(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: The Return of Trump [DWAC], Diwali, FOMC, RBA, BoE & Final Countdown on 2021
Top of Mind…
- TGIM & welcome to Nov!
- As KVP starts his trip back home to SG – was tough to source a vaccine route, yet super grateful for that & just in time for Diwali!. Happy Diwali everyone!!! – its worth noting given that Dec is never quite a full month for the markets, this year is really now just down to 6wks, before the usual year-end wrap ups, fatigue & Christmas/holiday parties set in.
- A lot can happen in 6 wks – be sure to keep a look out for our Flagship Outrageous Predictions, which are going into c. year 15 & pioneered not just research into year-end/year-start (used to be a vacuum) but has spawned a copy-cat cabal of black, grey & tail-risk type of publications. No doubt the Saxo Strats squad will come up with a few interesting scenarios.
- Worth noting, that historically what may seem outrageous one year, is down right consensus a few years later. You have been warned. The whole framework of low probability yet highly impactful events, is a great exercise to bring into practice into one’s own life, family, career, business & of course one’s investment portfolio. People tend to find they are too concentrated on some aspects, to many bottle necks on others & still at other times, find that overall they are not taking enough exposure for the upside.
- So watch out for our Outrageous Predictions & as always, feel free to send in your suggestions – the word for inspiration is, revolution.
- Worth noting the CH PMI data over the wkd missed across the board as the headwinds continue on growth: 49.2a 49.7e for Mfg PMI & 52.4a 53.0e for Serv. PMI. There are potentially few things one can ever say in the Global Macro world with certainty, but does not look like China is going to be hiking anytime soon!
- The first wk of a new month is always full-court press, with Final PMIs, US ISMs, US NFP & in a case of this time of the year, likely final push performance wise into year end – so watch out for those potential month-end/month-start flows.
- And if that was not enough, we have a Fed meeting this wk – so watch out for that FOMC statement (Wed). The Fed will likely overshadow the rate decision meetings out of the RBA (Tue) & BoE (Thu)
- Daylight saving shift for Europe – Winter is coming.
- Hols: FRA & IT out on Mon, JP out on Wed, SG out on Thu (Diwali)
The Return of Trump… DWAC +$3.1B Mkt Cap
- During the Trump regime, that Dragon gassed a lot about what was coming out of the then POTUS’s office. One of the things we speculated on, was that he was going to tilt to media in one form or another. Either launching something akin to Trump TV, or being a presenter for 10s of millions a year or some sort of social media platform.
- Well, the law of unintended consequences has come full circle. The majority of the incumbents (& elite) worked hard to block Trump, often for no other reason than disagreeing with his views that opposed theirs & sometimes for very valid & rational reasons that had to do with the safety of others – the capital riots come to mind. So the hatred & extreme speed (from both left & right side) continued to escalate throughout his term, with the final coup being Trump getting banned from Twitter & some other social media platforms.
- Twitter was the stake in the heart – through it, Trump pioneered a direct line to American citizens & the world that had never been seen since the dawn of radio & TV (even those mediums & presidents speaking on them, were deemed controversial at the time), which has seen been replicated by many leaders globally – for Trump, as the absolute worst thing that you can do to a megalomaniac is to starve them of oxygen, a channel into the world. The paradox of course was +74m Americans voted for Trump & he had over 80m followers on twitter – now granted not all of those votes & followers are fanatic fans. It’s a relative world after all. Yet one would say 25m (1/3) of those votes are potentially big Trump fans. Enter the power of the network effect…
- Last week Trump launched a SPAC vehicle [Digital World Acquisition Corp, ticker DWAC] that will be focused on media – listing all major media platforms & outlets as potential competitors. Trump is basically offering a counter voice to the very left controlled mediums of the New York Times, the Washington Post, etc.
- At one point last wk DWAC was up over 1200% before finally closing the wk at $67.75 – for those not familiar with SPACs – we covered them here before on Macro Dragon – the strike of the shares is $10. So whilst the highs of the wk were $175, where at one point it was worth over $8B, we are still c. 7X from a normal SPAC strike & the mkt cap is $3.1B.
- The result of all this, is the incumbents who worked so hard to kick Trump off “their” stage, have done something for Trump that he could never do himself. They have made him a bona fide billionaire – assuming he executes correctly on this. The smartest & simple thing would be to buy out a few established media sources, rather than try to build everything from scratch. It will be interesting to see how it plays out.
- There are a few lessons here from an investment perspective: 1. There are always opportunities, one needs to have a cultivated mind that is open to everything, yet attached to nothing. 2. Never underestimate the power of the network effect (Power law distribution), coupled with contrarianism against the established narrative & the anti-fragile nature of what Trump represents (rightly or wrongly) to his flock – something different from the current establishment.
- All of that is currently worth $3B – which is likely what the NYT & Post are combined. We will almost certainly see more SPACs in the works for The Donald. Move over MEME stocks, there is a new Sherriff in town.
Recent Works to Keep In Heavy Rotation
Start <> End = Gratitude + Integrity + Vision + Tenacity | Process > Outcome | Sizing > Position.
This is The Way
Dragon Interviews: Dragon Interviews U-Tube Channel for easier play-ability…