By Michael McKenna
From our perspective, the world has been a fairly interesting place in 2016. From the financial game of chicken that is zero- and negative-rate policy to widespread political turmoil to Britain's voting to leave the European Union, this year has provided one seismic shift after another, with more seemingly waiting in the wings (Hi, Donald).
What we could not have predicted, however, is how much more interesting the world gets when a smartphone app overlays animated monsters on its surface. Nintendo, thankfully, was more prescient than we were and its Pokémon Go game, which does exactly that, has reached the level of cultural phenomenon in every country in which it has been released, sending Nintendo shares soaring by 125%.
Speaking live from Saxo Bank's Copenhagen trading floor this morning, Saxo head of equity strategy Peter Garnry reports that the game is seeing an average revenue per daily active user of $0.25.
This is $0.5 higher than the previous record ARPDAU (feel free to whip that one out in conversation) of $0.20 posted by King Digital's Candy Crush, and Pokémon Go's potential for advertisement placement and similar monetisation is extraordinarily strong.
But a 125% gain?
"[The game's high ARPDAU] still doesn't justify the current valuation," says Garnry, adding that Saxo's equities team has added a short position to SaxoStrats Model Portfolios that will activate at tomorrow's Tokyo open.
"This remains a high volatility stock so investors should look to scale in over a few sessions," says Garnry; "it could still go higher."
Today's European session, he continues, will see traders weigh the value of Volvo and Ericsson's Q2 sales misses as well as Novartis' EPS beat ($1.23 versus $1.19 expected). As we head into the New York trading day, expect markets to focus on earnings releases from Philip Morris, Johnson & Johnson, UnitedHealth, Lockheed Martin, Microsoft, and Goldman Sachs.
Garnry notes that he expects GS to post a strong result in line with the general outperformance seen in US financials this past quarter.
In Asia, today's session tracked risk sentiment shift closely with most bourses tracking slightly lower. The exception was Japan, where a weakening JPY boosted risky assets. reporting from Saxo's Singapore desk. trader Edmund Liu tells us that the NZD saw yet another weak session as the Reserve Bank of New Zealand proposed new restrictions on mortgages in an attempt to rein in the country's housing boom/bubble.
"We are keeping an eye on the Antipodean currencies today as everything else appears to be dead in the water," says Saxo Bank head of forex strategy John J Hardy. Hardy adds that the release of the Reserve Bank of Australia's latest minutes last night saw the AUDUSD head lower from the 0.76 area following a large rally from the cycle lows below 0.72 in late May.
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Source: Saxo Bank
This pair, says Hardy, "appears to be triangulating and we are looking for a bigger break." Saxo's head of FX strategy believes the area to focus on is the 200-day moving average near 0.73, noting that he sees AUDUSD moving to the downside in the short- to medium-term.
Today's data releases include a UK inflation print that is sure to show a determined uptick, but as Hardy notes, "it's kind of a one-off as it's not every month that sees sterling lose 10% of its value". The release, however, remains an important one if only because it is one of the first post-Brexit indicators we have from the UK.
Turkey's central bank will also be making its first post-coup attempt statement today after the insurgency seen over the weekend shot USDTRY to 3.05 before retracing nearly all of its gains yesterday and then ascending again to its current levels around 2.98.
So there remain a lot of interesting things afoot, and more boiling below the surface. But whether or not you feel that this metric is boosted by the digital presence of colourful animated creatures, we must reiterate Peter Garnry's words of caution on Nintendo shares and remind traders that, ultimately, a Rattata here or a Bulbasaur there
doesn't really represent a 125% shift in the world's reality, whatever you have personally invested.
These Pokémon Go players, as well as anyone else born after 1985,
might disagree. Photo: iStock
From the Floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios.