Global Macro Strategist
Summary: Macro Dragon = Daily Cross-Asset Global Views
2020-Jan-09
We’ll be shaking things up from KVP’s side, so expect a lot more trade views going forward, as well as 20 long-term trades views for 2020 – which KVP will do a special piece & mini-series on.
Ok let’s get after it…
(here were Parts I & Parts II – & the foundation piece from Monday)
To say this wk has been a dynamic one, would be an understatement – you should see the KVP chat rooms with clients yest, more intra-day 180 degrees than a protractor, yet as covered in the Monday foundation piece: New Year Kicks off with Middle East Conflict – all with the overall skew that in hindsight this is going to be a great tactical opportunity to buy the dip in equities & sell the risk-off wave in the likes of energy, gold, yen, US bond futures, etc.
All super tactical in horizon & views…
Well overnight these were just some of the wicked reversals from the highs/lows:
(note these are un-levered moves, i.e. for FX you have to factor at least +5x to 10x to the rtns)
We seem to be in a stand down situation between Iran which has explicitly said they are not looking for a War, which is also something that Trump echoed in his speech Wed evening Asia time (Wed Morning US time).
This is good, this is very good – not only to the KVP bullish skew, but more importantly because war is insane. There were no casualties from the base attacks.
Here is a link to the text on Trump’s speech overnight, love the closing segment which will be shared below.
Would encourage everyone to read the statement - as its about as presidential, historic & brilliant as these speeches come.
If Obama had given this speech, people would have been over the moon.
“Finally, to the people and leaders of Iran: We want you to have a future and a great future — one that you deserve, one of prosperity at home, and harmony with the nations of the world. The United States is ready to embrace peace with all who seek it.”
That is not a president seeking war & conflict in the Middle East.
Trump has been very adamant (& absolutely correct) about the wasted spending of American military conflict abroad (its in the trillions!) as well as US blood being spilt in senseless campaigns, that have just not delivered what they intended to (unless you’re a military contractor and Dick Chaney, oh wait…).
Now does this mean, that things are done & dusted in the middle east?
Of course note, the situation is still fluid & who knows if this is really the last of Iranians retaliation.
They have definitely saved face & shown a lot of force in the response to the assassination of their general – i.e. Iran is not to be trifled with, we can also hit back directly.
However it does look – at least for now – that we are past peak conflict and are seeing the best potential scenario that we covered in yesterday’s Macro Dragon.
If this is as bad as it gets, Trump comes out of this like the Teflon Don – this is a major, win.
The paragon of Presidential, to take out the queen chess peace from your opponent at minimal cost.
This is a big deal, will he ever get the credit from the establishment?
Hell no, not in a million years.
But his base will love it, the Reps will love it & folks that may have been on the fence will like it – we are genetically wired to flock towards perceptions of strength & power – be they real or not. And what we have witness over the last wk has been very real.
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Good luck out there today & to finishing the week strong…
To our Middle East kinfolk happy synthetic Friday & hopefully safe peaceful weekend ahead
Namaste,
-KVP
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(Times would be SGT)
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
