Attack the Week (ATW)
On Fridge Magnets / Macro FX Spreadsheet / Weekly Calendar / Asset Allocation Update
Sunday Thoughts
You know, I am no big fan of holiday souvenirs. I get it; some people love a memento from the places they visited. Mostly tacky things. You won’t find me browsing airport gift shops for a miniature landmark, a novelty T-shirt or another coffee mug that will spend the rest of its life gathering dust in a cupboard.
There is, however, one exception.
Fridge magnets. I know what you think, but to me they’re a genius invention, and I’m a bit obsessed with them. Yes, my fridge and oven are littered with them.
What fascinates me is that magnets don’t simply preserve memories. They attract.
Every one of them takes me back to a place, a restaurant, a conversation, or a moment in time. They’re not really souvenirs at all. They’re reminders of experiences, quietly pulling me back to memories I had long forgotten.
And that’s not dissimilar to our memories and scars in financial markets. It’s not only our past experiences that matter; they also draw us towards reacting in similar ways when we encounter familiar conditions again.
Markets have their own magnets. Every few weeks, investors become irresistibly drawn towards a single event. An inflation report. Payrolls. A central bank meeting. Earnings season. As the date approaches, almost everything else fades into the background as conversations begin to orbit around one question.
This week, that magnet is the July FOMC meeting.
Only a few weeks ago, the idea of another rate hike seemed almost unimaginable. Today, a growing number of economists and investors are openly debating whether Warsh should raise rates once again. Personally, I think there is a respectable case for doing so. Inflation has proven more persistent than many expected, financial conditions remain relatively loose, and the Fed has repeatedly argued that credibility matters.
Whether they ultimately hike or not is, in many ways, almost irrelevant.
Isn’t it funny? Markets have an uncanny ability to become magnetised by a single event, as if everything hinges on one decision. Yet we all know that, in the grander scheme of things, the world is unlikely to look materially different on Thursday morning whether the Fed hikes or not.
When was the last time an FOMC meeting felt this uncertain? September 2024 comes to mind, when the Fed cut 50 bps following a weaker payrolls report. At the time, it felt monumental. Looking back, many would argue it was an overreaction and ultimately the wrong decision. But none of that mattered in the moment. The market had found its magnet.
By Thursday morning, it will have found another one.
We don’t get to choose what captures the market’s attention, but we do get to choose whether we are pulled in with it. As investors, we constantly have to decide what truly matters. Do we allow ourselves to become magnetised by the next headline, or do we zoom out, let the attraction pass, and focus on the bigger forces that will still shape markets long after this week’s FOMC has faded into memory?
Let’s now get down to business and do what we always do when faced with another trading week ahead
Look at Macro D’s latest thoughts and his detailed Macro FX Book & Trades.
Analyse the Macro Calendar ahead
Revisit the latest dashboard output and signals captured by our models
Unveil the asset allocation model’s latest asset preference.
As a reminder, all our models/strategies and daily dashboard/signals are now housed in pa-globalmacro.com, a place only members have full access to.
