Macro

• Welcome to this week’s Great Game! Once again, we’re focused on the two big wars going on – Ukraine and Gaza.
• What are the risks, what will hit markets and what’s the outlook?
• Last Tuesday, Ukraine launched an offensive into Russian territory in the Kursk and Belgorod Oblasts.

• Happy Monday from Copenhagen!As usual, we use Monday to look ahead at the upcoming week.
• We are currently focused on the Nat Gas trade, which is trending aggressively upward due to 1) Ukrainian disruptions affecting the remaining MCMs flowing through the Brotherhood pipeline, 2) the upcoming Norwegian maintenance season, and 3) very early signs of bottoming demand.
• It still seems mostly driven by the supply side, with the current drawdown in supplies via Sudzha in Russia accounting for around 0.5% of daily inflow.

• Take aways: Norwegian maintenance season and no flows from Russia is a spicy mix. Temperature is the main factor for worries about stock levels 2022 mayhem may be closer than you think. Refiners’ capacity utilization weak causing fear of crude gluts
• Fears in natural gas markets have returned as Ukrainian troops are giving Putin his own “Operation Citadel” moment.
• While many European countries have sought alternatives to Russian gas, nations like Austria and Slovakia still depend on it.

• XLF Decline Post Rate Cuts: The Financials Select Sector ETF (XLF) declined by an average of 5.6% in the six months following the last three monetary policy pivots.
• Credit Delinquency Risks: Rising credit card delinquencies, now at 10.93% for severe cases, pose a significant risk to financial firms within XLF, potentially amplifying their underperformance as rates decline.
• Utilities Sector Advantage: Utility companies tend to outperform during rate cuts due to reduced debt payments, with the sector seeing a ~6% spread increase compared to the S&P 500.

• Carry strategies experiencing drawdowns, wiping out YTD gains
• Market expected to stabilize after recent shocks, carry strategy appeal diminished
• Yen likely to take a breather, BOJ stance unchanged, market normalization ongoing.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• This week likely marks the end of the positioning squaring phase, as multiple positioning gauges now signal that trades are no longer as extended as they were 2-3 weeks ago across various assets.
• This shift provides an opportunity to revisit our strategies and assess where macroeconomic trends might be steering global assets next, now that the worst of speculative activity has subsided.
• As we all know, the CFTC report is always a week behind in updating markets on positioning, making last Friday’s report particularly interesting.

• CPI inflation receded to a 59-month low of 3.5%YoY in Jul’24, with food inflation abating to 5.1%YoY (from 8.4%YoY in Jun’24), as vegetable inflation fell to 6.8%YoY (from Jun’24’s 29.3%YoY).
• Whilst retaining its 6.5% policy rate on 8/8/24, RBI forecast 4.4%YoY inflation in Jul-Sep’24, and 4.7%YoY in Oct-Dec’24; we expect 4.2%YoY and 4.3%YoY respectively, amid 8-10% above-normal monsoon rainfall.
• The policy repo rate will likely decline 50bp by Dec’24 and a further 50bp to 5.5% by Jun’25. Rate sensitives like banks, auto-companies, NBFCs and property stocks will benefit. 

• Weak employment data led to a shift in Fed forecast, with projected rate cuts in September and November
• Rates have backed off from lows, with markets pricing in a less dovish path
• Treasury market in transition, with dealer balance sheets at bloated levels and auctions showing poor results due to lack of demand from traditional investors.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Trade / Cover Story: Fixing China’s trade imbalance needs a home remedy
• FDI /: Net foreign direct investment withdrawals from China hit record high
• Zhongzhi /: Criminal charges handed to 49 Zhongzhi employees after dramatic downfall

• Unemployment shockingly plummeted to 4.16% in June as the single-month rate hit its record lows. The overstated preceding rise is unwinding, with underlying trends flatter.
• Headline pay growth slowed as expected amid powerful base effects, but the monthly impulse remains excessively high because pay awards remain elevated.
• The news clashes with August’s narrowly delivered cut, so the BoE may downplay it as statistical noise or labour hoarding. Rates should be firmly held in September.

