Macro Dragon WK #26: The Week After the Hawkish Fed Pivot...
Summary: Macro Dragon = Cross-Asset Quasi-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 WK #26:The Week After the Fed Hawkish Pivot...
Top of Mind…
- TGIM & welcome to WK #26…
- Despite the title, we’ll cover the thoughts & potential pathway from last wk’s FOMC meeting on a different thread later this Monday Asia – so look out for a Macro Reflections piece… It was just getting too long for a wk ahead piece
- Suffice to say, risk-off is the name of the game equity wise in the Mon Asia Midday Session… a slight pop in AUD 0.7489 +0.13% & NZD 0.6955 +0.27% post the beatdown they got last wk at -3.0% to 0.7479 & -2.7% to 0.6936, respectively.
- Gold 1774 +0.57% trying to bail water out of the flooded ship, post last wk’s -6.0% to 1764…
- …& ditto on copper than finished last wk at -8.4% to 415.
- And as always Oil completely not giving a fudge & ticking up +0.50 to +1.0% after finishing up last wk. Clearly oil – for now at least – could not spell hawkish Fed if you held its hands. Still think Oil could easily do -5% to -15% & still be in a bullish Ascension. It has been pretty much relentless since Nov of last year – was interesting to see energy names like etf XLE $52.39 pullback by -5.4% last wk.
- The theme this wk is going to be digestion of the Fed & its implications, as well as have some flash PMIs, BoE, FOMCs speakers & Powell set to speak on Tues (Wed 0200 AM SGT).
- Eight key question for cross assets & markets to consider:
- Have the moves from last wk completely repriced us for a Hawkish Fed from a cross-asset perspective?
- Have the moves from last wk overshoot from a cross-asset & themed perspective?
- Have the moves from last wk undershoot, either from a few lagging securities like say BRL or TWD and/or we are just getting started in regards to USD bulls positioning?
- Is the reflation theme dead, or is this a beautiful place to add onto some of the cyclicals likes financials?
- Will the Fed have to potentially do another 180 degree turn closer to Jackson hole, as it seems that the Biden|Harris Administration may not be able to do as much fiscal as we envisaged from just 4-8wks ago?
- A lot of key technical weekly closes from last wk, so regardless of one’s thoughts on fundamentals are these about to be new emerging trends or false break-outs, or a mix of both depending on asset class & underlying play within that asset class?
- Why were things like financials selling off, if we are hiking rates – shouldn’t banks do well in that environment?
- Is there a chance that the Fed is pivoting towards being hawkish right when we are seeing maximum growth in the US & potentially peak inflation given base effects fall off & almost half of the components from US CPI rises from the last two readings had to do with temporary factors of second hand car prices?
Rest of the Week & Other Reflections
- Econ Data: Econ data is light this wk, we got flash PMIs across the board, with the US seeing final GDP & durable goods readings set to come through.
- CB: BoT 0.50% e/p BSP 2.00% e/p BoE 0.10% e/p (yet taper is key risk, yet we are still delayed on reopening) MX 4.00% e/p
- Fed speak: Tons of speakers with a few dovish FOMC speakers kicking off the wk, key focus will be Powell Tue testimony (Wed 0200 AM SGT/HKT)
- ECB|EUR: Lagarde speaking twice on Mon & once on Wed
- Hols: No major hols on the agenda
- Dragon Interviews U-Tube Channel for easier play-ability… Check out our recent Crypto Interview with The Spartan’s Group Casper B. Johansen & yes, the increased volume for regulation coming out of the US is actually a massively positive structural aspect for the space. Translation: Regulation of Crypto = Acceptance of Crypto.
Start<>End = Gratitude + Integrity + Vision + Tenacity | Process > Outcome | Sizing > Position.
This is The Way
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.