Macro

• Headline numbers disappoint investors hoping for a massive stimulus plan
• “Around” 5 percent GDP growth should not be considered weak
• Messages from the Two Sessions supports a positive outlook on China equity markets

• Negative roll yield killing BCOM returns, even as spot has performed OK
• We need to see some serious stimulus out of China for broad commodities to rally
• Macro data turning bullish in shipping and the Container output from Shanghai is showing signs of a STRONG rebound

• The ECB unanimously maintained its policy rates and did not even discuss cuts despite this meeting being dovishly priced as starting a cutting cycle until recently.
• April is effectively ruled out, barring a crisis, with weakening wages needed to justify a June start. Resilient services inflation may mean wage costs are not benign enough.
• Although we believe the ECB expects to cut in June, we still expect resilience to delay that first move to September. A high neutral rate would also limit and slow cuts.

• The MPC of Bank Negara Malaysia retained the OPR at 3.00% against the backdrop of global economic expansion, moderate inflation, and an improving trade environment.
• Malaysian growth is projected to accelerate in 2024, bolstered by the positive turn in export growth and robust domestic expenditure; however, monetary policy will need to remain agile to address any downside risks to external demand and commodity market volatility.
• The inflation outlook remains moderate for 2024, predicated on stable demand and cost pressures, but subject to the domestic subsidy and price control policy trajectory, which will be a significant determinant in the future direction of interest rates.

• Mexico’s CPI inflation for February 2024 was 4.4% year-on-year, matching expectations and marking the lowest growth rate since November 2023.
• The core CPI rate decreased by 12bps to 4.64% year-on-year.
• This decrease confirms the anticipated easing in underlying inflationary pressures.

• Greetings and welcome to this month’s Macro Regime Indicator.
• Financial markets have behaved pretty much just as we laid out in last month’s predictions.
• Sentiment remains strong and the US consumer continues to spend.

• Gold and Silver have remained unresponsive to lower rates, escalating geopolitical risks and higher China and India seasonal demand.
• Notably, early February saw the emergence of two contrarian signals that merited closer attention.
• While these signals are not foolproof market timing tools, they warrant attention when they align with technical support levels within an established consolidation pattern.

• Hello everyone, and welcome to our ‘5 Things We Watch’, where we as always provide you with 5 things that we find particularly interesting in the world of global macro currently.
• This week we are watching out for the following 5 topics within global macro: Natural Gas, ECB, Crypto, Liquidity, Positioning.
• Natural Gas has really not been the place to be for a long time, as hotter weather and prudent storage dynamics has left supply WAY greater than demand.

• Welcome to this week’s edition of our EM-angled editorial, which comes hot on the heels of the PBOC Key Ministry Briefing.
• So, where better to turn first than China?
• Findings in brief: More stimulus for the Chinese economy and markets; Spill-overs to manufacturing/China sensitive geographies and currencies; Both EM (particularly Asian) equity and FX appear cheap.

• The UK Budget should be the last fiscal statement before the general election. It merely sold more of the same fiscal approach, measures, and political focus to weary voters.
• A fiscal windfall was spent on a national insurance tax cut in an ongoing effective reconfiguration from income tax. Non-dom reform steals a bad Labour policy.
• Challenges for the next Labour government are increasingly severe but not scaring markets. Loose fiscal policy is sustaining the need for relatively high interest rates.

• Global wheat prices have been defying expectations and have continued on a downward trend since the start of 2024
• Russia is expected to have a high wheat production of over 90 million tons in 2024 due to favorable growing conditions
• Ukrainian wheat exports are expected to improve with better logistics and an estimated production of nearly 20.5 million tons in the 2024-25 season

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• The Bank of Canada’s decision to hold the policy rate at 5% aligns with economic consensus. It was influenced by a global economic slowdown, easing inflationary pressures, and modest domestic growth below potential.
• Despite CPI inflation moderating to 2.9%, concerns over persistent core inflation and elevated shelter costs underscore the need for continued vigilance. The Bank anticipates inflation to stay close to 3% in the near term before gradually easing, with a full return to the 2% target expected by 2025.
• The Bank remains open to adjusting the policy rate if inflationary surprises occur. Its current focus is on monitoring wage growth, demand-supply balance, inflation expectations, and corporate pricing behavior. The decision process incorporates domestic conditions and global economic dynamics, ensuring readiness to act to maintain price stability.

