Macro Dragon: Trump, RBA, Powell, Lagarde... & count-down to Wed's VP Debate Macro Dragon: Trump, RBA, Powell, Lagarde... & count-down to Wed's VP Debate Macro Dragon: Trump, RBA, Powell, Lagarde... & count-down to Wed's VP Debate

Macro Dragon: Trump, RBA, Powell, Lagarde... & count-down to Wed's VP Debate

Macro 4 minutes to read
Kay Van-Petersen

Global Macro Strategist

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: Trump, RBA, Powell, Lagarde... + Wed's VP Debate

 

Top of Mind…

  • Touched on this wk in the Dragon’s New Month = New & Final Quarter = New POTUS piece

  • Worth noting that the key Final Service PMIs yest generally came in stronger than expected with final EZ in at 48.0a 47.6e/p (yet obviously in contraction territory being sub 50), UK 56.1a 55.1e, US 54.6a/e & US ISM Serv. PMI 57.8a 56.3e 56.9p (again US data still holding up!)

  • Today we got a few key things including RBA rate decision, as well as ECB’s Lagarde (@ 16:35 & @ 21:00 SGT) & Fed’s Powell (@ 22:40 SGT) set to speak at different events

  • Tomorrow will be all about the VP debate – naturally viewed as that much more pivotal, with Trumps’ health status likely to be in a state of Limbo until at least 2H of Oct

  • In regards to Trump’s tweet last Fri on having contracted Covid-19 – biggest likely change from the Dragon’s view is that the probability of fiscal deal prior to the election has gone up

  • By no means a done deal or even significantly above 50%, yet aesthetics of POTUS catching the virus are likely Net-Negative from the republican camp… its not going to be a Bojo sympathy theme. This could force the Republicans to be more open to getting to an agreement with the Democrats. Obviously one can argue if it really makes any difference, with votes already coming in… yet hard to see when US politics has been rational over the last few years

  • Its worth noting with Trump that we are likely not going to know just how bad a state he will be in, until midway this wk to end of the wk. If you recall Bojo was first at home, ordering curries & dropping jokes… then needed to be rushed to hospital.

  • Whilst the dominant press coverage on Trump is rarely net positive, its does seem pretty clear that the updates from the Doctors have been with a positive spin & a lot of questions are being dodged. It’s also worth noting Trump seems to be on steroids – which traditionally are only given to folks who are really in bad shape around covid – as well as a number of other prototype cocktail of drugs.

  • He is back in the White House, yet still under full care - & whilst his car drive publicity stunt has been criticized , clearly he was still well enough to do that. Again real MtM on his health is likely to be seen before mid Oct.

  • CNN Cut: Trump returns to White House and removes mask despite having Covid

  • Fox Cut: Trump discharged from Walter Reed, returns to White House

  • From what KVP can gather, the cleanest pathway in the scenario of Trump falling to Covid-19 or in someway being incapacitated is that Pence becomes the de facto face of the Republican Ballot. And it almost surely raises the delta of the Dragon’s contrarian (yet changing consensus view post the debate last wk), view that this is going to be a blue tsunami  

  • Either way – one thing that few people seem to be keeping in mind, is that no one is talking about upside risk. And on election night – despite ballots that will still need to be counted (our understanding is they have to wait for election night to open the mailed votes) –  we may have a scenario where it mathematically impossible for one candidate to catch up to another, due to the loss of a number of the key swing states

  • So pay special attention again to the likes of Florida, Wisconsin, Pennsylvania & Minnesota

  • As always anything is possible… yet current feel is that most folks are on the side-lines, with a potential net-short bias on equities & folks worried about election uncertainty

  • That could change very quickly if we have a highly probable clear winner on/very close to election day – i.e. short-squeeze, to relief rally given uncertainty & big event-risk being cleared, as well as anticipation of a new administration getting the next fiscal bill in order  

-

Not Caught Enough of KVP?

-

Dragon's Must Reads

John Hardy dropping a roadmap US Election Primer: The Final Sprint to November 3rd

We sort through important dates in this final sprint phase of the absurdly long US presidential election cycle. Historically, we have seen significant shifts in the polling in the final weeks leading up to the election. As well, we consider factors that can change the odds between now and Election Day on November 3rd.

Saxo’s US Election Cheat Sheet Which cuts into the three potential pathways into the elections, probabilities around them, as well as short & long-term positions across equities, bonds, commodities & currencies.

-

Start-to-End = Gratitude + Integrity + Vision + Tenacity | Process > Outcome | Sizing > Idea

This is the way 

KVP

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

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)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992