encik wan - IT Developer on Global Investment and Technical Analysis

Conclusion : If there is no global recession, there is a chance USDSGD will be around 1.00 by 2015

Main reason to be bullish on USDSGD is possibility of global recession. Appreciation of USDSGD is demonstrated in 1997 and 2008. So far for 2011, it seems the same playbook is being used.

Reason to be bearish on USDSGD is US debt monetization. As long as depreciation of USD is orderly and there is no severe recession in Singapore, then Monetary Authority of Singapore is likely to keep the current 2011 monetary policy to use strong SGD to control inflation. Since US debt monetization is least painful for everyone comparing to US fiscal austerity, therefore it is more likely to see USDSGD at parity in the long run.

P.S In the short term, USDSGD may bounce back to 1.275 before end of 2011.

USDSGD 2000-2011

USDSGD 2008-2011

It is understandable I am bearish on equities(at least in short term) after a two-digit correction for September 2011 asset allocation. How about other asset classes, e.g. bonds, commodities?

For bonds, encikwan portfolio is too late. Using 10-year US Treasury note yield as a proxy to global bonds due to US Federal Reserve as world central bank , it is at lowest point since 1995. See monthly TNX chart below.
10-year US Treasury note yield (monthly) - 2011-09-02.
The phenomenon of lowest interest for more than a decade is also confirmed by
3-month Singapore Interbank Offered Rate or SIBOR (1987 July - 2011 August). Tip - time to borrow as much as you can handle.

For commodities as represented by Continuous Commodity Index, it is interesting.
Continuous Commodity Index weekly chart - 20110902(CCI)

On one hand, precious metals like gold seem ‘unstoppable’, but oil and agriculture is not following due to fear of recession which will affect demands and US dollar is not ‘fall-off-a-cliff’.
‘SPDR Gold weekly - 20110902

iShares Silver weekly - 20110902

Light Crude Oil Spot weekly - 20110902

PowerShares Agriculture weekly - 20110902

USD weekly - 20110902

So should I follow hottest sectors? Of course, my answer is NO. Silver and agriculture will be interesting investment candidates in October 2011 if prices can move closer to their respective 50-day moving average and gold is not overbought, e.g. RSI < 60 (reason : silver may be hit together with gold in a correction).

Conclusion: 100% cash, e.g. no adjustment

Analysis:

MSCI indices (daily) - US, Emerging market Asia, Europe (2011 Aug 31)
A drop of around 20% for 3 major indices in one month warrants some caution. Since this is a monthly asset allocation review, e.g. no buy or sell except beginning of each month and there is no style restriction, e.g. must buy something, therefore 100% cash is a reasonable conclusion. Even there is a sharp rebound, it will not be done in September 2011. See monthly chart below. Another reason for less than 50% chance of sharp rebound is fear of spread of economic crisis from Europe.

MSCI indices (monthly) - US, Emerging market Asia, Europe (2011 Aug 31)

Note : This is NOT investment advice. Details of asset allocation can be found here