DMER Investors suffered massive wealth erosion in 2015, as share prices of container...

Drewry Maritime Financial Research

LPG Shipping - Consolidation Wave Set to Begin in the VLGC Sector?

Expect bigger players with financial flexibility to grow inorganically Source: Bloomberg, DMER• The VLGC market is highly fragmented as 54% vessel...

Drewry Maritime Financial Research

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