Macro Dragon: GOOD...
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: GOOD...
Top of Mind…
- There has been nothing new / screaming from a conviction basis on the Macro Dragon pallet that we have not already flagged before…
- …GOOD. This should be the default state. There is a misconception in investing/trading & most walks of life where ideas are sought after… that they fly about, a dozen a day… if you are getting a dozen investment ideas a day… chances are… you are net-net losing money…
- The Default state should be nothing standing out & then, now & then you get chunks of opportunities & interesting set-ups in the making.
- It’s also GOOD, to see investment themes that you have had prime conviction views on play out… this could be US Duration (recall Jan & Feb, “one cannot own enough US duration” when US 10s were 1.80% to 1.50% range) or most recently months of banging on Gold… which post the break-out through $1750 from Mid-Jul, continues to grind up with yest’ +0.57% to $1794.
- Interestingly enough, in a world where a lot of assets are either making ATHs or close to ATHs… Gold is still south of its 2011 $1920 highs… KVP has touched on gold enough times:
- 25 Jun: Macro Dragon: Gold = Antifragile?
- 14 May: Macro Dragon: Checking-in on Bitcoin... Legendary Trader Paul Tudor Jones, is in Love, with Bitcoin & Gold...
- 6 May: Macro Dragon: Dissecting Gold part II of III... The Bull
- 22 Apr: Macro Dragon: Dissecting Gold part I of III... The Bear
- GOOD is an anthem to the investment process, as well as a stoic lifestyle. GOOD is anti-fragile. You see the positive convexity in everything. No Ideas? GOOD – we can catch up on some long overdue reading & research, or/& take some well deserved break. Got tons of Ideas? GOOD – time to filter & optimize across the ideas, how does our overall asset allocation look like, where are we weighted exposure wise on a risk/reward basis…
- Trade idea blew up in your face – GOOD, opportunity to learn & tweak the process. Trade idea shot our the lights & was one of the most lucrative of your career, GOOD – opportunity to see how we can have more of these.
- Currently the risk-on regime & framework in the market is the paragon of GOOD! We rally on positive economic data – Yay! We are coming out of the downturn - & we also rally on negative C19 news & potential shutdowns restarting – Yay! It means more pressure for even more liquidity to flow.
- On a completely separate note - & reflagging this again! – CH & HK equities & currencies, despite the negative rhetoric are breaking out bullishly… this is a function of contrarian forces of the world being underweight, the reflexivity of FOMO, as well as underlying China data continuing to surprise to the upside – not to mention continued accommodation policies.
- We had flagged 388 HK (HK Exchange) a few wks back, yet now its pick your sector… banks (Like ICBC), autos (Like Geely) breaking out higher…
- The yuan? Strengthening vs. the USD… at c. the key 7.00 lvls we’ve broken below the key 7.05 – 7.15 range. The HKD has also been trading on the strong end of the band at 7.75, actually forcing the HKMA to sell HKD & buy USD. All these are price actions & lvls that one would not believe if they just kept to the headlines & consensus rhetoric.
To Keep In Mind Today
- JP: Bank Lending, Current Account, Economy Watchers
- EZ: EU Economic Forecasts
- US: Crude Oil Inventories, Consumer Credit, 10yr Bond Auction
-Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.
This is the way.
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.