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How long will market remain jittery?

With many factors weighing on risk sentiment, volatility in risk assets will remain high for a while yet.

With many factors weighing on risk sentiment, volatility in risk assets will remain high for a while yet. However, the money printing and stimulus spending will continue unabated as reiterated by Federal Reserve Chair Powell and US Treasury Secretary Yellen before the US Congress yesterday.

The bright spot is that the longer end US bond yields seem to be stabilising for now. Every long-term trend will have corrections and swings along the way. For now, this still seems to be the case, as even the weakest among the major US stock indices, Nasdaq, is still up about 0.5% on the year.

The USD which has been recovering from the lows recently, still have many headwinds, with the government intent on continuously printing USD to fund its deficits. The recovery is likely to just be reduction of USD shorts amid an uncertain environment, and should come to an end soon enough.


Nothing Has Changed

Painful days makes us want to bail on our positions as it reminds us that the journey to the promised land seems long and perilous. As schizophrenic as recent price action may seem, there is no change of trajectory by Governments and Central Banks, the flood of money is promised and policies will remain accommodative to make the fiscal burden on governments (especially the US) bearable. All these points to higher asset prices as the only way out of this debt conundrum is for governments to run inflation above nominal interest rates on exponentially growing amounts of debt (i.e. negative real rates).

The initiation of huge infrastructure projects and creation of jobs being the main focus these days are what governments will be focused on. They will prioritise generating strong economic growth ahead of preemptively reacting to inflation fears. The way forward has been chosen and interim volatility is the price we all have to pay for outperformance in the long run.


SNB meets later today. No policy changes are on the cards. The SNB is likely to stress that it will continue to intervene in the FX market if necessary. Since the SNB will not raise rates over the next few years, the currency will probably suffer in an environment where foreign yields are rising, as rate differentials widen against it.


1. Currencies : Keep short USD and long NZD, & CNH. USDCNH is creeping up to the top end of the 6.45–6.55 range as the USD continues to trade well as risk sentiment remains weak. NZD remains on its backfoot as well. Stay cautious for now.

2. Commodities : Silver — Support for Silver is at 24.70–80. Silver remains close to support. Stay patient but cautious.

Key risks: Spikes in US bond yields may lead to a stronger USD and weaken risk sentiment. .

3. Equities :

Equity Index: : Long Nasdaq futures. Risk sentiment still looks fragile for now. Stay patient.

Single Stocks: As the market stabilises, certain sectors which have been trending higher will resume their strong rallies. Don’t miss out on the asymmetric opportunities we have highlighted in our TrackRecord Model Portfolio.

Key risks : Higher US yields and inflation fears are the key risks.


As of New York Close 24 Mar 2021,


  • US 10-yr Bond yield decreased 1 basis point to 1.62% amid an uptick in demand following the $61 billion 5-yr note auction. The 2-yr yield decreased 1 basis point to 0.14%. The U.S. Dollar Index increased +0.26% to 92.58. Dollar inched higher as the U.S. Treasury Secretary and Fed chair indicated to Congress that they had confidence in the U.S. economy and some safe-haven flows as investors fret over potential U.S. tax hikes on a day the stock markets are selling off. WTI crude futures rebounded +5.9%, or $3.38, to $61.13/bbl amid technical and supply-side factors.
  • There was a strong pro-cyclical trade to start the day after Intel (INTC 62.04, -1.44, -2.3%) announced plans to invest $20 billion to build two semiconductor manufacturing facilities in Arizona, the eurozone reported stronger-than-expected flash March Manufacturing PMIs, and more states announced plans to expand COVID-19 vaccine eligibility.
  • S&P 500 declined -0.6% on Wednesday in a disappointing session from a price action perspective. The benchmark index was up as much as +0.8% in the morning on the back of renewed strength in the cyclical stocks, but weakness in the mega-cap/growth stocks limited the early advance with broader selling interest picking up into the close. The Nasdaq Composite fell -2.0% after being up +0.5% in early action, and the Russell 2000 fell -2.4% after being up +1.7% in early action. The Dow Jones Industrial Average (-0.01%) closed relatively unchanged after being up +1.1% intraday.
  • Elsewhere, the ARK Innovation ETF (ARKK 114.78, -6.92, -5.7%) fell -5.7% while shares of GameStop (GME 120.34, -61.41, -33.8%) plunged -34% following its earnings report.


