Daily Notes / Pre Market thoughts


Trades

  • I like owning EM today on the other side of some dow futures. Boeing not going to lift Dow again today, if anything we’re going to have dovish surprises and overnight move in China feels like it derisks EM into year end and could see ppl chasing it. I like that Dow doesn’t have Tesla in it / could see it being lagard / pain trade on other side of financials (remember Brainard likes the idea of forcing banks to cut divs)
  • Also like owning fixed income futures (namely 5 years). On balance I think the strong retail sales numbers won’t really matter as much as people realizing RBA taking hikes off the table for next year, plus likely Brainard appointment where she “unveils” some new money printing framework
  • Shorting some GBPCAD – think the fertilizer / gold narrative as well as some changes in Energy demand which might slow down Trudeau’s gutting of oil industry combined with pressure on BOE from european policy makes it asymmetrically lower
  • Shorting some USDHKD. Sigh.
  • Re Crypto – need to read more about it later this evening after I due dilligence fertilizer cos as European gas surging again

General Summary

  • Seems like hyper bullish outcome for US/Asian markets overnight as RBA and BOE taking abrupt dovish stances after Lagarde’s ridiculous meetings yesterday. Walmart if it is indeed a GDP tracker putting up 8-9% growth with positive holiday commentary not going to be a bad thing
  • Biden 3.5 hour with Xi with very nice statement from China going to be a positive for Asian risk assets
  • I think the cleanest risk reward has to be power / food plays going into year end. Should own commodity stack for electric vehicles (doing work today on MOS, NTR etc for qualitative trade ideas). Essentially Biden will look “Tough on China” by having them buy food they were going to need to purchase anyways
  • Because every currency is dovish we are very much in the “printer” phase where I am prone to own some hard assets intraday on other side of FX
  • Hard to imagine Tesla completely crashing with Carbon futures going to the moon and Citi doubling price target on EV companies. Bubble is very much in force. Company exec selling some shares for taxes should pass so don’t really want to press that narrative short (last night was considering shorting XLY – I think this is the wrong idea esp after Walmart numbers and the Casper acquisition yesterday)
  • Regarding the Bitcoin drop - I could definitely see a world where Biden admin and China collaborate to stop the rise of crypto as it’s antithetical to mutual climate aims. Would be very concerning if there are any joint resolutions there as BTC to some extent is a large bet on China/the US not being able to get their shit together

Overnight News

  • Home Depot comps aggressively good “Comparable-store sales, a key metric for retailers, increased 6.1% in the period. That’s above the 1.5% average estimate of analysts surveyed by Bloomberg.”
  • Monster retail sales number with big beats on prices. 16.3% yoy Oct retail sales
  • RBA was fairly dovish – said “inflation just above the bottom of target band”. Said possible next rate increase will not.
  • “The governor reiterated that it was “still plausible” the first increase in the cash rate will not be before 2024. That view is in stark contrast to market expectations, where overnight interest swaps imply at least three rate hikes next year and the chance of a fourth.”
  • Lucid up 7% pre market for funsies because Citi hiked price target 100%. (note in data tracking EVs are the strongest)
  • Rivian surging pre market for no reason. Electric vehicle meme is very much on
  • Bailey backpedaling hard about his poor communication about rates
  • Gazprom setting up a German subsidiary causing surging Dutch front end gas to roof it. Trafigura’s boss warns rolling black outs this winter
  • Estimated that US has enough savings to last until year end
  • Twitter CFO not buying crypto… lol. Also infra bill passing supposedly dropped BTC overnight but this seems unlikely. Meng Wei crypto mining crackdown. SEC indicting marathon digital
  • UK earnings were in line and employment was quite good with 247k beat vs 185 expects
  • Frenc CPI right in line / Italian CPI roughly in line. Eurozone GDP completely in line
  • Pre market Equinor is surging – Nordic oil
  • Pfizer giving out the cheap pill for covid, incremental travel positive / reopening positive
  • Walmart beat and raise - comps +9.2%. Can this unchain from GDP
  • 3.5 Hour Talk between Biden and XI with no outcome is probably a positive outcome
  • Discussion of Biden tapping the SPR … honestly, how can he do this? Given need to phase out oil?
  • Inflation continues to be political lightning rod
  • Danish economy surging
  • Dubai surging after kicking off IPO boom -“China and the United States should respect each other, coexist in peace and pursue win-win cooperation. I stand ready to work with you, Mr. President, to build consensus, take active steps and move China-U.S. relations forward in a positive direction.”