April 1, 2009

And it’s the start of a new month, a new quarter. The days have passed much quicker than I anticipated and honestly things are great. I am rebuilding my life physically, emotionally and mentally and it has been a challenging but awesome ride.

Weeks ago, topo had an entry on her blog which in turn was taken from someone else’s blog. The passage was titled “living well isn’t just about organic fruit”. I printed it off and it’s now on my sticky board at work, reminding me to live life to the fullest everyday.

I made a conscious decision to rein in my spending on material wares and instead channel the money into more experiential things. Holidays, excursions, volunteer work and other experiences that will help me discover life and make me a more fulfilled and richer person. I’ve  realised that all I have to do is allow myself to embrace opportunities and possibilities and they can be done. Just take a step out, even if it’s not within my comfort zone, and try. If I don’t try, I never know what the outcome will be. I pretty much live by this mantra now.

Also spending more quality time with family and I know more than ever I can always count on them whenever I need them.

Work has been ok, some corporate changes at the top and I was a bit disappointed when it was announced last week that there would be a general pay freeze except for junior level staff. But today I got an email from the big boss that I would be one of the few exceptions this year. So that was good to hear. I have always had a slight inferiority complex professionally because I always feel I’m not good enough compared to my peers. It’s not about the extra money, which i think won’t be much anyway, but it’s knowing that your work is appreciated and valued, and it motivates me to work harder.

Looking ahead into the next quarter, I have a few fitness goals to achieve, and quite a few holidays already being planned. Plus all the mini adventures along the way, I’m looking forward to very exciting times.



March 11, 2009

Citibank shares are up 15 cents to US$1.60. Whoopee-f**king-dooda

March 11, 2009
Op-Ed Columnist

This Is Not a Test. This Is Not a Test.

It’s always great to see the stock market come back from the dead. But I am deeply worried that our political system doesn’t grasp how much our financial crisis can still undermine everything we want to be as a country. Friends, this is not a test. Economically, this is the big one. This is August 1914. This is the morning after Pearl Harbor. This is 9/12. Yet, in too many ways, we seem to be playing politics as usual.

Our country has congestive heart failure. Our heart, our banking system that pumps blood to our industrial muscles, is clogged and functioning far below capacity. Nothing else remotely compares in importance to the urgent need to heal our banks.

Yet I read that we’re actually holding up dozens of key appointments at the Treasury Department because we are worried whether someone paid Social Security taxes on a nanny hired 20 years ago at $5 an hour. That’s insane. It’s as if our financial house is burning down but we won’t let the Fire Department open the hydrant until it assures us that there isn’t too much chlorine in the water. Hello?

Meanwhile, the Republican Party behaves as if it would rather see the country fail than Barack Obama succeed. Rush Limbaugh, the de facto G.O.P. boss, said so explicitly, prompting John McCain to declare about President Obama to Politico: “I don’t want him to fail in his mission of restoring our economy.” The G.O.P. is actually debating whether it wants our president to fail. Rather than help the president make the hard calls, the G.O.P. has opted for cat calls. It would be as if on the morning after 9/11, Democrats said they wanted no part of any war against Al Qaeda — “George Bush, you’re on your own.”

As for President Obama, I like his coolness under fire, yet sometimes it feels as if he is deliberately keeping his distance from the banking crisis, while pressing ahead on other popular initiatives. I understand that he doesn’t want his presidency to be held hostage to the ups and downs of bank stocks, but a hostage he is. We all are.

Great and difficult crises are what produce great presidents, so one thing we know for sure: Mr. Obama’s going to have his shot at greatness. This crisis is uniquely difficult in four respects.

First, to get out of a crisis like this you need to let markets clear. You need to let failed companies, or homeowners, go bankrupt, unlock their dead capital and reapply it to thriving entities. That is how the dot-com bust ended, and out of that carnage emerged a whole new set of companies. The problem with this crisis is that A.I.G., Citigroup and General Motors — and your neighbor’s subprime mortgage — are not You let the market clear them away, and we could all be wiped out with them. Therefore, the president has to find a way to punish bad financial actors without setting off another Lehman Brothers domino effect.

Second, we need to get a market going that would bring fair value and clarity to the “toxic mortgages” crippling the balance sheets of our major banks. This will likely require some degree of government subsidy to private equity groups and hedge funds to get them to make the first bids for these toxic assets by guaranteeing they will not lose. This could make great policy sense, but be a nightmare to sell politically. It will strike many as another unfair giveaway to Wall Street.

