Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

Like his hero Andrew Jackson in 1824-28, Trump wants to begin running again for president four years hence. The second impeachment will slow those plans (but not derail them except in the unlikely event of 17 GOP Senators voting to convict him). Ironically Biden and the Republican leadership are united in wanting to shift the focus away from Trump in the next few months. A big stimulus will be market-positive, but sentiment is likely to change once Biden (enabled by control of the Senate) proposes the big hike in corporate tax rates in his Budget next month. Near-term positive for over-stretched markets, until fiscal/debt realities are reckoned with.  The final step in the US election process was completed on 6th January 2021, but not with the peaceful transition that is normal. Instead, a violent mob invaded the US Capitol at outgoing President Trump's instigation (alongside more incendiary calls from his surrogates such as Rudy Giuliani, who demanded "trial by combat"), resulting in 5 deaths and untold destruction of national property and tradition. Vice President Pence announced Biden's election as president in the early hours of 7th January (after Congress had certified the Electoral College count), and called the National Guard into action to counter the mob of Trump supporters. On 8th January, President Trump too formally denounced the violence, having acknowledged the previous night that a new administration would take office, and he would cooperate in the transition.  The violence on Capitol Hill was not an unprecedented response to a US election: in 1861, several states seceded before Lincoln's inauguration and a 4-year Civil War ensued. In 1824, Andrew Jackson denounced the outcome of the election (decided in the House because the Electoral College outcome wasn't decisive), and he began running for president almost immediately for the 1828 election. But this time, a sitting President was inciting the mob. This is different from 1824, since Andrew Jackson was not the incumbent; this time, the incumbent president is likely to face indictments and prosecution for inciting murder, and possibly disqualification from future public office. Although Trumpism is likely to live on, it has been wounded, and the Republican party is likely to spend the next few months confronting an internal struggle between the Trump and anti-Trump wings. The latter was almost non-existent in 2020, but has re-emerged since 6 Jan 2021.  From the perspective of politics in 2021, the more significant outcome on 6 January was that the Democrats won both the run-off races for the US Senate from Georgia, Raphael Warnock becoming the first Black and Jon Ossoff the first Jewish person elected to the US Senate from Georgia (Warnock is also only the 10th Black ever elected to the Senate). This ensures that the Democrats will have 50 of the 100 Senate seats, plus Vice President-elect Kamala Harris having the casting vote. So, in effect, there was a mild Blue Wave in the 2020 election, and the Democrats will control the White House, Senate (by a casting vote) and the House (by a narrow majority, with 222 of the 435 seats, reduced to 219 seats after Biden nominated three House members to his Cabinet). President-elect Biden has already nominated a centrist Cabinet, and is likely to retain his focus on a centrist agenda, eschewing the ideas of the left-wing of his party. The narrowness of the  Democratic majority in Congress makes it impossible to pursue a more radical program.  Despite clear evidence of Trump's incitement to the crowd on 6 January, only 10 House Republicans voted to impeach him a second time. The US still remains polarized, and Biden's centrist Cabinet is likely to aim primarily at reconciliation.

