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Let the 2nd Quarter begin!

Cryptos such as ETH and BTC continue to trade strongly, as assets which are denominated in fiat currency will continue to do so in the months ahead.

While some markets are still out for the Easter long weekend, when the 2nd quarter gets underway, investors will be faced with the task of putting more capital to work and staying underinvested and in cash is a dangerous proposition in our world of relentless money printing.

Cryptos such as ETH and BTC continue to trade strongly, as assets which are denominated in fiat currency will continue to do so in the months ahead.

The game plan is clear. Stick to it.


The Price Of Too Much Activity

In investing and trading, people often associate constant action with progress and profitability, or at least that is the “guru story” retail folks are being sold. In most fields of work, it is indeed true that there is a correlation between activity and productivity. In addition, since the adoption of the industrial prussian model of education was indoctrinated into the school system, the act of completing tasks releases dopamine (feel good hormones) which leads us to believe this is what it takes to succeed. Hence it is not hard to understand why successful investing and trading is counterintuitive to how modern man is shaped to survive.

In its simplest form, to create wealth requires one to ride a long-term trend, and in essence a long-term trend takes a reasonable amount of time to play out without you over-managing it. Overtrading and trying to micromanage your positions often lead to you missing out on the long term trends that take months and years to play out.


With most markets closed on Monday for the Easter celebrations, it will be a fairly muted week as there’s not a lot on the agenda that can excite markets. The Reserve Bank of Australia’s policy decision will be the main highlight (Tue), but the minutes of the Federal Reserve’s (Thu) and European Central Bank’s (Thu) previous meetings could stir some reaction too as policymakers tread water so as not to deepen the bond rout. Outside of the central bank sphere, employment numbers out of Canada and the ISM non-manufacturing PMI (Fri) in the US will be the only notable releases to watch.


1. Currencies : Keep short USD and long NZD, & CNH. USDCNH remains at 6.57+ and is staying above the top end of the 6.45–6.55 range. NZD looks better now that it is trading above 0.7000 again. Stay patient.

2. Commodities : Silver — Neutral for now.

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

3. Equities :

Equity Index: : Long Nasdaq futures. Expect more investors to continue deploying their capital as the 2nd quarter gets underway. Stay long.

Single Stocks: As the market starts the new quarter on a positive note, 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 2 Apr 2021,


  • On Thursday, US ISM Manufacturing Index for March jumped to 64.7 (expected 61.2) from 60.8 in February, reaching a level not seen since late 1983. The dividing line between expansion and contraction is 50.0. March marked the tenth consecutive month the ISM Manufacturing Index has been above 50.0. The Index reached its highest level in more than 37 years in the March reading, thanks to a growing backlog, rising prices, and low customer inventories.
  • Financial markets were closed in Australia, Singapore, Hong Kong, Britain, Europe and the US in observance of the Good Friday holiday.
  • Friday’s U.S. nonfarm payrolls surged 916,000 jobs last month (expected 647,000) the largest gain since last August. Data for February was revised higher to show 468,000 jobs created instead of the previously reported 379,000. The strength in the labour market will continue to boost optimism in the economic recovery and pressure US bond yields higher as markets will worry that the Federal Reserve may have to start raising interest rates sooner than priced.
  • US 10-yr Bond yield increased 3 basis points to 1.72%. The 2-yr yield increased 2 basis points to 0.19%. Sentiment for the Dollar has improved in recent weeks, while Treasury yields have spiked, as the Biden administration’s planned stimulus of more than $2 trillion and a rapid COVID-19 vaccine rollout spurred economic optimism as well as inflation fears.
  • S&P 500 (+1.2%) set intraday and closed record highs on Thursday, topping the 4000 level for the first time, in a relatively broad-based advance. The Nasdaq (+1.8%) and Russell 2000 (+1.5%) outperformed the benchmark index with solid gains, while the Dow Jones Industrial Average (+0.5%) rose modestly.
  • The Philadelphia Semiconductor Index (+3.7%) was another pocket of strength after Micron (MU 92.41, +4.20, +4.8%) beat EPS estimates and issued upbeat Q3 guidance and Taiwan Semi (TSM 124.80, +6.52, +5.5%) announced plans to invest $100 billion over three years to expand production capacity.
  • Energy stocks drew additional support from higher oil prices following the OPEC+ policy meeting where the group agreed to cautiously increase output from May through July with Saudi Arabia easing on its extra 1 million barrel/day cut. WTI crude futures settled higher by +3.8%, or $2.22, to $61.41/bbl.