Unfortunately, the president may have to look the American people in the eye and explain that “fairness is not on the menu anymore.” All that’s on the menu now is whether or not we avoid a system meltdown — and this will require rewarding some new investors.

Third, the president may have to make some trillion-dollar decisions — like nationalizing major banks or doubling the economic stimulus — with no real precedent and without knowing all the long-term ramifications.

Finally, to do all this, the president has to make us realize how dangerous a moment we’re in, without creating a panic that will prompt Americans to put every dime in their mattresses and undermine the economy even more.

All this will require leadership of the highest order — bold decisions, persistence and persuasion. There is a huge amount of money on the sidelines eager to bet again on America. But right now, there is too much uncertainty; no one knows what will be the new rules governing investments in our biggest financial institutions. If President Obama can produce and sell that plan, private investors, big and small, will give us a stimulus like you’ve never seen.

Which is why I wake up every morning hoping to read this story: “President Obama announced today that he had invited the country’s 20 leading bankers, 20 leading industrialists, 20 top market economists and the Democratic and Republican leaders in the House and Senate to join him and his team at Camp David. ‘We will not come down from the mountain until we have forged a common, transparent strategy for getting us out of this banking crisis,’ the president said, as he boarded his helicopter.”

Copyright 2009 The New York Times Company


November 20, 2008

I’m having a very unfocused day. When I should really be working on stuff I have to do ie something on oil sector reforms in china, I keep drifting off to one thing or another that’s totally unrelated, like behind-the-election-scenes on Newsweek, or reading people’s blogs. I also keep revisiting Outblush to look at the things over and over again — there’s a dress from Victoria’s Secret that is supposed to be really amazing because it can be worn seven ways, although I bet it only works seven ways on tall and skinny people.

I need a new job that inspires me, with better benefits and where people will take me more seriously. If I was smarter and more talkative maybe i would be somewhere else. Oh wait, I did get a new job but they couldn’t hire me because of this little economic crisis and something known as a recruitment freeze.

I also keep thinking about my money and whether Citigroup’s going to crash. I got a shock when I saw this morning that the stock closed at a piddlesome $6.40 and they shut down some underperforming hedge fund and decided to purchase some of those remaining SIV loans. It is quite ridiculous that I bought Citi at $28 and $21 and tomorrow, who knows, it might all be worth nothing. I mean, how low can it drop?

I have decided to be more conscientious about learning songs, so I’ve uploaded all the available repertoire on my ipod and put it in a special Korea playlist. Trouble is I usually skip the horrible sounding ones like Pamugun and ave maria, and put eric whitacre on repeat instead. Listening to Hana on repeat is not great because the choir is sharp by the end and it just keeps on looping back to the original key, where the sops are also flat anyway.

as the midnight watch tower tolls

over rooftop street and dome

the triumph of a human being ascending

in the dreaming of a mortal man


September 17, 2008

In another sign that fundamentals are getting increasingly divorced from oil price fluctuations let’s look at what’s been happening in the last week.

Didn’t Ike just come through and destroy half of Texas and before that, didn’t Gustav threaten to do some major damage? We’ve had a major cut in oil and refinery production in the Gulf Coast for close to four weeks now. The heart of the entire US oil sector crippled for a month.  In recent days there’s also been more militant attacks in Nigeria that has curtailed Royal Dutch Shell’s production somewhat. And where’s the oil price? Yup it’s at $90 and looks likely to edge closer to $85 than $100. Products on the Nymex are tracking crude losses and coming down as well, while gasoline prices in the US are going up past the pivotal $4/gallon again.

Now what’s been happening in financials? This morning, AIG had to get a $85 billion bailout package from the US Federal Reserve, yesterday Lehman Brothers’ employees went to work and found themselves out of jobs — there was nothing left to take so staff in London swiped cans of diet Coke as farewell gifts. The markets are getting so jittery, today I heard an analyst from the Bank of Lichtenstein saying on tv that they were “overweight on cash” and I tried to figure out when was the last time I heard such a phrase.

So it’s pretty clear what’s happening. Suddenly energy doesn’t look so hot anymore. Even though the immediate outlook is of a very real threat to oil supply, a lot more people and institutions are cashing out and holding on to their funds instead. If we’re talking about fundamentals, then perhaps they’re also subscribing to the view that with all this turmoil in the financial markets likely to weigh further on global economic woes, oil demand going in the medium term will likely fall or grow more slowly as well.