• Welcome to this week’s Great Game where we turn our attention to China.
• The Communist Party is annual National People’s Congress where Premier Li Qiang (Xi’s right hand man) delivered a very noteworthy speech on the Central Committee’s financial and political plans.
• Watching a speech from a Chinese politician is a very different beast from watching top US politicians address the masses.

• Hello everyone, and welcome back to our weekly positioning watch! Equity markets continue their drift higher for yet another week, and it seems safe to say that markets are now more concerned about liquidity/growth than rates to reiterate ourselves, as equity markets have not attributed the U-turn in rates expectations any value whatsoever.
• As the growth and liquidity outlook still looks decent for the weeks/months ahead, we keep our long risk asset bias.
• The rates outlook looks to have a bigger impact in FX and especially the carry-heavy side of this asset class, and with the market likely going to up-hawk expectations even further if inflation picks up momentum, it could be time for a revival of the USD – FX volatility has at least started to pick up a bit of momentum (bullish USD).

• India grew by a strong 8.4% in 4Q23, but growth in industrial value-add came in slower. Bullish claims of strong growth momentum thus need to be qualified. 
• The primary driver of growth remained public sector-led investments, with private consumption and capital spending still playing largely second fiddle. 
• Slowdowns were also observed across all major sectors, with a contraction in the employment-heavy agricultural industry a potential drag on broader rural demand. 

• The 6 March budget is expected to be highly political, primarily aiming to strengthen Conservative ‘core’ support.
• The budget strategy is also intended to counter the threat from Reform UK, instead of appealing to a wider electorate.
• There is an underlying assumption that an incoming Labour government would have to deal with the fiscal consequences of this budget.

• Put-Call Ratio back at 1.30. Put-buying interest returns as Nifty50 scales new All-time-Highs
• Nifty50 Vol curve starts the week in Backwardation & moves into Contango as Weekly IVs dip. BankNifty Vol curve showing a kinked shape.
• Vol Curve has unwound the skew/smile compression built up over prior weeks

• The Philippines’ CPI inflation exceeded market expectations, reaching 3.4% year-on-year in February 2024.
• This is the highest level since December 2023.
• The inflation rate breaks a downtrend, rising towards the core rate, indicating positive news.

• Thailand’s CPI inflation in February 2024 declined by 0.77% year-on-year, which was the least negative outcome since November 2023 and close to the consensus forecast.
• Core inflation slowed slightly further to 0.43% year-on-year, contrary to expectations.
• This sustained dovish pressure on monetary policy.

• A monthly review at 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

• The Past week saw insights on GoTo, Grab Holdings (GRAB US),Sido Muncul (SIDO IJ), Matahari Department Store, BFI Finance Indonesia (BFIN IJ) and Astra International (ASII IJ).
• There was also a macro insight on the Thai Economy and further insights on Comfortdelgro Corp (CD SP), Bumrungrad Hospital Pub Co (BH TB), and UNOAsia in the Philippines. 
• 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 hopes of a March cut are long gone, but the ECB meeting will be interesting to watch nonetheless.
• The ECB has been dovishly surprised on right about every single measurable parameter since the December meeting, which will likely make its impact at the March meeting.
• HICP assumptions for Q1 averaged at 2.9% with the actual prints in January and February coming in at 2.8% and 2.6%, respectively.

• Take aways: Another green week for natural gas. Bullish demand/supply outlook for crude. Seasonality will now be working in favor of crude. Israel Hamas-Ceasefire a little less impactful for crude now.
• Before we get to the OPEC supply cuts and crude, we would like to address our natural gas position from a couple of weeks ago.
• Our timing has been very fortunate with the position, as the market realized that we were trading too low. As we predicted, the low prices act as a natural constraint on supply as seen most recently by EQT Corp.

• Understanding the ISM Manufacturing Index has been a tricky affair in recent months. Based on regional PMI data, the ISM (48.7) was anticipated to breach the 50 mark (50.7).
• The gap between the current 10-year US Treasury yield and the ISM Manufacturing Index is huge!
• In addition, the latest ISM numbers suggest a 26% downside for the S&P 500 Index. Yikes!

• CTA Positioning Update According to UBS’ biweekly CTA momentum study, CTAs bought oil and sold precious metals in size in February.
• The investment bank expects ⅔ of those flows to reverse in the next two weeks.
• CTA’s have meanwhile built a decent short position in agriculturals, and flows should remain negative there.