• We have successfully navigated our macro portfolio through yet another week of high volatility, especially following Monday’s (in hindsight) outlier event.
• Risk sentiment has turned, and recession fears are muted for now.
• With position squaring largely completed, equities have regained momentum.

• Happy Sunday, folks!I hope you’ve enjoyed the weekend.
• After a bizarre week, starting with the rug-pulling in Japan on Monday morning, it was time for a well-deserved break over the past two days.
• We’ve encountered tons of questions about the size of the USDJPY carry trade, and here’s what we’ll say on the topic: Those claiming that the carry trade is 10-20 trillion USD have very little understanding of the netting of derivatives and/or the FX hedging policies of international investors.

• Volatility surged in financial markets due to events like the Bank of Japan meeting, Fed meeting, Bank of England rate cut, and disappointing US jobs numbers
• Macro data and economic indicators will play a key role in stabilizing or further destabilizing the markets
• Safe haven currencies like the yen and dollar are expected to perform well, while currencies tied to global growth like the Australian and New Zealand dollar may struggle

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• US oil and gas rig count increased by two to 588 for the week ending 09/Aug, following a decline the week prior.
• US oil rig count rose by three to 485, after remaining flat the previous week. Gas rigs decreased by one to 97, marking a third consecutive weekly decline.
• For the week ending 02/Aug, US crude oil production hit a record 13.4 mbpd, following four weeks of steady output at 13.3 mbpd.

• The presidential race has tightened since VP Harris replaced President Biden at the top of the Democratic ticket. Harris leads popular vote, but Trump is ahead in the Electoral College. 
• Both VP candidates are ideological clones of the presidential candidates. Unless Harris moves to the centre at her convention and debates, Trump’s Electoral College lead is likely to persist.  
• The energized Democratic base is likely to ensure that either House, Senate or both will be won by Democrats. Divided government is positive for markets, limiting scope for policy extremism. 

• The past week saw insights on Astra International (ASII IJ), Aspirasi Hidup Indonesia (ACES IJ), Multi Bintang Indonesia (MLBI IJ) and DFI Retail Group Holdings (DFI SP).
• There was also an insight from Sameer Taneja looking at high-conviction ideas in the Philippines and a separate insight looking at ETFs that benefit from. ASEAN’S long-term positive prospects. 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.

• The escalation in international trade tensions is expected to be more severe under a second Trump administration.
• Despite the outcome of the US election, protectionism is predicted to persist globally.
• The rise of protectionism is a global concern, not solely dependent on US politics.

• Hurricane Debby caused 300,000 electricity customers to lose power in Florida and Georgia, reducing electricity demand, which led to natural gas prices declining.
• Since the 2006 shale boom, the share of US natural gas production from the offshore Gulf of Mexico has dropped from 15% to 1.8% by 2023.
• The Gulf of Mexico area accounted for 14.4% of US crude oil production in 2023. Although still a significant share, it has declined from 25.4% in 2006. 

• While the 2023-24 cocoa crop in West Africa declined, growth in other global regions and actions in West Africa should improve supply, Hershey’s CEO Michele Buck, one of the largest chocolate producers in the world, said in the Q2 earnings call last week.
• “Today’s operating environment remains dynamic, with consumers pulling back on discretionary spending,” Buck stated.
• Meanwhile it seems like the chocolate maker is really focusing on the cocoa harvest detail in West Africa this fall before making any new major decisions in terms of their cocoa price hedging strategy for next year.

• Financial crisis causing extreme volatility in EM fixed income assets
• Three factors driving market moves: concerns of US and global recession, unwind of carry positions, concerns of escalation in Middle East
• Not currently positioning for a US recession as labor market softens but job growth remains positive.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Financial markets took fright from the weaker than expected July Employment Situation report. Fed policy remains data-dependent and the Fed will wait for more data to formulate an appropriate response.
• BoJ policy has seemingly broken the attraction of the yen carry trade, beneficial for US equities in 2024. Financial market volatility has forced the BoJ to postpone policy rate increases. 
• The case for an emergency Fed policy rate cut remains unconvincing, particularly when current circumstances are compared to other instances of inter-meeting policy rate reductions back in 2020 and 2001.

