Macro Dragon: Who wants to be a millionaire?
Summary: Macro Dragon = Daily Cross-Asset + Global Views
Macro Dragon: Who wants to be a millionaire?
Before we get into it, for those that are back – or on the way back in – from what was hopefully a restful year-end holiday break, Happy New Years!
Let me sincerely (hand on liver) wish you, your families & teams the best of 2020. May your health, vigor & experiences be excellent & full of fun + laughter. May you continue to grow & develop yourself. May you be awash in gratitude & contribution plus fall [tail] backward into more money than Bezos.
We’ll be shaking things up from KVP’s side, so expect a lot more trade views going forward, as well as 20 long-term trades views for 2020 – which KVP will do a special piece & mini-series on.
Ok let’s get after it…
So we did a great piece & detailed thought piece yest on KVP’s take on the US / Iran escalation following the drone strike assassination of probably the de facto #2 most powerful person in Iran, the revered (& reviled) General Qassem. It been quite well received & as in all things, tried to take all parties into account for a balanced view.
One can look at the framework, points & risks associated with the view that KVP has that this is likely a tactical buy the dip situation in equities & fade the risk-off moves i.e. gold higher, yields lower, yen stronger, oil higher, vol higher.
Early days, but as we slowly get more people back on their desks this & next week – the ‘true’ price action & participation will dictate the lay of the land. This also has to be measured by whatever steps Iran takes & based on those steps, potential counter measures by the US. And as we flagged in the risks to the view – nothing else landing on the menu, a la Rocket Man or Putin.
We have already seen the Iranians say that in regards to Nucler development, all systems are a go – this should come as no real surprise, Trump sunk that boat when he broke the original US/EU/Iranian Nuclear Deal that his predecessor Obama had put together.
A state backed Iranian TV has run with one dollar being raised for the 80m Iranians to facilitate a contract for the assassination of Trump – so basically a $80m bounty.
Whilst this is not (yet?) an official Iranian government statement (yet obviously given the green light), it does show how this one unwritten rule of international diplomacy - no targeting of leaders by sovereign countries – could potentially be written off on the global political sphere.
Anyhow, S&P closed up +0.35% to 3246, oil is off its recent highs with Brent closing at 68.91 +0.45%, after getting as high as 70.74. Gold was +0.87% to 1565 after touching 1588! And this Tue Asia morning we got DollarYen heading towards 108.50, from 108.40, after being as low as 107.77 early yest morning.
Pretty much a sea of green on the Dec Final Service PMIs…
EZ beat 52.8a 52.4e, German retail sales also came in at +2.1%a +1.1%e & upward rev. to -1.3%r
UK beat 50.0a 49.1e
US beat 52.8a 52.2e
Key part will obviously be US ISM Non-Mfg. due out today, especially as last wk’s Mfg. was a big miss with 47.2a 49.0e 48.1p (A miss & not trending the right direction, sub 50 is contracting & we are into winter season)
Have a great, profitable start to the year everyone. Best of luck in 2020, may it be your best yet.
On The Radar Today:
It’s really all about US ISM Non-Mfg today…
- EZ: Flash CPI 1.3%e 1.0%p, CORE 1.3%e/p, Retail Sales
- NZ: Milk Auction
- CA: Ivey PMI 60.2e 60.0p, Trade Balance
- US: ISM Non-Mfg. 54.5e 53.9p, Trade Balance, Factory Orders
What We Are Reading From SaxoStrats:
- Jakobsen & SaxoStrats team with our 2020: Outrageous Predictions
- Ole on initial cut on the conflict: Middle East tensions drive oil & gold higher
- Peter-G on equities in the new year: What to expect in 2020?
- Eleanor’s latest on China: Patchy Activity Keeps Policy Makers in Easing Mode
- Hardy latest FX Breakout Monitor: Geopolitical concerns washing over currencies
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.