Macro Dragon: Gold = Antifragile?

Macro 2 minutes to read

Kay Van-Petersen

Global Macro Strategist, Saxo Bank Group

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: Gold = Antifragile? 

 

Top of Mind…

  • Mo’ brownian motion today….
  • Antifragile: In the current regime of QE infinity & perpetual government debt creation (MMT voddoo), grand canyon wide disconnect between the underlying economy & asset prices, is gold the new asset class that is also antifragile?
  • “Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better” -Taleb
  • Love the concept of antifragile, it takes stoicism, investing, resource & decision allocation to the snowy peaks of the highest mountains. A portfolio that is antifragile thrives, irrespective of anything – even the portfolio manager!  
  • And yes, all our lives, lifestyles, habits, decisions… are our individual portfolios. Some are designed to compound wealth day-in, day-out… others are basically one long theta trade, bleeding day in, day out…
  • Still regardless of the intraweek price action on Gold (we made new highs on spot o/n at c. $1779.50), its all about where we close at the end of the wk – if you are a bull like we are on the Dragon, we need two consecutive weekly closes of spot gold above $1750.
  • Obviously the pesky bears will be trying to dissuade that. Let us see where the global macro winds drop the chips… again KVP’s conviction on this has no bounds… this is going to be a historic break up (sooner rather than later) & will take us to ATHs past previous c. $1920 lvls in 2011
  • Bank Stress Test: During the GFC… bank stress tests ended up being a negative catalyst for many banks & a boon to the shorts… it was always a catch twenty two… why is your tier one ratio so low, oh wait such a high tier one ratio – what are you worried about? Etc... It was basically a...
  • ...Profragile regime for banks & financials in generally, did not matter what was on your balance sheet… it was a negative feedback system that accelerated in on itself. This profragile regime, situation, trade, investment, decision, action, lack of action… etc… is perhaps an even more important concept to keep in mind. I.e. taking patron tequila shots while scaling mountain side walls, literally does not have much upside. Sounds obvious, yet many of us put our lives & portfolios in profragile situations – where its just a matter of time, before you take a hit.
  • Early morning Asia time Friday, we will be getting US Bank Stress Test Results – its worth noting the rules have already been changed in regards to the effect of government bonds on the banks capital structure parameters. I.e. to the benefit of creating more bidders for US debt… don’t be surprised if at some point, some gov. pensions may have their mandates adjusted for owning more US duration…
  • Central Banks: Watch out for decisions out of the Philippines, Turkey & Mexico later today. First is expected to stay put at 2.75% e/p, whilst a 0.25% & 0.50% cut are expected out of the later two to 8.00% (8.25%) & then 5.00%(5.50%).
  • There is also some Fed speak on the board from Kaplan & Bostic, as well as ECB minutes due.

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To Keep In Mind Today

  • CH + HK: Both out today, HK back in on Fri. CH on Mon
  • NZ: Trade Balance
  • EZ: ECB Mins, German Gfk Consumer Climate,
  • US: Final 1Q GDP -5.0%e/p, Durable Goods, Jobless Claims, Continuing Claims, Inventories, Bank Stress Test Results
  • JP: All industries Activity 

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Start-End = Gratitude + Integrity + Vision. Create Luck. Process > Outcome. Sizing > Idea.


Namaste,

KVP

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