Macro Dragon: Fed - No more TELL Powell, time for some SHOW...

Macro Dragon: Fed - No more TELL Powell, time for some SHOW...

Macro 2 minutes to read
Strats-Kay-88x88
Kay Van-Petersen

Global Macro Strategist

Summary:  Macro Dragon = Cross-Asset Daily Views that could cover anything from tactical positioning, to long-term thematic investments, key events & inflection points in the markets, all with the objective of consistent wealth creation overtime.


(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Macro Dragon: The FED - No more TELL Powell, time for some SHOW...

 

Top of mind...

  • As likely the only Fed chair who could play James Bond, Powell has so far been as cool as the northern wind (pre-climate crisis / global warming) over the last few Fed meetings & more importantly press conferences.

  • However, with the market pricing in no hikes out through 2023… some correlation-confirmation of that will likely be sought in the dot plots. One can only jawbone for so long…

  • Here is the link to the transcript of the Jackson Hole speech & the recorded video of his Jackson Hole speech

  • Link to Jul 29 FOMC Statement & the Jul FOMC Minutes

  • He (+ FOMC committee) will also have to contend with continued delay in Fiscal support from congress & yes, they are linked. If Fed does extra easing, there will be less pressure on the Reps to meet the Dems… if Fed does nothing… could be a risk of some near-term unwinding in their efforts so far this year – again by no means structurally irreversible, yet its current neat-term headwind to monitor until we get on the other side of the elections.

  • Also a Biden administration will do a lot more heavy lifting on the Fiscal side than a Trump administration… so not to be political or anything (of course the Fed is not right?)… why ‘help’ now before the elections?
  • So Powell has to show, but just enough to confirm the new dynamic commitment to inflation that allows us to overshoot big time…

  • The risk is if we see no new developments since his Jackson Hole shoutout… this could have near-term pressure on yields ticking up, gold & precious metals complex lower, dollar higher & general risk-off in US equities.

  • If we do get a surprise on the accommodative side – we’ve gotten this a few times from smooth Jay – then we could get the inverse of all that, including the next big structural break higher in gold.

  • One thing that the Dragon is getting more & more excited on, is energy… either way you cut it… it’s the celestial space into & out of the US elections… the underlying meta trend is Goliath liquidity & that will take risk-assets higher, real negative rates lower & inflation higher… Oil is ze best inflation hedge… & don't forget... all fiscal policy roads lead to infrastructure. 
  • Until the FOMC, the session today is likely set to be quiet… with that said watch out for what should be the debut listing of pure play cloud computing player Snowflake, which Peter Garnry covered in detail here:

  • Snowflake enters equity market with red hot valuation Peter weighs in on the first pure listed cloud player that is part of the c. $7bn in IPOs out this wk in the US.

  • This could have interesting implications to the valuations & strategic business models of Alibaba & Amazon (i.e. spin-offs).

-

On The Radar today…

  • US: The Fed, Snowflake listing, Retail Sales, Business Inventories, Crude Oil Inventories, TIC Long-Term Purchase

  • CA: Inflation

  • UK: Inflation, PPI & House Prices

  • NZ: Early doors Thu Asia Thu Morning, quarterly GDP -12.5%e -1.6%p (had incorrectly state CPI at the start of the wk)

  • BZ: Early doors Thu Asia Thu Morning we’ll hear from the central bank of Brazil
-

 

Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

This is the way 

KVP

Quarterly Outlook

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.