Global Macro Strategist
Summary: Macro Dragon = Daily Cross-Asset Global Views
KVP runs us through some contingency planing around a highly probabilistic break of the phase one deal - likely before the end of 1H20. End of the day, Trump will do what it takes to win voters in his bid for re-election & looking tough on China, will get him clicks & votes.
2020-Jan-11
We’ll be shaking things up from KVP’s side, so expect a lot more trade views going forward, as well as 20 long-term trades views for 2020 – which KVP will do a special piece & mini-series on.
Ok let’s get after it…
Jan 15th seems to be the D-date for the signing for the signing of the phase one deal – I believe China’s officials will be flying in a few days earlier to make sure all the t's & dots are aligned.
No hard view here from KVP, it remains a window dressing exercise as far as he is concerned.
Long in spirit, short in details – it should all go through, for now.
KVP still thinks the biggest tactical 1Q20/2Q20 risk is eventual breakdown of US-China deal – the probability here is high & he would urge all serious traders to spend some time on scenario planning on a phase-one deal breakoff.
It would be tactical in nature & usual suspects in execution – this is going to be “easy” money if you are on point when the news breaks:
(also steepners should work, plus love those as strategic trades – watch out for KVP’s 20-4-2020… )
If we go the entire 2020 without a Phase One deal break – that would actually qualify for an outrageous prediction in KVP’s book.
Still think a combative Trump vs. China, adds to his Re-Election capital & chances…
So watch out for that potential strategy as we get closer to 3 Nov 20
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
