Macro Dragon: Bull Market Bro...
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: Bull Market Bro...
Top of Mind…
- Bull Market Bro…
- Covered the Dragon’s Bullish Tactical View in this Monday’s Macro Dragon: Limitless Upside!
- And yes, resonates with Strategic Outlook in the Liquidity = Everything Regime that we are in. Split Congress or Not, there will be monetary printing & loose policies for years – even with a vaccine.
- We’ve already seen some decent start to the risk-on views for the wk, USDRUB 76.60 -1.29%, BRLUSD 18.44 +0.79% - have a feeling these are both like coiled springs, with a lot of catching up to do with the moves that we have seen in other EM FX like CNY, PHP, MXN & most recently, TRY (look out for Thu as we covered on our piece yest)
- Energy grind continues, love this tactically & strategically – banged & shouted going into & out of US election. WTI $41.50 +3.0%, Brent $44.02 + 2.4% & XLE $36.11 is starting to warm up, as it clocked +6.6% o/n post the +17% lift last wk. Also worth noting lag in ruble rerate, vs. the higher moves we’ve been getting in energy.
- Kudos to those that resonated with the call option views that we’d flagged to our VIPs, as those calls are anything from 3x to 5x the premium, depending on the maturity construction in sub 3wks. Its worth noting even with all that move, XLE is still down -40% YTF & Energy is still down -33% YTD. Oh & don’t forget the +6-7% indicative divies on XLE…
- Lastly on energy, check out this credit piece on the space that our Bond Strategist Althea put out a few days before the elections. Credit opportunities within the energy sector: a relative value analysis Althea like our other excellent strategists, as well as GST team are available on our VIP offering. Also Althea’s week ahead in Bonds, a few key auctions on point, including TIPs.
- Bottom line things are just getting started in the energy space, they kicked out Exxon [XOM] out of the Dow at the worst possible time. Speaking on indexes looks like TESLA is finally going to be included in the S&P 500. It will be the biggest heavyweight to join given its c. $400bn in mkt cap. Tesla closed slightly down at -0.10% at $408.09, yet looks like the news was post the close as its bubbling up c. +13% in the post market at c. $460… so we could be in for a session.
- Bitcoin solid +2.5% session at these $16,700 lvls… its all about $20,000… will likely do a piece on this tmr. For now we got the trackers, word on the street though is we may finally get spot exposure… Wuhuuuu! Sometimes even if you are getting to the party late, its still very early in the party.
- Call to lift the sell-off in precious metals o/n, on the latest new vaccine, proved to be on point (also check out Ole’s piece on this: Gold drops on Moderna vaccine news). KVP is also watching Platinum, which yest at 907 had interesting 1000/848 skew, yet has been basing for a while. Palladium may also be worth playing for a break-out higher.
- And copper continues to defy the odds with a close above $320 (Good China monthly growth data o/n + the big Asia trade agreement that kicked of this wk, that KVP completely forgot to flag in the detailed weekly start piece… catch most, loose some… as my man Tony used to say.. “Its, the name, of the game…” then he’d aske you to pour him his 10th “small beer”)
- Vol lower, equities higher, USTs flattish… So VIX at 22.45 post a -2.8% pullback, SPX 3627 continuing to outperform NDQ 12013 at +1.1% to +0.6%, yet the real mover & shaker here is Rus… Russel2000 clocking +2.4% & recall this index is now up c. +13% in last two wks. So definitely looks like there is continued element of growth to value flow, a systematic macro trader bud of KVP… lets call him… Hanzito… was flagging how one of his models was leaving tech & picking up things like Buffet’s Berkshire. You don’t have to believe in the rotational flow, yet respect & believe the price action.
- Lastly yes, Trump (have you tried typing LOSER.COM into your web browser?) is still in office for another c. 63 days & may try all kinds of shenanigans – like say ordering a strike on Iran over his final weeks… (apparently this theme was also on the wkd papers in Israel). This time around he seemed to have been talked out of this by his advisors… yet the overall Trump Temper Tantrum Theme (T4) bears watching… may provide some tactical opportunities & make things awkward for the Biden presidency… yet very little delta for changing things on a structural way (And yes – thank god for the super women & men, in the current administration that believe it or not, have kept it sailing way better than it would have)
- Bull Market Bro…
- In case you missed it previously – been super well received, thx for feedback, sharing & support on this project folks - the first in a string of exclusive Dragon Interviews series with exceptional professionals with skin-in-the-game, across different strategies, asset-classes & backgrounds.
- We kicked off with Singapore Based, AVM Global Opportunity, run by the talented & always exceptional Ashvin Murthy. Who in KVP’s view is world class in his approach, process & even more importantly trade construction & money management. Point being, if the process is pristine & consistent, the returns will take care of themselves overtime.
- The timing of the interview is uncanny as it was at the cusp of the last US presidential elections that AVM was launched. It’s worth noting since the interview, the fund has also been nominated for the Singapore’s Best Hedge Fund of 2020, given its consecutive five straight positive months at the start of this volatile year.
Start-to-End = Gratitude + Integrity + Vision + Tenacity | Process > Outcome | Sizing > Idea.
This is the wayKVP
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.