Manulife US Reit - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
06/30/21	Phillip	Manulife US Reit	0.795	0.84	Buy
08/13/21	DBS Vickers	Manulife US Reit	0.765	0.88	Buy	DCF
08/13/21	Kim Eng	Manulife US Reit	0.765	1	Buy	DDM
08/13/21	UOB Kay Hian	Manulife US Reit	0.765	0.84	Buy	DDM
08/25/21	Phillip	Manulife US Reit	0.73	0.84	Accumulate
09/07/21	Amfrasers	Manulife US Reit	0.73	0.82	Outperform	DDM, Cut from $0.86
09/07/21	DMG & Partners	Manulife US Reit	0.73	0.9	Buy
11/05/21	CIMB	Manulife US Reit	0.695	0.918	Add	DDM
11/05/21	Kim Eng	Manulife US Reit	0.695	1	Buy	DDM
11/05/21	Phillip	Manulife US Reit	0.695	0.84	Accumulate	DDM
11/08/21	OCBC	Manulife US Reit	0.72	0.83	Buy
11/10/21	UOB Kay Hian	Manulife US Reit	0.71	0.84	Buy	DDM
12/01/21	CIMB	Manulife US Reit	0.71	0.918	Add	DDM
12/03/21	UOB Kay Hian	Manulife US Reit	0.685	0.87	Buy	DDM
12/06/21	Phillip	Manulife US Reit	0.695	0.84	Accumulate	DDM
12/15/21	DMG & Partners	Manulife US Reit	0.66	0.9	Buy
02/09/22	Lim & Tan	Manulife US Reit	0.645	0.87	Accumulate on weakness
02/10/22	CIMB	Manulife US Reit	0.63	0.89	Add
02/10/22	DBS Vickers	Manulife US Reit	0.63	0.88	Buy
02/10/22	DMG & Partners	Manulife US Reit	0.63	0.86	Buy
02/10/22	Kim Eng	Manulife US Reit	0.63	0.95	Buy
02/11/22	OCBC	Manulife US Reit	0.65	0.8	Buy
02/17/22	Phillip	Manulife US Reit	0.665	0.86	Buy	DDM
03/15/22	UOB Kay Hian	Manulife US Reit	0.63	0.8	Buy	DDM
05/10/22	UOB Kay Hian	Manulife US Reit	0.6	0.8	Buy	DDM
05/10/22	DBS Vickers	Manulife US Reit	0.6	0.88	Buy
05/10/22	Kim Eng	Manulife US Reit	0.6	0.9	Buy	DDM
05/10/22	DMG & Partners	Manulife US Reit	0.6	0.83	Buy	DDM
05/10/22	CIMB	Manulife US Reit	0.6	0.86	Add
05/11/22	OCBC	Manulife US Reit	0.6	0.77	Buy
05/26/22	DBS Vickers	Manulife US Reit	0.59	0.7	Buy	DCF

Livingstone - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
02/04/22	SAC Capital	Livingstone	0.147	0.168	Hold	DCF

Lian Beng - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
06/15/21	Lim & Tan	Lian Beng	0.485	0	Reject offer	offer price $0.50

Stock calls for 18 July 2022

Date	Analyst	Company	Last	Target	Call	Valuation
07/18/22	CIMB	City Developments	7.54	8.97	Add	RNAV
07/18/22	Citi Research	Genting	0.805	1.01	Buy	EV/Ebita10x FY23
07/18/22	CIMB	Singapore Post	0.645	0.8	Add	PER18.8x FY23
07/18/22	Lim & Tan	Singapore Post	0.645	0.79	Accumulate on weakness
07/18/22	UOB Kay Hian	Singtel	2.65	2.9	Buy	DCF
07/18/22	DMG & Partners	Suntec Reit	1.57	1.95	Buy	DDM
07/18/22	CIMB	UOL	7.17	8	Add	RNAV

US economic and financial situation.

 The US is projected to grow at 1% in 2022.

However, the EPS is expected to decline in 2022 as the economic surprise index has entered negative territory.

The world is facing a stagflation problem including the US.

What will the FED do in 2022 and 2023?

The Fed is expected to raise its fed rate to 3.5-3.75% by the end of 2022 to contain the sky-high inflation.

Thereafter, the Fed is expected to reduce its Fed rate in 2023 because of a recession.

More indicators are flashing recession!

Bank of America called for a mild recession this year.

Is there any validity to BoA's call?  Let's look at some indicators.

