Matein Khalid My short idea on Mr. Market was a beauty in Sept, with the S&P 500 down 4.9% and Nasdaq down 5.8%. Even though Street folklore, sentiment U-turn and seasonals argue that the index will mean revert now, I believe we will drop to 4200 level and violate the 200 DMA trendline. If so, all hell will break loose. There are too many matador swords dipping […]
By Matein Khalid India is the crown jewel in the MSCI EM index, just as it once was for the British Empire. Yet Nifty now trades at the same stratospheric valuation as it did in December 2007, not exactly the best month in Vedic history to go long Bharati equities. Two metrics make me go gaga on Modinomics. One, the free distribution of sanitary pads to millions […]
Matein Khalid Lord Rothschild’s advice to “buy when there is blood on the street” is perfectly apt in the bombed out carnage of US office REITs, where stocks have fallen on a quantum scale more than the value of the underlying brick and mortar. Vacancy rates have spiked in the post pandemic, remote/hybrid work zeitgeist of 2023, the Fed’s draconian monetary tightening has gutted valuations and the […]
Matein Khalid It was a mini Black Thursday for debt/equities last night but it was macro nirvana for me as four trade ideas I have rhapsodized ad nauseum in the past three months have now proved, “the mettle of their pasture”, to borrow from King Hal’s speech to his English archers on the eve of Agincourt. With Taiwan Semi and AMD down 25% from recent peaks and […]
Matein Khalid The retail sales and PPI data bombshells only reinforces my view that a pause at the September FOMC only means that the Powell Fed is certain to raise the Fed funds rate to 5.75% in November. The terminal overnight borrowing rate in this cycle could well be 6.5%. The parabolic rise in Brent crude prices from $70 in early June to $93.4 demonstrates that the […]
Matein Khalid Blackstone (BX) was founded with $500,000 in 1985 by two Lehman partners after a civil war at the I-bank forced its sale to American Express. BX had a meteoric rise from a small LBO boutique in Manhattan to the world’s first true alternative asset management colossus with $1 trillion in AUM. I have rhapsodized about Blackstone in the Gulf/UK media ever since its shares fell […]
Matein Khalid There is now no doubt in my mind that we are witnessing a replay of the inflection point in the global liquidity cycle that culminated in the Asian currency meltdown in 1997, the TMT debacle in 2000 and the subprime mortgage crisis/credit market contagion in September 2008. China’s $5 trillion deflation nightmare has only just begun, a replay of Japan’s two lost decades with a […]
Matein Khalid In my late 1970’s boyhood, I was mesmerized by the Shah of Iran’s regal hauteur and magnificent uniforms as he made periodic state visits to Larkana, the then de facto capital of Pakistan. Sadly, the party ended for the Shah in January 1979 as he piloted his Imperial Boeing 707 out of Tehran while a million Islamist revolutionaries screamed for his blood and welcomed a […]
Matein Khalid Dubai’s royal and merchant elite has always had a significant financial exposure to UK PLC, and thus sterling. The historical umbilical cord between Britain and Dubai goes back to even before the birth of the UAE Federation in December 1971. The late Sheikh Rashid al Maktoum, the father of the current ruler of Dubai, was a frequent guest at Buckingham Palace, Windsor Castle and Sandringham. […]
Matein Khalid Three generations of Gulf Arabs have been enraptured with German luxury auto brands like Mercedes, BMW, Porsche and Audi. But please, please, do not fall in love with German homes or CRE as the Fatherland faces the mother/mutti of all property meltdowns. New construction starts have plunged a ghastly 50% in H1 2023. Hundreds of property developers, squeezed by the sharp spike in borrowing costs, […]
Matein Khalid I expected a bond market bloodbath ever since the yield on the 10 year US Treasury note rose above 3.50%. Why? One, the neutral rate of interest, called R* in the vocabulary of the Federal Reserve monetary economists and the bond trading desk of Wall Street. This is the rate of interest where the economy is in neither growth or recession mode and R* neither […]
Matein Khalid Literature is often a better guide to navigate the emerging markets than the cold algorithms of modern finance. This is definitely true with the magic realism genre of Latin American writers like Argentina’s Borges, Colombia’s García Márquez and Mexico’s Carlos Fuentes, the three men for whom I have struggled to achieve fluency (without success) in Spanish/Castellano. So when I think of emerging market equities in […]
Matein Khalid Saudi Arabia’s unilateral 1 MBD output cut in Vienna last week did not trigger a credible rally in crude oil prices. Au contraire, Brent ended the week at $74.80 and West Texas a tad above $70, down 2%. Prince Abdulaziz’s warning to the oil bears to “watch out” has failed for the second time since April’s shock OPEC+ supply cut. It is obvious that both […]
Matein Khalid The $7 trillion foreign exchange market can be merciless if you read its macro smoke signals wrong or ignore the hoofbeats of the leveraged herds who determine its positioning, politics of central banks, government policy and above all the psychology that shapes sentiment. The biggest consensus trade for 2023 was supposed to be the dethronement of King Dollar amid a robust Chinese reopening recovery and […]