• The recent disorderly risk-off episode can be attributed to the unwind of a series of trades that depend on a low-volatility and complacent environment.
• Historically, such unwinds have resolved in volatility spikes and higher equity returns soon afterwards
• The current environment is supportive of a quick market recovery, though the risk of a LTCM-style blowup could see a longer and more complex market bottom.

• Numerous historical studies of volatility spikes indicate that the stock market is poised for renewed strength.
• A review of market leadership shows weakness by technology and other large-cap growth stocks.
• We believe the rotation from growth to value and from large caps to small caps will continue and these stocks will be the new leadership in the next leg up.

• Central Bank of Turkiye (CBRT) released its third quarterly inflation report of the year on August 8, and did not change its inflation forecasts and policy guidance.
• CBRT projects that inflation will fall to 38% at end-2024, and kept its forecasts for 2025 and 2026 unchanged at 14% and 9%, respectively, emphasizing the disinflation process has started.
• We envisage CPI to cool off to 50%’s in August on base effects coupled with tightened monetary and fiscal policies, additional macro prudential measures, and relative

• July CPI up 0.5% y/y vs June +0.2%, PPI -0.8% y/y vs June -0.8%.
• CPI uptick comes as Beijing boosts support for weak consumer sector, but core CPI still weaker than previous month.
• Overall data outcome such as weak CPI, strain on exports, and soft domestic demand backs expectations for more stimulus.

• The calls for a rate cut are rising in the Indian market, but this is unlikely to impact the RBI’s upcoming decision.
• The RBI will retain its stance of withdrawal of accomodation and maintain benchmark rate of 6.5% in its August meeting, staying on the path of inflation target.
• Concerns around high borrowing costs are rising, which could change the RBI’s stance.

• The Fed’s Q3 Senior Loan Officer Opinion Survey of bank lending practices has a less negative tone in terms of both supply and demand, suggesting limited downside risk to investment. 
• The YTD showed a less negative tone in Q1 relative to 2023, and while Q2’s findings were similar to those of Q1.Q3 data is clearly less negative than Q2’s.
• The net percentages tightening standards on C+I loans of 7.9% for medium and large businesses and 8.2% for small, compares with 15.6% and 19.7% in Q2 respectively.

• The crowded JPY carry trade will not unwind quickly although future unwind episodes may not be as dramatic.
• The size of the carry trade is unknown, however its correlation to various asset classes is predictable.
• The largest question for global markets is whether the unwind of the JPY carry trade is a harbinger of tighter monetary conditions globally as markets decline and leverage tightens.

• VIX has become lively, reintroducing volatility to the markets
• Small caps are gaining attention after being neglected for years
• Discussion on credit cycles and potential risks in commercial real estate market, with a focus on interest rates and property values

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• US crude inventories fell for the sixth straight week by 3.7 mb, exceeding the 1.6 mb decline expected by analysts. However, gasoline stocks rise by 1.3 mb.
• For the week ending 02/Aug, US natural gas inventories were up 8.2% YoY and 14.9% above the 5-year seasonal average.
• Occidental shares surged as it beat Q2 EPS estimates by 32.5%. Exxon and Aramco also exceeded EPS forecasts, while Chevron fell short.

• Discussion on the recent market volatility, particularly in metals markets
• Gold being a standout performer, while other commodities struggle
• Challenges in finding solid investment opportunities and concerns about earnings for gold companies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Welcome back to our monthly regime update, sharing insights from our data hub on cross-asset returns in different regimes.
• Coming into July, we wrote: “While we are not convinced of the general US recession call following the poor ISM Services report, our forecasts for the coming month place us in the ‘QE (Like)’ regime bucket – Growth lower, Inflation lower, and Liquidity higher.
• That said, our slightly rosier view on Growth (compared to consensus) leads us to consider and balance this against asset performance in the ‘Gung ho’ regime (Growth and Liquidity higher, Inflation lower).” And while, we had the input variables and our forecasts almost 100% correct, the market ended up souring substantially after the CPI report in Mid July due to the turning tide in USDJPY.

