Macro Dragon: Welcome to WK # 38 The Fed, $7bn IPOs ( Snowflake, Unity), BoE...
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.
Macro Dragon: Welcome to WK # 38 The Fed, $7bn in IPOs (Snowflake, Unity) + BoE...
Top of Mind…
- Happy Monday Folks & Welcome to WK # 38… Hope everyone had a great wkd
- What kind of week are you trying to have?
- So, about 2.5wk left in 3Q… which likely means KVP will have 4Q piece to work on this wk. Also as we know 4Q is never a full quarter, by the time one gets into the 1st & 2nd wk of Dec, folks are in shutdown & downsizing exposure as we get into the year-end hols, as well as winter in the northern hemisphere.
- So basically, it’s really only “3months left” from today before into the seasonal dance. And of course focus on US elections. KVP has had a lot of folks looking to get a lunch or dinner off the US outcome… he will either be eating for free for the entire 2021, or forking over a small fortune in restaurant bills.
- End of the day, talk is cheap. Its all about skin in the game – which by the way, does not mean that one needs to have exposure. There are plenty of games to play in & many pathways towards compounding wealth, we tend to forget this when we get caught up in the moment &/or get too emotional &/or unfocused about what we are trying to achieve.
- Markets: With the S&P having posted two consecutive wks of pullback for a c. -4.8%, alongside the higher beta Nasdaq-100’s -7.6%, there will be an obvious focus to see if we consolidate here, are moving lower or reversing. One key potential aspect for the bulls is on the US IPOs route, according to the FT, there is going to be close to $7bn in capital raised from a dozen IPOs.
- Chief among those will be $2.2bn from Snowflake & just under a $1bn from Unity – both are respectively cloud software & gaming businesses. And yes, both of those business models benefit grateful from this “covid-enhanced world” that we find ourselves in.
- Its also worth noting the circles of silence – unlike last wk that saw c. +$63bn in new supply in the US treasury market from the 10yr & 30yr segment (more yield was demanded), there are no auctions scheduled for this wk under those durations.
- There is $22bn scheduled for the 20yr bond, yet that’s still just a third of the supply that we got into the long-end of the curve last wk. This could suggest better support for treasuries overall (i.e. tighter yields), as well as precious metals, the commodity complex in general & less support for the USD – which has also seen a consecutive 2wk bounce higher. Still Tues & Wed could be dead as we await ze Fed.
- Economics: A touch busier than last wk. Key data that the Dragon is watching will be monthly growth figures out of China, ZEW our of Germany, inflation out of the UK, CA & NZ, plus out of the US: retail sales, Empire Mfg, Cap Utilization, Industrial Production, Philly Fed, CB leading index out of the US.
- Politics: Nothing new here, as its usual suspects. US election countdown. US/CH dance.
- Central Banks: A busy wk for sure! Expect scheduled rate decisions are due out of Brazil 2.00% e/p, US 0.25% e/p, UK 0.10% e/p, Indonesia 4.00% e/p, South Africa 3.50% p, Japan -0.10% p & Russia 4.25% e/p.
- From an economist’s consensus standpoint, seems the only rate changes are expected in South Africa to 3.25% from 3.50% - all the other CBs are expected to stay put, so it will be a function of guidance & in the case of the Powell, press conference + Q&A.
- Minutes are also due on Tue from the RBA’s Sep meeting.
- Fed Speak: Non prior to FOMC, so far only have Bullard on the docket for Fri.
- Holidays: No major public holidays on the Macro schedule.
Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.
This is the wayKVP
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.