Macroeconomic and Investing, The Macro Compass

Alfonso Peccatiello (Alf)

Macroeconomic and Investing

The Macro Compass

Actionable investment ideas and unique global macro insights. From the desk of a former Head of $20 bn Investment Portfolio straight to your inbox.

Actionable Investment Ideas

Macroeconomics

<ul>
<li>The CPI report: once again, the inflation momentum is accelerating and inflationary pressures are broadening.</li>
<li>While mainstream headlines would focus on the 9.1% YoY print, I’d like to highlight two more relevant statistics that would worry the Fed further here.</li>
<li>MoM headline and core inflation are the highest in 20+ years: the inflation momentum is not only failing to decelerate, but it’s even picking up!</li>
</ul>


The CPI report: once again, the inflation momentum is accelerating and inflationary pressures are broadening.
While mainstream headlines would focus on the 9.1% YoY print, I’d like to highlight two more relevant statistics that would worry the Fed further here.
MoM headline and core inflation are the highest in 20+ years: the inflation momentum is not only failing to decelerate, but it’s even picking up!


Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

Technical Analysis

<ul>
<li>The US market led the global equity rally as the invasion started. The long bond yields rose, and the yield curve steepened</li>
<li>European markets did well on Thursday and Friday but failed to recover as strongly as US stocks. Asia was a laggard in general.</li>
<li>I would have been more confident of the equity rally had the long bond yields rose on Friday, and the curve steepened.</li>
</ul>


The US market led the global equity rally as the invasion started. The long bond yields rose, and the yield curve steepened
European markets did well on Thursday and Friday but failed to recover as strongly as US stocks. Asia was a laggard in general.
I would have been more confident of the equity rally had the long bond yields rose on Friday, and the curve steepened.


Managing Partner, VRS (Valuation & Research Specialists)

VRS (Valuation & Research Specialists)

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FX & Rates

<h3>Graph Analysis</h3>
<p>According to Graph 1, the AUD/USD exchange rate traded along the channel 0.71-0.80 with notable price fluctuations during the last 52 weeks. More specifically during the examined period, there were 5 secondary movements. The first movement was an upward one from the end of November 2020 until the end of February 2021 with interim ups and downs. The second movement was a sideways one along the narrow channel 0.76-0.78 and lasted until May 2021, followed by a third movement which was a downtrend from end of May until late August 2021. After that, the pair followed an upward trend from late September until late October 2021. Finally, the exchange rate recorded a rapid fall in November 2021. Reviewing the pair during the last 4 weeks, and regarding the support levels, these were formed at 0.7086 while the resistance levels at 0.7792. Looking at the Candle Chart (Graph 2), there were mostly negative fluctuations during the period from the end of October 2021 until November 26, 2021. In the middle of November 2021, the MACD (Graph 3) crossed below the signal line generating a potential sell signal. Also, PPO (Graph 4) remained mostly into the positive area, however after the middle of November 2021, it moved into negative territory, generating a potential sell signal.</p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/251/332/original/Screenshot%202022-01-12%20at%204.14.53%20PM.png?1641975315" class="editor-image img-responsive" data-smartkarma-image-id="251332"></figure>
</section>
<h3>Fundamental Analysis</h3>
<p>At the end of November 2020, the AUD/USD rose as the USD fell to multi-month lows following COVID-19 restrictions. | In December 2020, the pair continued rising, reaching multi-year highs, due to the publication of positive data on Australia's economic growth and dovish stances by the U.S Fed. | The upward movement continued during the month as low U.S interest rates and COVID-19 aid bills set the greenback on a downward course. | In January 2021, the USD kept falling as U.S Democrats won senate control. | In early February 2021, the pair experienced bearish pressure after RBA’s (Reserve Bank of Australia) prospects for monetary policies. | During the month, the greenback pushed higher after U.S bond and Treasury yields rose. | In March 2021, the Aussie gained ground after aggressive selloffs in global bond markets finally stabilized. | At the end of March, the exchange rate fell as the RBA continued its dovish position and the U.S economy’s recovery pushed the USD to multi-month highs. | At the beginning of April 2021, the greenback was up, helped by expectations of strong U.S economic growth, fiscal stimuli, and vaccine rollouts. | Afterwards, the pair inched up due to falling U.S treasury yields and the Fed’s dovish stance. | At the end of April, the rate declined following strong U.S consumption figures. | The falling trend continued at the beginning of May 2021, as Australia experienced trade tensions with China. | Later in that month, though, the USD weakened after the U.S. announced lower than expected jobs data. | At the end of May, the pair fell due to the anticipation for a tighter U.S. monetary policy and a rise in headline inflation. | The USD hit a two-month high in June 2021, as Fed projected rate increases and the termination of emergency bond-buying. | At the end of June, the pair declined further, as coronavirus cases surged in Australia, causing prolonged lockdowns and tighter restrictions. | The downward trend continued in July 2021 due to a plunge in Chinese equity market and a further expansion of the coronavirus lockdown. | At the end of that month, the Aussie fell to a one-month low, as U.S. GDP increased at a 6.5% annualized rate in Q2. | At the beginning of August 2021, the Aussie rose when the RBA announced plans to reduce bond-buying in September. | Later in August, the AUD/USD kept its upward movement as the U.S. consumer sentiment fell to the decade low of 70.2. | At the beginning of September 2021, the Aussie advanced due to encouraging economic data caused by a rise in the vaccination rate. | Later on, however, the Australian dollar decreased after the RBA announced a dovish outlook, expecting rates to remain steady until 2024. | In early October 2021, the pair advanced with the Fed announcing plans to start tapering stimulus in November. | Later in the month, the Aussie continued to rise while the surge in energy prices fueled concerns about inflation. | At the end of the month, the AUD gained ground as Australia's core inflation increased at the fastest pace in 6 years in Q3. | In the first week of November 2021, the Aussie fell after the RBA announced that it was planning to discontinue its target of keeping yields steady until 2024. | At the end of November, the USD rose to a 16-month high as the U.S. inflation increased at the fastest pace in three decades.</p>

