Macro Dragon WK 3: Forget Noise... Focus on The Signal Macro Dragon WK 3: Forget Noise... Focus on The Signal Macro Dragon WK 3: Forget Noise... Focus on The Signal

Macro Dragon WK 3: Forget Noise... Focus on The Signal

Macro 8 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 WK #3: Forget Noise... there is only The Signal


Top of Mind…

  • TGIM & welcome to WK #3… Sometimes. Sometimes. You. Just. Know. Its going to be a sensational wk everyone, lets get after it!  

  • By the end of Jan we’ll already be through 8.5% of 2021… how stunning is that?

  • If you missed our first Dragon of the year, take a deep breath, don’t panic, its right here:

    Macro Dragon WK #2: Reset for the Re-Up... Final Stretch... New Year New Opportunities, Same Risks...

  • If you were surprised by the events at the US’s Capital Hill & Trump’s permanent ban from twitter… you are not picking up what KVP is putting down, we covered that back in Nov

    12 Nov 2020 – Macro Dragon: Treason for Trump?

  • KVP would not be getting caught up around what Trump will do next, impeachment, resignation so Pence can exonerate him, etc… its fascinating & very much lights up the social DNA algorithms that are embedded with us… yet it is all noise. KVP does not skate to the stands & audience, but to where the puck is going…

  • There is not enough focus on the most important Macro Event of last wk…

  • … & no that was not US10s breaking up past 1.00% (albeit that is key & complicates the very near-term tactical horizon for USD bears, precious metal bulls & YCC|Neg. rates views)… it was the Dems actually doing what seemed like impossible given their track record on flipping red states for the senate (i.e. +$100m in SC & still lost by a wider margin than a Usain Bolt foto finish).

  • It the Ninja-Delayed-Slow-Motion Blue wave… & this is truly goliath. Let’s say this again to drive home the point. The Blue seep in WK #2 of 2021, is truly goliath & epic in everyway. With Harris to break the 50 / 50 potential Tie in the Senate – c. $7 Trillion Dollars in Green Infrastructure that Biden & Harris campaigned on, has risen several magnitudes in not just probability but scope

  • The Dragon has gone from very bullish from coming out of the US Election… see…

    Macro Dragon: Limitless Upside!

    Macro Dragon: Bull Market Bro...

    Macro Dragon: Bullish on Bitcoin? All About $20,000... We Ain't Seen Nothing Yet...

    Macro Dragon WK 48: Limitless Upside Part II...

    Macro Dragon WK 51: Sixteen Central Banks (Including Fed, BoE, BoJ, Norges), Flash PMIs, Year-End to 2021 Thoughts plus Thx for 2020!

  • …to Mega Bullish… which is saying something seeing the amazing melt-up we had into year end… Still potential +$7trn on top of the already c. +$3trn of fiscal & ignoring what has been done already by the Fed/Treasury (+70% Fed Balance Sheet Expansion).

  • $7trn is c. 1/3 of the US’s $22 Trillion Economy (pre Covid)… that money will cause an avalanche of asset class inflation & a spiral down the MMT / Social Stability / Climate Crisis campaign that is likely to last a decade or two – at the very least 8yrs. With the assumption the Dems keep the WH & Senate, plus if Texas is not blue by 2024… it almost certainly will be by 2028… with huge structural implications for US politics (its 38 electoral votes).

  • Now we are not saying the full $7trn will come into fruition, it could actually be more… but even if its ‘only’ $3.5trn… the ripples are huge & we once again add onto the reflexivity of not enough assets & too much money. We may seem to be all-time highs on a number of different front, yet if one was to adjust for all the fiscal & monetary stimulus over 2020 into 2021… we are likely not yet at adjusted ATHs

  • And whatever pullback is likely at best -10% to -20% on the S&P before policy makers freak-out about the tapestry unravelling. So make no mistake… the strategic/long-term upside picture just got multiplied by a positive multiple greater than one.

  • Oil & equity-credit energy complex (which we have been yelping about like fanatics on the Dragon) was one of the few areas to really catch the significance of the moves. You had single stock names like BP, Woodside & Exxon putting in +17%, +12 & 10% moves last wk, with the broader energy etf XLE also clocking in at +9.3% for the wk [Brent & WTI we c. +9-10% last wk]. Kudos to those of you that resonated with energy call options towards back-end of Dec.

  • Short-term term / tactical risks include US10s & US30s finding a floor for bond prices & a ceiling for their yields. Folks seem to be watching 1.2% to 1.4% on USTs & 2.0% at US30s… what they should be watching is the Fed & what Yellen does once she is in as US Treasurer.