Matein Khalid President Erdoğan recalled his pro-markets ex-Wall Streeter Mehmet Şimşek as Finance Vizier and the head of MIT who negotiated his diplomatic rapprochement with Egypt, Israel, Saudi Arabia and the UAE as Foreign Minister but all hell has broken loose in the money markets of Istanbul as I write. The Turkish lira has plunged 7% this AM as state owned banks have stopped the dollar sales […]
Matein Khalid My muse is the Kingdom tonight – not the kingdom of heaven but the Kingdom of Saudi Arabia. Prince Abdulaziz reinforced Saudi Arabia’s role as the swing producer of OPEC+ at Vienna with a voluntary 1MBD output cut and his energy diplomacy gave UAE a 200,000 barrel a day quota increase. The impact on oil prices has not been dramatic as Brent is now $77 […]
By Matein Khalid Bubbles are a recurrent phenomenon in financial markets, from Dutch Tulips in Rembrandt’s Amsterdam to Kuwait’s Souk al Manak, Japan’s Nikkei Dow to the dotcom debacle in 2000, the credit bubble in 2007 to the crypto SPAC roller coaster in 2021 and now the global hype over artificial intelligence (AI). Is there a bubble in AI stocks even though some have been blowout winners […]
Matein Khalid I have been fascinated by the global commodities markets ever since I lost a semester’s tuition at Penn trading silver futures at EF Hutton. Family folklore tells me that my ancestral clan traded physical commodities in British India for generations and the Great Depression plus General Yamashita’s assault of Fortress Singapore devastated my paternal grandfather’s godown/inventory, though cousins in Paris and Dubai are still among […]
By Matein Khalid The global EV market has entered a cutthroat, even Darwinian competitive dimension now that Tesla (TSLA) has initiated a price war to capture market share, though a plunge in gross margins is the blood sacrifice for market dominance. So TSLA’s Q1 earnings were a predictable horror, with a fall in operating income/margins after successive price cuts. Tesla can succeed in this strategy in the […]
Matein Khalid I must thank Saudi Arabia’s prince Abdulaziz for the very welcome 7% (pre-market) rise in APA Corp (APA), Marathon Oil (MRO) and Schlumberger (SLB). My three large cap stooges in the universe of black gold. The Saudi Oil Minister had sent numerous smoke signals that speculators were shorting paper oil, whose volumes are often 15 to 20 times the 100 million barrels a day consumed […]
Matein Khalid Get set for a spectacular rally in bank shares that has already begun in the pre-market. First Citizens will acquire the loans/deposits of SVB from the FDIC injects badly needed confidence into the US banking system. Deutsche Bank is also a false alarm as the 40% spike in its credit default swaps on Friday was due to panic selling in European banks rather than any […]
Matein Khalid There was no way Uncle Sam was going to allow a mass extinction event to destroy thousands of VC funded tech and life science startup to be wiped out due to the collapse of Silicon Valley Bank (SVB). The “flight to quality” trade, illustrated by a steep plunge in the yield of the 2 year US Treasury note from 5.07% last Wednesday to 4.35% is […]
Matein Khalid If banks were people, Standard Chartered Bank (SCB) would be a plain Jane spinster, always a bridesmaid but never a bride, jilted at the altar by her suitors and now at the nikah by First Abu Dhabi Bank. I had a near heart attack when I saw the shares rise 20% in London as the grapevine said a major Abu Dhabi bank was going to bid for […]
Matein Khalid Three millennia of Chinese history and the neonlit grandeur of Macau are a testament to the fact that passion for speculative assets is a recurrent theme across untold generations in the Middle Kingdom. Yet even I was stunned by the swiftness and intensity of the bull market in China/Hong Kong that began in late October after a sell off triggered by foreign selling after President […]
Matein Khalid Was King Dollar dethroned in November? The trade weighted US Dollar Index rose 20% from June 2021 to November 2022, its biggest bullish run since the year before the Plaza Accord in 1985. The macro ballast behind the King Dollar trend gained huge momentum after the Powell Fed abandoned its “inflation is transitory” mantra and began to raise interest rates in early 2022. The US […]
Matein Khalid Don’t fight the Fed is a Wall Street cliché that makes total strategic and tactical sense as America heads for Turkey/cranberry sauce this Thanksgiving. While the S&P index is up 12% since its October low on euphoria over a CPI dip, hopes (misplaced) of a Fed pivot, a fall in the 10 year US note yield to 3.77% and a 4% drop in King Dollar. […]
Matein Khalid Tesla (TSLA) was a fairytale in 2020 when it soared 740% and then 50% in 2021. The fairytale has morphed into a nightmare in 2022, with the shares down 52% from their January highs of 402 to 168 as I write. What went wrong? One, 2022 has been an annus horribilis for NASDAQ, which is down 32% YTD. Since Tesla has a stock market beta […]
Matein Khalid An asteroid collision with earth 65 million years ago created a mass extermination event that wiped out the dinosaurs. This is an apt metaphor for the monetary tightening of the Powell Fed in 2022 that wiped out so many emerging growth segments in Nasdaq, including several notable electric vehicle (EV) startups now on critical life support. Most wannabe Teslas all over the world are going […]
Matein Khalid My digital purdah came to an end with a bang and not a whimper as Powell made it clear that it is “very premature to think about a pausing”. This was a cold shower to the bulls and the DJIA went from +350 to -500. What an ouch! The Treasury bond market resumed its bloodbath. Chairman Powell’s message to the Street was precisely what I […]
