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

<p><em><strong>The presidential debates are usually totems of democracy's best features--as two (occasionally three) candidates lay out their arguments cordially before a national audience. The first debate of the Fall 2020 campaign was anything but a talismanic symbol of American democracy, doing little to change voters' minds. But it greatly heightened the risks of a chaotic November in the US, possibly the most chaotic post-election scenario since 1860-61. </strong></em></p><p>The first inter-party presidential debate of the 2020 election cycle was an ugly tie: there was no clear winner in an incoherent and undignified brawl that hardly aired any of the election's key issues. Trump's abrasive style likely strengthened the degree of support from his base. Biden's uneven performance (a few good lines, drowned in bouts of incoherence) did not enhance his appeal to the wider electorate, but he held his own (thus refuting Trump's suggestions that he is senile), and made no significant gaffes (apart from one false claim about the US-China trade deficit, and a brief defense of the Green New Deal, which he was soon obliged to repudiate). </p><p>President Trump appeared intent on questioning the legitimacy of the election process -- particularly mail-in ballots. Asked by moderator Chris Wallace (from the conservative Fox News channel) to reassure voters of the integrity of the voting process, Biden complied--and made a strong, direct pitch to voters to go out and vote. Trump said the voting process is "a disaster", a "fraud and a shame". When asked if each candidate would wait until a result/outcome had been certified before declaring victory, and would tell his supporters to stay calm in the intervening period, Trump declined to do so--especially if it was "a fraudulent process".</p><p>At this stage, President Trump appears to have decided he will lose the election, and is hence preparing his supporters to question the legitimacy of the election -- a dangerous and unprecedented situation that has not occurred in any election since the 19th century.  November 2020 was already looking like a terrible month for the US, but it has just become much more dangerous, as the sitting president has begun questioning the legitimacy of the entire electoral process. In the 1860 election, the refusal of many states to accept the outcome (a victory for Lincoln) led to a Civil War, as southern states unhappy with the outcome chose to secede. November 2020 will not necessarily signal a Civil War, but is likely to result in an ugly and chaotic month or two in US politics -- uncertainty that will be very negative for global equities and risk assets. The US dollar is likely to gain strength this quarter, as will gold prices.  </p>

The presidential debates are usually totems of democracy's best features--as two (occasionally three) candidates lay out their arguments cordially before a national audience. The first debate of the Fall 2020 campaign was anything but a talismanic symbol of American democracy, doing little to change voters' minds. But it greatly heightened the risks of a chaotic November in the US, possibly the most chaotic post-election scenario since 1860-61. The first inter-party presidential debate of the 2020 election cycle was an ugly tie: there was no clear winner in an incoherent and undignified brawl that hardly aired any of the election's key issues. Trump's abrasive style likely strengthened the degree of support from his base. Biden's uneven performance (a few good lines, drowned in bouts of incoherence) did not enhance his appeal to the wider electorate, but he held his own (thus refuting Trump's suggestions that he is senile), and made no significant gaffes (apart from one false claim about the US-China trade deficit, and a brief defense of the Green New Deal, which he was soon obliged to repudiate). President Trump appeared intent on questioning the legitimacy of the election process -- particularly mail-in ballots. Asked by moderator Chris Wallace (from the conservative Fox News channel) to reassure voters of the integrity of the voting process, Biden complied--and made a strong, direct pitch to voters to go out and vote. Trump said the voting process is "a disaster", a "fraud and a shame". When asked if each candidate would wait until a result/outcome had been certified before declaring victory, and would tell his supporters to stay calm in the intervening period, Trump declined to do so--especially if it was "a fraudulent process".At this stage, President Trump appears to have decided he will lose the election, and is hence preparing his supporters to question the legitimacy of the election -- a dangerous and unprecedented situation that has not occurred in any election since the 19th century.  November 2020 was already looking like a terrible month for the US, but it has just become much more dangerous, as the sitting president has begun questioning the legitimacy of the entire electoral process. In the 1860 election, the refusal of many states to accept the outcome (a victory for Lincoln) led to a Civil War, as southern states unhappy with the outcome chose to secede. November 2020 will not necessarily signal a Civil War, but is likely to result in an ugly and chaotic month or two in US politics -- uncertainty that will be very negative for global equities and risk assets. The US dollar is likely to gain strength this quarter, as will gold prices.  