Like his hero Andrew Jackson in 1824-28, Trump wants to begin running again for president four years hence. The second impeachment will slow those plans (but not derail them except in the unlikely event of 17 GOP Senators voting to convict him). Ironically Biden and the Republican leadership are united in wanting to shift the focus away from Trump in the next few months. A big stimulus will be market-positive, but sentiment is likely to change once Biden (enabled by control of the Senate) proposes the big hike in corporate tax rates in his Budget next month. Near-term positive for over-stretched markets, until fiscal/debt realities are reckoned with.  The final step in the US election process was completed on 6th January 2021, but not with the peaceful transition that is normal. Instead, a violent mob invaded the US Capitol at outgoing President Trump's instigation (alongside more incendiary calls from his surrogates such as Rudy Giuliani, who demanded "trial by combat"), resulting in 5 deaths and untold destruction of national property and tradition. Vice President Pence announced Biden's election as president in the early hours of 7th January (after Congress had certified the Electoral College count), and called the National Guard into action to counter the mob of Trump supporters. On 8th January, President Trump too formally denounced the violence, having acknowledged the previous night that a new administration would take office, and he would cooperate in the transition.  The violence on Capitol Hill was not an unprecedented response to a US election: in 1861, several states seceded before Lincoln's inauguration and a 4-year Civil War ensued. In 1824, Andrew Jackson denounced the outcome of the election (decided in the House because the Electoral College outcome wasn't decisive), and he began running for president almost immediately for the 1828 election. But this time, a sitting President was inciting the mob. This is different from 1824, since Andrew Jackson was not the incumbent; this time, the incumbent president is likely to face indictments and prosecution for inciting murder, and possibly disqualification from future public office. Although Trumpism is likely to live on, it has been wounded, and the Republican party is likely to spend the next few months confronting an internal struggle between the Trump and anti-Trump wings. The latter was almost non-existent in 2020, but has re-emerged since 6 Jan 2021.  From the perspective of politics in 2021, the more significant outcome on 6 January was that the Democrats won both the run-off races for the US Senate from Georgia, Raphael Warnock becoming the first Black and Jon Ossoff the first Jewish person elected to the US Senate from Georgia (Warnock is also only the 10th Black ever elected to the Senate). This ensures that the Democrats will have 50 of the 100 Senate seats, plus Vice President-elect Kamala Harris having the casting vote. So, in effect, there was a mild Blue Wave in the 2020 election, and the Democrats will control the White House, Senate (by a casting vote) and the House (by a narrow majority, with 222 of the 435 seats, reduced to 219 seats after Biden nominated three House members to his Cabinet). President-elect Biden has already nominated a centrist Cabinet, and is likely to retain his focus on a centrist agenda, eschewing the ideas of the left-wing of his party. The narrowness of the  Democratic majority in Congress makes it impossible to pursue a more radical program.  Despite clear evidence of Trump's incitement to the crowd on 6 January, only 10 House Republicans voted to impeach him a second time. The US still remains polarized, and Biden's centrist Cabinet is likely to aim primarily at reconciliation. 

The Spectre of 1824 (Not Quite 1860), but Georgia & Impeachment Aid Centrist Biden

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

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Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Nasdaq-100 Stock Index / Technical Analysis

The call to buy risk on the January 4 draw down has panned out. SPX sub 3,700 long now meeting the 3,800 objective representing the topside of the rising wedge. We also touted buying the Nikkei at 27,000. Keep in mind that rising wedge formations have a 70% probability of breaking lower. Our cycle works turns negative mid Jan into late Jan for a pullback that sets up a very nice long entry for a February rally. The next risk cycle would come in late February.

The call to buy risk on the January 4 draw down has panned out. SPX sub 3,700 long now meeting the 3,800 objective representing the topside of the rising wedge. We also touted buying the Nikkei at 27,000. Keep in mind that rising wedge formations have a 70% probability of breaking lower. Our cycle works turns negative mid Jan into late Jan for a pullback that sets up a very nice long entry for a February rally. The next risk cycle would come in late February.