• This week, I’m going to try and combine my three interests: 1. working out what the heck markets might do next,
• 2. figuring out how economic growth rates impact stock market returns (surely there must be some relationship or are they entirely unrelated), and
• 3. digging into the economic history record books to see what’s worked in the past in investment terms.

• Gold held flat in February, continuing a long period of consolidation, and most other metals were down modestly.
• The precious metal equities further sold off in February, compounding the losses in January, highlighting to the market this industry is still out of favour.
• We had several significant updates from companies within our coverage.

• Switzerland’s CPI inflation in February 2024 slowed by a tenth to 1.2% year-on-year, slightly above the market expectations of 1.1%.
• The inflation rate continues to be below the average for most of 2023.
• The current inflation rate is significantly below the Swiss National Bank’s target.

• Bahrain’s CPI inflation rate saw a substantial rise of 0.6% in January 2024, representing the most significant growth since June 2023.
• The inflation rate for January 2024 surpassed the one-year average by 0.53 percentage points.
• This indicates a deviation from the usual inflationary behaviour.

• The cyclical rotation is slowly but slowly rolling and if central banks add rate cuts to this mix, we are staring directly into the melt up.
• Welcome to our weekly Portfolio Watch, where we assess the tradeable themes and discuss our portfolio composition.
• In this revamped version of the series, we will touch upon the developments in our Macro Alpha Portfolio and our Digital Assets Portfolio.

• Happy Sunday from Copenhagen and welcome to our flagship editorial.
• The cyclical rotation continues in markets, but interest rates have to a certain extent been out of sync with the business cycle for a while.
• The yield curve inverted during the summer of 2022, but we are yet to see a recession in the US economy, which is a bit out of the ordinary given the typical validity of the yield curve inversion signal.

• A YOLO and FOMO mania has gripped stock market psychology and it’s unclear when the mindset will reverse.  Numerous warnings are appearing and the market can correct at any time.
• We are long-term bullish on stocks, but remain cautious near term.
• Despite our cautious short-term outlook, traders are advised against taking a short position until some tangible signs of a bearish reversal appear.

• We review Warren Buffett’s shareholder letter and his pivot from deep value to QGARP investing.
• We offered two case studies to compare and contrast his approach: 1) Berkshire’s holdings in Japan, which was successful; and 2) China, a deep value opportunity that he ignored.
• We are agnostic in our opinion between the two approaches and believe both can offer alpha, but on different time horizons.

• My hybrid nowcasting framework tracks the inflation-adjusted or real GDP growth rates of US, Euro Area and Japan
• My nowcasts for the individual G3 economies are prospectively diverging at the beginning of 2024
• But in aggregate, my nowcast suggests that G3 GDP growth is potentially tracking softer through the first-half of 2024 on average 

• In contrast to previous Fed tightening cycles, there are fewer signs of private sector balance sheet stress, thereby potentially sowing the seeds for significant stimulus once monetary policy is eased.
• US households have delevered, while the prospective onset of lower mortgage rates will boost housing affordability. Companies took advantage of extremely favourable borrowing conditions during the pandemic to refinance debt. 
• The current real Fed policy rate appears high, but aggressive nominal rate cuts are not in the offing and interest rate futures are now reflecting this baseline outlook.

• Chair Powell set to deliver semiannual testimony in Congress, February employment data on Friday
• ECB decision on Thursday with potential impact on US rates and currencies
• Revision of rates forecast to reflect Fed easing expectations and QT process, potential for rates to decline if February data does not repeat January strength

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• US crude oil inventories buildup outpaces gasoline and distillate withdrawal for the week ending on 23/Feb.
• Refinery utilisation rates rose by 0.9 percentage points on a weekly basis to 81.5%, for the first time in 2024.
• Disparity between crude oil and refined petroleum inventories to remain in the near term as refinery utilisation rates are yet to recover completely after the maintenance season.

• Data / In Depth: China’s efforts to unlock the value of data as an asset
• Bonds /Chart of the Day: China’s plunging long-term government bond yields
• Stocks /Securities watchdog tells quant funds to downsize popular strategy

• China’s securities regulator is tightening its grip on a popular and highly leveraged quantitative trading strategy that is blamed for fueling the recent stock market upheavals.
• The China Securities Regulatory Commission (CSRC) in a Wednesday statement promised to gradually reduce the size and leverage of Direct Market Access (DMA), a business model widely used by quantitative funds.
• The move will help control risks and ensure the stable and healthy operation of the market, the regulator said in the statement.

