Macro Dragon WK #8: Happy Lunar New Year – The Year of the Crypto Ox

Macro Dragon WK #8: Happy Lunar New Year - The Year of the Crypto Ox 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 WK #8: Happy Lunar New Year – The Year of the Crypto Ox

 

Top of Mind…

  • TGIM & welcome to WK #8

  • Happy Lunar New Year to everyone, as that’s very much the season that we are in for most of the Asia Pacific. The US & HK not back in until Tue & CH not back in until Thu

  • Wishing you all the most epic of times – in the most positive way possible – in the year of the Crypto Ox, or is that Metal Ox… guess we don’t have to be maximalists… there is always a bull-market somewhere! 

  • In case you missed our 1Q Outlook here is the link

  • KVP would also like to get a plug in for the always excellent Althea & Ole who will be doing two separate webinars this wk that give an update on their respective areas:

    Ole on the Commodities Update – Tues 16 Feb 1900 SGT

    Althea on the Bonds Update on  – Thu 18 Feb 1900 SGT

  • Rumor has it that KVP is working on a webinar at the end of Feb that will cover Asymmetric Trade views as well as SPACs, Psychedelics, Alternative Protein & Crypto amongst other things… Stay tuned!

  • We’ll be touching launching a Macro Dragon campaign off a number of these things, as they have been very much in hot discussions with our VIPs

  • On markets & cross-asset views, no big change from the Macro Dragon’s side. With that said look out for a potential change in the formal House View of the bank later today/this wk.

  • The value is always in the plethora of views & frameworks, there are multiple pathways to getting to our destinations – at the end of the day, we all need to choose our own paths alongside the game plan that goes with them.

Rest of the Week & Other Top of Mind Thoughts

  • Again, generally light wk ahead from an economic, central banks & geopolitical known unknowns. There is a flash PMI theme across the board given it’s the 2nd to last wk of the month. As well as a few key CB minutes due.

  • CBs: FOMC Mins, RBA Mins, ECB Mins, Rate decisions out of Indonesia 3.50%e 3.75%p & Turkey 17.00% e/p

  • Quite a bit of Fed speak – including Brainard at a Climate Finance Summit.  

  • US: FOMC Mins, Empire State mfg., Retail Sales, Capacity Utilization, IP, Philly Fed, Flash PMIs

  • CH: Nothing major scheduled (Lunar New Year holiday)

  • EZ: Industrial Production, Flash GDP, German ZEW, Flash PMIs

  • CA, AU, NZ: Retail Sales & Inflation out of CA. Jobs data out & RBA mins out of AU. Visitor Arrivals, Milk Auction & PPI.

  • Hols: US & HK back in on Tues. China still out on Lunar Holidays until Thu.

Dragon Interviews…

  • Next Dragon Interview is hot out the oven & set to drop soon, likely this Sat…. Stay tuned!

  • In the latest segment of our Dragon Interview series, we sit down & sit with the talented, as well as always witty Keith Dack – known as Dacky in the markets.

  • Dacky has been trading since the 80s, making tens of millions of dollars for a large number of banks – including legendary firms such as Bankers Trust & Salomon Brothers – in the multi-trillion global currencies markets

  • We touch on the change in market regimes over the decades, risk-taking, his approach to trading currencies & how he looks at the market.

  • And naturally we make some time for war stories, career progression as a risk taker, as well as some of his biggest winners & losers on the trading floor. Dacky does not hold back on the challenges that come with the craft, that often get glossed over in trading books & with the media.

  • It’s rare to come across an individual of Dacky’s deep experience, talent, humility, as well as continued passion & drive for trading the markets.

  • For context during the turbulent year of 2016, think Brexit & Trump US election victory surprises among many things, Dacky returned +50% for the year.

  • Lastly we close on big picture thoughts going into 2021 – the interview was filmed on 28 Nov 2020 – which will give people some MtM as well as ideas & investment themes to reflect on.

  • You can watch the full interview here.

  • We hope you enjoy the interview, as much as we had putting it together.

  • The Profile of the interview is roughly broken into:
    • 01:25 – “Background, Career Path & Changing Market Regimes”
      • Amazing to note the regime change & how consolidation & regulatory reach has actually taken out so much liquidity & price discovery in the Currency market over the last few decades.
    • 39:30 – “Warstories”
      • Here we touch on some of Dacky’s biggest wins & biggest loses, including being woken up being down six million dollars, as well as making c. +50x on FX options
    • 48:00 – “Thoughts on Trading Frameworks, Approach to Markets & Style”
      • Trying to pin down Dacky’s approach to the Craft of consistently compounding wealth overtime across numerous market regimes
    • 54:00 – “2021 Views & Top of Mind Thoughts”
      • Interesting to note the high conviction view on the macro picture for Indonesia & its layer cake of tailwinds, that is still likely not quite as appreciated as it should be – given that global investors still seem so focused on DMs opening up before EMs
      • Dacky also weighs in on the US dollar, China (only real significant positive rates globally) & other assets

Previous Dragon Interviews

Discussing Global Macro & the Building Out of a Hedge Fund the AVM Way, with the Class-of-One Ashvin Murthy

  • Going into year 5 in one of the toughest & dynamic changing Global Macro Regimes, AVM has returned +42.7% since its Nov 2016 inception, with an astounding Sharpe of +1.7x

  • For context, over that period government bonds & equities have had a Sharpe ratio closer to 0.74 (i.e. way more risk for return)

  • This was the first in a string of exclusive Dragon Interviews series with exceptional professionals who have skin-in-the-game, across different strategies, asset-classes & backgrounds.

  • Singapore Based, AVM Global Opportunity, is run by the talented & always exceptional Ashvin Murthy. Who in KVP’s view is world class in his approach, process & even more importantly trade construction & money management.

  • Ash has demonstrated that, if the process is pristine & consistent, the returns will take care of themselves overtime. He has also returned volatility that is lower that government bonds, yet obviously with much better returns.

  • The timing of the interview is uncanny as it was at the cusp of the last US presidential elections that AVM was launched. It’s worth noting since the interview, the fund has also been nominated for the Singapore’s Best Hedge Fund of 2020, given its consecutive five straight positive months at the start of this volatile year.

  • Please click here for interview link.

  • You can follow & learn more about AVM here.

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

    This is the way 

    KVP

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

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