Ugly, Disorderly Debate Raises the Spectre of 1824, if Not 1860

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

<ul>
<li>Last week we highlighted a downward shift in US inflation expectations, and our diffusion index of inflationary vs. deflationary expressions continues to soften (see <a href="https://www.smartkarma.com/insights/tmi-snapshot-cross-currents-in-the-us-rental-market-hint-at-pausing-inflation-expectations" target="_blank" data-smartkarma-citation="insights:43259" rel="noopener">TMI Snapshot:  Cross-Currents In The US Rental Market Hint At Pausing Inflation Expectations)</a>
</li>
<li>We believe this shift is largely responsible for unwelcome USD strength and recent pressures on precious metals as well as the overall commodity complex (as noted in <a href="https://www.smartkarma.com/insights/tmi-indicators-gold-sentiment-seeking-catalysts-following-latest-leg-up-on-us-benefit-expiration" target="_blank" data-smartkarma-citation="insights:43356" rel="noopener">TMI Indicators: Gold Sentiment Seeking Catalysts Following Latest Leg Up On US Benefit Expiration</a>)</li>
<li>While our inflation expectations note focused on emerging pressures in the US rental market and their impact on TIPS inflation breakevens, we must acknowledge that the psychology behind the emerging consensus inflationary mindset went into overdrive when extraordinary open-ended QE was perceived to be augmented by continued massive fiscal support and accelerated COVID-19 vaccine news flow</li>
<li>Our text mining sees an unprecedented spike in US political divisions coinciding with a sharp step down in fiscal stimulus expectations, as well as lowered expectations on the near-term availability of a COVID-19 vaccine</li>
<li>With two pillars of the emerging inflationary mindset now broken, the underlying narrative is seeing significant near-term challenges</li>
<li>As a potential post-election silver lining, our text mining sees a shift in perceptions of a Biden win from potentially disinflationary to inflationary (as Biden tax implications are now seen as less onerous and infrastructure investment potentially larger)</li>
<li>As long as uncertainty on post-election outcomes lingers, we suspect disinflationary pressures drive elevated vol, a stronger USD, continued pullback in precious metals &amp; the broader commodities complex, and a near-term shift away from the incipient cyclical/value rotations</li>
</ul><div class="content-highlight"><p>TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </p></div>


Last week we highlighted a downward shift in US inflation expectations, and our diffusion index of inflationary vs. deflationary expressions continues to soften (see TMI Snapshot:  Cross-Currents In The US Rental Market Hint At Pausing Inflation Expectations)

We believe this shift is largely responsible for unwelcome USD strength and recent pressures on precious metals as well as the overall commodity complex (as noted in TMI Indicators: Gold Sentiment Seeking Catalysts Following Latest Leg Up On US Benefit Expiration)
While our inflation expectations note focused on emerging pressures in the US rental market and their impact on TIPS inflation breakevens, we must acknowledge that the psychology behind the emerging consensus inflationary mindset went into overdrive when extraordinary open-ended QE was perceived to be augmented by continued massive fiscal support and accelerated COVID-19 vaccine news flow
Our text mining sees an unprecedented spike in US political divisions coinciding with a sharp step down in fiscal stimulus expectations, as well as lowered expectations on the near-term availability of a COVID-19 vaccine
With two pillars of the emerging inflationary mindset now broken, the underlying narrative is seeing significant near-term challenges
As a potential post-election silver lining, our text mining sees a shift in perceptions of a Biden win from potentially disinflationary to inflationary (as Biden tax implications are now seen as less onerous and infrastructure investment potentially larger)
As long as uncertainty on post-election outcomes lingers, we suspect disinflationary pressures drive elevated vol, a stronger USD, continued pullback in precious metals &amp; the broader commodities complex, and a near-term shift away from the incipient cyclical/value rotations
TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary software text-mines the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshots:  More Signs Of Pressure on Inflation Expectations, USD Upside, And A Silver Lining

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. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

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

<div>DXY rise is gaining traction after the Euro broke below 1.18 trendline support per our fade call from 1.20 to 1.15. Used Euro/JPY as our short vehicle to capture a Euro pullback.</div><div></div><div>We are alert to Euro shakeout risk given overly bullish positioning and watching momentum below trendline. This would surprise the dollar bears if positioning is squeezed.</div><div></div><div>DXY rally call from 92 to 95.00/80 in what is touted as a counter trend bounce sequence with risk of a sharper rise in October on risk aversion and support stemming from bull divergence. Macro posture is to sell the USD into October strength.</div><div></div><div>Gold is seeing a c wave decline tied to a stronger USD and questions over QE.  We view weakness as a buying opportunity near 1,850 and 1,800. Gold is expected to be able to shrug off a stronger dollar with market volatility becoming the primary driver in October. </div>

DXY rise is gaining traction after the Euro broke below 1.18 trendline support per our fade call from 1.20 to 1.15. Used Euro/JPY as our short vehicle to capture a Euro pullback.We are alert to Euro shakeout risk given overly bullish positioning and watching momentum below trendline. This would surprise the dollar bears if positioning is squeezed.DXY rally call from 92 to 95.00/80 in what is touted as a counter trend bounce sequence with risk of a sharper rise in October on risk aversion and support stemming from bull divergence. Macro posture is to sell the USD into October strength.Gold is seeing a c wave decline tied to a stronger USD and questions over QE.  We view weakness as a buying opportunity near 1,850 and 1,800. Gold is expected to be able to shrug off a stronger dollar with market volatility becoming the primary driver in October. 

