Macro Dragon: FinTech Weds, Tesla, No Grazie & Equities Down..

Macro 4 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: FinTech Weds, Tesla, No Grazie & Equities Down...

 

Saxo’s 7th Annual SG FinTech Conference. Fintech Unfiltered: Looking beyond the Covid-19 Storm

 

Rollcall

  • US Jobless: Dembik touching on Unemployment matters more than you think

  • The number of analysis pointing out that the U.S. labor market continues recovering has been quite astounding in light of the August non-farm payrolls report. We don't share this optimistic view about the U.S. economy. We have done some data-crunching and have reached a totally different conclusion.

  • Italian Govies: One of our very own stars, bond specialist Althea Spinozzi is back after a well-deserved maternity leave (apparently the little trooper is already trading in day care, talking about this being priced richly vs that, relative value strategy already!).

  • Althea has published a piece on Italian sovereigns, that is so hot out the oven, that even KVP has not yet read it. For our VIPs with an interest in bonds as an asset class to trade, as well as allocate to strategically – please feel free to reach out in regards to having a call with Super Spinozzi.

  • Recession, economic stagnation and an unstable Italian government are some of the reasons why one shouldn't be happy to hold BTPs at record low yields. As volatility remains high, it is crucial to take a short-term stance on these instruments and actively trade them.

  • Softbank: In case you missed the SaxoStrat’s take on Softbank, heard those WeWorks are amazing to work out of: The new world of SoftBank Group and retail options trading

 

Markets – Quick Comment…

  • Tesla $330 -21%: So looks like amidst the continued pullback in US equities o/n, that saw the S&P & Nas-100, retrace by -2.4% to 3,333 & -4.8% to 11,068, saw Tesla drop by a 1/5th of its market cap. Even for a stock as volatile as Tesla, that is c. 6 standard deviations.
  • Rationale on the drop seems to be linked to the news that Tesla will not make the cut into the S&P 500 this time around (no doubt a big contribution to the massive run we’ve seen in the name over the last few wks, as it had popped c. +74% for the month of Aug).
  • Oh & for those of you thinking, price of $330, wasn’t this puppy above $2000 just a few wks back?
  • Yep, yep… but they had a 5 for 1 stock split (bullish signal generally speaking) whilst KVP was on studycation. Interesting thing is the timing, as on Sep 1st they had announced a $5bn additional raise that was completed on Sep 4th. Say what you want about Musk (my African cousin), but there is timing & there is TIMING. For context, Tesla shed c. $83bn of market cap yest, their five yards of capital raised was c. 6% of that!
  • From a chart perspective, the ATH is now 502.49, so we are c. -35% from that. Just for context, TSLA was down c. -63% during the Feb-Mar sell-off earlier this year. So we have pulled back more than half of that.
  • If one takes a step back on a daily 1yr chart & looks at Fibo & MA lvls, a few things are worth noting.
  • We are south of the 38.2% retracement lvl from the highs (using the wkly low in Mar for the bottom of the Fibo measure) lvl of 337.32. The next big lvl of support from a fibo view is the 286.12, 50% retracement. After which you run into the 100DMA of $250 & the 200DMA of 180.

     

  • One thing to note, if the sell-off yest was really linked to Tesla not making the S&P 500… then the volume o/n whilst large, was not much bigger than on a few previous volume days. C. 115.5m shares were traded, vs. the 6m avg. Of 79.5m, yet over the last 3wks Tesla has had 8 days, where shares traded were over 100m. Again if your thesis on the name is about the S&P inclusion now being at the very least delayed, then it’s a function of how much of the money going into Tesla for the inclusion play is tactical & short-term, very strategic & long-term?
  • From KVP’s standpoint, the convexity in the name is to the upside. Yet obviously timing around that will be a function of the market & one’s view on the whole “S&P inclusion theme”, i.e. whats your estimate of that being a driver of the name this year vs. the micro around the company’s developments & progress, plus of course the backdrop of the Goliath liquidity regime that we are going to be in for a while.
  • It looks like an ‘easy” jump on name, if/when we get a strong bullish market bounce (say on new stimulus bill being passed), one need not be the first one through the door.
  • Their next earnings release seems to be scheduled for Oct 23.

    -

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

    This is the way 

    KVP

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