Macro Dragon: It Does Not Matter, Until It Matters...

Macro 2 minutes to read

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: It Does Not Matter, Until It Matters...

Top of Mind…

  • O/N pretty much flat-lined session if you were looking into Dixie (DXY), SPX & UST.... yet…
  • …looking at the energy, gold & the Euro we were anything but flat
  • WTI was +20% to 17.05, Brent Crude +5% to 21.90, Gold +0.965 to 17223 & EURUSD -0.43% to 1.0766. We’ve talked about the risks to the Euro-zone, our CIO Steen Jakobsen is generally the bearish he has been in the decades of following the dynamics out there, our chief Economist Christopher Dembik is slightly more constructive: EUCO Review: There is hope
  • Still watch the European open today… usual suspects EURUSD, EURJPY, EURCHF, BTPs, Bunds, Dax etc…
  • And yes gold is looking great for the upside technically & price action wise, even with DXY at 100. And yes, the bull case on our mini-gold series will come… $4000 is initial tgt that KVP & incidentally CIO Steen Jakobsen is thinking… obviously we will have to let our Chief Commodity Commander Ole Hansen, set the formal House target…
  • To KVP at least, the key point here is that the convexity for gold is highly skewed to the upside… highly skewed… there will likely come a time when this puppy will be putting in back to back days of +$25, +$50, +$100… no one is paying attention to gold… it does not matter, until it does… & that’s Macro in a nutshell. Think $2,000 is very doable before year end... could go on, on this... yet lets save it for The Bull piece
  • Are the lows in, in energy?
  • Only easy questions here on the Macro Dragon…
  • …KVP does not know… he does not think they are in, yet we have come off a lot & a few more days of intense rallying cannot be ruled out. Can also imagine we have a wave where energy rallies as the US is set to open up in increments, then the unescapable reality of demand not going back to Jan 2020 levels being completely laid bare, before we crash again.
  • The challenge for energy… given that all the storage is taken up, production is still sky high (demand shortfall is -20mbd to -30mbd depending on how you look at it) there is going to be a lag in any constructive change in lower supply dynamics. The more switched on players who are playing a structural bounce in energy are doing it through Brent Crude (better structural parameters than WTI) & much further along the curve…
  • It’s worth noting USO has continues to redistribute its exposure from c. having it across two months, to then three, to I believe now at least four – latest KVP heard it was 20% Jun, 50% Jul, 20% Aug & 10% Sep, which would reduce pressure (as well as unwind / blow-up risk) to the next scheduled rolling period of May 5. What a lot of people fail to understand is that USO had already finished rolling last wk, i.e. there is a misconception that they were chiefly responsible for Monday’s May contract move to -$37, -300%.. yet this was just supply demand – this short interview with the CME Chairperson is crisp, spot on & worth the watch.
  • Whilst still on energy, Ole flagged that NatGas bears watching was looking like it may have a break upwards technically & tends to benefit form lower oil… so perhaps next big leg down in oil… there is a spread trade there…
  • Next key date – now that USO has diversified the time decay of their exposure – is really going to be the expiry of the current contracts so run up to
  • Not worth talking about PMIs… & the mkt still could not give a fudge about jobless numbers in the US… that’s right 1 / 6 US works (17%) are without a job. And the markets don’t care… it does not matter… until it matters. The US at back end of 2019 had c. +$15trn in consumer spending, the cast majority of that will be from the people working.
  • Now 17% of them are out of work, that number is still likely to go up (granted we are likely past peak job loss velocity)… that is going to not just have a huge deflationary impact on their ability to spend but also ripple into the remaining 83% (& dropping) – who have also been forced to save during this period – who are likely not going to be rushing out to spend when the economy opens.
  • Yes we’ll see an initial & natural boost… discretionary spending as a theme in the US is going to be in dead waters for a while… unless your doing something very niche & in the echelons of wealth where their discretionary spend has 0 correlation with the economic cycle.
  • So would KVP go limit short SPX here?
  • Nah… but short the discretionary spending XLY etf vs. say long the utilities XLU etf?
  • That resonates & think there is some shelf life there, because utilities have transcended being defense… in a world with no yield there will be a structural bid in the utilities space. Funnily enough YTD their performances are not much different. XLU -10.3% & XLY -12.0%
  • Lastly here is a link to a recommended reading book list that our regional CEO, Adam Reynolds, All-Star StashAway Founder & CIO Freddy Lim (awesome book recommendation by the way – on of KVP’s Top 10 for sure) & KVP were featured on.
  • Now these are great books, yet what is potentially ‘wrong’ with the list?
  • TGIF & have a great weekend out there – be well.


On The Radar Today…

Flash PMIs (Thu), when + how do we reopen (May-Aug) themed week 17

  • JP: All industries Activity
  • US: Durable Goods Orders, UoM Consumer Sentiment
  • EZ: GER IFO Business Climate
  • UK: Retail Sales


Good luck to everyone out there, be nimble & position accordingly.  




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.