Macro Dragon: Synthetic Fridays & Arbing Wkds...
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: Synthetic Fridays & Arbing Wkds...
Top of Mind…
- As some of you may know, we have elections here in Singapore tmr hence its going to be a public holiday. KVP will be arbing that over Mon, to catch up with loved ones (& maybe even some family members) plus some side projects. So we are likely not back with the Macro Dragon until Tuesday… everything else being equal
- Macro… macro… macro… takes longer than you think & you almost drive yourself crazy talking about prime conviction theme…. Then next thing you know gold is above $1800… we have not even started to move in the precious metals complex yet imho… we will be get strings of back to back days, of the likes of gold popping by +$25 to +$50 a day
- If you did not catch yesterday’s Saxo Market Call podcast that comes out in the European morning, please do so. Our equity strategist Peter Garnry held the fort & had a special guest talking about an interesting contingency Phase-One deal break scenario…
- …which with USDCNH south of the pivotal 7.00 handle, as well as CH & HK equity names flying - CH Airlines still lagging by the way, still down c. -30% YTD… whilst CSI-3000 up +14% YTD in-line with Nasdaq-100 - could make for an interesting risk-off tactical shorting to strategic buy-the-dip opportunity
- A lot of folks out there are not clear on the regime we are in… if you don’t know what regime we are in… you need to stop right there & either figure that out first… or even better outsource it to someone that lives & breathes it every day - & trust KVP, its far from a walk in the park for them…
- …or for the USD bulls… as the DXY at sub 96.50 (the c. 200WMA) is showing that the dollar bearish downside trend (Another Dragon Anthem) continues to be very much intact…
- Speaking of far from a walk in the park, you will be shocked how few people really understand asset allocation (AA)… be they finance “professionals” like HF & AM managers, private bankers & wealth advisors, to family office & UHNW investors, to even value folks… KVP could do a book on this… but he will not… there are so many holes in people thinking…
- Likely one of the biggest is approaching every investment opportunity with the same risk-reward framework… everyone is trying to optimize the highest return for the lowest risk. Afterall that’s what the text book says & intuitively it makes sense right?
- Again context is everything… you have to think of AA from an overall wealth distribution basis, as well as the objectives & parameters of the tranches of those distributions.
- Here is a simple question, KVP gives you $100m to invest as portfolio manager at his family office (Upside Capital), What is the best allocation below?
- 100% into Equities
- 100% into Bonds
- 65% Bonds, 35% Equities
- 20% Bonds, 20% Equities, 20% Gold, 20% Commodities, 20% Currencies
- 50% passive all weather portfolios, 50% Active HF Allocations
- 100% Bitcoin
- If you chose 6, 4, 1, 3, 5 or 2 – you are wrong. Because you don’t have enough information to be an optimal manager for that capital
- Perhaps the family office has $1bn in total AUM, with 90% of that being in Amazon, or Bitcoin, or Beyond Meat or Yeti or Tencent or in a long Gold position or short USDNOK position. Does the family have capital commitments that need to be funded out of the AUM, or is it capital infusions of +$25m a quarter?
- You need context, as that gives you parameters & objectives to work under… otherwise you have already failed before you have begun. Or at best, are just massively under-performing from your true potential of consistently compounding wealth
- You cannot approach your bond allocation how you would approach you bitcoin allocation – yet people do this all the time… it used to drive KVP up the wall… no longer. This. Is. GOOD.
To Keep In Mind Today
- JP: Machinery Orders, Money Supply
- NZ: ANZ Bis. Conf.
- CH: CPI 2.5%e 2.4%p PPI -3.2%e -3.7%p
- EZ: Euro-group Meetings, GER Trade Balance
- US: Jobless Claims, Inventories, Natural Gas Storage, 30yr Auction
Start-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.