Macro Dragon: Is this Monday open different, or do we rally regardless?

Macro 3 minutes to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Macro Dragon highlights the wk ahead, checks in on the Coronavirus as well as shares views strategically & tactically.

(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:Is this Monday open different?


The Week Ahead…

  • Central bank wise, we have decision out of New Zealand (rates expected to be held at 1.00%) & Mexico (Rates expected to be cut to 7.00% from 7.25%). There is quite a bit of Fed speak, with Powell set to testify before the Senate banking Panel. Also on same theme Lagarde will be speaking before the EC. We’ll also be hearing from RBA’s Lowe & Norges Bank’s Olsen.
  • Econ wise, CPI & PPI out of China, alongside loan data are likely to be ignored given the focus on the virus. We do also have CPI & retail sales out of the US, that is likely to be very much not ignored. Lastly IP & Flash GDP data out of Europe will be key.
  • Lastly for WK 7, it will be interesting to see if the New Hampshire primaries (Tue Feb 11 US time) will be just a touch better than the slow-motion-train-crash that was the Iowa Caucuses – which likely resulted in Trump being the real winner & Peter-B getting some wind knocked out of his sail. Other candidates really starting to take aim at Peter-B.
  • The Macro Dragon Slam-dunk-presidential trade is for Sanders, Warren or Bloomberg to take Peter-B as VP, then its game over. At 38, he’d get max 4yrs as VP (if they win), then potentially 8yrs as President after.
  • Its also going to be a long US wkd towards end of this wk, as they got Trump day on Feb 17th (Presidents Day, can see all the liberals heading to work anyway – not! That would be pretty funny though).
  • Markets will continue to focus on the Virus… as ideally we should start to see numbers drop off in China… i.e. +2wks period incubation period is over given the excellent decision to extend the lunar new year holiday that technically started on Jan 24th. Its worth noting that as China gets back into business slowly this wk, a lot of companies are urging remote working initiatives for that can do so


2019-nCoV Update Mon Asia Mrn 10 Feb & Thoughts…

  • We’ve expanded our thoughts this wk with a combination of updates, potential scenarios around opportunities & risk surrounding the Novel Coronavirus (a.k.a. 2019-nCoV / Wuhan Coronavirus) on “Speechless…” Thu 6 Feb, on Wed 5 Feb, on Tue 4 Feb, start of WK 6 Mon 3 Feb, here on Fri 31 Jan, here on Thu 30 Jan, here on Wed 29 Jan & here on Tue 28 Jan.
  • Also on Fri 7th Macro Dragon also included the context piece & thoughts of how the virus eventually plays out – combination of burning itself out as summer kicks into the Northern Hemisphere (granted break-outs in Southern Hemisphere possible) and/or the more likely case that it just become another seasonal flu bug that has to be contended with – similar to the US swine flu virus that broke out in 2009 & ended with over 60m Americans infected, over 270m globally & likely a conservative c. +300,000 deaths. Two key differences between that & now: 1. It was c. 10yrs ago when the social media volume was at 1x rather than today’s 11x and it was the US & not China – which lets be honest, western media & governments like to beat up relative to their own peers/neighbors.
  • Key risk to this view is that there is something a lot more dangerous about this virus than we know – which again given that we are seeing treatments & infections abroad, is likely a low probability. As to the risks of mutations, that a risk in all viruses & the truth is they are constantly mutating – it’s the extent of the mutation. For context according the the US Centers for Disease Control & Prevention, so far in this flu season in the US 19m have been infected, 180,000 had to end up in hospital & 10,000 have died.
  • Whilst the markets –  & China Equity Markets in particular – rallied tremendously last wk with new highs being seen in the S&P, the Macro Dragon remains skeptical at best on China/Asia Equity rally & would be bearish vs. having a long bias again the US. Again as the Macro Dragon has said from the first wk of covering the outbreak, we are back in a world of US outperformance vs. RoW, with a reflexivity twist. Strategically, one cannot own enough US duration – as all roads lead to a Fed that will need to cut. Tactically, it’s been a dice game to KVP, where if you are not staring at the screens all day, you can be in & out of profit on being either long or short. Its not to say the opportunities are not there – there always are opportunities (KVP totally missed the move by MAS & the weaker SGD), yet you need to be on point through all the regional trading sessions – and/or focus on an event that no one else is paying attention to.

Quick update & thoughts on the Virus since the Fri check in:

  • China slowly starts to come back to work this wk – albeit it could be weeks, potentially months in some cases before we are back to the production in the economy firing on all engines.
  • As of this Mon 10 morning, the China Figures we are getting are at c. 40,300 confirmed cases, +900 deaths & +3,000 recovered.  
  • Out of China the countries with confirmed cases over 10 are:
  • Japan 96,
  • Singapore 43
  • Hong Kong 36
  • Thailand 32,
  • South Korea 27
  • Taiwan 18
  • Malaysia 17
  • Australia 15
  • Germany 14
  • Vietnam 14
  • United States 12
  • France 11
  • Macau 10


Below bears a re-read or initial read if you missed previously…

This is a replay segment from Fri’s Macro Dragon – again due to its importance, key part to bear in mind here is what time-horizon are you playing & do your horizons/views match your exposure

Note these were prior to the huge melt-up that we had in wk #6 (Last wk). So question is, does it play out this into next wk… or does the bullish euphoria continue. Is there just too much liquidity in the system, for markets to care about the deflationary hit that China is going to take and/or are markets, just looking through all this as just a hiccup before we get China stimulus?

[From WK 5]

  • Here are a few other thoughts around the virus from the rest of the dream team at SaxoStrats – Key summary as captured by our CIO & Chief Strategist Steen Jakobsen, the near-term deflationary shock of the virus is not yet priced into markets, the economy, policy makers & companies – Jakobsen is envisaging a potential scenario where the Fed cuts 3x this year! Currently for the Mar 18, Apr 29 & Jun 10 meetings the implied probability of a Fed Cut (it was hikes prior to the mtg earlier this wk) are 14%, 28% & 55%.

Have a fantastic, gratitude & abundant filled wkd ahead everyone, stay healthy as well as keep your mind open to profitable & abundant opportunities. Life happens for us, not to us.  




Some Anchor Pieces from #SaxoStrats:


Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.