The Eoci had entered the negative territory.  From the chart, we can see that a negative Eoci has a high probability of a recession (shaded).

The consumer composite indices are in a downtrend.  A downtrend has a high probability of a recession (shaded).

Whenever the M2 growth rate hit zero or breached zero, a recession would happen.  The M2 growth rate has breached zero now.

Let's take a look at the yield curve again.  The 10-2 year yield curve is still having an inversion (negative).

There are also other yield curve inversions now and this is not good for the US.  As a yield curve inversion presages a recession, the increases in the yield curve inversions will increase the probability of a recession (shaded).

Last but not least, the fear index is rising.

Will inflation come down after the oil price is below $100?

Let's take a look at the correlation between US inflation and oil price.

According to the above chart, the oil price has a high correlation with the CPI.  Thus, the CPI should move in sync with the oil price in the future.

However, Goldman Sachs had projected the oil price to reach $140 at the end of 2022 in its latest assessment.

The US demand destruction had begun!

Small businesses are always the first to feel the pulse of the economy because they're mostly doing business-to-consumer (B2C) businesses.

Let's look at more statistics to verify the US demand destruction.

The container and baltic daily indexes are still trending down.  The lower indexes indicate lower consumer demand.

As semiconductors are used in many devices and machines, the semiconductor sales figure will indicate the health of the economy.  The overall sales by the top 10 suppliers had dropped by 5%.

The US trucking demand is still in a downtrend.

The US industrial production is declining which means the producers are producing fewer goods.

The Americans are using credits to sustain their spending because they have very low savings now.  This also means that they can no longer continue their current expenditures much longer.

Last but not least, the rising US rentals continue to hurt the consumers' pockets.

Reviews of US inflation (CPI and PPI) and retail sales.

The June US inflation had increased to 9.1% year on year.

US inflation breakdown:

US inflationary sector:

The June US PPI increased to 11.3% year on year.

The PPI for goods was showing an uptick but the PPI for services was indicating a downtick.  This PPI phenomenon was completely different from CPI whereby the CPI for goods was showing a downtick but the CPI for services was indicating an uptick.

What does this mean?

This meant that the CPI was being pulled up by services prices while the PPI was being pulled up by goods prices.  From another perspective, we can say that the consumers are cutting back on their goods purchases which will cause an inventory overhang in the future.  Simultaneously, the producers are producing goods at higher prices but they can't sell at higher prices and this will cause their margins to diminish as they've to absorb the rising costs.  Therefore, we can foresee the earnings per share (EPS) to fall in the future.

The chart below showed the difference between CPI and PPI.

The US retail sales figure after factoring in the sky-high inflation had shown that consumers purchased fewer items.

Just as the CPI & PPI statistics suggested, the retail inventories had been building up because of declines in consumer spending caused by the elevated inflation.  Thus, it looked like demand destruction had already begun and this would cause the economic growth to slow down (recession).

Consequently, the long-term inflation expectation (inflation outlook) declined because the consumers expected the US recession to lower US inflation in the future and this boosted the consumer sentiment.

What happened after the CPI was released?  The Fedwatch tool showed that the probability of a 1% rate hike in July spiked to 83.3% immediately.

However, the probability dropped significantly after 3 Fed officials supported a 75bp rate hike.

Therefore, we can project that the next hike will either be 75bp or 100bp.  Which one will it be?

In view of the above-mentioned factors (Demand destruction, falling EPS, and recession), we think that the Fed will likely hike by 75bp and wait for more inflationary data to act further since there is no FOMC meeting in August.  The Fed will have the room to do an emergency hike in August if the inflationary situation warrants it.

Nevertheless, we will continue to monitor US inflation and provide an update whenever necessary.

Baltic dry index - 2150

 Related stock: Sembcorp Marine, Cosco & Pan ocean.

US rig count (weekly) - 756

Related stock: Sembcorp Marine & Cosco.

LHN - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
06/07/21	Phillip	LHN	0.295	0.54	Buy	PER9.5x FY21
09/28/21	Amfrasers	LHN	0.315	0.49	Outperform	PER6x FY22
11/29/21	Lim & Tan	LHN	0.365	0	Take Profit
12/01/21	Phillip	LHN	0.335	0.49	Buy	PER7x FY22
12/23/21	Amfrasers	LHN	0.3	0.44	Outperform
04/25/22	Phillip	LHN	0.34	0.49	Buy
05/03/22	Phillip	LHN	0.31	0.51	Buy
06/03/22	CIMB	LHN	0.143	0.22	Add