Macro Dragon: Keep Industrials on the Radar...

Macro 2 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: Keep Industrials on the Radar.... 

 

Top of Mind…

  • So this one is potentially a touch in the INIL camp – Invest Now, Investigate Later… which allows one to dip a toe into a theme, with the pros of not forgetting about it down the line – yet put it on your radar folks… its going to be big when the move comes…
  • And yes, like Gold’s eventual (high probability) big break-out here, this is a question of when, not if…
  • All this Fiscal spend globally in a C19 impacted world is going to continue – the current spend has been more like relief/stability packages at best. One cannot stimulate an economy that is not moving…
  • So once again, we can say with high certainty (high probability) that the taps of fiscal policy will be like monetary policy open & loose for a very long time
  • Fiscal almost certainly “ends” with infrastructure spend – this will be the paragon of saving the best for last (yes, should already have been out in force), as this will be the most powerful element of an already very strong element of a country’s policy
  • A multi-trillion infrastructure spend will spur “real” demand globally & likely be set out of the US… be it before the election or with a future Trump or Biden presidency. For those who have been in the US & Europe – you know doubt have seen some of the 4th world infrastructure, bridges collapsing, pot holes the size of mini-craters, etc… its long overdue.
  • Don’t know about you, yet if KVP has to pick his form of debt… he’d rather take $2-4 trillion of debt going into infrastructure, that will pay dividends for decades to come for a country (not to mention spur millions of jobs)… rather than another $2-4 trillion of wall street paper to protect the vested interests & buds of the Fed & treasury – and no, they don’t have to be exclusive, but clearly main street continues to be the undisputed 2nd class citizen, that all politicians & policy makers say they are serving, but in actuality are like a multi-decade underperforming hedge fund manager – they are charging you, for the privilege of underperforming on your capital (in this case tax payers money).
  • Whilst focusing here on the US, this would be a global theme – i.e. more of Europe doing what Germany is going to do.
  • Our Equity strategist Peter Garnry highlighted some of these names, yet there are also etfs like XLI – industrial etfs. Obviously energy, materials & likely A&D would also get massive structural bids, things like copper, iron ore, steel, concrete, sand, etc… would be in tremendous demand… so keep that in mind with the likes of Australia (AUD) & Chile (CLP)

Summary:  In today's equity note we show a basket of 30 US construction related stocks that could benefit from the potential new $1trn infrastructure plan by the Trump administration. This basket of stocks is high beta to the S&P 500 but has historically outperformed S&P 500. The basket has a lower net-debt-to-EBITDA than the market highlighting the industries' prudent financial management and valuations are generally in line with the market

-

On The Radar Today

Flash PMIs Tuesday across the board… remember RBNZ tmr Weds @ 10:00 SGT

-

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


Namaste,

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 is not intended to and does not change or expand on this. 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-hk/legal/disclaimer/saxo-disclaimer)

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract) and Type 3 Regulated Activity (Leveraged foreign exchange trading) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.