Commodities | Emerging Markets | Equities | US
We recently conducted a macro and markets survey across researchers from Macro Hive’s network. We have decided to share the final report with you, our members, as we found it very insightful and we’re confident you’ll appreciate it too.
Topics include outlooks on the S&P 500, gold and the dollar, countries that will emerge as winners after the COVID crisis and a list of favoured trade ideas and investment strategies.
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We recently conducted a survey across the Macro Hive network. The respondents were mainly sophisticated investors and analysts from financial institutions. The topics ranged from outlooks on S&P500, gold, and the dollar to which country will emerge the winner from COVID to favourite trade ideas.
We’ve decided to share the full survey results with our subscribers. I’m sure you’ll find it insightful.
Warm Regards,
Bilal
Macro Hive Intelligence – Survey Results
Why Do You Think That Is The Case? (Selected responses)
- Risk aversion trade
- Exploding central bank balance sheets, Fed capping mid to back end yields mean lower real rates = higher gold price.
- Creeping Fiat paranoia
- USD weakness , inflation, monetisation
- The real Gold is BTC. HODL for life
- Central bank reallocation from U.S. treasuries – even if a small percentage for say PBoC, it will make a big difference in price.
- FUD (fear, uncertainty and doubt)
- Extraordinary fiscal packages will ultimately drive real asset buying
- If SPX is 20% lower, oil price lower, Biden president (as is my forecast) it means that the economic uncertainty is exceptionally high – leading to a higher gold price.
- 2000 might be a very strong psychological level to break unless economic climate keeps deteriorating at a sudden faster speed. So post 2020 it could happen.
- Gold is mostly retail-driven.
- 2nd wave of COVID infections will be apparent as will the need for the second tier of lockdown bullish for Gold
- Lack of alternative investment
- Gold may not replace USD, but the steep devaluation of certain currencies will force people to think about replacing USD. Gold also can not be magically produced.
- I think the demand for hard assets will continue, but with lower inflation I doubt we see a massive spike. I think we might see lower over the next two months and then higher again
9. Which Country In Your View Will Emerge As A Winner Either Politically Or Economically After The Crisis Is Over And Why? (Selected responses)
- China, India
- China will win economically in the short term as it has suffered a smaller hit to the economy than its main rivals
- Politically, can’t see a standout winner
- If based on COVID-19 approach and subsequent mortality, South Korea (i.e. early aggressive testing)
- If based on marketing (i.e. nationalism + moderate approach), U.S.”
- S. – fastest and largest to respond, no current challenger to USD for reserve currency status
- USA because of their economic power, firms, tech, and trust the whole world has in them.
- The ones with the means to spend during this crisis, and not over 2-3 months but consistently. So the ones with stable public finances and external surpluses.
- K., embracing capitalism/independence
- Germany – fast action
- They’re going to buy strategic assets (African ports, Mineral deposits, other countries in the one belt initiatives )at dramatically decreased prices
- The virus just exposes existing weakness. Countries like the U.S. that had preexisting social, healthcare, and fiscal issues will be worse off. Countries that were already strong in these areas like South Korea will come out ahe
- Sweden because it seems to be working, N.Z. because they’re good now
- The Nordic countries will emerge much more intact what comes to the cohesion of society, European countries as well, but E.U. will struggle if there is no real burden-sharing. U.S. will continue to be divided with tensions in society that stokes violence.
- No major political winners. Global fragmentation continues.
- Maybe Germany but certainly big parts of the E.M. side will be the biggest losers
- Russia: It is more self-sufficient and less financially leveraged than most.
- Switzerland, a good mix of businesses and safe-haven status
- China, fast recovery, corona diplomacy will pay off. Germany, fiscal position helps and limited impact overall
- There will be no ‘winners’ unless we let ourselves believe Chinese official data
- S. – if we can elect a congress that can overcome bipartisanship – or put differently, congress aligns with the White House
- Israel – biotech,
- China – supply chain supremacy, strong dollar winner.”
- Sweden because they had a much more sensible policy response
- Germany- looks to be coming back online well and hasn’t taken too much of a hit.
- S. due to lack of alternative reserve currency (eurozone not united, CNY defiance)
- Norway – has budget leeway and oil will rebound
- India (economically)
- The global order is falling, but the increasing animosity to China will grow in intensity, and that will be lead by the U.S., especially if Biden becomes President. If its Trump, not all the European and East Asian countries will agree with him, but they will look to counter China.
- Japan
11. What’s Your Favourite Trade or Investment Idea Right Now and Why?
- Buy equity on dips, pay rates on dip on fiscal expansion – especially in EMs
- I think Brent has probably bottomed and commodity currencies are a buy
- Buying highly distressed bonds issued by GREs which are backed by highly rated E.M. sovereigns
- Long US pro-cyclical (e.g. equities over rates, discretionary over staples, etc.).
- Real rates receivers
- Sell U.S. 30yr bonds
- Long clean energy sector vs short stock indices.
- Long Gold on contract monetary easing
- Value Stocks and Gold
- Long yen, curve steepener
- long USDBRL
- Bullish stocks
- Cash
- Short equities, rally overdone
- Large caps + Midcaps
- Long unlevered energy service companies. Trash will rise.
- Cash till S&P = 1600
- Long Gold via call spreads with long USD calls (F.X. vol is cheap) in the event I’m wrong and/or equities take another leg down
- Short SPX
- Waiting for the second wave, markets will fall again.
- Long NZD/USD
- Oil Tankers and pipeline stocks cause of oil storage earnings, with fees spike up cause of huge demand of storages.
- Utilities
- Broadly risk positive trades
- Reduce risk on rallies, reinvest in businesses that are vital for mankind, steer clear of businesses that sell/manufacture physical products in any way reliant on a borderless world.
- Deflation protection
- “Tactical short U.S. equities via 1×2 put spreads for short term.
- Keep short selective E.M. ccies versus combination CHF/JPY/EUR.”
- Mining stocks. They are trading at historically low valuations.
- Long Gold continued monetary expansion
- High cash holdings, stay clear of Corp credit. Default cycle should offer up lower prices for risk assets. Underweight China exposure as ss impacts negatively for next 5 years at least
- Buy hotels
- Short USD
- European bank cocos. Unloved but politically protected, decent cash return
- Gold Reasoning mentioned in my answer to question 11. Second choice govt bonds for capital preservation
- Look for opportunities to go short equities as Vix declines and market becomes more complacent
- Short high Vol Audusd option strategies.
- Pay Brazil Rates. Cut too much too fast and ccy is puking. Rate cuts haven’t helped the economy at all.
- Long 9-12mth SPX vanilla convexity, if needed funded via equity gamma (1month maturity)
- long Gold and stocks
- long cyclicals- betting on the growth rebound
- Trying to buy equity lows after missing the train
- Long Gold but long term with wide drops. Bonds no longer offer diversification – will see added investment when trend resumes.
- Value stocks
- Buy BTP on the sell off’s
- Long PSX ETF
- EM
- Bullish USD on the short run
- Short EM FX. MXN and BRL Short Deutsche Bank, short Equity Residential REIT (EQR), Las Vegas Sands (LVS), Short Blackstone. Own Puts on SPY and IWM
- Sell 30yr USTs
Survey Details
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)