Macro Dragon: The Wire, Risk-On Party & Impeachment...

(Note that these are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations.)

 

2020-Jan-10

Macro Dragon: The Wire, Risk-On Party & Impeachment  

Before we get into it, for those that are back – or on the way back in – from what was hopefully a restful year-end holiday break, Happy New Years!

Let me sincerely (hand on liver) wish you, your families & teams the best of 2020. May your health, vigor & experiences be excellent & full of fun + laughter. May you continue to grow & develop yourself. May you be awash in gratitude & contribution plus fall [tail] backward into more money than Bezos.

We’ll be shaking things up from KVP’s side, so expect a lot more trade views going forward, as well as 20 long-term trades views for 2020 – which KVP will do a special piece & mini-series on.

Ok let’s get after it…

Sometimes...

KVP: You know sometimes these Macro Dragons just write themselves… & other times its like trying to conduct surgery to separate a cluster of quarks…

Stan: Are you reading more Neil DeGrasse Tyson books?

KVP: Hey man don’t knock Astrophysics… it generally makes more sense than the markets…

Stan: So how many Macro Dragons have you done?

KVP: Like in total?

Stan: Yeah dude, in total … sum of… all of the above…  

KVP: Eh… including today? Cinco…

Stan: [long pause… rolls eyes slowly…  then goes back to reading the paper]

…As the risk-on party continues…

We continue to lift higher on equities & general risk-on sentiment.

As per KVP’s morning Saxo Wire, which you can catch on the SaxoTraderGo platform:

Asia Fri Start: Risk-on sentiment cont. as covered in KVP’s Macro Dragon on Mon. SPX +0.67% 3274, DAX +1.31% 13495. USTs still same 1.87 lvls of Thu. DXY now up 3 Days in a row for +0.81% to 97.45. Gold pulls back for 2nd day -0.26% 1552, Brent starting to settle -0.11% to 65.37

If you don’t already know, the Saxo Wire are alerts that come pop up for clients that are logged on – coming directly from our phenomenal Global Trading team, as well as the Sensation SaxoStrats squad. So on days like earlier this wk, it can make a big difference for clients looking for anchors of clarity amidst the noise. Here was a phenomenal example, that ended up being back on if you had the same skew for a bounce.

Wed Jan 8 Singapore Morning

US/Iran Trade Views: Think more risk-off look to potentially short both USDCHF & EURCHF -0.05% & -0.03% vs. -0.27% for USDJPY. Those playing a bounce can reverse those shorts trade views, plus long USDJPY at these c. 108 lvls & long Puts on gold c. $1590, with $1550-75 strikes


So that’s The Wire…  “A man got to have a code”

It worth noting that AUD & NZD did not join the risk-on sentiment party o/n as they were down -0.12% & -0.47% vs. the USD…

So KVP would be looking at laggards, if your skew is that the Risk-on party cont. Which is KVP’s former & current view – for now…

Trump Impeachment…

So KVP’s views on the Impeachment Saga are unchanged from our Sep 2019 triple "I" piece: Impeachment Investigation Implications

Basically a DOA (dead on arrival), that is wasting tax payers money, taking up valuable bandwidth in which the Dems should be focusing instead on the election year & given that the Reps control the Senate (who rule on the impeachment) its was never going anywhere.

Its one thing to do something symbolic & in principle, its another to waste tax payers money & continue to get more entrenched, as well as less bipartisan. The incredible thing about congress - & up until recently the UK parliament comes to mind - is that citizens are basically paying politicians for the privilege of them not doing their job, it amazing!  

Still – in the pursuit of objectivity, process & remembering anything is possible, lets play ball here & assume Trump does get impeached – i.e. the Dems mng to turn enough Reps to get a 2/3 majority in the Senate. He would likely step down/resign right before the verdict & then we’d get Pence as President – markets would love that.

Pence at 60, is the spring chicken / young buck to the 78yrs of Sanders,  77yr of Bloomberg & Biden & 70yrs of Elizabeth Warren.

Trump by the way is only 73 – yet KVP still reckons Biden can crush him on Push-Ups, now if it was a Micky-Ds eating contest… or Golf… or Quips… Trump would wipe the floor with “Sleepy Joe”… left, right, back & forth… and he’s be talking S#&! the whole time.

As a side note, Buttigieg at 37yrs is unfortunately just too young for the current American voters to elect for president – but he will be back in 2024. You know what would be awesome? If he was taken as a VP if the Dems win or if Trump dropped Pence for Buttigieg - Trump would gain mad props for that, a democratic gay millennials as VP! People's minds would literally blowup.  Also worth noting, the Burn is back & Warren has been losing some steam – still early days… Mid July is the Nomination & remember what happened last year.

 

On a side-side note, apart from extending the 4yr prezi term to a one 8yr term, not paying congress if they go 2-3 months without significant agreements/progress, think having a VP from another party would also be a great principle for cohesion in the system. And yes, the US needs more parties – if you really only have two, you have a duopoly & we all know how “fair” those systems are.  

Anyhow, no one has done the calculus on Pence vs. rest of Dems Fields – yet he has the economy going for him (this is a massive deal, especially for minorities that generally rate this as #1), no doubt Trump’s supporters, as well as the Christian base. What he definitely does not have, is Trump’s Charisma which can cut both ways.        

Probably still the only one that can really beat Trump is Sanders. To paraphrase roughly, the only way to beat Crazy is by Crazier! And by that, it’s the voter base. It going to sound crazy, but the American voters are still not ready for a woman president – Yet once they do (& they will get one), we are likely never going back which is likely a good thing.

 

ON The Radar Today

Really all about US data today…

• US: NFP 162k e 266kp, U/R 3.5%e 5.9%p, AHE 3.1%e/p, Inventories
  
  
• CA: U/R 5.8%e 5.9%p, Employment Change 24.9ke -71.2k p
  
  
• AU: Retail Sales beat +0.9%a 0.4%e 0.1%r (0.0%p), AIG Service Index 48.7a 53.7p
  
  
• EZ: FR & IT Industrial Production

 

What We Are Reading From SaxoStrats:

• Jakobsen & SaxoStrats team with our sensational 2020: Outrageous Predictions

• Dembik on ADP beat overnight & ISM beat earlier this week

• Hardy latest FX Update: USDJPY to test above 110 if US yields continue to climb & USD bullish reversals abound 

• Peter-G on equities in the new year: What to expect in 2020? & Green stocks are the next mega trend in equities