Macro Dragon: Welcome to WK # 24...
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 # 24...
Top of Mind…
- Happy Monday Folks & Welcome to WK # 24…
- What kind of week are you trying to have?
- What is your legacy going to be this wk? You gonna hit the world outside for some "thriving" walks, hills, forests, swims or runs, or are you going to be "surviving" through Netflix, watching other people’s stories?
- Are you gonna do the heavy lifting for your own due diligence & research (post inspiration from the Dragon & SaxoStrats squad), or just keep “busy” with reading line after line of news & “research”? Are you going to make time to think for yourself or let things be dictated to what you should do?
- Are you gonna go through the charts & the technicals, to enhance your trade set-ups or just wing it, keep you stops & targets in you “head”?
- Either way, you are going to get a better or worse this wk in your craft & life…
- …it is going to be an interesting wk, and like any other wk full of limitless upside & downside opportunities… stick to the process & systems in place, there is no belief, like self-belief…
- As we flagged last wk & had previously highlighted in our May Macro Dragon’s monthly high probability exercise, for one to expect more fiscal stimulus & monetary stimulus in the quarters to years ahead… i.e. we are not done, with central bank & government debt balance sheet expansions…
- …and that’s exactly what we got in Europe last week with the ECB & the fiscal leap up in Germany (38% of GDP) – imagine where Germany is 6-12-18m from now, vs the rest of its European peers…
- Themes & Economic data: This week a lot more light that the previous two… its likely going to focus around FOMC, with perhaps expectations raised given ECB last wk. There is a bit of an inflation theme across the board with the US & CH figures there due, OPEC could be interesting (albeit the shenanigans there are unchanged).
- The same themes will continue, dislocation between underlying economy, coupled with liquidity from MP & FP & asset prices flying to the moon. US / CH relations, will we escalate, cool off or be on ice this week? And of course, will the social instability in the US (Yes, yes… which we also flagged many times) continue to play out… whilst its unlikely to have a big effect on risk-assets unless it explodes further in places like NY, SF… its going to become a central issue into the elections… & one that Trump is not geared to play well… so watch out for that trade deal breakout scenario that we have been on about… only upside for Trump & he would get the narrative back on his side.
- And of course, continued USD weakness, the potential tailwinds for EM assets here & risk assets in general. And the fact that currently, it seems that only a phase one deal breakdown can significantly turn the USD around.
- The Dragon is still in the Technicals over Fundamentals camp… as the latter does not matter until it does & that could take 6wks, 6m or even 1-3yrs…
- Central Banks: FED.
- Holidays: AU out on Mon holiday
- US: JOLTS, Inflation, FOMC, PPI, Jobless Claims, UoM sentiment
- CH: Inflation, PPI, Money supply, New Loans, Trade Balance
- EZ: German IP, EZ IP, GDP
- JP: Bank Lending, Current Account, GDP, Avg. Cash Erns, PPI
- UK: GDP, Construction Output, Trade Balance, IP
- AU: Nab Biz. Conf., Westpac Cons. Sentiment, MI Inflation Expectations
- NZ: ANZ Biz Confidence, Mfg. Sales, Biz Mfg. Index, FPI
- CA: Housing Starts, Corporate Profits Q/Q, Capacity Utilization Rate
- Other: Looks like we should have OPEC meetings on Tue
Some Recent Stand-Outs From the Sensational #SaxoStrats Squad…
Start-End = Gratitude+Integrity+Vision. Create Luck. Process > Outcome. Sizing > Idea.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)