Macro

In today’s briefing:

The Weekly Market Monitor – Chinese Equities Out, Bitcoin In!

The Weekly Market Monitor – Chinese Equities Out, Bitcoin In!

By Jeroen Blokland

After a ten-year struggle, US spot Bitcoin ETFs have been approved, closing one of the most entertaining and remarkable (what regulator gets hacked in the process) ETF races ever.
US inflation came in hotter than expected, but unlike previous months, underlying data was pretty benign, with one measure of headline CPI dropping below 2% for the first time in 3.5 years.
Chinese equities are out. And not just by sentiment-driven short-term investors. Meanwhile, Japanese stocks are on fire, powering ahead by more than 6% since the start of this year.

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Jan 13

Daily Brief Macro: Spot BTC ETFs Attract $4.3 Billion on Day 1 Paving the Way for Institutional Adoption and more

In today’s briefing:

Spot BTC ETFs Attract $4.3 Billion on Day 1 Paving the Way for Institutional Adoption
Singapore Economics: On Track for A Robust Recovery in 2024
Regional Economics: Asia’s Manufacturing Ended 2023 on a Weak Note
Portfolio Watch: Peak Dovishness & more liquidity?
Taiwan: Election Likely to Deliver a Hung Legislature, Constraining DPP’s Autonomy
UK CPI Watch: Another milder than usual report

Spot BTC ETFs Attract $4.3 Billion on Day 1 Paving the Way for Institutional Adoption

By Pranay Yadav

SEC narrowly approves listing of spot Bitcoin ETF citing high correlation between CME futures and spot bitcoin price and adequacy of CME surveillance sharing.
New ETFs offer highly competitive expense ratios. ETFs also offer discount to expense ratio during a discount period.
ETFs see strong trading activity on day 1 but much of it likely came from outflows from GBTC to lower cost ETFs.

Singapore Economics: On Track for A Robust Recovery in 2024

By Manu Bhaskaran

Singapore’s 4Q23 GDP showed convincing signs of recovery, with the manufacturing sector returning to growth after a trade-induced slump for most of the year.
The city-state will also benefit from positive spillovers from growth in other markets in the region via stronger FDI inflows, international trade, and tourism activity.
The recent developments give us confidence that the Singaporean economy can outperform consensus expectations in 2024, even if structural worries remain.

Regional Economics: Asia’s Manufacturing Ended 2023 on a Weak Note

By Manu Bhaskaran

Manufacturing sectors in Southeast Asia remained in overall contraction in December 2023 due to still-sluggish export sales, but signs of bottoming out remain visible.
Firms’ outlook for future production, however, remains positive due to expectations of a recovery. Continued hiring and purchasing activity back this up.
Resilient domestic conditions will underpin growth in the new year, even if the recovery in international trade remains fitful and uncertain.

Portfolio Watch: Peak Dovishness & more liquidity?

The speed at which financial market narratives shift nowadays never ceases to amaze us.
Last quarter saw a notable drop in inflation expectations, but now, we’re observing supply chain disruptions and escalating geopolitical risks pushing oil prices higher, potentially reversing that entire trend.
The effect of these recent developments on the market and their continued impact on the economy is still unclear.

Taiwan: Election Likely to Deliver a Hung Legislature, Constraining DPP’s Autonomy

By Prasenjit K. Basu

Today’s election is likely to result in a narrow win for the DPP’s Lai Ching-te, but with a hung legislature, requiring the DPP to form a coalition with Ko’s TPP.
This outcome would be positive for markets, as it would circumscribe Lai’s ability to openly advocate independence. Unlike Chen (2000-08), he would not be hemmed in by the KMT ascendant.
If the KMT’s Hou (also native Taiwanese) wins, he would face not only a hung parliament, but also dissension within the party. After initial euphoria, this would be market-negative.

