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Everyone’s waiting for the same thing…

For this week, it’s the US jobs report tomorrow in the form of the US Non-Farm Payrolls data release.

For this week, it’s the US jobs report tomorrow in the form of the US Non-Farm Payrolls data release. Till then, the market is just trading off what it’s always been trading for the past year.

The forces of money printing continue to drive risk assets higher in the absence of more relevant short-term factors. As such, just stay on the path that is taking you in the right direction.


Do No Harm

When your positions are doing well and trending in the right direction, often the right course of action is to do nothing. Don’t try to be cute and mess with what’s working.

Let the profits ride. That’s one of the most important rules of trading.


Fedspeaker Bostic (current voter, mild hawk) is speaking today, and his comments are unlikely to move the markets unless it’s wildly different from what’s been said so far by the other Fedspeakers. On the data front, USD Trade Balance and Weekly Initial Jobless Claims will be released today. These should not have a major impact on markets.


1. Currencies:

Keep short USD and long NZD, & CNH. Tight trading range for now, but stay patient.

2. Commodities: Uranium & Energy — Things are starting to get interesting. Stay long and patient.

Key risks: Spread of the delta strain & data on the US jobs data front tomorrow.

3. Equities:

Equity Index: Long Nasdaq futures. New intraday and closing highs yet again but you already knew this would happen. Stay long and patient. Look to buy dips on approach of support levels at 13950–14000.

Single Stocks: Regretting the missed chances to buy the dips? Find out which addition to our TrackRecord Model Portfolio has nearly doubled in a matter of days!

Key risks : Spread of delta strain.


Market movements as of New York Close 1 Sep2021
  • August ISM Manufacturing Index came in at 59.9% (expected 58.5%), up from 59.5% in July. A number above 50.0% is indicative of expansion. August marked the 15th straight month of expansion for the manufacturing sector, and at a faster pace than what was seen in July. Manufacturers and suppliers continue to struggle to meet increasing demand levels due to a range of factors that includes record-long raw material lead times, shortages of basic materials, transportation difficulties, worker absenteeism, and difficulty filling positions.
  • The U.S. Dollar Index decreased -0.2% to 92.51. The US Dollar fell against a basket of major currencies on Wednesday after a report on the U.S. labour market missed expectations by a wide margin, while the EUR climbed to a one-month high. The greenback fell after the ADP National Employment Report showed private payrolls rose by +374,000 in August, up from +326,000 in July but well short of the +613,000 forecast. The market reaction was decidedly tepid because the ADP report has been a weak predictor of the more significant jobs data point, the US Non-Farm Payroll report (due Fri).
  • US 10-Year Treasury Bond yield increased 1 basis point to 1.31%, and the 2-yr was unchanged at 0.20%. WTI crude futures increased +0.2% after the expected OPEC+ decision to keep production-increases steady at 400,000 bpd.
  • Nasdaq (+0.3%) eked out fresh record highs on the first day of September, as new money continued to flow into the market’s largest stocks amid softer economic data. The S&P 500 (unch) closed little changed after coming within one point of its all-time high (4537.36) with a +0.3% gain in the afternoon. Russell 2000 (+0.6%) outperformed the Nasdaq, while the Dow Jones Industrial Average declined -0.1%.


Didi and workers get unions in watershed moment for China’s tech sector

Notable Snippet: Chinese ride-hailing giant Didi Global Inc (DIDI.N) has set up a union for its staff while e-commerce powerhouse (9618.HK) has also established one — landmark moves in the country’s tech sector where organised labour is extremely rare. Regulators in China have come down hard on its biggest technology firms this year, criticising them for policies that exploit workers and infringe on consumer rights in addition to unleashing a slew of antitrust probes and fines.

The government is also encouraging companies to implement initiatives to share wealth as part of a recent “common prosperity” drive laid out by President Xi Jinping to ease inequality in the world’s second-largest economy.

COMMENTS/IMPACT: Labour Unions will be good for Chinese wages in the long run, we suspect this will bode well for Xi’s dual-circulation mandate as a comfortable middle class is essential to healthy domestic consumption. We continue to believe that the CNH is a structural long and the CCP’s policies have been congruent with their long term goals.

Chinese EV maker Nio cut sales forecast due to chip supply shortage

Notable Snippet: Chinese electric vehicle (EV) maker Nio Inc (NIO.N) on Wednesday cut its delivery forecast for the third quarter this year due to uncertain and volatile semiconductor supplies.

Nio cut its delivery forecast for the third quarter to around 22,500 to 23,500 vehicles from a previous 23,000–25,000 vehicles. It delivered 5,880 electric sports-utility vehicles last month, up 48% from a year earlier.

Thematic Context: “It is evident that semiconductor chips are an essential commodity like steel or copper, and the competitive edge in this field still lies in the West. This is an edge that the US government knows cannot be lost as it’s one of the last standing factors that’s withholding China from becoming the preeminent superpower (this begs us to think, is the reunification talk with Taiwan mainly just that? Or is it about Taiwan Semiconductor Manufacturing?). We suspect that unprecedented amounts of fiscal will flow into this sector and we are well positioned in two of the most essential companies in this field.” — 12th July 2021

COMMENTS/IMPACT: We continue to be positioned in key semiconductor chip companies (Check out our Model Portfolio for these stocks which have been crushing the competition with up to 84% in profits in the sector). This sector is no longer as cyclical as before because chips are the building blocks upon which the new civilization will be built upon. Companies with defensive moats will be assets of national security and targets for fiscal outputs.

Two Billionaires Join Forces in Poland’s Nuclear Energy Push

Notable Snippet: The European Union’s most coal-reliant country received a fresh boost for its energy transition bid after two of its richest entrepreneurs united to build nuclear reactors.

Michal Solowow, who controls chemicals producer Synthos SA, and Zygmunt Solorz, the main owner of media and telecommunications giant Cyfrowy Polsat SA, plan to build four to six nuclear reactors, each with a capacity of 300 megawatts. The investment is planned at the site of a lignite-fired power plant in Patnow. That facility is operated by Solorz’s ZE PAK SA, which had pledged to switch it off by 2030.

Thematic Context: “Traditional energy is here to stay and the ESG “dream” of having the world run on Solar, Wind and Hydro is far fetched from a practical point of view. The only energy source that can truly sustain such large energy demands while remaining “Green” is nuclear power and for that reason, we believe uranium to be the most mispriced/underpriced asset in the coming supercycle. In the meantime, traditional energy supply/demand imbalance will only be brought forward, leading to an interim bull (years) market in the traditional energy space. We remain heavily invested in this theme.” — 16th Feb 2021

COMMENTS/IMPACT: The uranium sector is starting to wake up, we are still early in the supercycle but we believe that the train is leaving fast. September to October tends to be one of the best months for seasonal uranium performance. (Have a look at the stocks we have included in our Model Portfolio. So they are up an average of 185%, and we expected this to accelerate in the months ahead.)




Phan Vee Leung
CIO & Founder, TrackRecord

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