Macro Dragon WK #9: Powell Testimony, RBNZ, BoK, E-Feb, KVP's Tues Asymmetrical Trades Webinar

Macro Dragon WK #9:  Powell Testimony, RBNZ, BoK, E-Feb, KVP's Tues Asymmetrical Trades Webinar

Top of Mind…

• TGIM & welcome to WK #9…
  
  
• Hope everyone has an excellent wkd, with concentrated bets across some R&R, great company, loved ones, some meditation, some form of movement & some reading
  
  
• We are going into the last wk of Feb which leaves us with c. 15% of the year already under the belt. That. Was. Quick.
  
  
• KVP has pretty esoteric webinar tmr @ 1700 SGT | 1000 CET that is titled:
  
  

  Asymmetrical trades and high conviction investment themes:
  
  SPACs, Psychedelics for Medicine & Treatment, Alternative Protein and Crypto
  
  

• Feel free to sign-up & join the webinar if you have not already, will aim to share the recording when its available later in the wk. As usual when KVP is on deck, we’ll touch on cross-assets, tactical & strategic horizons & a closing AMA session.
  
  
• The Wkd chart works just continues to underline the break-out higher in yields, which basically shows a few things looking ready to either continue their pop upwards or pop upwards big time including:
  
  
• Financial both in the US [IYF] & Europe [Euro Stoxx Banks] are breaking out higher.
  
  
• Airplane etf JETS, taking off. At $24.82, the JETS etf still has a +305 move to get back to its Jan 22020 lvvls of $32.34.
  
  
• The Aerospace & Defense etf ITA $99.01 is looking very bullish on weekly confirmation & bullish MACD. We are still south of the ATH of c. $119 from Feb 2020, i.e. a +25 move
  
  
• And the space that we have been blowing the trumpets on, since the wk prior to the US elections, so late Sep 2020, the energy sector.
  
  
• Energy etf XLE weekly is looking very bullish, big candle closing up over key WMA of $42.72, with last wk’s $46.18. More importantly from a technical perspective, we are above the c. $45 high in Jun last year that saw the fake bounce in energy & value in general. Where were we in Dec 2019? C. $68! This implies that there is still a c. +48% move to get back to Pre-Covid lvls, yet the Dragon would argue that the structural demand/supply dynamics for Oil have actually only gotten better for the oil majors in the space.
  
  
• And it worth noting that unlike IYF the financials ETF, ITA, XLE & JETS are still well below their pre-covid lvls – not many stocks & sectors that can make that claim.
  
  
• And yes with US10s at 1.385 & gunning for 1.50% and US30s at 2.17% & gunning for 2.50%... gold at these $1784 lvls (despite the awesome tactical short call from $1830 by our CIO Steen Jakobsen) is likely going to breakdown through the $1750/1780 support lvl… in fact.. more than likely in the Dragon’s books. Unless of course Powell drops three letters during his testimony, Y-C-C! Meanwhile Bitcoin at +$55,000 continues to make ATHs wk in wk out.
  
  
• Speaking of the webinar tmr & Psychedelics for Medicine & Treatment, Compass Pathways (CMPS) had a decent c. +11% lift on Friday to $53.12. This is after a wk that saw +617K of volume, prior to the previous two wks of +660K & +311K & respectively +9%, +8% +3% rtns. Someone should dig around, yet smells like it could be accumulation to KVP.
  
  
• Recall last KVP check (a while back, so a bit stale when we flagged it at $29 post its IPO +71% pop), there were at least three broad events to watch on CMPS:
  
  
  • 17 Mar lock-up expiry – which could naturally see some insiders & backers of the company diversify to exiting their concentration.
    
    
  • 1 Mar scheduled earnings release (these earnings dates can move around)
    
    
  • 2H21 – Most importantly the big update on their trials.
    
    
• Back-end of the wk, KVP will get back on a deeper dive into the space – as there are quite a few names that he has not touched on (We’ll touch on some of this on tmr’s webinar) & of course SPACs.      