Intel to Build Chips for Other Companies With New Foundry Business

Notable Snippet: Intel is making a new push into the foundry business, which will involve manufacturing custom computer chips for tech companies and Western governments. The news means Intel could end up building ARM chips for Qualcomm and Apple — assuming it can win them over as customers. It will also put Intel in closer competition with the two biggest foundries in the market, TSMC and Samsung, which also build chips for AMD and Nvidia. The newly announced “Intel Foundry Services” will initially build semiconductors using the company’s older 22-nanometer manufacturing processes. But the plan is to eventually upgrade the manufacturing to Intel’s more advanced 7nm process and beyond. To do so, the company is spending $20 billion to build two new factories at Intel’s existing campus in Chandler, Arizona.

THEMATIC CONTEXT: “Chip suppliers cannot keep up as software eats the world. This is a key theme going forward and some chip companies have the weight and influence of “Big Oil” companies like Exxon Mobil during the era of peak oil. More on this in the following snippet.” — 10th Feb 2021

“The aforementioned comments make it clear why Taiwan Semiconductor Manufacturing (TSM) is expanding outside of Taiwan. A key piece of information that will fly over most people’s heads is the fact that TSM is expanding a very crucial and specific technology in Japan (fiercely staunch US ally), that is 3D manufacturing of semiconductor chips (a topic we covered in depth in our latest webinar). 3D manufacturing is the final frontier for advanced chip packaging technology and a key Intellectual Property know-how that will put US and western allies far ahead of current chip technology in China. With software eating the world and the next advanced civilization being built upon chips, we cannot greater stress the importance of these seemingly nuanced moves with deterministic implications for who might be the next superpower.” — 10th Feb 2021

U.S. COVID-19 cases top 30 million as states race to vaccinate

Notable Snippet: The United States crossed 30 million coronavirus cases on Wednesday, according to a Reuters tally, as states accelerate the vaccination process by lowering age limits. Health authorities are racing to vaccinate in the face of the first uptick in new cases on a weekly basis since January. Against the advice of health experts, several states have lifted mask mandates and more infectious variants have also spread across the nation. Although cases are trending higher in 30 out of 50 states compared with the previous week, health officials hope the vaccinations will prevent a rise in deaths.

THEMATIC CONTEXT: “Countries should not rest on their laurels because viruses do not take days off. As countries with successful vaccine drives continue to open up while those who are slow to inoculate and are nonchalant about safety practices fall back into the doldrums, we will see a bifurcation in economic activity even across developed world economies and we suspect this will show up in FX rates. As such we continue to be more constructive towards Asia Pacific currencies like the CNH, SGD and AUD.” — 20th Mar 2021

North Korea fires at least two suspected ballistic missiles into sea

Notable Snippet: North Korea launched at least two projectiles suspected by Japan to be ballistic missiles on Thursday, officials in Seoul, Tokyo and Washington said, the first such test reported since U.S. President Joe Biden took office in January. North Korea’s ballistic missiles are banned under United Nations Security Council Resolutions, and if the launch is confirmed it would represent a new challenge to Biden’s efforts to engage with Pyongyang, which have so far been rebuffed.

THEMATIC CONTEXT: “Social fabric around the world remains fragile and it seems that chaos and order is just a degree away in many societies (Hong Kong, Myanmar, Australia, US, UK etc). No one wants to lose control of the country under their stewardship, and especially in western democracies outright consolidation of power is not really an “option”, so what can governments do? Social issues in a country are complex and a symptom is usually not representative of the true culmination of issues. If money is the “root of all evil”, then we believe that politicians will do what they do best, “print the money or trigger the revolution”. — 15th Mar 2021




Phan Vee Leung
CIO & Founder, TrackRecord

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