UK CPI Watch: Another milder than usual report

Greetings from Europe! We had the US CPI report smack dab at our forecast yesterday again and based on public demand here is our UK preview for next Wednesday.
December inflation is typically fairly hot in core terms in the UK as especially services increase ahead of the holiday season.
Services increased >0.8% MoM in December 2022, making it “easy” to deliver Services disinflation on a yearly basis in December 2023.

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Jan 12

Daily Brief Macro: Central Banks’ Policy Pivot Impact on Developed Markets and more

In today’s briefing:

Central Banks’ Policy Pivot Impact on Developed Markets
Crude Oil Prices to Fall Forecasts EIA on Weak Demand Growth & Strong Inventory Buildup
CPI Nugget: Kiss your 2% target goodbye, Powell?
Energy Watch: Red Sea Situation Is Worsening with Spill-Overs to Energy
CX Daily: Huawei Aims to Pull Ahead of Tesla in Autonomous Driving Race
UBS Economist Expects Less Property Drag on China’s Economy in 2024

Central Banks’ Policy Pivot Impact on Developed Markets

By Raghav Chandra Mathur

Throughout 2023, the global developed economy was at the forefront of tackling rising inflation that has been gathering steam since mid-2022.
The majority of developed G20 countries saw their central banks raise policy rates at record pace to tame rampant price increases.
Rapid tightening and the potential of an upcoming pivot has resultantly upended stability in growth prospects for the upcoming year.

Crude Oil Prices to Fall Forecasts EIA on Weak Demand Growth & Strong Inventory Buildup

By Suhas Reddy

Despite supply cuts by OPEC members the EIA expects supply to outpace demand for most of 2024 and 2025.
The agency forecasts the average spot price of WTI and Brent to decline in 2024 and 2025.
Concerns of tepid global demand and inventory build-up grow as short positions in the crude oil options market jump.

CPI Nugget: Kiss your 2% target goodbye, Powell?

Inflation once again printed smack-dab at our target of 3.9% YoY core inflation and even if there are mixed signals beneath the hood, we are growing increasingly certain that US inflation will not print at 2% or below in this cycle.
The shelter component is probably not waning fast enough for inflation to reach target before a cyclical reacceleration in prices will take goods categories higher again.
H2-2024 pricing for the Fed looks oddly off given this.

Energy Watch: Red Sea Situation Is Worsening with Spill-Overs to Energy

Welcome to our Energy/EIA watch; we continue to see extraordinary strong demand for energy in the US, but weaker demand in Europe and China.
Meanwhile, the situation worsens in the Red Sea.
Oman begins an investigation into the hijacking of an oil tanker in the Gulf of Oman as Iran’s semi-state agency Tasnim confirmed that Iran was behind the hijacking.

CX Daily: Huawei Aims to Pull Ahead of Tesla in Autonomous Driving Race

Self-driving / In-Depth: Huawei aims to pull ahead of Tesla in autonomous driving race
Corruption /: Beijing health insurance director detained, source says
Central bank /: Former China central bank deputy governor abused power for 30 years

UBS Economist Expects Less Property Drag on China’s Economy in 2024

The property slump is expected have slightly less of an impact on China’s economy in 2024 than feared, while fiscal support will play a bigger role, Wang Tao, UBS’s chief China economist, said at a Tuesday seminar.
The year-on-year growth rate in 2024 will be lower than that in 2023, but the economy will continue to recover and stabilize with a growth rate of about 4.5%, Wang said.
The biggest drag on the economy from the property slump happened in 2022, the economist said.

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Jan 11

Daily Brief Macro: Vietnam: Resilient Economic Growth Driven by Friend-Shoring & Bamboo Diplomacy and more

In today’s briefing:

Vietnam: Resilient Economic Growth Driven by Friend-Shoring & Bamboo Diplomacy
Simple Math – Why Rates Must Fall!
US Labor Watch – The plot thickens
5 Things We Watch: USD-flation, Global Inflation, US Labor Market, Japan, Bitcoin
[Counting Beans #4]: Soybean Price Tumbles as Headwinds Prevail
Macro Lessons For 2024
EM by EM #38: Inflation Returning with a Vengeance?

