Macro Dragon: Week #18 - Month End, Final PMIs, Long WKDs, BoJ & Fed...
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.
Macro Dragon: Week #18 - Month End, Final PMIs, BoJ, Fed, ECB & Long Wkds...
Top of Mind…
- This week is going to be dominated by finals PMIs, including ISM mfg. figures out of the US, before culminating in a 1 May public holiday for most of the world (ex US, CA, AU, NZ)
- We still get continued focus on US earnings, with a lot of big names due this wk including Amazing which has been making all time highs & is now valued at $1.2 trillion
- Holidays: NZ out today, JP out Wed, most mkts shut on Fri…
- Economic data – a lot on, does it matter? It does not matter until it matters… so far equities continue to live in a hype world of Fed/Treasury wall street bailouts & complete ignorance on the fact that we are not getting back to a Jan 2020 world, in 6months let along 1-2 months. This is not solely a 1-2Q drag… there are potential ripples here that can cascade epic-ally
- US: Trade Balance, Whole Sale Inventories, CB Consumer Confidence, 1st cut on 1Q GDP print -3.9%e 2.1%p, Pending Oil Sales, Wed is of course Crude Oil Inventories where we are likely to see ATHs again post the 19.2 from two weeks back. Obviously Thu is jobless claims that could take us to +30m jobless Americans in just 7wks – thats c. 20% of labor force & likely directly affects +100m Americans (the families of the 30m) & indirectly affects the rest of the 330m – i.e. are you going to go out spending right, left & center when so far 1 in 6 Americans workers are out of a job. We also get core PCE, personal income, Chicago PMI, Final Mfg. PMI & ISM Mfg. PMI.
- CH: Mfg. PMI 51.0e 52.0p, Non-Mfg. PMI 52.8e 52.3p
- EZ: Flash CPI, Flash GDP -3.3%e +1.0%p, Unemployment Rate,
- JP: Unemployment claims, BoJ Core CPI, Retail Sales, Final Mfg. PMI
- Central banks: We got the BoJ out this morning Asia – no key takeaways from KVP, at the end of the day we know central banks are going to be the doctors that will keep pumping unlimited morphine into the body of the economy, no matter how each successive hit gets weaker & weaker. So whether or not they formally announce they are all in – they always were… interestingly enough yen is strengthening off the back of this.
One last point, BoJ / Japan set the bell curve of where debt lvls & central bank BS use is going… they have finished the race…. & KVP can see the USDJPY well south of 100, easily in 3-9months. Just take a step back, we have been around these 107-108 lvls, even with the epic bear squeeze moves in US equites & the dollar still being so strongly bid (imagine when DXY finally breaks?)…. There is likely big trade with stops around 110 & profit targets at a touch higher than 105, then 103, then 100 & save that last clip for braging rights – Dragon’s rule on this, slide your stop loss towards each successive lvl. Also FX vol is lower than morale in a Covid-19 lockdown.
We also have the FOMC this wed (early Thu Asia) where we are likely to see some questions in regards to negative rates, as well as the wall street over Main Street.
Last & most likely least, ECB on Thu - unless of course, they try to come to the rescue of the euro-zone again, given the subpar performance of all the political bobble-heads last wk.
Generally speaking from KVP’s side, the actual central bank meeting are less relevant now than Pre-Covid19… i.e. we know they are all committed to doing whatever it takes & the race to the bottom in the QE infinity game is here to stay for much longer than most people can envisage. What we can look for is hints & planting of the seeds of next potential steps... yield curve inversion, buying equities, bailing out more airlines (through the Treasury), negative rates, etc.
-Start with gratitude & integrity. Make your luck out there. Positioning > Idea. Process > Outcome.
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.