Rest of the Week & Other Reflections

• G20 towards the back of the wk should be the most civil one in what? 5yrs, given the new POTUS in the US… would expect a coordinated blanket statement around vaccine for everyone, governments need to do more & perhaps more actionably, firm return of the US to the climate crisis agenda (see latest Dragon Interview below).
  
  
• US/mkts still really focused on continued break-out higher in yields (watch questioning of Powell around that this wk), the freeze across the Midwest & in Texas specifically, the fiscal stimulus package (believe should be going to the house this wk) & testimonies around the whole GME / Robinhood / WSB / Melvin Capital / Point72 / Citadel drama.
  
  
• Despite last wk of the month, we will not be getting the super Friday NFPs out of the US, that will be for Fri 5 Mar. We do have secondary readings on the US 4Q GDP 4.2%e 4.0%p, as well personal income, personal spending & inventories due. PCE is also on the cards as are a few Fed activity measures (Chicago & Dallas), consumer confidence & durable goods.  
  
  
• CBs: Light with rate decision out of New Zealand 0.25% e/p & South Korea 0.50% e/p.
  
  
• Key focus is likely on Powell Testimony on Tue & Wed
  
  
• Hols: JP out on Tues.
  

New Dragon Interview– Global Macro & Nature Conservationist Geo Chen

Our third Dragon Interview takes us to an outlier’s outlier, with a world class trader, investor & Nature Conservationist Geo Chen. 

We had the pleasure of sitting down & speaking with Geo who is:

Board Member @ The Rain Forest Trust

Co-Founder of the Huang Chen Foundation  [Nature Conservation Focus]

@geochen

Whilst the interview was filmed at the tail-end of Nov 2020, there is something here for everyone to take something away, including bigger picture thoughts on 2021, broader implications of the macro regime that we are in, as well as overall framework, allocation & investment process.

Geo has been running his own capital across both liquid & illiquid strategies since 2017, chalking up +8x returns in the process, which more importantly fuel Geo & his family’s passion & calling, for Nature Conservation.

What is impressive outside of the large returns over the period, is that Geo somehow does it all – from trading to investing, to internal capital allocations as well as external allocations across the entire asset class & strategies spectrum. I.e. its tough enough to consistently do well in one area, lets alone across the board.

We cover his come up story, his framework + process & approach, his passion & the importance of the Nature Conservation. Lastly we close with Top of Mind Thoughts & views for 2021 & the general global macro regime that we are in.

We hope you enjoy the interview, as much as we did putting it together. And if there is something that you take away from this, be it inspiration, enhanced framework, investment thesis that resonates, left you thinking, etc…  

Do consider making a donation to the Rain Forest Trust – which buys up rainforest land around the world & maintains them within an ecosystem of local residents.

From a markets perspective these are some of the areas we touched on:

• How Geo fared in 2020, given the massive bullishness in Jan, crazy sell-off in Feb & Mar, then once again bullish recovery in Apr & May
  
  
• Inflationary regime & the huge fiscal forces that we are seeing
  
  
• Precious Metals & US duration
  
  
• Bitcoin & Crypto
  
  
• Energy

We hope you enjoyed this Dragon Interview, as much as we enjoyed putting it together

Namaste,

-KVP

Ps. Yes, the video player in the platform/website is a pain with no ability for an acceleration option (been kicking up a storm about this internally for years). Will have a u-tube linked version later this wk, as its one of those pieces that is worth re-watching a few times… lot to digest.  

Previous Dragon Interviews

• Ever wondered what it would be like to be a Proprietary Trader of Global Currencies over multiple market regimes across the world?
  
  
• In the our second Dragon Interview series, we sit down & jam with the talented, as well as always witty Keith Dack – known as Dacky in the markets.
  

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• Ever wondered how a Macro CIO would approach the top-down process?
  
  
• 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. Catch the great interview with Ashvin here.  

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

This is the way