• Monetary / Caixin Explains: Why and how China’s overhauling monetary policy (Part 2)
• Housing /: Guangzhou district uses quasi-Hukou to lure new homebuyers
• Land /: Shanghai plot in high-end district breaks 2016 price record

• Hang Seng recovered by 2.48% to 17000 level and S&P 500 declined by 1.07% over the past week. S&P was particularly hit by the global stock decline on Black Monday.
• We are betting Hang Seng will be up for one more week and hence is heavily loading up call position on Hong Kong stocks.
• US market is much harder to predict in the coming month and therefore we are not easily building up any position in it first, until rate cut in September.

• Last El Niño was one of the strongest on record, and typically are followed by La Niña, but this transition has yet to occur. 
• Latest ONI Reading and trend shows possibility of La Niña developing in August-October, could coincide with winter. 
• Historically, adverse weather changes and high hurricane incidence are likely to spoil bearish bets against corn and lead to sustained price recovery.

• ASEAN will be the engine of global economic growth in the coming decades. 
• With stocks in ASEAN countries benefiting from rapid economic growth, the Premia Dow Jones Emerging ASEAN Titans 100 ETF (SEHK 2810) and FTSE SE Asia ETF (NYSE: ASEA) will thrive.
• Southeast Asia is the next “economic miracle” after the BRICs and stocks there could thrive in coming years.

• Welcome back to the weekly positioning watch.
• What a week it has been so far! The recession narrative has slowly but surely vanished from global markets, leaving the events of this Monday a clear outlier and more a question of positioning rather than anything else.
• However, there are still debates about the true causes behind the sell-off, with the position squaring in USDJPY currently dominating the headlines as the main cause.

• The first Act of this drama has played out in a very short time frame
• The trend has likely changed for the JPY and it won’t be back to business as usual for the carry trade
• This should benefit both real incomes and consumption in Japan

• Welcome to our US Inflation Watch.
• We see US CPI inflation coming in at 2.8% YoY and 0.1% MoM, with core inflation at firm  3.1% YoY and 4 bps hotter than headline on the month.
• This is clearly below the early consensus, even if a few contributors dare to forecast even lower inflation levels than us.

• Over capacity problem has plagued China’s heavy industry in the past years, especially in aluminium, steel, car, and construction.
• On the other hand, consumption upgrade has been a recent policy direction of the Central Government. Overcapacity problem will start to emerge in lower-end manufacturing products.
• As the economy produces and consumes higher-end goods, the supplies of heavy industries that end up with buildings and cars may get satisfied.

• Volatility spiked on 5 August, feeding dysfunctional dynamics. Risk assets have suffered but would be near their lows and soon recover their highs under historical examples.
• Equity prices also fell into the Fed’s first rate cut in 1998 before the tech bubble was blown. The equivalent potential for easing to prove premature is undiminished.
• There is no need for an emergency cut, and September’s monetary policy decisions should depend on the recession risk in macro data rather than on recent equity moves.

• Take aways: Prime age unemployment looks to green light a rate cut. ISM service employment surprising to the upside. The Fed will take a decision in September based on hurricane-impacted numbers.
• The Sahm rule would not have been triggered if it wansn’t for labor force entries and temporary weather related lay-offs.
• The job market is doing much better than feared by many and the Fed Funds pricing is overcooking the easing cycle.

• Autos / In Depth: New rules set to give state-owned carmakers an EV boost
• Corruption /: Former Shenzhen mayor gets life sentence for taking $15 million bribes
• Huawei /: Huawei unveils first luxury sedan model under partnership with BAIC

• Majority of the market now believes Fed is going to lower rate by 100bps to 125bps by end of this year and by 50bps in September.
• Coupled with the most recent weak job reports and stock market revision,  current market environment call for possibility  of reversal to QE.
• However, we stick to our forecast of only one 25bps rate cut in September, as inflation is still a concern and the Fed would not want to revert to QE.

• Arguably, the state of the US labor market is key to any recession call
• Despite the ongoing rise in the unemployment rate, other labor market dynamics might be at play
• One simple approach is to use the claims gap along with the unemployment rate to assess whether labor market conditions are deteriorating 

• Crude oil prices ended Monday lower but fell less than other commodities and equities. WTI dropped 0.79% and Brent fell 0.66%, while the S&P 500 declined 3%.
• Crude oil prices were supported by rising Middle East tensions, the shutdown of Libya’s largest oil field, and a sharp decline in the DXY.
• Henry Hub futures fell 1.27% due to surplus stockpiles, cooler US weather forecasts, and the impact of Hurricane Debby.