• Bitcoin rose nearly 20% this week, and the impact of spot Bitcoin ETFs is huge, but with a twist.
• This week’s US personal income data provides yet another chart showing that the recession is already behind us. But will the US consumer keep spending?
• That new The Economist cover does not bode well for stocks, but the moving average does. Yet, sentiment remains in Frenzy.

• Flash EA inflation unusually exceeded expectations by only slowing by 0.2pp to 2.58% in February. This outcome matches average forecasts for the month held since Dec-22.
• Resilient services inflation only slowed by 5bps to 3.93%, driving the upside surprise in the headline and core inflation rates, with the latter at 3.1%.
• The ECB will likely look at headline inflation above this pace at its June meeting, with services at 3.5% in our forecast. We still expect it to delay cuts until September.

• NPS is in discussion to invest nearly 11 trillion won in low PBR/undervalued Korean stocks.
• Korea Exchange is in discussion with NPS to create a new index tracking low PBR/undervalued stocks in Korea in efforts to boost government’s efforts to boost the local stock market
• This index is tentatively named Korea Value-Up Index and institutional investors are expected to use it as one of the benchmark indices for equity investments.

• Hong Kong Dollar (HKD) Carry Trade (CT) is an good leading indicator of the directional trend of the Hong Kong Market
• Recently the HKD CT has been trending to a less positive/flat position
• Hong Kong Aggregate Balance will no longer provide cushion against HIBOR rising due to the HKD peg system

• We had hoped for a soft European inflation report in February, but we have to admit that we were off.
• End of discussion.
• Rents, energy-tariffs / network-prices and a few wage heavy service categories continue to keep February inflation numbers elevated, albeit substantially lower than in 2023, and our nowcasts suffer a bit from changes in lead/lags on especially wage heavy categories.

• If we look at M2 trends (narrow money + time deposit / MMFs and similar assets), the broad USD measure remains a staggering 18% above trend with M2 nominally trending almost 4 trillion USDs above a long-term trajectory.
• The similar trend in EURs is much less extraordinary with M2 currently 7% above trend, which translates to a little more than 1 trillion EURs nominally.
• There is still a large excess of USDs in the systemSo where are those excess USDs parked?

• In a few short weeks, Vladimir Putin will be announced the winner of the Russian Presidential election.
• As a formality, Russian voters will head to the polls between March 15th and 17th, but the result is predetermined: the man behind the ongoing invasion of Ukraine will lead Russia for the next six years in an unprecedented third term as President.
• But with sanctions mounting against the Russian economy – the latest of which were announced just this Friday by President Biden – how long can Putin sustain military aggression in Ukraine?

• Interest rate spikes in 2022 and 2023 rattled the housing market, but prompt reversals in market rates dissipated the shocks before they were adequately felt.
• UK mortgage rates are back to their lows from last spring, and approvals for new loans are higher than then. Lending values are set to turn positive again soon.
• The risk to economic activity and RPI inflation increasingly appears to have blown over, with housing depreciation troughing and MIPs unlikely to turn negative soon.

• Law / In Depth: China overhauls Company Law
• Foreign companies /Foreign firms slow expansion plans in China, survey finds
• Bonds /In Depth: Behind the suicide of leading figure in shady fundraising practice

• The Federal Reserve was expected to announce tapering of quantitative tightening (QT) in March and implement it in April, but recent minutes suggest a more relaxed approach with no urgency to start the process soon.
• SOFR rates have trended lower in January, easing concerns over upward pressure, and there is plenty of liquidity in the marketplace, with significant RRP and reserve balances.
• Forecasting for the Fed’s balance sheet evolution suggests a less volatile TGA balance and a shift in the relationship between t-bill issuance and RRP balances, leading to a more stable scenario for reserves in the near term.

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• Thai equities lack growth and innovation. Big corporations continue to have unfair advantages in terms of access to bank financing and business opportunities.
• Thailand is an aging society with rising income disparity and a stalling education system. Hence, we have questioned how Thailand will escape the middle income trap in the near term.
• We expect more disruptions and policy blunders which could impair Thai stock performance. We do not believe Thailand can correct its cause in the near term.

