Looking for 2017 macro opportunities ?>

Looking for 2017 macro opportunities

During this week I have opened 2 long positions, in gold and in the EUR/USD (I’m going to explain wh in this entry).

I’m also looking for a long in the GBP in the mid/long term due to the growing inflation in the UK and because we all know that the BoE traget is a 2% (and, if inflation keeps going to this rythm, we’ll see an aprox 2.8% at the end of the year). I also think that Carney is a hawish and despite the brexit deal, he won’t wait too long in order to hike at least a 0.25% more. But, at the moment, the market is correcting the expectations that had until this weeks BoE decision, so I’m still waiting for this trade.

About the EUR/USD and gold trades, it’s quite simple: TRUMP.

Trump is afraid that a strong dollar will hurt the US economy as exports will be reduced and also corporate profits as US cmpanies earn at least 1/3 of its profits outside the US, so he’ll probably start a currency war against the EU (he has blamed Germny for ‘keeping the Euro low’) but, lowering the dollar would also benefit exports to Canada.

But he question is…. How is the FED (that has already been pressed by Trump) going to lower the USD? Who knows… But lowering the USD would mean a new rally in the US stock exchanges, so that would be a clear long in the US markets in order to benefit from the measure.

There’s also the fact that the ECB is reducing its QE, so the euro will be stronger while this happens, but if the US enters a currenc war I’ll reconsider my bet as the ECB will have to act against it in order to keep inflation at a good level.

About gold, we can (and must) assume that stocks are quite expensive, and that bonds are not going to be a great trade as interest rates hikes will hurt those older emissions that we have in the market right now (so I’m betting on new emissions as money will flow from low ield bonds into the new emissions with a higher yield, but that’s quite difficult to do for a small investor).

So, we have those facts affecting the economy/markets and also the fact that the US is entering into a really difficult situation in which is hurting globalization and international trade with its protectionism and political behaviour. So, that political behaviour will provoke tensions and unertainty in the whole world (and also brexit, the French elections, etc) that, in my opinion, and if we sum the higher inflation rates and low interest rates, will boost gold prices.

 

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