MM 24 November 2020
Quotes
Markets & Macro news
The choices of Biden’s picks are revealing of what’s in store for the next four years. Note the appointment of Antony Blinken as Secretary of State and John Kerry as climate czar (globalist Europe must be happy)
But of course, the most revealing appointment is former Fed chairwoman Janet Yellen as Treasury secretary. Known for her ultra-dovish stance, it states loud and clear that Fed insiders are in control. After making promises during the campaign that the new administration will be tough on Wall-Street, you know who is laughing now
Some had speculated on a student loan debt jubilee. But as time goes by this looks increasingly likely.
To be fair, USD 1.6tn student worth of student loans is a drop in the ocean of debt that the US government is ready to borrow (at least USD 3tn stimulus plan or 15% of GDP!), just as global debt reached USD 277tn
A major generational transfer of wealth is underway
The spirit of ThanksGiving (in two days)
Also a good way to see that America is less homogenous than some thought
Are you an insider or an outsider?
So what do the insiders have to say?
Free trade zones and protectionism: As tensions with neighbors continue to build up, Australia is blocking Chinese buying of one of its dairy producers. If you are wondering why A2Milk is falling from grace look no further
If you are an outsider therefore, some protection may still be needed. M2 (cash and deposit savings) is at USD 100tn so gold is 10% of total, but looking at the pace of money printing, 1% extra money supply could be worth 10% for gold.
And if you are afraid of owning cash or bonds ahead of inflationary pressures…
…Paladium and Platinum (which have industrial uses as catalysts) are good too
Four of my favourite markets’ strategists (BoA, MS, Stifel and Kepler) have turned bearish in the short term. They believe too much good news is in the price and a temporary roll over is overdue, even if the mid term is probably ok.
Rising PMI is good for cyclicals and bad for long duration growth stocks and other defensive bond proxies
But there is still some way to go to get back to "normal"
Too many bulls
Testing technical resistance
It is all good according to breadth indicators. In markets, good = bad.
Small cap rotation could spell bad news for big index leaders
Not cheap
More money = higher prices. Higher prices = lower returns.
The context is favourable to bubbles
Signs of froth
If FX and fixed income securities are 80% fundamentals (mostly liquidity considerations) and 20% psychology, equities are 80% psychology and 20% fundamentals
Another week, another vaccine news. Are you prepared for a post Covid world?
You need to two tango
If you hear one day that the market is going up because there are more buyers than sellers, you can say it is wrong. There can’t be. For every price is a transaction between a buyer and a seller. In the absence of one of the two there is no market. Now what drive price directionally is what can be called the point of least resistance
If the market in its simplest form is a zero sum game with one winner and one loser, then the key to understanding price movement is to understand its structure
To understand structures, use simple fractals
Themes, Sectors & Corporate news
As the FAA is starting to authorise drone zones in the US, is it time to revisit the commercial drone market as a theme? Unfortunately, DJI (Shenzhen DJI (Da-Jiang Innovations) Sciences & Technologies dominates with a 70% share of the civilian drone industry. France’s Parrot (no 2) with a 5% share has struggled to catch up and now focusing exclusively on B2B applications and platforms.
Space, the final frontier: the race is on
Cyber security theme
Culture and technology go hand in hand. With the rise of K Pop in Asia and now the rest of the world
Mature food companies change strategies every two years and cut costs
In Finance, the passive investing giants continue to swallow their competitors and market share, while the active managers are forced to shut down. A sign of our time: insiders are taking over and outsiders are kicked out. Obey or die.
Passive major advantage over active investors
Use the market to serve you, not the opposite
Post Covid fashion: here is a new shoe for you…? If you liked Crocs, you’ll love these!
A cyclical rally without the banks participating? The long term trade is and has always been: long product-service innovation / short financial engineering
Semi Cons
"In a world with so much opportunity, it pays to ignore the vast majority of it and focus on a tiny bit of it. That may seem counterintuitive, but I am certain that it is the right thing to do."
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