• The real-time market cap of gold is USD 15 trillion, not USD 13 trillion, as is often stated.
• This matters because I expect gold to gain on and outperform bonds within a multi-asset portfolio. In recent years, this has been the case.
• A real-time estimate of gold’s market cap also translates to a real-time Bitcoin price estimate as it functions as digital gold. In this piece, I show my base case scenario.

• The recent rally in Chinese stocks has been corrective in nature and was triggered by several factors: National Team Intervention: Authorities intervened to stabilise the market.
• Banning of Short Sales: Short selling was restricted to prevent excessive downward pressure.
• No Net Selling by Funds: Fund managers refrained from net selling.

• Russell was down almost a full percent last week, but consumer staples, MLPS, and shipping performed well
• Domino’s reported slightly lower earnings and showed signs of global headwinds, momentum slowing
• China looks like a good long bias opportunity for the second half of 2024, while consumer staples are poorly positioned for reaccelerating inflation

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• BTC faces a bullish outlook with tailwinds from ETF inflows and an upcoming halving. Early signs of a broader cryptocurrency market rally are underway.
• Gold prices remain pressured from investor rotation to other assets. Fading recession fears are eroding gold’s risk premium. 
• Cumulative ETF fund flows for bitcoin and gold ETFs highlight the diverging outlook with large inflows to bitcoin ETFs and outflows from gold ETFs. 

• PBoC’s 25bp LPR and 50bp RRR cuts in Feb’24 are likely to prove ineffective palliatives to deal with the massive overhang of unsold real-estate across China. 
• Challenge manifests in urban vacancy rates of 20% (>twice Japan’s at its bubble peak), real and potential liquidations of Evergrande and Country Garden, and bankruptcy of Zhongzhi shadow-banking group. 
• 3% FAI growth underpinned 5.2% RGDP growth in 2023 despite low base. RGDP growth in 2024 will be 4%, and less in the medium-term as FAI and non-Russia exports stagnate.  

• The flash services PMI’s bounce raised a risk that the Euro area’s stagnation might be ending. However, we still believe that is residual seasonality rather than substance.
• ESI survey data corroborate this sceptical assessment as they were broadly unchanged at levels below the historical average for most sectors and countries.
• Ongoing labour market resilience in the EEI and unemployment data sustains cyclical support for wage costs. Services and retail price expectations remain historically high.

• Embrace all types of stimulus, even if they look different from the past
• Experienced investor in Asian markets sees similarities in current sentiment to past market cycles
• Michael Fritzell, founder of Asian Century Stocks, shares his journey from journalism to finance and his passion for Asia and Chinese language and culture.

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• Trust / In Depth: China intensifies efforts to curb risk in troubled trust sector
• Personnel /China’s ousted foreign minister removed from top legislature
• Ant Group /Ant Group outbids Citadel Securities for Credit Suisse’s China JV

• Hello everyone, and welcome back to our weekly positioning watch! We have been all about the possibility of a cyclical rebound with the US economy showing great signs at the moment, and China is also potentially looking to beat the fairly bearish expectations (and why barely anyone has been net long cyclicals in all asset spaces).
• This leaves markets with a great divergence, as Europe is yet to show the same signs of momentum, and inflation expectations (between USD and EUR) are also starting to diverge, but positioning has not followed accordingly.
• Let’s rerun our current trades to kick things off: Equities: Long Materials and Long Korea (as a China proxy).

• Biotech / Cover story: Chinese pharma turns to global deals to cure capital crunch
• Obituary /Chinese beverage tycoon Zong Qinghou dies at 79
• Fire /Nanjing e-bike parking lot fire kills 15 after spreading to apartment building

• Yesterday we got the full release of the February Ifo report from Germany.
• We note that price expectations in services ex. real estate fell almost 10 percentage points.
• One of our high conviction macro bets for this year is the major divergence between US and Euro inflation and looking at the below chart using employment data from Ifo and compensation plans from the NFIB Survey in the US certainly points in this direction.

• Money trends were abysmal for most parts of 2022 and the early parts of 2023, but we are starting to see interesting trends arising in the global money growth with clear geographical divergences.
• Japan, China and the Euro zone have reported January M1, M2 and M3 developments and while trends remain benign in JPY and CNY, the money trends in EUR are re-worsening.
• A gap seems to be opening between USD and EUR money trends, which rhymes well with our strong thesis of a growing inflation gap between the US and the Euro zone.

