Attack the Week (ATW)

September 2, 2024

Monday Thoughts

As most of my loyal readers know, I am a huge tennis fan. Who is the Goat, you ask? I won’t go into those discussions, but statistics usually speak for themselves. Last night, I completed a bucket list wish to attend the US Open and it was a marvellous experience. It’s entertainment overload and extremely fun to attend one of the night matches, even when they finish at 2.15 am local time. That’s one of the reasons, alongside today being a US holiday, that the ATW delivery is a bit later than usual.

In Tennis, you are alone (unless you’re in doubles) on the court. Yes, you have your coaches screaming and signalling to you but there is nobody else but you out there. It’s as much of a mental sport as it is physical. I am sure you’ve read the statistics of Federer’s famous Dartmouth commencement speech, where he revealed that he won 80% of his singles matches but only 54% of all points. This should give us hope! I was reading a sports psychologist interview with someone who trained and coached tennis players. He also revealed something quite interesting: the top players distinguish themselves from the rest by their positive attitude in the few seconds between points. You don’t argue or regret the last point; you take on the next one furiously.

Moving this piece of wisdom to markets and investing, I am sure there is we could regret not having done in August. Damn, why didn’t we buy the dip? Again, it’s so obvious in hindsight. I take notes of my thoughts and decisions and review them weekly and monthly. What are the things I could have done better or something I might have missed? What have I gotten right? I keep a log, but that’s it; I don’t dwell over things as we take on the next weeks and months. It’s called attacking the week for a reason.

This week, we will see the binary event of payrolls unfolding. This will cement either a 25 or 50-bps cut. If you ask me, and I haven’t changed my stance on this, I don’t see a reason why they should cut by 50. Yes, payrolls might be a shocker, but overall, the economy is ticking along nicely. It’s also worth noting that since Jay’s Jackson Hole performance, bonds have traded higher in yields, supported by generally better economic data.

As I updated my global bond models for new weekly inputs, I was somewhat surprised that the count of countries where the model sees as a long has dropped from nearly 100% to now below 25%. That’s quite a big move lower. The only country where the model is still long is the US, where both bond strategies have been long since their first signal in June. I will give more details in the coming days.

Source: Paper Alfa Engine Room

August, with all its chopping price action, is behind us. Let’s focus on what’s ahead and how to play the points. My sense is things could change quickly. I will make sure that none of the larger themes and setups are missed.

Let’s now read Macro D’s latest thoughts below and then see what else is in store on this week’s calendar while observing 10 important charts that should accompany us over the coming shortened week.

Let’s go!