• Wheat, Corn and Soy gained on Monday even as US indices and commodities tumbled over recession woes. 
• Weaker dollar supports stronger US exports of agri-commodities. Grains and oilseeds rise as dollar weakens.
• Technical indicators and fundamental outlook remains bearish for agri-commoties. IV remains subdued at multi-month lows. 

• The milder drop in crude oil prices was reflected in energy stocks on Monday, with most major oil and gas companies, outperforming the S&P 500.
• Most of the oil companies’ volume PCR was elevated on Monday and Friday, with Haliburton’s volume PCR exceptionally high at 3.66 on Monday (5/Aug).
• On 5/Aug, all major energy companies saw a rise in implied volatility due to recession fears, except Shell, whose IV dropped slightly to 20.01% from 20.28% on Friday.

• With nominal GDP growing 6%YoY in the latest 3 quarters, Japanese interest rates will be gradually normalized. The JPY rebound, however, precludes the need for rapid BoJ hikes. 
• Unwinding of Yen carry-trades should take JPY to ¥125/US$ by end-2024, which will contribute to tightening monetary conditions sufficiently, further slowing inflation (from 2.85%YoY in May-Jun’24). 
• Appreciating JPY is bad for Japanese equities, so stay Underweight, with a defensive portfolio comprising utilities, pharmaceuticals and consumer staples. 

• Champion Iron (CIA AU) reported an inline Q1 FY25, with revenue/earnings up 57%/308% YoY owing to a 34% YoY volume increase and better pricing. 
• The company reiterated its guidance for 15 million tons of production and equivalent sales. It is working on improving logistics after forest fires and other port/rail issues. 
• The stock trades at 8.5x PE and a 6% dividend yield for FY25e ( assuming iron ore prices of USD 108/ton with a 15 USD/ton premium on 65% Fe). 

• Law / In Depth: How to better protect procedural justice for criminal suspects in China
• Default /: State-backed leasing firm misses $55.9 million bond payment
• Corruption /: Former boss of Shanghai’s state-owned conglomerate tried for embezzlement and bribery 

• Good evening from Europe.
• I will keep this analysis short and sweet as I know you are all trying to deal with these nasty markets and time is of the essence.
• We have thankfully made our way through this turbulence clearly in the money, but we are starting to see interesting counter-trends arising now.

• Fears of a US recession and higher Japanese rates have sparked a market panic that may hurt Asian economies and markets in the very near term. 
• However, the Asian region should weather the storm so long as the US avoids a recession, as we believe it will. 
• Not all Asian central banks will follow the Fed in cutting rates. Improved growth in Asia and stable inflation yield a different set of tradeoffs than that facing the US. 

• Gold, silver, and copper futures fell by 3%, 6.7%, and 4.6% respectively on Monday amidst recession fears
• Gold and silver options showed bullish sentiment with significant call option buildup, while copper options saw mixed activity with high put interest in the front-month
• Implied volatility surged for gold, silver, and copper, with copper IV increasing by 7 percentage points to 27% post non-farm payroll report

• Welcome to this week’s Great Game! I know that geopolitics are probably the last thing you want to have to consider these days, but there are some scenarios we need to cover, so here’s a quick rundown of the most important geopolitical risks right now: Iran-Israel stand-off
• Situation:As discussed last week, the tensions in the Middle East are increasing.
• We are still awaiting the response from Iran following the assassination of Hamas leaders inside Iran last week and the latest assessments point to attacks on Israel in a few days.

• We have examined the quantitative data surrounding the cutting cycle to optimise the curve steepener trade for hit ratios, carry returns, and ‘max contributions.’
• This is the steepener trade you want to own in a cutting cycle!
• In our Saturday Portfolio Watch, we discussed the potential value in steepeners and promised to more thoroughly backtest the curve in order to find the optimal steepening expression in a cutting cycle environment.

