2016 Oasis Macro Bets

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One month into 2016, we at Oasis Partners have more or less decided where we will focus our attention and energy to stay ahead of the markets.   Today we will highlight where we are betting and also identify key events that will trigger further action from our team.  As always, our aim is to keep things simple and efficient, saving our limited time and energies to execute and ride the larger trends.

1 – For 2016, when looking at global markets, the United States finds itself to be best positioned to outperform other economies.  Those that are more nimble will be able to catch profits in what we expect to be a sideways stockmarket.  When considering value- for-time, we will still use real estate as the most efficient proxy to profit from a strong U.S. economy.  In February Oasis will launch a new private fund called ‘Sierra Real Estate Partnership’ as a vehicle to capture more profits in our favorite cities of Phoenix, Las Vegas and Seattle.Case Schiller 20-bg


2 – Six years ago we shifted our overvalued Canadian dollars into U.S. assets.   For the past 5 years, we have helped our members in China to diversify abroad to protect from the overvalued RMB’s depreciation.  Three years ago not many in China were convinced of a reversal of the RMB’s strength, but our group took prudent steps and is comfortably positioned.

USD CNY TrendJPY CNY TrendFor 2016, the only single event coming from China that we care about is the behaviour of the real estate market in the Tier 1 cities.  We regard the performance of property asses in Shanghai, Beijing, Shenzhen as the ‘tipping point’ indicator.  The current price levels have weak support because large percentage gains were achieved with little ‘rest’ along the way.  Periods of price stability are necessary in order for markets to establish strong support levels.  ChinasalesroomWhere global markets are concerned, if weakness (similar to Hong Kong and Singapore) develops, then confidence will deteriorate, and serious damage could be done to the domestic banking system, and major exchanges around the world will see mini-crashes and possible short recessions.  So long as the China does not lose confidence in real estate prices, the world markets will continue their steady upward trajectories.China Reserves level


3.  Early preparation for an eventual change in the negative trends in the commodities markets.   Our group is developing its resources across Canada and Mexico as the best bets to find high growth real estate opportunities with limited risk.  Both countries benefit greatly from being right next to the strong United States economy, and the free trade agreement between them allows products and investments to flow freely.  Global companies continue to grow their footprint in Mexico.  At current exchange rates, Canada and Mexico are extremely undervalued relative to America.

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4.  Industrial commodities have crashed, but gold has held stubbornly to the $1100 usd/ounce range.  We continue to be bullish on gold and are preparing to take initial entry steps to gradually build an allocation in the coming years.

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5.  We get asked about oil a lot, and coming with our Canadian roots, for the next few years, we expect oil companies and oil rich nations to heavily sell more product if the price rises above $45 – $50 per barrel.  Cheap oil is a great stimulus for all the large economies and is equivalent to multi-trillion liquidity boost to all business and consumers.  China alone will save more than $200 billion usd  this year because of cheap oil and a further $260 billion usd on other cheap materials.
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We are always looking for data and events that will cause us to alter our strategy and our financial bets.  We encourage everyone to focus on the larger trends and move patiently and deliberately when the opportunities are ripe.
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