September 15, 2008

Just when we thought we’d hit rock bottom, things are turning even scarier…

Nightmare on Wall Street


A weekend of high drama reshapes American finance

EVEN by the standards of the worst financial crisis for at least a generation, the events of Sunday Spetember14th and the day before were extraordinary. The weekend began with hopes that a deal could be struck, with or without government backing, to save Lehman Brothers, America’s fourth-largest investment bank. It ended with Lehman’s set for Chapter 11 bankruptcy protection and the bank preparing to wind itself up after those efforts failed. Other vulnerable financial giants scrambled to sell themselves or raise enough capital to stave off a similar fate. Merrill Lynch, the third-biggest investment bank, sold itself to Bank of America (BofA), an erstwhile Lehman suitor, in a $50 billion all-stock deal. American International Group (AIG) brought forward a potentially life-saving overhaul and went cap-in-hand to the Federal Reserve.

On Sunday night the situation was still fluid, with bankers and regulators working to limit the fallout. They were girding themselves for a dreadful Monday in the markets. Australia’s stockmarket opened sharply lower on Monday (most other Asian bourses were closed). American stock futures were deep in the red too, and the dollar weaker. Spreads on risky credit, already elevated, widened further.

With these developments the crisis is entering a new and extremely dangerous phase. If Lehman’s assets are dumped in a liquidation, prices of like assets on other firms’ books will also have to be marked down, eroding their capital bases. The government’s refusal to help with a bail-out of Lehman will strip many firms of the benefit of being thought too big to fail, raising their borrowing costs. Lehman’s demise highlights the industry’s inability, or unwillingness, to rescue the sick, even when the consequences of inaction are potentially dire.

The biggest worry is the effect on derivatives markets, particularly the giant one for credit-default swaps. Lehman is a top-ten counterparty in CDS, holding contracts with a notional value of almost $800 billion. If it were to cease trading, chaos could ensue. On Sunday, banks called in their derivatives traders to assess their exposures to Lehman and work on mitigating risks. In a highly unusual, hastily convened weekend trading session, the market’s main players sought to reduce the risk hanging over Lehman’s outstanding trades by matching buyers of its swaps directly with sellers, thus cutting Lehman out of the equation. But only $1 billion-2 billion of trades were executed. The Securities and Exchange Commission, Lehman’s main regulator, said it is working with the bank to protect clients and trading partners and to “maintain orderly markets”.

Government officials believed they had persuaded a consortium of Wall Street firms to back a new vehicle that would take $40 billion-70 billion of dodgy assets off Lehman’s books, thereby facilitating a takeover of the remainder. But the deal died when the main suitors, BofA and Barclays, a British bank, walked away on Sunday afternoon. Both were unwilling to buy the firm, even shorn of the worst bits, without some sort of government backstop.

But Hank Paulson, the treasury secretary, decided to draw a line and refuse such help. After the Fed had bailed out Bear Stearns in March and the Treasury had taken over Fannie Mae and Freddie Mac last weekend, expectations were high that they would do the same for Lehman. And that was precisely the problem: it would have confirmed that the federal government stood behind all risk-taking in the financial system, creating moral hazard that would take years to undo and expanding taxpayers’ liability almost without limit. Conceivably, Congress could have denied Mr Paulson the money he needed even if he had been inclined to bail Lehman out.

This left Lehman with no option but to prepare for bankruptcy. Though the bank has access to a Fed lending facility, introduced after Bear’s takeover by JP Morgan Chase, the collapse of its share price left it unable to raise new equity and facing crippling downgrades from rating agencies. Moreover, rival firms that had continued to trade with it in recent weeks—at the urging of regulators—had begun to pull away in the past few days. The inability to find a buyer is a huge blow to Lehman’s 25,000 employees, who own a third of the company’s now-worthless stock; in such a difficult environment, most will struggle to find work at other financial firms. It also makes for an ignominious end to the career of Dick Fuld, Lehman’s boss since 1994, who until last year was viewed as one of Wall Street’s smartest managers.

Merrill’s rush to sell itself was motivated by fear that it might be next to be caught in the stampede. Despite selling a big dollop of its most rotten assets recently, the market continued to question its viability. Its shares fell by 36% last week, and hedge funds had started to move their business elsewhere. Its boss, John Thain, concluded that it needed to strike a deal before markets reopened. It approached several firms, including BofA and Morgan Stanley, but only BofA felt able to conduct the necessary due diligence in time.

