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Macro Macro Macro

Macro Dragon: Top of Mind... BRL, RUB, MXN, EEM, XLE, XLI, NKY, ASX-200

Macro 2 minutes to read

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: Top of Mind... BRL, RUB, MXN, EEM, XLE, XLI, NKY, ASX-200

 

Top of Mind…

  • Touched on this wk in the Dragon’s Welcome to WK # 42 - 3Q Earnings, Brexit, EU Council, NZ Elections, US Stimulus?

  • Just a house keeping note folks, for 4Q there are a number of new internal initiatives for our VIPs that KVP is running point on and/or deeply involved, the other side of that skew implies that apart from the Monday Pieces, the daily Macro Dragon’s may be more sporadic.

  • At the end of the day, we have a finite amount of high quality bandwidth with the preference on this side being always for less yet higher quality, than more & lower quality

  • HK out this morning on Typhoon 8 Warning, there is a chance trading could be off for the entire day.

  • Today on the economic data front, really about UK jobs data, German inflation & ZEW survey, as well as US Inflation & Federal Budget Balance.

  • Overnight session continued to see risk-on in US equities, +1.6% 3477 on the S&P, +3.1% 11726 on the Nasdaq-100, yet there was divergence from a cross-asset basis in regards to the equity risk-on theme.

  • Dollar as a whole unchanged, with DXY 93.10 flat as were 10yr treasury futures. Brent & Crude pulled back by c. -3%, given the c. +9-10% pop last wk.

  • Silver & Gold were also a touch on the back food at -0.40% & -0.20% to $1926 & $25.06 – next big catalyst here again is all about the stimulus announcement, failing that we could consolidate or more than likely go back to test $1900 / $1880 on gold & $24.00 on silver.

  • Tactically & Strategically the Dragon being long selective EM FX names such as RUB, MXN, BRL & CLP vs. the USD (granted those folks long EURUSD, may also consider being short EURMXN to potentially dampen port vol & still have a macro overlay theme)...

  • ...the likes of EEM, XLE (2-3x Long on Trump win for potential tactical squeeze), XLI (reverse to short on Trump for potential tactical crash). Nikkei looks interesting top-side & for the reflation global play, as does ASX-200 which is still more than a 1000 points (more than 10%) lower that pre-covid lvls [not many major indices can say that]

  • FTSE-100 & Sterling in general worth keeping on the radar given how underweight the world is on UK assets & of course the latest (& final??) Oct 15 Brexit deadline. Sterling continues to trade well & feels like most folks have forgotten about Brexit, as the combination of a C19 world & US elections sucks up all the oxygen out of the room!

  • Again its not a question of do you want to be long sterling & UK related assets imho (don’t forget FTSE-100 is heavy on commodities), it’s a question of magnitude & construction of your long exposure plus more importantly timing around that. One has to naturally measure that vs. continued C19 world & BoE on negative rates.

     

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Not Caught Enough of KVP?…

  • From c. 52min in KVP talking on DollarYen on Bloomberg’s Daybreak This will resonate with the 4Q20 piece, where a high conviction structural trade view from KVP’s camp is being short DollarYen, seeing 85 – 95 range by back-end of 2021 & potentially 100 to high 90s by end of 2020. Naturally this gels with the multi-year dollar bearish regime view & also note how strong the North Asia Currencies have been of late, USDCNH, USDKRW, USDTWD

  • Country 1.0 And How to Edit Inequality Out of the Equation with Kay Van-Petersen Could have gone on for days here! :) Bottom line AI, ML & Tech integration is literally the highest probability pathway for a sustainable earth with humans as a species continuing to be part of the eco system

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Dragon’s Must Reads… #SaxoStrats

  • Podcast Special Edition: Q4 2020 Outlook - The US election & everything gone all K-shaped

    In this special edition podcast, the Saxo Strats team takes you through the key points of our Q4 Outlook, including a particular focus on the US election and what is at stake for global markets over this election and as we peer into 2021. The focus is on portfolio allocation, the risk of a secular shift in inflation to the upside, and the implications of the K-shaped narrative on policy and markets. On the podcast are Saxo CIO Steen Jakobsen, Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX.

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

This is the way 

KVP

Quarterly Outlook Q2 2022: The End Game has arrived

  • The End Game has arrived

    Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
    Read article

  • Energy crisis could turn energy stocks into secular winner

    With long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
    Read article

  • The great EUR recovery and the difficulty of trading it

    If the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
    Read article

  • Tight commodity markets – turbocharged by war and sanctions

    With supply already tight, commodities keep powering on. But will it last for yet another quarter?
    Read article

  • Between a rock and a hard place

    Geopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
    Read article

  • The Great Erosion

    Inflation is everywhere and central banks try to combat it. But will they get it under control in time?
    Read article

  • Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recession

    While global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
    Read article

  • Cybersecurity – the rush to catch up with reality

    With the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
    Read article
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