• The past four weeks have been a whirlwind for fixed-income markets, with seemingly contradictory signals emerging across US and UK rates.
• While volatility reigns supreme, the question remains: are we witnessing a fundamental shift or temporary turbulence?
• Recent weeks have seen wide weekly ranges (28bps) despite minimal net change (-2bps), suggesting unease amongst investors.

• Global equities finished the week on a high note, with Nvidia’s strong earnings boosting markets, especially in Japan.
• European yields rose due to strong PMIs, while the dollar weakened and the euro and pound strengthened.
• In the US, core PCE inflation is expected to be strong, with potential temporary factors contributing to the high readings.

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• It seems like no one is willing to add bets on rate cuts in H1 after even the doves from the ECB and the Fed have been hard to convince of spring action lately.
• G3 central bankers have been on parade with messages around the risks of easing prematurely after watching the cocktail of 1) higher freight rates, 2) sticky wages and 3) easing financial conditions, especially in the US.
• We have seen front-end back paddling in rates space ever since New Years accordingly and the almost bizarre uniformity in views and positioning has been blown into pieces in a matter of weeks.

• On 26 February, South Korea announced its long awaited Corporate Value Up reform plan details to improve shareholder returns of listed Korean companies. 
• Due to the lofty expectations about these corporate reforms, there was some disappointment when the details actually came out. KOSPI declined by 0.8% today following these corporate reform details. 
• Many investors are likely to take a “wait and see” attitude to see if real, material, positive changes will be announced in 2Q/3Q, before committing additional capital into Korean equities.

• China’s mutual funds produced a mixed bag of performance last year. Publicly offered equity funds endured a second straight year of losses, grappling with a prolonged stock market rout. Bond funds, on the other hand, had a comparatively stellar year.

• The uptick in bond fund flows fueled a shift in China’s asset management landscape, with mutual funds emerging as the most preferred asset management avenue, outstripping banking wealth management for the first time.

• This shift reflects investors’ concerted efforts to navigate prevailing financial market volatility and mitigate risk in the country’s stock market, which has seen a protracted rout continue into this year.

• The past week saw insights on Indonesia’s election, Grab Holdings (GRAB US), Bangkok Dusit Medical Services (BDMS TB), Delta Electronics Thailand, Singapore Airlines (SIA SP), and Sea Ltd (SE US).
• There were also insights on Indonesia and Singapore, a sector view on the EV ecosystem in Southeast Asia, a sector view on Indonesian banks, and ASEAN’s EV Ecosystem.
• 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.

• Price benchmarks of Nat Gas among major producers have fallen off a cliff relative to price benchmarks of major net consumers/importers as the halt to global shipping has led to regional bottlenecks and abundances.
• We remain long US Nat Gas as a minor improvement in shipping paired with bottlenecks in 1-2 months from now makes for a potential extremely bullish cocktail if it squeezes out the current aggressive short-selling by CTAs. 
• We expect a spill-over from shipping to the pricing of goods

• Updates on the Macro scoreboard, including the S&P 500 futures and the US dollar index
• Key news to watch next week, such as consumer confidence numbers and GDP
• Interview with Mike Green from Simplify Asset Management discussing inflation and monetary policy, potential risks and market expectations

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• Recent market volatility with large moves in individual stocks
• Multistrategy hedge funds may be impacting these market movements
• Goose Hollow Capital founder Krishna Kumar discusses the workings of pod shops and their impact on stock trading

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• As per the International Cocoa Organization, there was a deficit of 216kt in the global market during 2021/22 and 99kt in 2022/23.

• With a significant decline in West African output in the ongoing 2023/24 season, it is anticipated that the market will experience a substantial third deficit, nearing 400kt.

• This would result in stocks reaching their lowest levels in at least a decade.

• We have been banging the drum on a potential sharp gap opening between inflation trends in the US and in Germany (or the Euro zone).
• The market has slowly but surely started to acknowledge the trend, but we continue to see traded inflation spreads as vastly mispriced given the forward looking indicators on inflation.
• The IFO survey details from Germany made for very benign inflation reading as price expectations decline in manufacturing, autos and metal and not least SERVICES.