Not only has Mr Thain managed to shelter his firm from the storm, but he has also secured a price well above its closing price last Friday, $29 per share compared with $17. How he managed that in such an ugly market is not yet clear. Ken Lewis, BofA’s boss, is no fan of investment banking, but he is a consummate opportunist, and he has coveted Merrill’s formidable retail brokerage. Still, the deal carries risks. It will be a logistical challenge, all the more so since BofA is in the middle of digesting Countrywide, a big mortgage lender. Commercial-bank takeovers of investment banks have a horrible history because of the stark cultural differences. And it is not clear if BofA has a clear picture of Merrill’s remaining troubled assets.

The takeover of Merrill leaves just two large independent investment banks in America, Morgan Stanley and Goldman Sachs. Both are in better shape than their erstwhile rivals. But this weekend’s events cast a shadow over the standalone model, with its reliance on leverage and skittish wholesale funding.

Wall Street has company in its misery. Washington Mutual, a big thrift, is fighting for survival under a new boss. Even more worryingly, so is AIG, America’s largest insurer, thanks to a reckless foray into CDS of mortgage-linked collateralised-debt obligations. Investors have fled, fearing the firm will need a lot more new capital than the $20 billion raised so far. Prompted by the weekend bloodletting, AIG brought forward to Monday a restructuring that was to have been unveiled on September 25th. This was expected to include the sale of its aircraft-leasing arm and other businesses. It is also reported to be seeking a $40 billion in bridge loan from the Fed, to be repaid once the sales go through, in the hope that this will attract new capital, possibly from private-equity firms.

With Lehman left dangling, official attention is now turning to putting more safeguards in place to soften the coming shock to markets and the economy. The first step has been to encourage Lehman’s counterparties to get together and try to net out as many contracts as possible. On Sunday the Fed also expanded the list of collateral it will accept for loans at its discount window, to include even equities; and dealers may lend any investment-grade security, not just triple-A rated, to the Fed in exchange for Treasury bonds.

Markets are also pricing in some possibility that the Fed will cut its short-term interest rate target from 2% when it meets for a regularly scheduled meeting on Tuesday. That would be an abrupt turnaround from August, when officials figured their next move would be to raise rates, not lower them.

In a sign of how bad things are, even straitened banks are stumping up cash to help the stabilisation efforts. On Sunday, a group of ten banks and securities firms set up a $70 billion loan facility that any of the founding members can tap if it finds itself short of cash.

Even if markets can be stabilised this week, the pain is far from over—and could yet spread. Worldwide credit-related losses by financial institutions now top $500 billion, of which only $350 billion of equity has been replenished. This $150 billion gap, leveraged 14.5 times (the average gearing for the industry), translates to a $2 trillion reduction in liquidity. Hence the severe shortage of credit and predictions of worse to come.

Indeed, most analysts think that the deleveraging still has far to go. Some question how much has taken place. Bianco Research notes that while the credit positions of the 20 largest banks have fallen by $300 billion, to $1.3 trillion, since the Fed started its special lending facilities, the same amount has been financed by the Fed itself through these windows. In other words, instead of deleveraging, the banks have just shifted a chunk of their risk to the central bank. As spectacular as this weekend was, more drama is on the way.

Copyright © 2008 The Economist Newspaper and The Economist Group.

All rights reserved.


May 24, 2008

Ok some people have asked what’s the deal with oil at $130. Here’s an educated attempt at an explanation:


a. fundamentals: commodities in theory trade according to supply-demand balances. if demand for something goes up, or if supply is tight, the price goes up, and vice versa.

But other factors are at play, including

b. speculation: because the stock markets and financials are down in the dumps and the USD is sliding, investors are looking at other forms of investment to park their money ie moving it into energy markets. they buy oil-linked products or buy oil traded on the Nymex therefore pushing up the price. this is why historically the value of the USD has been inversely propotional to oil prices.

c. geopolitics: oil is produced in many politially unstable regions like the Mideast, Russia, Central Asia, Africa (supply) but bought by many stable and developed nations (demand). war and trade embargos can befall big producers  and curtail supply.  Militants in Nigeria sabotage major pipelines, the oil price goes up; Iran-US relations worsen, the oil price goes up.

