APAC Global Macro Morning Brief – Happy Macro Wed 16 Oct 2019: The day could get ugly for bulls & beautiful for bears...
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
All market updates, research and trade ideas from our strategists in Copenhagen, Paris, Singapore and Sydney can be found at home.saxo => Traders => Market Analysis.
(Note that these are solely the views & opinions of KVP/sender of this email & do not constitute any trade or investment recommendations.)
Happy Macro Wed 16 Oct 2019
APAC Global Macro Morning Brief – The day could get ugly for bulls & beautiful for bears...
Again, the whole “Here We Go Again” seems applicable on a daily basis in the cross-asset & geographic agnostic world of Global Macro Investing…
I was wondering why I was running so late this morning, yet as Master Oogway wisely said “there are no accidents”. (good adage to keep in mind for how we position our portfolios, allocate our investments & more importantly live our lives)
Yet it now all seems linked to some news that has just come out this Asia Weds morning.
After a positive o/n session that saw US equities close up +1.0% with the S&P at 2996, we are now down c. -0.20% in the Asia session on what could be a big monkey wrench in Trump's "art of the deal".
It looks like congress may be looking to pass a Hong Kong bill that could include sanctions on HK & perhaps CH officials, & especially most alarmingly - If you are HK based & have exposure to not just equities but property - to HK’s special trading status – this is all linked to the demonstrators on the street.
Once again, rule number one of momentum, the next move is likely in the direction of the last move. The situation in HK almost certainly gets worse before it gets better. And its also likely to be one of those situations where the adage be careful what you wish for, comes to mind.
Going back to the US, one of the few points of common ground between the two parties is on being tougher on China – so there could be support in both the house & senate here - the threat is real.
Whilst anything is always possible, hard to see how a bill on HK could come into fruition, whilst on a parallel stream Trump still manages to do a deal with Xi.
I am very surprised that Nikkei futures 22500 are still up +1.4% & DollarYen 108.65 is only down -18bp
This is likely to be a very bearish day…
Usual suspects… Gold, Silver, JPY, CHF & bond futures to lift…
Equity futures & the likes of AUD & NZD on the backfoot… again caveat in all this…
It’s a headline market… so stay close to the screens if you are doing anything tactical.
For the long-term investors, you can get back to reading your papers, resorts & bottoms up research… you are all gonna live even longer than the rest of us
Hang Seng open could get ugly, currently futures looking down c. -3% before the local 09:30 open
Good luck out there… stay profitable
- UK: CPI & PPI, Carney speaking at 21:00 SGT/HKT (09:00ET)
- EZ: Final CPI 0.9%e CORE 1.0%e, TB, Bond auction (30yr)
- CA: CPI
- US: Retail Sales, Business Inventories, Beige Book
- 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
- Our latest Quarterly Outlook: Taking Down The Killer Dollar
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.