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:

• 25 Jun: Macro Dragon: Gold = Antifragile?
• 14 May: Macro Dragon: Checking-in on Bitcoin... Legendary Trader Paul Tudor Jones, is in Love, with Bitcoin & Gold...
• 6 May: Macro Dragon: Dissecting Gold part II of III... The Bull
• 22 Apr: Macro Dragon: Dissecting Gold part I of III... The Bear

• 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.  

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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  

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