• Take aways: China will be a key player for gold markets. MBS suffering even more as crude tumbles. High frequency indicators don’t scream recession in the US. 
• Hi and welcome to this week’s Energy Cable! We will do a short note this week as many of you are mostly trying to extinguish fires due to the sell-offs in markets.
• We have two major themes regarding commodities that we’ll focus on today, namely gold and crude.

• China’s economic trajectory is clarified by Xi Jinping’s statement regarding the Third Plenary’s outcome.
• Xi Jinping frequently expresses his determination to make China technologically self-reliant.
• This self-reliance in technology is seen as a hedge against external threats.

• DXY weakened by 0.8%, Yen surges by 6%, and Euro by 0.75%. Recession fears, BoJ rate hikes and subsequent unwind of the yen carry trade drove forex market volatility.
• Implied volatility (IV) for JPY options increased sharply from early July, with a surge following the BoJ rate hike and non-farm payroll report. EUR options IV reached a one-month. 
• Euro options saw a large buildup of calls for near-term expiries and a significant increase in puts for September expiries, reflecting mixed market sentiment.

• Iron ore bounced from the 100 USD/ton level and has maintained a rangebound level between 95 and 130 USD/ton for the last three years.
• Inventories at the ports continued to increase, surpassing 150 million tons, representing about 38 days of inventory (normalized levels around 35 days). 
• After Capital Group’s recent selldown, Fortescue Metals (FMG AU) looks attractive (with a trailing dividend yield of 11% and 6.5x PE) and could be worth exploring. 

• The RBA maintained its policy rate at 4.35% amid persistent inflationary pressures, aligning with the economic consensus and highlighting the challenges in achieving its inflation target promptly.
• Future policy decisions will hinge on domestic consumption trends, labour market conditions, and global economic uncertainties, with the RBA emphasizing a data-driven approach to sustainably ensure inflation returns to the target range.
• The RBA remains vigilant to upside inflation risks, prioritizing inflation targeting within its mandate, and is prepared to adjust policy settings based on evolving economic data and risk assessments.

• What a crazy day (week), starting August off with a somewhat disastrous NFP report.
• Private sector jobs are trending down, government payrolls are trending down, while manufacturing and goods-producing jobs actually improved in July despite the recessionary ISM manufacturing report.
• This is a clue that the manufacturing sector is rebounding, as we have been alluding to, which is something that will likely become relevant for markets in the coming months.

• Welcome to our weekly “The Week At A Glance” publication, where we dig into the most important key figure releases and tradeable themes for the upcoming week.
• Everything is about assessing the USD economic cycle and the potential for rate cuts of the magnitude priced in after a crazy week last week.
• We ultimately have our doubts (especially as the labor market report on Friday was heavily impacted by the storm Beryl), but we are still waiting for potential triggers to bet on it.

• Happy Sunday! What a week, and what a few months we have ahead!
• To use the words of my friend Boris Kovacevic, “it’s like 2024 never happened.” Everything we learned about the re-acceleration of inflation in H1 and the “high for longer” narrative has just vanished into thin air over the course of a few days.
• While it is hard to disagree that a cutting cycle is commencing, it is still very much up in the air whether this is a normal cutting cycle.
• We spent last week examining returns in various asset classes around the commencement of cutting cycles, and the saddening truth is that it very much depends on the type of cycle.

• In this insight, we discuss strategies for outperformance amid market convulsions and downturn. 
• In particular, we highlight six reasons why it may be a wise move to position one’s portfolio more defensively (at least for the next several months).
• Warren Buffett slashed nearly half of his holdings in Apple, which was probably one of the main triggers of the tremendous market sell off in Asian markets on Monday.

• China’s state grid is increasing spending by 13% this year, which could boost sentiment in the copper sector
• Chinese steel rebar standards are changing, leading to concerns about obsolete inventories and potential pressure on steel prices
• India’s rising demand for metals, particularly in steel production, could have a significant impact on the global market by 2030

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• The July Nonfarm Payroll report showed only 114k jobs added, increasing the unemployment rate to 4.3%, the highest since 2021.
• The Sahm rule, a reliable recession indicator, was triggered with a current value of 0.53, signaling a potential recession on the horizon.
• FedWatch indicates a >90% probability of a 50 basis point rate cut in September, up from 10% last week, due to recession fears.