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


<ul>
<li>
<strong>International capital</strong> is quitting the US</li>
<li>Two<strong> key policy changes</strong> will spur these flows: the US <em>excess inflation</em> target and the formation of a notional <em>pan-Asian dollar</em>
</li>
<li>
<strong>Asian Central Banks</strong> appear to be collectively targeting their currencies to reduce volatility</li>
<li>The Euro and <strong>gold</strong> are likely to be the major beneficiaries of the USD fall</li>
<li>Stronger gold prices typically mean an <strong>EM equity boom</strong>
</li>
</ul>



International capital is quitting the US
Two key policy changes will spur these flows: the US excess inflation target and the formation of a notional pan-Asian dollar


Asian Central Banks appear to be collectively targeting their currencies to reduce volatility
The Euro and gold are likely to be the major beneficiaries of the USD fall
Stronger gold prices typically mean an EM equity boom



Commodities

<p>Parsing through our thematic database we find that the most recent leg up in gold, a +$200/oz move to &gt;$2000/oz in July-August, has been largely associated with the "fiscal cliff" of US benefit expiration and its potential impact on growth.  Thus, gold had been eagerly anticipating a macro-driven risk-off phase which did not materialize throughout the summer.  Unprecedented central bank balance sheet expansion drove great conviction in a secular bull market for gold on the premise that a multi-year inflationary phase has begun, but the increasing popularity of the trade may lead to conflation of short-term with long-term inflation; and as we highlighted earlier this week, we expect a downshift in short-term inflation expectations (<a href="https://www.smartkarma.com/insights/tmi-snapshot-cross-currents-in-the-us-rental-market-hint-at-pausing-inflation-expectations" target="_blank" data-smartkarma-citation="insights:43259" rel="noopener">TMI Snapshot:  Cross-Currents In The US Rental Market Hint At Pausing Inflation Expectations</a> , 9/15.) </p><p>Our text-mined indicators suggest sentiment on gold has been trending lower recently, both directly and indirectly via gold's macro drivers.  Ironically, softer short-term inflation expectations and shrinking estimates of the next phase of US stimulus are both USD-friendly, and thus potentially gold-unfriendly at this stage.</p>

Parsing through our thematic database we find that the most recent leg up in gold, a +$200/oz move to &gt;$2000/oz in July-August, has been largely associated with the "fiscal cliff" of US benefit expiration and its potential impact on growth.  Thus, gold had been eagerly anticipating a macro-driven risk-off phase which did not materialize throughout the summer.  Unprecedented central bank balance sheet expansion drove great conviction in a secular bull market for gold on the premise that a multi-year inflationary phase has begun, but the increasing popularity of the trade may lead to conflation of short-term with long-term inflation; and as we highlighted earlier this week, we expect a downshift in short-term inflation expectations (TMI Snapshot:  Cross-Currents In The US Rental Market Hint At Pausing Inflation Expectations , 9/15.) Our text-mined indicators suggest sentiment on gold has been trending lower recently, both directly and indirectly via gold's macro drivers.  Ironically, softer short-term inflation expectations and shrinking estimates of the next phase of US stimulus are both USD-friendly, and thus potentially gold-unfriendly at this stage.

TMI Indicators: Gold Sentiment Seeking Catalysts Following Latest Leg Up On US Benefit Expiration

United States

Gold is a chemical element with the symbol Au (from Latin: aurum) and the atomic number 79. In its purest form, it is a bright, slightly reddish yellow, dense, soft, malleable and ductile metal. Chemically, gold is a transition metal and a group 11 element. It is one of the least reactive chemical elements, and is solid under standard conditions. The metal therefore occurs often in free elemental (native) form, as nuggets or grains, in rocks, in veins and in alluvial deposits. It occurs in a solid solution series with the native element silver (as electrum) and also naturally alloyed with copper and palladium. Less commonly, it occurs in minerals as gold compounds, often with tellurium (gold tellurides).

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Ugly, Disorderly Debate Raises the Spectre of 1824, if Not 1860

The first president

Prasenjit K. Basu

TMI Snapshots: More Signs Of Pressure on Inflation Expectations, USD Upside, And A Silver Lining

Last week we highlighted

Elan Gore

FX Risk Warnings and 1,850 Gold Buy Zone

DXY rise is gaining traction after the Euro broke below 1.18 trendline support per our fade call from 1.20 to 1.15. DXY rally call from 92 to...

Thomas Schroeder

Could Emerging Markets Double From Here?

International capital is quitting the US Two key policy changes will spur these flows: the US excess inflation target and the formation of a...

Michael J. Howell

TMI Indicators: Gold Sentiment Seeking Catalysts Following Latest Leg Up On US Benefit Expiration

Earlier this week, we wrote about a

Elan Gore

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