APAC Global Macro Morning Brief – Happy Macro Tue 19 Nov 2019: Mr 45 doing unannounced hospital visits...
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
(Note that these are solely the views & opinions, they do not constitute any trade or investment advice of any kind.)
To see this wk’s Macro Monday click here
APAC Global Macro Morning Brief
Happy Macro Tue 19 Nov 2019: Mr 45 Doing Unannounced Hospital Visits...
If you caught this wk’s Macro Monday, you know the theme is predominantly Flash PMIs, Central Bank Minutes (RBA, ECB & FOMC), US/CH Trade Deal Wrap Up? – folks bought the rumour, do we now sell the fact?
As well as continuing geopolitical tensions in Hong Kong, North Korea / US / South Korea, Japan / South Korea & the US in general (whether its 2020 elections or latest on the impeachment investigations)
KVP will one again reiterate, the YTD stock returns on major indices are stellar – i.e. some of the best on record. At the same time the lvl of volatility is quite low, so the premium to get some protection on one’s portfolio is very cheap historically
There is prudence & just being smart, as well as imprudence & just being greedy. One thing to note, protection from a market pullback does not just have to be in the form of say puts spreads on Equity Indexes, the HIS or Semi-Conductor index for example
Its can also be puts in DollarYen, picking up call options on gold & silver, as well as US treasury futures. There are numerous ways to defends one’s house
Speaking of defending, Trump was actually in Biden corner o/n, defending him against the ‘rabid dog’ comments from North Korea towards Joe Biden
“Mr. Chairman, Joe Biden may be Sleepy and Very Slow, but he is not a “rabid dog.” He is actually somewhat better than that, but I am the only one who can get you where you have to be. You should act quickly, get the deal done. See you soon!”
You cannot make this up… now don’t be surprised if at some point Trump is like… hmmm maybe he is a rabid dog after all. The Art of Smoke & Mirrors... The only consistency in Trump, is his lack of consistency – yet he has remained a master of the click bait, & its not just twitter that has benefitted but also traditional media
Makes you wonder if they are a short when we one day enter a world of no Trump. One last comment on Mr. 45, he was taken into Hospital in what seems like an unscheduled event. Obviously the official speak from the White House, is this was all part of routine check-ups…
Obviously this will only lead to further speculation on his ability to lead (a la Bernie’s chest discomfort which are the new word for heart attack), no doubt VP Pence is licking his chops
Currencies: We continue to see the dollar on the backfoot as the DXY drops by -0.21% to 97.794, with both Yen & Euro gaining against the greenback. Similar to last wk though, the sterling continues to be one of the star performers as cable closed at 1.2953 +0.43% - this is catching up with our previous briefs & MMs, where we thought that post vote date & Farage’s steps, the upside seems to be getting a lot less cluttered
There was a divergence in USD performance, as it gained vs. quite a few EM FX o/n. Some of the standouts included USDMXN 19.3130 +0.70%, USDBRL 4.2092 +0.48% & USDZAR 14.8134 0.69%. KVP continues to flag that some work is needed on BRL’s underperformance vs. some of its higher yielding cousins
Commodities: Usual suspects of oil 62.44, gold 1470, silver 17.00 & copper 262 saw -1.4%, +0.2%, +0.5% & -0.7% suggesting that risk-off was the theme across the that asset class. Palladium? Still doing its on thing +1.30% to 17404
Equities: Was lower in the EZ, while in the US the S&P alongside the Nasdaq close up a touch at +0.05% & +0.11% to 3122 & 8550
For the bottoms-up stock pickers, Peter comments on the earnings from tech chip maker NVIDIA as well as Godzilla shipping & logistics company Maersk
Bonds: USTs were slightly tighter closing at 1.8153%, this resulted in +0.15% move in US 10yr bond futures. The curve was mixed overnight, flattening a touch on 2/5, 2/10, 5/10 while steepening on 2/30 & 10/30
Worth noting that whilst US 2/10 is no longer inverted & has actually made a big move over recent wkd from -5-6bp to current +21-22bp, same slice of the curve in Canada is sitting at c. -6bp, what KVP did not realize is this was actually as low as -25bp in mid-August – so once again we’ve seen some huge steepening
We had bunds & JGBs close at c. -33bp & -8bp, worth noting we flirted with parity on the latter last wk. China’s 10yr bond on the other hand yield much higher than the G10, at c. +3.18%, not to far from the middle of its +2.99% to +3.30% range over the last 3 months
Only thing KVP is currently looking out for this day is going be Wilkin’s from the BoC & whether that gives us a clue as to their Dec 4 meeting (We covered Kiwi longs… also KiwiCad longs on the Macro Monday yest, check out the charts & note RBNZ not until 12 Deb 2020)
- NZ: PPI data has come in quite strong this morning. PPI Input 0.9%a 0.2%e 0.3%p, PPI Output 1.0%a 0.4%e 0.5%p
- AU: RBA mins due 08:30 SGT/HKT (19:30 ET)
- UK: CBI Industrial Orders
- US: Building Permits, Housing Starts, FOMC’s Williams speaking @ 22:00 SGT/HKT (09:00 ET)
- CA: Mfg. Sales -0.5%e 0.8%p, BoC’s Wilkins speaking @ 02:00 SGT/HKT (13:00 ET)
- To catch this wk’s Macro Monday Click here… & replay of the call here
- Don’t forget to bookmark & check our Daily SaxoStrats calls from the European morning session c. 09:00 CET
Some Pieces From the Rest of the SaxoStrats Squad
- Peter’s on equities: NVIDIA’s bleedings ends with crypto rally
- Dembik’s Chart of the Week: China Credit Intensity
- Hansen’s Latest CoT Cut: COT - Oil buying accelerates; gold long deflates further as well as Speculators rebuild dollar longs; VIX short continues to climb
- Hardy’s on currencies: EM FX Carry Trade Update November 18, 2019 plus also a take on sterling which had a very strong weekly close last wk FX Update: Sterling sending strongest signal in quiet market
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.