• The US oil and gas rig count declined by three to 586 for the week ending 02/Aug, following two consecutive weeks of increases. 
• The US oil rig count held steady at 482, after rising by 5 last week. Gas rigs decreased by three to 98, marking a second consecutive weekly decline.  
• In May, US crude oil production experienced its first monthly decline since January, while natural gas output dropped to its lowest level since February 2023. 

• The past week saw insights on Bank Central Asia (BBCA IJ), Thai Beverage (THBEV SP), Sheng Siong (SSG SP), and Delta Electronics Thailand (DELTA TB).
• There was also a macro insight on the Singapore economy from Manu Bhaskaran and a Thai banking sector post-results review from Victor Galliano with Krung Thai Bank as top pick.
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.

• A monthly review of how the markets and our themes are currently performing
• Analysing what went wrong and what went right in stocks and sectors
• Highlighting positions added or removed from the thematic investment portfolio

• Sajeet Pai, a VC at Bloom Ventures, provides insights on the Indian market, discussing unique features like low levels of debt and lack of trust.
• India’s massive population presents challenges and opportunities for investors, with a large segment of the population having low per capita income.
• Cultural differences, such as the prevalence of cash on delivery in e-commerce, highlight the need for a nuanced approach when entering the Indian market.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Risk appetite is undergoing a cross-asset carry trade-driven panic and a bottom is near. The equity market is sufficiently oversold and poised for a relief rally.
• Barring some unexpected exogenous event, downside risk is limited at these levels.
• Expect a short-term relief equity rally into August, led by small caps and value stocks.

• The Fed has been a political institution since its inception, while its responsibilities have been changed over time.  Political pressure on the Fed is counter-cyclical will always prevail this way.
• Markets have become decidedly more dovish about the Fed’s policy conduct as the presidential election approaches, effectively raising the ante on the Federal Open Market Committee. 
• President Trump wishes the federal funds rate to remain unchanged until the election, but the current FOMC membership suggests at least one policy rate cut this year. 

• Gold tread new high of $2,386.10 per ounce​.  Several factors support the gold price including geopolitical instability, upcoming Fed interest rate cut, central bank purchases, and still slightly strong inflation.
• Gold’s long-term returns are actually pretty good. Investors should hold a certain proportion of gold in their positions to increase risk-adjusted returns.
• Currently, global investors hold too many risky assets such as stocks, resulting in a lower rate of return on such assets.

• Copper declined below the 9,000 USD/ton levels (WoW by -0.5%) due to weakness in financial markets caused by the Federal Reserve’s slowness in cutting rates. 
• Positive signs for copper were the Yangshan Copper Premium inflecting into positive territory and combined inventory on all exchanges being drawn down by almost 5%. 
• Lundin Mining (LUN CN) and BHP Group Ltd (BHP AU) will acquire Filo (FIL CN) for 4.1 bn CAD and develop the Josemaria project in Argentina. 

• The Hang Seng Index plunged 2.1% last Friday and fell 0.5% for the week to close at 16,945 points. A total of 7.4% have been evaporated in three weeks.
• Looking ahead to this week, the mainland will release a number of economic data, coupled with the release of blue chip stocks, it will become the focus of the market.
• The U.S. presidential candidates may toughen their stance against China. Therefore, even the Chinese stocks are cheap in valuation, foreign investors are still cautious about absorbing Chinese stocks.

• The markets have been rattled by a series of weak economic data, but it’s not time to panic. Economic growth is decelerating, but it’s not recessionary.
• The Fed is correctly signaling an imminent cut in interest rates as long as inflation data remains soft.
• The U.S. economy is in a not too hot, not too cold Goldilocks growth scenario that should be equity friendly.

• North Dakota accounts for 51% of total US spring wheat production. The region’s projected 2024 crop yield 15% higher YoY at an average of 54.5 bushels per acre.
• Large old-crop corn inventories record yield of 183-185 bpa collectively dragging corn prices down.
• Wheat vols rebounded last week after falling the prior week. Prices face uncertainty as strong exports, lower production in EU & China provides support against massive US harvest.