Macro Dragon WK # 36: Post Jackson Hole, US NFP Fri, Final PMIs Month-End, Afghanistan-End?

Top of Mind…

• TGIM & welcome to WK #36…
• First up, Afghanistan remains top of mind, not just due to Kabul Blast last wk, Macro Strike: Afghanistan Airport blast kills over 70 people, including 12 US Service Members, Biden on the tape… yet the sub 2 days deadline for US to exit the country based upon their agreement with the Taliban.
• KVP will not weigh in on the finger pointing, linear analysis & generally arm-chair expert / keyboard warriors posturing around this… he will flag two key things to watch out for this wk.
• One: Wed, Sep 1 – Please join us next week when we set up a one of a kind webinar on Afghanistan: Return of the Taliban with Former US Ambassador to Afghanistan, Mr. Hugo Llorens, alongside our always excellent CIO & Chief Strategist Steen Jakobsen, who will be hosted by Lester Chan, Greater China Head of Wealth Management.
• So do please sign up, we’ve pulled the stops to make this as global as possible across our many clients, offices & time-zones: It will be 2000 SGT, 1400 CET, 0800 ET.
• Two: Macro Reflections & thought piece on the entire set of events & parameters.
• Month-end wk, means things could get noisy from a flow perspective across asset classes – so full settlement of Jackson Hole will likely not be clear until next wk Tues – as both the US & CA are out on Mon for Labor day.
• And of course, if that was not enough, we got final PMIs on Fri & more importantly for Macro & thoughts around the Fed, NFPs. 750K is was is currently expected, if we get a banger of a number, read +1M… we could once again see a tidy reversal of the moves we saw last Fri. If we get in-line, probably not much of an effect… if we get a big miss, sub 500K… then we could see quite a healthy extension of where we closed last wk.
• It worth noting the big moves last wk from +13% on Brent, to +4.4% on silver, +5% on the Russell, etc… were a big reversal from the previous wk. So once again, unless your US Big Cap equities (S&P, Nas-100)… you’ve just been range bound for months.  
• Jackson Hole – rightly or wrongly – was taken as Risk-On Disco Party by markets, with EQ & CMDs up, volatility/yields/USD down – a big chunk which was reversing the previous wks move that saw risk-off across assets. Powell is still in the transitory inflation camp. The previous link is to the actual recorded speech, the transcript can be found here. 
• With the next Fed meeting on Sep 22, now likely seen as just a set-up for Nov 3 – post this wk, attention will fully get back to this $3.5T infra bill.
• From the Asia Pacific, CH & HK equities are still far from our of the clear & the monthly + wkly closes are going to be key to see if we continue to consolidate around the bottom here, break out to new highs, or go from oversold to another -5% to -10% lower. Sentiments continues to be super poor, bearish, with no bull in sight.
• SG has hit +80% of the population being fully vaccinated, which makes us on the Dragon continue to like upside in SGD especially vs. EUR, SEK, JPY & even tactically vs. AUD, USD & NZD. Sydney continues to make new record highs in Covid cases, which likely means the restrictions are not coming off anytime soon (RS & GDP due this wk for AU).
• Oh & our long NOKSEK 0.9915 continues to do well – loving the price confirmation.

• The “easy” move is to 1.02/1.03… this puppy was +1.05 pre-Covid. From these 99c lvls (initially flagged this at 97c), KVP would have a wide stop to at least 96c (its a volatility cross with NOK getting a beating on risk-off market moves), with tgts set at 1.02, 1.04 & +1.06. Would have the usual dynamic risk-management of the rubber band stop (i.e. first tgt hit, stop moved to entry, 2nd tgt hit, stop moved to 1st tgt, etc). In addition to chart & price confirmation, the key rationale here is divergence in both inflation & monetary policy in Norway vs. Sweden with Norges bank set to hike in their Sep 23 mtg, whilst the Riksbank is likely on hold for years to come – with inflation in Sweden continuing to lag their Norwegian neighbors.  Key risks are; obviously Norges Bank pulling at RBNZ & blinking before an anticipated hike, falling inflation & growth in Norway, more hawkish Riksbank & spike in PCI in Sweden, general big risk-off in mkts & in particular energy which would weigh heavy on the NOK. 
  

   

Recent Works to Keep In Heavy Rotation

• Peter Garnry, Equity Strategy: Is it time to buy Chinese technology stocks?
  
  Summary:
  “Our Chinese Consumer & Technology basket is the worst performing basket this year due to the ongoing technology crackdown in China.

  Many investors are asking us whether it is time to buy Chinese technology stocks?

  The short answer is no.

  Chinese technology stocks are currently trading at a discount to US technology stocks for good reasons and as long as this discount persists we think investors should focus on Chinese consumer stocks and get exposure to technology in the US. Finally, we take a look at Facebook and Tencent as both companies are pivotal for technology sentiment in the US and China.”

• KVP weighs in on a potential Asia investor skew into Europe, looking at the UK as a spin-off from the conglomerate & less effective EU. As well as highlighting China Tech’s underperformance in the 1H21,  vs their Global Counterparts especially in the US.  

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Start<>End = Gratitude + Integrity + Vision + Tenacity | Process > Outcome | Sizing > Position.

This is The Way

Namaste,
KVP

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