Despite the weaker-than-expected non-farm payrolls (NFP) report for November 2020 (with payrolls rising by just 245K versus the consensus expectation of 469K), the US economy otherwise remains in robust health. The ISM manufacturing PMI gauges for October and November were the strongest two readings in 2020, with the leading indicator (new orders) suggesting that manufacturing will strengthen substantially further in 1H 2021. ISM's services PMI (56.3) was marginally (1.3 points) weaker in October-November than the June-September average, but still suggestive of a stable economy, with new orders (58) pointing to a healthy 1H 2021. The surging toll of Covid-19 cases and deaths in the US (which both climbed to new records for 7-day moving averages in the latest week) will bring forth an aggressive federal-government response from the incoming Biden administration, slightly slowing the momentum of the US economy in 1Q 2021. However, the emerging Biden cabinet is essentially a restoration of the centrist elements of the Obama-Biden team, with the economic team notably lacking any clear representatives of the Democratic left (the Sanders-Warren wing), instead packed with experienced hands like Janet Yellen (ex-Fed chair) as Treasury Secretary. The chair of the council of economic advisors (CEA) and national economic council (NEC), Cecilia Rouse and Brian Deese respectively, are both centrists, although the two other members of the CEA are from the left. The likelihood of an early roll-out of the Pfizer/BioNTech vaccine, and rival ones by Moderna and Oxford/AstraZeneca will buoy markets and risk appetite for the rest of the year, despite the fact that global equities are very richly-valued. The Biden foreign policy team is notable for being manned by relative China doves: Biden himself said last year about China "they're not bad folks, folks"; his pick for Secretary of State (Anthony Blinken) said in July that a Biden administration will "re-engage and work with China" from a position of strength, while Biden's NSA (national security advisor) pick, Jake Sullivan, has spoken of "managed coexistence" with China. Despite hawkish language in the official Democratic platform, the Biden team's instincts are to be relatively soft on China. However, both houses of Congress have turned very hawkish on China, and the State Department published a 74-page document on 20 November 2020 entitled "The Elements of the China Challenge", very akin to Kennan's 1946 "Long Telegram" arguing for containment of the USSR, asserting that "in the face of the China challenge, the United States must secure freedom" around the world. Although the Biden team's instincts are more dovish (and this will ease the trade war by mid-2021), the tension between containment and "managed coexistence" will be an ongoing theme of the Biden administration.

Despite the weaker-than-expected non-farm payrolls (NFP) report for November 2020 (with payrolls rising by just 245K versus the consensus expectation of 469K), the US economy otherwise remains in robust health. The ISM manufacturing PMI gauges for October and November were the strongest two readings in 2020, with the leading indicator (new orders) suggesting that manufacturing will strengthen substantially further in 1H 2021. ISM's services PMI (56.3) was marginally (1.3 points) weaker in October-November than the June-September average, but still suggestive of a stable economy, with new orders (58) pointing to a healthy 1H 2021. The surging toll of Covid-19 cases and deaths in the US (which both climbed to new records for 7-day moving averages in the latest week) will bring forth an aggressive federal-government response from the incoming Biden administration, slightly slowing the momentum of the US economy in 1Q 2021. However, the emerging Biden cabinet is essentially a restoration of the centrist elements of the Obama-Biden team, with the economic team notably lacking any clear representatives of the Democratic left (the Sanders-Warren wing), instead packed with experienced hands like Janet Yellen (ex-Fed chair) as Treasury Secretary. The chair of the council of economic advisors (CEA) and national economic council (NEC), Cecilia Rouse and Brian Deese respectively, are both centrists, although the two other members of the CEA are from the left. The likelihood of an early roll-out of the Pfizer/BioNTech vaccine, and rival ones by Moderna and Oxford/AstraZeneca will buoy markets and risk appetite for the rest of the year, despite the fact that global equities are very richly-valued. The Biden foreign policy team is notable for being manned by relative China doves: Biden himself said last year about China "they're not bad folks, folks"; his pick for Secretary of State (Anthony Blinken) said in July that a Biden administration will "re-engage and work with China" from a position of strength, while Biden's NSA (national security advisor) pick, Jake Sullivan, has spoken of "managed coexistence" with China. Despite hawkish language in the official Democratic platform, the Biden team's instincts are to be relatively soft on China. However, both houses of Congress have turned very hawkish on China, and the State Department published a 74-page document on 20 November 2020 entitled "The Elements of the China Challenge", very akin to Kennan's 1946 "Long Telegram" arguing for containment of the USSR, asserting that "in the face of the China challenge, the United States must secure freedom" around the world. Although the Biden team's instincts are more dovish (and this will ease the trade war by mid-2021), the tension between containment and "managed coexistence" will be an ongoing theme of the Biden administration.  