  • For now though if we keep punching higher in yields (& last wk was a massive move), the USD could gain more legs, precious metals will continue to collapse (strategic picture intact, yet we may test again recent lows…) & we may get some liquidity risk especially in commodities & currencies (check out BRLUSD which KVP has been advocating have an abysmal -4.10% last wk… again this is all a dollar story. Still watch out for BRB on Jan 21st).

  • One last near-term horizon “risk” is the New Administration inducing a Federal Lockdown for the first 100 days. Presidential Joe talks about masks for first 100days, including +100m vaccines… And yes an enforced lock-down will put a pause in the k-shaped segments of the economy & society, once again raising the probability & magnitude of the next fiscal bill being in the +$3-6trn range.

  • If/when KVP was/is consigliere to Team Biden|Harris, this would be a no brainer, as well as incentivising people to get their vaccine shots. You want more fiscal support, np, take your vaccine for the greater of the country.

  • No vaccine? Np, guess what now you are a threat to the rest of the population & we have to track you plus you have little to no access to basic government services & goods. People, you cannot have the best of both worlds… nothing is free in this world, even for those of you that ‘freely’ read the Macro Dragon.

  • Biden|Harris can also incentivise the states that respond best to vaccine mitigation & shutdown by helping them out with their finances & resources. It smart for them to take the hard medicine that America should have done in Jan/Feb a year ago. And all this right at the start of what is likely to be a +8 to +12yr run.

  • What’s the biggest risks to the Macro Dragon Macro Views? Obviously a Senate that is dead set against any further fiscal spending, despite the dems control. A more hawkish stance from the ECB & the Fed… Yellen dropping her clock of Doves for one of Hawks.

  • As well as a view – likely wrong – that enough has been done policy wise globally & the world will be able to grow itself out of the C19 crater symmetrically & damn the K-shaped!

  • In summary, make sure you are focusing on the absolute most important macro factor right now = US Blue Sweep.

  • Likewise, make sure you are focusing on the most important asset right now = _________?

  • Everything else is just noise.  

Some SaxoStrats Specials from KVP’s peers that were likely missed during X-mas Season


Rest of the Week & Other Top of Mind Thoughts

  • US: Quieter wk ahead, at least in regards to known unknowns… we got inflation out of the US, the usual Fed speak… yet key will be Powell due to speak on Thu (0150 Fri SG time), will he talk YCC or/& yields lower, be neutral or give the all clear?

  • EU: EZ has Lagarde (hands down most active ECB president KVP has ever seen, think Lagarde has spoken more in her first 2months that entire ECB presidents have in their entire career – this is good. This is leadership, out at the forefront, not hiding under a desk in your 3rd villa minimizing your gigs… Lagarde will be speaking on Weds (1700 SGT). We also have ECB mins & some IP data due this wk.

  • CH: China has CPI & PPI data due, as well as new loans & money supply.

  • CBs: Central bank majors, really only BoK scheduled to remain neutral at 0.50% e/p.

  • Hols: JP out today. Have upcoming long wkd in the US given LMK day & obviously next Wed, Jan 20th should be the inauguration of President Biden, with very high probability of violence & domestic terrorism, that could make last wk look like a cake-walk.


Dragon’s Heavy Rotation…

More of these on the way – editing ran into year-end, house moves & the like. What can we say, can’t rush greatness. Yet two more Dragon Interview coming up before the month is over – they are stuck with my editor… patience… KVP cannot do it all… apparently…

In case you missed it previously – been super well received, thx for feedback, sharing  & support on this project folks - the first in a string of exclusive Dragon Interviews series with exceptional professionals with skin-in-the-game, across different strategies, asset-classes & backgrounds.

We kicked off with Singapore Based, AVM Global Opportunity, run by the talented & always exceptional Ashvin Murthy. Who in KVP’s view is world class in his approach, process & even more importantly trade construction & money management. Point being, if the process is pristine & consistent, the returns will take care of themselves overtime. 

The timing of the interview is uncanny as it was at the cusp of the last US presidential elections that AVM was launched. It’s worth noting since the interview, the fund has also been nominated for the Singapore’s Best Hedge Fund of 2020, given its consecutive five straight positive months at the start of this volatile year.

Please click here for interview link.

You can follow & learn more about AVM here.


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

      This is the way 



      Saxo Capital Markets (Australia) Limited 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 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.

      None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

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

      Saxo Capital Markets (Australia) Limited
      Suite 1, Level 14, 9 Castlereagh St
      Sydney NSW 2000

      Contact Saxo

      Select region


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

      Saxo Capital Markets (Australia) Limited 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, Product Disclosure Statement and Target Market Determination 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. 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. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

      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.