Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Macroeconomics

<ul>
<li>US LEI release for December signals a weakening US economy</li>
<li>The annual growth rate of US LEI is deeply negative</li>
<li>December Taiwan Export Orders contract sharply indicating slower growth worldwide</li>
</ul>


US LEI release for December signals a weakening US economy
The annual growth rate of US LEI is deeply negative
December Taiwan Export Orders contract sharply indicating slower growth worldwide


Data Points to Continuing Signs of a Slowing US Economy

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.


Cross Asset Strategy

<ul>
<li>US Treasury yields have resumed their uptrends and look set to retest 5%
</li>
<li>
US Fed Liquidity continues to expand, following a 13% increase in 2023</li>
<li>This is a ‘normal’ investment cycle for equities, credit and the economy, but it has been abnormal for bonds</li>
</ul>


US Treasury yields have resumed their uptrends and look set to retest 5%


US Fed Liquidity continues to expand, following a 13% increase in 2023
This is a ‘normal’ investment cycle for equities, credit and the economy, but it has been abnormal for bonds


Rising Liquidity And The Threat of 5% US Bond Yields

<ul>
<li>Recent US economic data has been mixed on the inflation/growth front. </li>
<li>Fed dot plot and messaging at odds with market expectations.</li>
<li>The extent of rate cuts is correct, but timing is likely not.</li>
</ul>


Recent US economic data has been mixed on the inflation/growth front. 
Fed dot plot and messaging at odds with market expectations.
The extent of rate cuts is correct, but timing is likely not.


US Interest Rates and the Dollar and Impact on Markets

Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

<ul><li>US Treasury liquidity conditions remain weak and the turmoil in Treasuries during the third quarter of 2023 probably played a major role in the Powell pivot in December in hindsight.</li><li>There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves (USD liquidity).</li><li>It all has to do with the mechanics of leverage ratios in regulation.</li></ul>

US Treasury liquidity conditions remain weak and the turmoil in Treasuries during the third quarter of 2023 probably played a major role in the Powell pivot in December in hindsight.There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves (USD liquidity).It all has to do with the mechanics of leverage ratios in regulation.

USD Liquidity Watch: Treasury Selling Due to Bank Reserves Influx?

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

<ul>
<li>We expect the Fed Funds rate to decline a minimum of 50bp this year, starting with a 25bp cut in Jun'24. Consequently, bonds are likely to generate solidly positive returns. </li>
<li>Despite M2 contracting YoY for 12 months, core inflation still remains too deeply entrenched, and will consequently not allow any earlier easing. But a slower economy will help rein-in inflation. </li>
<li>The S&amp;P500's CAPE ratio is 32.27x, nearly double its mean of 17.07x, so equities are likely to struggle in Q1CY24. We recommend being Overweight Bonds and Underweight Equities this quarter. </li>
</ul>


We expect the Fed Funds rate to decline a minimum of 50bp this year, starting with a 25bp cut in Jun'24. Consequently, bonds are likely to generate solidly positive returns. 
Despite M2 contracting YoY for 12 months, core inflation still remains too deeply entrenched, and will consequently not allow any earlier easing. But a slower economy will help rein-in inflation. 
The S&amp;P500's CAPE ratio is 32.27x, nearly double its mean of 17.07x, so equities are likely to struggle in Q1CY24. We recommend being Overweight Bonds and Underweight Equities this quarter. 


US: Increase Weight in Bonds Vs Equities in the Early Part of 2024

United States

iShares 20+ Year Treasury Bond ETF is an exchange-traded fund incorporated in the USA.  The ETF seeks to track the investment results of an index composed of U.S. Treasury bonds with remaining maturities greater than twenty years. 

iShares 20+ Year Treasury Bond ETF (TLT US)

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iShares 20+ Year Treasury Bond ETF (TLT US)

Data Points to Continuing Signs of a Slowing US Economy

US LEI for December shows a weakening economy with a deeply negative annual growth rate, while Taiwan Export Orders contract sharply, signaling...

Rikki Malik

Rising Liquidity And The Threat of 5% US Bond Yields

The US economy may avoid recession, and Fed policy rates are unlikely to plunge. Yet, longer dated US Treasury yields look set to rise towards 5¼%

Michael J. Howell

US Interest Rates and the Dollar and Impact on Markets

Recent mixed US economic data on inflation and growth, has reduced interest rate cut expectations but we believe the path to US lower interest...

Rikki Malik

USD Liquidity Watch: Treasury Selling Due to Bank Reserves Influx?

There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves...

Steno Research

US: Increase Weight in Bonds Vs Equities in the Early Part of 2024

Core inflation remains entrenched despite a year of YoY decline in M2. But we expect 50bp of rate cuts in 2024, starting with 25bp in Jun'24. We...

Prasenjit K. Basu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Data Points to Continuing Signs of a Slowing US Economy

​US LEI for December shows a weakening economy with a deeply negative annual growth rate, while Taiwan Export Orders contract sharply, signaling...

Rikki Malik

Rising Liquidity And The Threat of 5% US Bond Yields

The US economy may avoid recession, and Fed policy rates are unlikely to plunge. Yet, longer dated US Treasury yields look set to rise towards 5¼%

Michael J. Howell

US Interest Rates and the Dollar and Impact on Markets

Recent mixed US economic data on inflation and growth, has reduced interest rate cut expectations but we believe the path to US lower interest...

Rikki Malik

USD Liquidity Watch: Treasury Selling Due to Bank Reserves Influx?

There are signs of increasing liquidity stress in US Treasury markets again, but how is that possible during a regime of increasing bank reserves...

Steno Research

US: Increase Weight in Bonds Vs Equities in the Early Part of 2024

Core inflation remains entrenched despite a year of YoY decline in M2. But we expect 50bp of rate cuts in 2024, starting with 25bp in Jun'24. We...

Prasenjit K. Basu

US LEI for December shows a weakening economy with a deeply negative annual growth rate, while Taiwan Export Orders contract sharply, signaling...