How To Improve Your Macro Knowledge On Markets

Okay, very good morning. It is Thursday the 26th of August. Hope you're doing well. And was just doing some preparation for this briefing, and it is really quiet, as you can imagine, ahead of Jerome Powell speaking on Friday. But I definitely wanted to add some value to this session, and so what I thought I could do is a common question I get is about how do you kind of form macro view on markets that can be something you can inaction on a day-to-day basis or of a more longer-term investment point of view. And then also, how do you understand what are the key themes in markets and how markets are generally positioned for a big forthcoming event like Jerome Powell, for example, speaking at Jackson Hole? So just one thing that I think is really easily accessible and that you guys can do. And this can really help students who are studying, looking to improve their knowledge of how markets work and constructing kind of macro views on markets for the purpose of interviews and things like that, to traders who are just trading day to day and investing in the market. And that is utilizing a lot of the big bank podcasts. Now, I'm not sure if you have come across this, but every big financial institution has a podcast, if not several podcast channels. And these include a lot of those big banks that a lot of you might be applying to, for example. And so just running through a couple of these, and if you were just to search any big bank name— so here I've just got a couple examples. So Morgan Stanley, they release a podcast on a daily basis. These are really short, sharp audio clips. They typically only range from 3 to 4 minutes talking about a hot topic in markets on that day. But what they do is they get internal senior people from various different desks who would be relevant for that subject. So it could be the head of rates, it could be the head of EMFX, for example, so on and so forth. If you switch over, um, if you were to look at Goldman Sachs, they have a weekly podcast they put out and this would be again senior people from their asset management division, from their trading team, so on and so forth. You go over to JP Morgan, their chief global strategist at JP Morgan Asset Management puts out a weekly call about his ideas for the week ahead, main topical points that they're looking at. So, you know, one of the tips I would say that's definitely served myself well is that sure, I can have my own views formed from my own research and reading, for example, but I'd say the secret is really is I listen to what a lot of other people are saying. What is their viewpoint? How are they constructing their arguments? And so therefore, it helps me have more robust idea about what's going on. And not only that, if you're a student, if you're applying to one of these banks, then it is definitely beneficial to know what that bank's view is. And so they talk about this a lot on their podcast. So there's a variety of different benefits of doing this, and as you can see, even this week ahead one from JP Morgan on a weekly basis is only 7 to 10 minutes long. So they're quite short, sharp sound bites, but definitely A, will get you up to speed, make you more fundamentally aware of what's going on if you're trading, But for a student, this is when you need to immerse yourself in the conversations to understand the types of terminology they're using, the types of themes they're talking about, and the types of views that these banks have that will serve you well when you come under pressure in an interview situation, for example. So yeah, just thought I'd put that out there as a bit of interest. There's another good one as well. Barclays Word on the Street is another one I like, particularly because of Will Hobbs who's the Chief Investment Officer at Barclays. He's really excellent, and they put out a weekly podcast every Thursday morning, I think it comes out. But anyway, let's get straight back to markets and talk about what's going on this morning. And as I've already alluded to, it's very quiet, and I really do think today is an exercise of patience. So if you're not a patient person, I would say you're probably better off having a day off and enjoy some of the last days of the summer sunshine and then come back tomorrow. In terms of the close on Wall Street last night, it was marginally positive, so 0.2% higher in the S&P, about 0.1% higher respectively each in the NASDAQ and the Dow. Overnight in Asia, we had a bit of a pullback in Chinese stocks, snapping a recent streak of gains. Hong Kong, China pulling back tech shares in particular, seeing the degree of the bulk of the volatility and the downside. And also China Evergrande Group's profit warning also dented property developers and bank stocks there domestically overnight. The South Korean KOSPI, just a point to be aware of, not this translates into anything really impactful for Western markets, but they have become the first of major Asian central banks to raise rates overnight, I believe, to 0.75%. Um, elsewhere, the dollar index is pretty flat. That's pretty much reflected in the major pairs. Um, gold and oil are a touch lower, albeit the latter has seen a slight uptick as European players have come back into the market, finding some support around its pivot at 67. But yeah, pretty quiet overall. So really then, it's about the day ahead And what have we got on the docket? Um, pretty quiet this morning. None of this data is really major. And so we look ahead to the ECB minutes, which we'll get at 12:30 London time. Investors are looking out for any clues as to what the ECB will do with its pandemic emergency purchase program at its 9th of September meeting. And then we have the second estimate of Q2 US GDP Um, not really expecting that to be much of a, of a game changer, to be honest. A, it's the second reading, and B, most people are more concerned about Powell tomorrow than they are about some very minor changes on that headline reading compared to the advanced reading. Weekly jobless claims, again, also not expected to be too dramatic, just to hold the line, if you like, at 350,000 from the previous 348,000. But one of the things that I am quite keen to watch later on today is Fed's Bullard and Fed's Kaplan, neither of which are voters on the FOMC, but both of which are more of a hawkish disposition. And I think then, just given the timing, could be quite a good insight to see then, are they still willing to hold that hawkish view? And certainly Bullard has been someone before who's talked about the commencement of tapering as soon as October. He's very much, much more on that more aggressive side of starting quicker. Um, Kaplan was similar. However, if you remember, pretty much this time a week ago last Friday, um, he had up until that point been one of the most forceful supporters of starting to reduce support for the economy. But he said that he may need to adjust that view if the Delta variant of the coronavirus slows economic growth materially. And with some of the softening that we're seeing in some of the data metrics, as well as some of the supply issues that we're still seeing with the bottlenecks as well, then it'd be interesting to see if he again starts to soften that call for tapering a little bit. And if that is the case, I definitely think— and just reading around the various bank consensus at the moment— I think that as much as all of the kind of build-up towards Powell on Friday. I actually think it could be fairly dull in terms of what he actually does say. I don't think he's going to come out with any type of definitive details here on tapering. And just given what that might mean then is by not saying too much, that might actually come as a relief to markets and be a net positive short-term on the daily session on Friday where you might have a case of a relief No explicit detailing or acceleration on this conversation as yet. That might come in the September Fed meeting. So therefore, stocks just kind of continue to march on their merry old way to record highs again. The dollar might soften a touch and support the pairs, um, and the likes of oil and gold get supported. But we'll go into that more tomorrow. But that is it. And so Yeah, as I said, not really any, any way of news for me to talk about, but hopefully some of that podcast explanation was, was useful. Feel free to check those out as well as don't forget to check out the Amplify podcast. It's called Market Watch. That's the one you need to listen to. Of course, that's from me and the head of trading, Piers Curran, which you can access on Apple, Spotify, and so on. All right, take care guys. Have a good session ahead.