Vietnam: Resilient Economic Growth Driven by Friend-Shoring & Bamboo Diplomacy

By Suhas Reddy

Vietnam’s GDP expanded by 5.05% in 2023, lower than the government’s official target of 6.5%
Chinese President Xi Jinping’s first visit to Vietnam in six years aims to strengthen ties between the two communist nations.
China and the US vying for cooperation with Vietnam in developing rare earth minerals essential for energy transition.

Simple Math – Why Rates Must Fall!

By Jeroen Blokland

The divergence among (bond) investors is rapidly increasing. One group expects yields to rise further, while the other expects yields to go down and remain low. I’m in the latter.
To maintain debt sustainability, real yields must remain below real GDP growth. But with declining potential GDP growth, this is not the case currently, and this includes the US.
In the Eurozone, the real yield – real GDP picture is distorted because the ECB must aim monetary policy at the weakest link, Italy.

US Labor Watch – The plot thickens

The US labor market has shown great resilience after the pandemic – together with the rest of the US economy – but employment has stood out as overly resilient with NFP and other labor data coming in very hot some months despite PMIs and consumer data hinting of a slowdown of the overall economy.
However, there might be a very good reason for this.
Each month, payroll-data is adjusted with the ‘Birth/Death adjustment’, which takes into account the net job creation associated with opening/closing of businesses, and over a 6 month period, BLS has assumed that around 800-900k jobs were created on a net basis as a function of entrepreneurship alone.

5 Things We Watch: USD-flation, Global Inflation, US Labor Market, Japan, Bitcoin

Global macro never sleeps, and this week is no exception.
The new year has started off with a blast, and it looks like dynamics all of a sudden have changed with sentiment going from full risk-on to risk-averse as the calendar has turned.
The US will be the overshadowing region to watch in the coming weeks as they look troubled the most with prices looking to stay hawkish for some time to come, while the labor market is weakening, but increasing growth due to easier financial conditions could keep the US away from stagflation.

[Counting Beans #4]: Soybean Price Tumbles as Headwinds Prevail

By Pranay Yadav

US Soybean futures have tumbled 4% from their close in 2023 due to favourable weather in Brazil as well as fading demand outlook in US.
Rainfall in Brazil has arrived in droves and remains strong this week but forecasts point to inconsistent rain next week.
CONAB and USDA reports this week should be watched for potential downward revisions in Brazil’s production, following Safras e Mercado’s lead.

Macro Lessons For 2024

By Phil Rush

Markets tend to overprice mean-reversion in the monetary policy outlook. Fading this dynamic is consistently the best approach outside of surprise regime shifts.
BoE pricing appears especially divorced from reality as Fed pricing temporarily moves it in lockstep. Rising real rates due to disinflation is not a dominant dovish factor.
Resilient employment suggests policy is not very tight. That stokes persistently excessive wage growth, which consensus inflation forecasts underweight.

EM by EM #38: Inflation Returning with a Vengeance?

Increased freight rates could lead significant players in China to delay imports and turn to local demand, depleting existing stockpiles.
In the US, rising goods inflation might contribute to reversing the disinflation trade or, at the very least, establish a floor for yields.
These factors create a challenging scenario for emerging markets, as they face potential inflationary pressures and reduced exports.

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Jan 10

Daily Brief Macro: KOSPI Superperformance Stocks (2019-2023) and more

In today’s briefing:

KOSPI Superperformance Stocks (2019-2023)
What’s next in the Red Sea and Taiwan?
USD Liquidity Watch: Trading the end of QT
CX Daily: Qinghai Has an Ocean of Solar Power, But Nowhere to Store It
Suez/Panama Nugget: Rising troubles in both Canals

KOSPI Superperformance Stocks (2019-2023)

By Douglas Kim

In this insight, we analyze the top 10 performing stocks in KOSPI in each of the past five years (2019-2023) as well as for this entire period.
The top 10 performing stocks in KOSPI were up on average 310% in 2023, sharply outperforming KOSPI which was up 19%.
There are some important takeaways from a review of the top 10 performing stocks in each of the five years in KOSPI, including market cap, sector rotation, and turnarounds.