What’s happening now


While spot prices (barrels sold today to be delivered now) have risen by $9 or so in the last few days, futures prices (barrels sold today to be delivered in future ie June 2009, January 2015 etc) have risen by a greater proportion. This suggests that people expect oil to be in higher demand/ tighter supply in the future than now, and believe it or not, makes them panic and start buying more oil now to store for later, thus pushing up the price. This phenomenon — where prices now are lower than prices in the future — is known as contango, and also suggests that there is actually no immediate shortage of oil. This is backed up by oil consumption data — US demand is falling, European demand is falling because of the high prices and current oil stocks/ inventories (measured in number of days of forward demand) are in no way tight.

Much like trading stocks, people also buy and sell oil on an exchange. They may find themselves making wrong bets on the price and therefore have to buy more futures to recoup their losses. This happened in the last few days. A few traders bet that the price would fall but were proved wrong, and had to buy large volumes of futures to cover their positions, therefore pushing the futures prices higher and therefore creating the contango explained above.

Then there are the big wigs who talk big. Gurus who are respected in the industry and who make predictions on the price. T Boone Pickens said expect $150 in a few months, Goldman Sachs called it at $200. This rattles the markets, makes people buy more now in anticipation of higher prices, and pushes up the price.

Fundamental demand-supply:

Many people have blamed Opec (organisation of petroleum exporting countries which includes some in the Mideast and also others like Ecuador, Angola and Indonesia) for not increasing output. But opec believes the market is well supplied and more capacity is already expected to come onstream in the latter half of the year. It does not make sense for them to invest in more production capacity now — in very challenging environments with high labor costs, equipment shortages, projet delays — when the current high oil prices could very well hurt demand (people drive less, fly less) and leave them with excess capacity later on. Oil is not easy to extract. It takes years to explore and develop a field before production is commercial. Nobody wants to invest in projects now when they’re not sure what demand will be like a few years later. When producers are left with excess oil, the price falls, which is not in their interest.

Another issue lies not with actual oil coming out from the ground, but the number of refineries that exist to refine this oil into products that we can use — gasoline and diesel for cars, jet fuel for planes, fuel oil for ships. Refining capacity around the world is limited because investment costs are high and also a lot of new oil being produced is nasty stuff that needs more sophisticated refineries to process.

Therefore, it’s clear that fundamentals are no longer sufficient to explain what’s happening with oil prices because oil has become a financial instrument as well, much like currencies and stocks. Add to that the emergence of sovereign funds which have billions of dollars at their disposal and the ability to invest in energy futures on a huge scale. They buy up barrels on paper and hold them ie don’t sell, because, as explained above, oil is perceived to be more valuable in future.

And that’s how we got from $50 in 2005, $60 in early 2007 to $100 in the early days of the year and $130 now.


February 20, 2008

Talk about inflation. Can’t find a decent pair of work pants for under $100. I don’t need anything fancy, just something with solid, crumple-free material that needs minimal ironing, in a nice dark colour that is not black. I don’t need those high waisted, broad legged styles that are in the shops now, or anything with pockets and multiple embellishments. Pants I’d consider in Zara go for $89 and up. The cheaper $60 and $75 ones are like crap. Didn’t find anything in MNG, actually i don’t remember seeing any normal pants. I found something at River Island for $105. It was a bit pricey but after all that scouting, I just didn’t want to leave empty-handed, my time is precious.

Also couldn’t find a decent pair of nice brown leather pumps which are smart and comfy enough to stand in all-day, preferably in pig skin leather. Finally found something at $101 today. GAH. Shopping for clothes and shoes is losing its allure. So maybe next time on my birthday I shall set up a gift registry of stocks. Please get me xx lots of zz counter. Then I won’t feel like crying every time I watch cnbc.

Today I attended the Brunei Forum, a sort of mini Brunei fair with government officials out in full force to do major PR for the small sultanate. I’m quite impressed with the Bruneians I met. They came across as very smart and personable and they all speak excellent English, I hadn’t known that it’s the language of instruction in schools. Anyway the country is so tiny, only a population of 380,000, but it produces about 200,000 b/d of oil. That’s a lot of oil per person, it contributes something like 97% to national GDP.

I wonder what Singapore would be like if it had indigenous oil and gas. Quite unlucky really, considering the rest of ASEAN can lay claim to some reserves somewhere — onshore basins, in the South China Sea, off the Borneo coast etc.. For one, perhaps KL would have fought harder to keep us a part of Malaysia so many decades ago. Our economy might not be as diversified as it is today; we would have more refineries and petchem plants. We’d also have a whole lot more local engineers, geophysical scientists and seismologists. We’d probably have a national oil company (NOC) with more than a measly 7,000 b/d of production from far flung areas of Indonesia and Australia. Hmm, what possibilities.

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