Taiwan says European countries helping with submarine project

Notable Snippet: European countries are providing help for Taiwan’s indigenous submarine project, the island’s defence ministry said, in a rare admission that the sensitive programme is not getting assistance solely from the United States. Taiwan, which China claims as its own territory, has worked for years to revamp its submarine force, some of which dates back to World War Two. It is no match for China’s fleet, which includes vessels capable of launching nuclear weapons.

THEMATIC CONTEXT: “With the rise of AI and Data, chips are the new age commodities and this makes Taiwan a country of increasingly key geopolitical importance as its semiconductor industry manufactures (notably Taiwan Semiconductor Manufacturing) the bulk of the world’s chips (even Nvidia outsources chip production to them). For U.S. to effectively beat China in a Tech War, it has to prevent the technological know-how from being acquired by China, this is especially important since Intel (INTC) lost the race to Taiwan Semiconductor Manufacturing (TSM), anecdotally evidenced by the decoupling in stock prices between the two companies. U.S. relations with Taiwan now hinges on much more than just a proxy state to nudge China, but Taiwan holds the key to the U.S.-China tech war in which the winner becomes a global superpower.” — 11th Jan 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

China reports 26 new COVID-19 cases; Myanmar link seen in Yunnan

Notable Snippet: Mainland China reported 26 new COVID-19 cases on April 2, up from nine a day earlier, the country’s national health authority said on Saturday, as officials in the country’s southwest linked a local outbreak to Myanmar. The National Health Commission said seven of the new cases were local infections in Yunnan province, where a COVID-19 cluster has emerged in the city of Ruili bordering Myanmar. Ruili is a key transit point for Yunnan province, which has struggled to monitor its rugged 4,000 km (2,500-mile) border with Laos, Myanmar and Vietnam for illegal immigration amid a wave of unauthorised crossings last year by people seeking a haven from the pandemic.

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 and SGD.” — 20th Mar 2021

“This was the reason for the selloff in cyclicals and risk assets. Poor vaccination drives have been Europe centric so far. Nonetheless the virus has no partiality and the world is only as strong as the weakest link, Europe’s vaccination drive will be a crucial barometer for recovery in the developed world and will be one of the pace setters for cyclicals.” — 24th Mar 2021

U.S., Iran head to Vienna for indirect nuclear deal talks

Notable Snippet: Iran and the United States said on Friday they would hold indirect talks in Vienna from Tuesday as part of broader negotiations to revive the 2015 nuclear deal between Tehran and global powers. Tehran has ruled out face-to-face bilateral discussions, but the presence of both Iran and the United States in the Austrian capital — welcomed by Washington as a “healthy step forward” — will help to focus efforts to bring all sides back into compliance with the accord. The aim is to reach an agreement within two months, said a senior official with the European Union, the coordinator of the deal. Iran holds elections in June.

THEMATIC CONTEXT: “After the UAE’s pivot towards the U.S. and Israel, this just became more sensitive. Iran has always been a political proxy chess piece for a U.S.-Russian standoff, the key thing to note now is that China has entered the fray and with an Iranian bias. The implications are not so much as to the sanction, but the geopolitical strain that will aggravate existing issues between the “three superpowers — U.S., Russian & China”. As a result, watchout for ratcheting of South China Sea tensions, faster push for Dual-Hegemonic Factions, issues over Gas Pipelines (Nordstream) and etc. — 14th April 2020




Phan Vee Leung
CIO & Founder, TrackRecord

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