Macro Dragon: Fed - No more TELL Powell, time for some SHOW...
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: The FED - No more TELL Powell, time for some SHOW...
Top of mind...
- As likely the only Fed chair who could play James Bond, Powell has so far been as cool as the northern wind (pre-climate crisis / global warming) over the last few Fed meetings & more importantly press conferences.
- However, with the market pricing in no hikes out through 2023… some correlation-confirmation of that will likely be sought in the dot plots. One can only jawbone for so long…
- Here is the link to the transcript of the Jackson Hole speech & the recorded video of his Jackson Hole speech
- Link to Jul 29 FOMC Statement & the Jul FOMC Minutes
- He (+ FOMC committee) will also have to contend with continued delay in Fiscal support from congress & yes, they are linked. If Fed does extra easing, there will be less pressure on the Reps to meet the Dems… if Fed does nothing… could be a risk of some near-term unwinding in their efforts so far this year – again by no means structurally irreversible, yet its current neat-term headwind to monitor until we get on the other side of the elections.
- Also a Biden administration will do a lot more heavy lifting on the Fiscal side than a Trump administration… so not to be political or anything (of course the Fed is not right?)… why ‘help’ now before the elections?
- So Powell has to show, but just enough to confirm the new dynamic commitment to inflation that allows us to overshoot big time…
- The risk is if we see no new developments since his Jackson Hole shoutout… this could have near-term pressure on yields ticking up, gold & precious metals complex lower, dollar higher & general risk-off in US equities.
- If we do get a surprise on the accommodative side – we’ve gotten this a few times from smooth Jay – then we could get the inverse of all that, including the next big structural break higher in gold.
- One thing that the Dragon is getting more & more excited on, is energy… either way you cut it… it’s the celestial space into & out of the US elections… the underlying meta trend is Goliath liquidity & that will take risk-assets higher, real negative rates lower & inflation higher… Oil is ze best inflation hedge… & don't forget... all fiscal policy roads lead to infrastructure.
- Until the FOMC, the session today is likely set to be quiet… with that said watch out for what should be the debut listing of pure play cloud computing player Snowflake, which Peter Garnry covered in detail here:
- Snowflake enters equity market with red hot valuation Peter weighs in on the first pure listed cloud player that is part of the c. $7bn in IPOs out this wk in the US.
- This could have interesting implications to the valuations & strategic business models of Alibaba & Amazon (i.e. spin-offs).
On The Radar today…
- US: The Fed, Snowflake listing, Retail Sales, Business Inventories, Crude Oil Inventories, TIC Long-Term Purchase
- CA: Inflation
- UK: Inflation, PPI & House Prices
- NZ: Early doors Thu Asia Thu Morning, quarterly GDP -12.5%e -1.6%p (had incorrectly state CPI at the start of the wk)
- BZ: Early doors Thu Asia Thu Morning we’ll hear from the central bank of Brazil
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
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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?
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Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.