Graph Analysis
According to Graph 1, the AUD/USD exchange rate traded along the channel 0.71-0.80 with notable price fluctuations during the last 52 weeks. More specifically during the examined period, there were 5 secondary movements. The first movement was an upward one from the end of November 2020 until the end of February 2021 with interim ups and downs. The second movement was a sideways one along the narrow channel 0.76-0.78 and lasted until May 2021, followed by a third movement which was a downtrend from end of May until late August 2021. After that, the pair followed an upward trend from late September until late October 2021. Finally, the exchange rate recorded a rapid fall in November 2021. Reviewing the pair during the last 4 weeks, and regarding the support levels, these were formed at 0.7086 while the resistance levels at 0.7792. Looking at the Candle Chart (Graph 2), there were mostly negative fluctuations during the period from the end of October 2021 until November 26, 2021. In the middle of November 2021, the MACD (Graph 3) crossed below the signal line generating a potential sell signal. Also, PPO (Graph 4) remained mostly into the positive area, however after the middle of November 2021, it moved into negative territory, generating a potential sell signal.



Fundamental Analysis
At the end of November 2020, the AUD/USD rose as the USD fell to multi-month lows following COVID-19 restrictions. | In December 2020, the pair continued rising, reaching multi-year highs, due to the publication of positive data on Australia's economic growth and dovish stances by the U.S Fed. | The upward movement continued during the month as low U.S interest rates and COVID-19 aid bills set the greenback on a downward course. | In January 2021, the USD kept falling as U.S Democrats won senate control. | In early February 2021, the pair experienced bearish pressure after RBA’s (Reserve Bank of Australia) prospects for monetary policies. | During the month, the greenback pushed higher after U.S bond and Treasury yields rose. | In March 2021, the Aussie gained ground after aggressive selloffs in global bond markets finally stabilized. | At the end of March, the exchange rate fell as the RBA continued its dovish position and the U.S economy’s recovery pushed the USD to multi-month highs. | At the beginning of April 2021, the greenback was up, helped by expectations of strong U.S economic growth, fiscal stimuli, and vaccine rollouts. | Afterwards, the pair inched up due to falling U.S treasury yields and the Fed’s dovish stance. | At the end of April, the rate declined following strong U.S consumption figures. | The falling trend continued at the beginning of May 2021, as Australia experienced trade tensions with China. | Later in that month, though, the USD weakened after the U.S. announced lower than expected jobs data. | At the end of May, the pair fell due to the anticipation for a tighter U.S. monetary policy and a rise in headline inflation. | The USD hit a two-month high in June 2021, as Fed projected rate increases and the termination of emergency bond-buying. | At the end of June, the pair declined further, as coronavirus cases surged in Australia, causing prolonged lockdowns and tighter restrictions. | The downward trend continued in July 2021 due to a plunge in Chinese equity market and a further expansion of the coronavirus lockdown. | At the end of that month, the Aussie fell to a one-month low, as U.S. GDP increased at a 6.5% annualized rate in Q2. | At the beginning of August 2021, the Aussie rose when the RBA announced plans to reduce bond-buying in September. | Later in August, the AUD/USD kept its upward movement as the U.S. consumer sentiment fell to the decade low of 70.2. | At the beginning of September 2021, the Aussie advanced due to encouraging economic data caused by a rise in the vaccination rate. | Later on, however, the Australian dollar decreased after the RBA announced a dovish outlook, expecting rates to remain steady until 2024. | In early October 2021, the pair advanced with the Fed announcing plans to start tapering stimulus in November. | Later in the month, the Aussie continued to rise while the surge in energy prices fueled concerns about inflation. | At the end of the month, the AUD gained ground as Australia's core inflation increased at the fastest pace in 6 years in Q3. | In the first week of November 2021, the Aussie fell after the RBA announced that it was planning to discontinue its target of keeping yields steady until 2024. | At the end of November, the USD rose to a 16-month high as the U.S. inflation increased at the fastest pace in three decades.

Australia

The Australian dollar is the official currency of the Commonwealth of Australia.

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AUD (USDAUD CURNCY)

Nothing Else (Except Macro) Matters

While mainstream headlines would focus on the 9.1% YoY print, I’d like to highlight two more relevant statistics that would worry the Fed further...

Alfonso Peccatiello (Alf)

Buy at the Sound of Cannons

The US market led the global equity rally as the invasion started. The long bond yields rose, and the yield curve steepened

Untying The Gordian Knot

Comment on Exchange Rate AUD/USD

Graph Analysis According to Graph 1, the AUD/USD exchange rate traded along the channel 0.71-0.80 with notable price fluctuations during the last...

VRS (Valuation & Research Specialists)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)