US Economy Robust Despite Surging Covid Toll; Biden Cabinet Looks China-Positive

US bull energy remains well supported on dips and will lend support to the impulsive bull breakouts in Asia.Bull triangles are macro bullish for new chart highs. Will be measuring pullback energy within pattern ranges. Only the NDX shows a weaker lead bias to test the mid triangle range.SPX – Call for a pullback/rally stall from 3,600+ to test the resolve of 3,500 support (NDX below pattern resistance a correlation warning). Below 3,500 targets 3,420. Holding 3,500-10 is viewed as bullish for a new rally cycle.NDX flirting with the 12.1k breakout point. Fading from this triangle barrier has buy points at 11,600 (met) and 11,400. We like buying any move back within the triangle range.Stimulus expectations remain the core driver for risk as well as a weaker USD. We are alert to near term risks that would provide a buying opportunity - Extended bull sentiment, vaccine rollout wrinkles, and rising case counts/shutdowns.

US bull energy remains well supported on dips and will lend support to the impulsive bull breakouts in Asia.Bull triangles are macro bullish for new chart highs. Will be measuring pullback energy within pattern ranges. Only the NDX shows a weaker lead bias to test the mid triangle range.SPX – Call for a pullback/rally stall from 3,600+ to test the resolve of 3,500 support (NDX below pattern resistance a correlation warning). Below 3,500 targets 3,420. Holding 3,500-10 is viewed as bullish for a new rally cycle.NDX flirting with the 12.1k breakout point. Fading from this triangle barrier has buy points at 11,600 (met) and 11,400. We like buying any move back within the triangle range.Stimulus expectations remain the core driver for risk as well as a weaker USD. We are alert to near term risks that would provide a buying opportunity - Extended bull sentiment, vaccine rollout wrinkles, and rising case counts/shutdowns.

The pollsters have egg on their faces again, with President Trump performing far better than the polls had suggested all year. The Electoral College is close to a dead heat, with the "path to the presidency" for Biden hanging by slender margins in 4 states. President Trump disingenuously suggested that votes "cast after election day" are still being counted -- and that he would mount legal challenges to stop the counting. This was the nightmare scenario: an extremely close election, with Trump leading in several states on Election Day, only to have that vote count overturned in favour of Biden once the mail-in/absentee ballots were (legitimately) counted. Our estimate suggests that former Vice President Biden will still win the presidency, but do so after a messy counting process, with wild swings in many states -- particularly the battleground states of Pennsylvania, Michigan, Wisconsin, Nevada, Georgia and North Carolina. Trump won Ohio (as polls had suggested) and Florida (against the polls, which had suggested a narrow Biden win there). As was widely expected, Michigan and Pennsylvania were able to start counting mail-in ballots only on Election Day, and these have delayed the process. But with likely victories in Michigan, Wisconsin, Nevada and Georgia, Joe Biden will get past the magic mark of 270 in the Electoral College, and be elected President. However, the Democrats are likely to see their majority in the House of Representatives whittled down severely, and the Senate will likely stay in Republican hands, which will oblige President-elect Biden to hew to the centrist line he prefers.  Biden is still likely to be able to raise the corporate tax rate to 28% (30.8% for corporates that have offshored goods and services), and undertake some of his plans for boosting infrastructure and green investment. But the more radical parts of the Democratic platform will be much tougher to enact -- including expanding the Supreme Court, widening Obamacare, and extending green regulation. Instead, Biden is likely to include a couple of Republicans in his Cabinet, and rule from the centre. While the next few days will be taken up with Trumpian legal challenges to the counting process -- which will prolong the uncertainty over the election outcome -- a Biden win will soon come to be accepted by most, including many Republicans. We were expecting a big sell-off in the market in November if there was a "blue wave". But this form of divided government is a better outcome: after a sell-off of 4-5% as the market digests the uncertainty and the impact of the Biden tax hikes on corporates, we expect the equity market to rebound. On a 3-6 month view, we are positive on the outlook for equities.

