Global Macro Strategist
Summary: Macro Dragon = Daily Cross-Asset + Global Views
2020-Jan-07
Before we get into it, for those that are back – or on the way back in – from what was hopefully a restful year-end holiday break, Happy New Years!
Let me sincerely (hand on liver) wish you, your families & teams the best of 2020. May your health, vigor & experiences be excellent & full of fun + laughter. May you continue to grow & develop yourself. May you be awash in gratitude & contribution plus fall [tail] backward into more money than Bezos.
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…
So we did a great piece & detailed thought piece yest on KVP’s take on the US / Iran escalation following the drone strike assassination of probably the de facto #2 most powerful person in Iran, the revered (& reviled) General Qassem. It been quite well received & as in all things, tried to take all parties into account for a balanced view.
One can look at the framework, points & risks associated with the view that KVP has that this is likely a tactical buy the dip situation in equities & fade the risk-off moves i.e. gold higher, yields lower, yen stronger, oil higher, vol higher.
Early days, but as we slowly get more people back on their desks this & next week – the ‘true’ price action & participation will dictate the lay of the land. This also has to be measured by whatever steps Iran takes & based on those steps, potential counter measures by the US. And as we flagged in the risks to the view – nothing else landing on the menu, a la Rocket Man or Putin.
We have already seen the Iranians say that in regards to Nucler development, all systems are a go – this should come as no real surprise, Trump sunk that boat when he broke the original US/EU/Iranian Nuclear Deal that his predecessor Obama had put together.
A state backed Iranian TV has run with one dollar being raised for the 80m Iranians to facilitate a contract for the assassination of Trump – so basically a $80m bounty.
Whilst this is not (yet?) an official Iranian government statement (yet obviously given the green light), it does show how this one unwritten rule of international diplomacy - no targeting of leaders by sovereign countries – could potentially be written off on the global political sphere.
Anyhow, S&P closed up +0.35% to 3246, oil is off its recent highs with Brent closing at 68.91 +0.45%, after getting as high as 70.74. Gold was +0.87% to 1565 after touching 1588! And this Tue Asia morning we got DollarYen heading towards 108.50, from 108.40, after being as low as 107.77 early yest morning.
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Services Rendered…
Pretty much a sea of green on the Dec Final Service PMIs…
EZ beat 52.8a 52.4e, German retail sales also came in at +2.1%a +1.1%e & upward rev. to -1.3%r
UK beat 50.0a 49.1e
US beat 52.8a 52.2e
Key part will obviously be US ISM Non-Mfg. due out today, especially as last wk’s Mfg. was a big miss with 47.2a 49.0e 48.1p (A miss & not trending the right direction, sub 50 is contracting & we are into winter season)
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Have a great, profitable start to the year everyone. Best of luck in 2020, may it be your best yet.
Namaste,
-KVP
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It’s really all about US ISM Non-Mfg today…
2024: The wasted year
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.
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.
