Antipodean Capital Macro Strategy Daily Jan 31 - Powell Fed delivers dovish trifecta, a patient pause, no preset hikes, and larger balance sheet. Stocks to test resistances, USD to decline significantly. Buy S&P, AUD, NZD US 10s.

Macro: Fed: Fed Chair Powell was able to deftly sidestep questioning around the potential for future rate hikes, focussing instead on the notion that policy is appropriate for now, and that the case for rate hikes has weakened. In addition, his commentary around balance sheet usage in response to macro conditions, and that it and reserves in the system will remain larger than otherwise expected have supported stocks and weakened the USD sharply. These trends should extend.

Summary: Growth assets took heart from the Fed message last night, which emphasized patience, no preset agenda re future rate hikes (although this was deftly sidestepped by Chair Powell, rather than addressed, due to the absence of dot points this meeting) and a commitment to use the Fed’s balance sheet according to macro issues, and retain it at a larger size. Stocks and growth assets should do better, the USD will decline further..

New trades: Buy AUD (risking .72) or NZD (risking .68) sell USD. Buy S&P at 2682 risk 2660 target 2740. Exit US 10’s longs from 2.91% at 2.69% (+2%). Sold HYG at 83.55 stopped at 85 (-1.8%). Sold WTI at 52.70 stopped at 54 (-2.6%).
FX: Short $JPY at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Long JPYKRW at 9.85 risk 9.76 target 10.30.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s short NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 17. Bought Gold at 1243 risk 1230 target 1380.