The pollsters have egg on their faces again, with President Trump performing far better than the polls had suggested all year. The Electoral College is close to a dead heat, with the "path to the presidency" for Biden hanging by slender margins in 4 states. President Trump disingenuously suggested that votes "cast after election day" are still being counted -- and that he would mount legal challenges to stop the counting. This was the nightmare scenario: an extremely close election, with Trump leading in several states on Election Day, only to have that vote count overturned in favour of Biden once the mail-in/absentee ballots were (legitimately) counted. Our estimate suggests that former Vice President Biden will still win the presidency, but do so after a messy counting process, with wild swings in many states -- particularly the battleground states of Pennsylvania, Michigan, Wisconsin, Nevada, Georgia and North Carolina. Trump won Ohio (as polls had suggested) and Florida (against the polls, which had suggested a narrow Biden win there). As was widely expected, Michigan and Pennsylvania were able to start counting mail-in ballots only on Election Day, and these have delayed the process. But with likely victories in Michigan, Wisconsin, Nevada and Georgia, Joe Biden will get past the magic mark of 270 in the Electoral College, and be elected President. However, the Democrats are likely to see their majority in the House of Representatives whittled down severely, and the Senate will likely stay in Republican hands, which will oblige President-elect Biden to hew to the centrist line he prefers.  Biden is still likely to be able to raise the corporate tax rate to 28% (30.8% for corporates that have offshored goods and services), and undertake some of his plans for boosting infrastructure and green investment. But the more radical parts of the Democratic platform will be much tougher to enact -- including expanding the Supreme Court, widening Obamacare, and extending green regulation. Instead, Biden is likely to include a couple of Republicans in his Cabinet, and rule from the centre. While the next few days will be taken up with Trumpian legal challenges to the counting process -- which will prolong the uncertainty over the election outcome -- a Biden win will soon come to be accepted by most, including many Republicans. We were expecting a big sell-off in the market in November if there was a "blue wave". But this form of divided government is a better outcome: after a sell-off of 4-5% as the market digests the uncertainty and the impact of the Biden tax hikes on corporates, we expect the equity market to rebound. On a 3-6 month view, we are positive on the outlook for equities.    

Election Cliffhanger Brings Near-Term Nightmare; but a Curtailed Left Helps Biden

United States

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Dow Jones Industrial Average (INDU INDEX)

Dow Jones Industrial Average (INDU INDEX)

The Spectre of 1824 (Not Quite 1860), but Georgia & Impeachment Aid Centrist Biden

Biden's centrist agenda needs modest GOP support given thin Congressional majorities. Trump trial will take back seat, & focus will be on stimulus...

Prasenjit K. Basu

US Cycle January Event Risk

The call to buy risk on the January 4 draw down has panned out. SPX long meeting the 3,800 objective representing the topside of the rising wedge -...

Thomas Schroeder

US Economy Robust Despite Surging Covid Toll; Biden Cabinet Looks China-Positive

ISM surveys suggest manufacturing and services will stay strong in 1H 2021 despite the weak NFP. Biden's centrist and China-dovish team, plus...

Prasenjit K. Basu

Buy SPX Dips for New Highs

US bull energy remains well supported on dips and will lend support to the impulsive bull breakouts in Asia. Bull triangles are macro bullish for...

Thomas Schroeder

Election Cliffhanger Brings Near-Term Nightmare; but a Curtailed Left Helps Biden

Uncertainty will be prolonged by legal challenges. But President-elect Biden will govern from the center, given a GOP Senate. After initial sell...

Prasenjit K. Basu