Macro Dragon: GOOD…

Macro Dragon: GOOD... by Michael McKenna
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.
(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: GOOD…

 

Top of Mind…

  • There has been nothing new / screaming from a conviction basis on the Macro Dragon pallet that we have not already flagged before…
  • …GOOD. This should be the default state. There is a misconception in investing/trading & most walks of life where ideas are sought after… that they fly about, a dozen a day… if you are getting a dozen investment ideas a day… chances are… you are net-net losing money…
  • The Default state should be nothing standing out & then, now & then you get chunks of opportunities & interesting set-ups in the making.
  • It’s also GOOD, to see investment themes that you have had prime conviction views on play out… this could be US Duration (recall Jan & Feb, “one cannot own enough US duration” when US 10s were 1.80% to 1.50% range) or most recently months of banging on Gold… which post the break-out through $1750 from Mid-Jul, continues to grind up with yest’ +0.57% to $1794.
  • Interestingly enough, in a world where a lot of assets are either making ATHs or close to ATHs… Gold is still south of its 2011 $1920 highs… KVP has touched on gold enough times:
  • GOOD is an anthem to the investment process, as well as a stoic lifestyle. GOOD is anti-fragile. You see the positive convexity in everything. No Ideas? GOOD – we can catch up on some long overdue reading & research, or/& take some well deserved break. Got tons of Ideas? GOOD – time to filter & optimize across the ideas, how does our overall asset allocation look like, where are we weighted exposure wise on a risk/reward basis…
  • Trade idea blew up in your face – GOOD, opportunity to learn & tweak the process. Trade idea shot our the lights & was one of the most lucrative of your career, GOOD – opportunity to see how we can have more of these.
  • Currently the risk-on regime & framework in the market is the paragon of GOOD! We rally on positive economic data – Yay! We are coming out of the downturn – & we also rally on negative C19 news & potential shutdowns restarting – Yay! It means more pressure for even more liquidity to flow.    
  • On a completely separate note – & reflagging this again! – CH & HK equities & currencies, despite the negative rhetoric are breaking out bullishly… this is a function of contrarian forces of the world being underweight, the reflexivity of FOMO, as well as underlying China data continuing to surprise to the upside – not to mention continued accommodation policies.
  • We had flagged 388 HK (HK Exchange) a few wks back, yet now its pick your sector… banks (Like ICBC), autos (Like Geely) breaking out higher…
  • The yuan? Strengthening vs. the USD… at c. the key 7.00 lvls we’ve broken below the key 7.05 – 7.15 range. The HKD has also been trading on the strong end of the band at 7.75, actually forcing the HKMA to sell HKD & buy USD. All these are price actions & lvls that one would not believe if they just kept to the headlines & consensus rhetoric.  

To Keep In Mind Today

  • JP: Bank Lending, Current Account, Economy Watchers
  • EZ: EU Economic Forecasts
  • US: Crude Oil Inventories, Consumer Credit, 10yr Bond Auction  

Start-to-End = Gratitude + Integrity + Vision + Tenacity. Process > Outcome. Sizing > Idea.

This is the way.

Namaste,

KVP

Topics: Macro AUD JPY CHF EUR GBP NZD Bonds Gold Apple USDTRY USDNOK EURNOK USDMXN FX Technical

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