What’s next in the Red Sea and Taiwan?

By Mikkel Rosenvold

Welcome to the second Great Game of the year.
What an action-packed start to 2024 we’ve had in geopolitics, and the coming weeks are looking no less eventful.
This week, we take a look at the status in the Red Sea as well as Taiwan and give our prediction as to what the coming weeks will bring.

USD Liquidity Watch: Trading the end of QT

Welcome to another edition of our USD Liquidity Watch series.
The investment bank consensus is now (finally) converging towards our long-held view that the US Treasury is effectively behind the liquidity steering wheels at the Fed.
Lorie Logan of the FOMC said on Friday that “… given the rapid decline of the ON RRP, I think it’s appropriate to consider the parameters that will guide a decision to slow the runoff of our assets.

CX Daily: Qinghai Has an Ocean of Solar Power, But Nowhere to Store It

Energy / Cover Story: Qinghai has an ocean of solar power, but nowhere to store it
Zhongzhi /: Troubled investment giant Zhongzhi files for bankruptcy liquidation
Everbright /: Bribery, love of calligraphy contributed to ex-Everbright chairman’s downfall

Suez/Panama Nugget: Rising troubles in both Canals

The Dry Bulk shipping sector has since the fall of last year been experiencing a sharp drop in crossings at the Panama Canal due to record low water levels, why Dry Bulk rates such as Baltic Dry experienced a large rally towards the end of 2023.
Up until this point container shipping has largely been left unscathed by the lower water levels in the Panama Canal (Partly because container ships get first priority at Panama) but the beginning of the new year has seen a large drop in container tanker crossings (Chart 1.a) along with an increase in container vessel prices for Panamax container liners (Chart 1.b) We hear from contacts in the dry bulk shipping industry that Panama is a greater concern to them than the troubles at the Suez (Largely due to the Houthis preference for attacking container ships) and if this spills over to container ships then watch out for another round of re-acceleration in goods inflation in the US (Chart 1.c) by week 18 and onwards on our empirical studies.
This re-acceleration in goods inflation will likely coincide with the trend weakening in the rent of shelter, meaning that the sticky services disinflation may be countered by rising cyclical inflation by spring-time.

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Jan 09

Daily Brief Macro: EM by EM #37: The Taiwan election & the Trade war and more

In today’s briefing:

EM by EM #37: The Taiwan election & the Trade war
Portfolio Watch: Chasing ships and fading narratives
A Pause That Refreshes the Uptrend
U.S. Debt Watch: Biden Lost $17B the First Day of 2024
Positioning Watch – Risk aversion is back?
Steno Signals #81 – Fed member promises that QT is effectively already over
USD-flation Watch: Still not softening as much as Europe
CrossASEAN Ground Zero – GoTo’s Sustainability Verified, 2W EVs, and the Stormy Year Ahead
Scandi-flation Watch: Finally a bit of respite?
US Employment Data Confirms a Weakening Economy

EM by EM #37: The Taiwan election & the Trade war

A victory for Lai in the upcoming election has the potential to significantly elevate geopolitical risks.
Should Taipei fail to maintain a satisfactory relationship with Beijing threats of retaliation will fuel derisking going forwardThe Taiwan election could reignite another round of cold trade sanctions between the United States and China.
Given the current hawkishness of the Biden administration, it’s unlikely that this stance will be softened in the upcoming U.S. election.

Portfolio Watch: Chasing ships and fading narratives

Hello everybody, and welcome back to our weekly Portfolio Watch!
The Hamas attack on October 7th coincided with a material repricing and a crash in oil prices, marking the peak in inflation expectations and the subsequent collapse of oil prices as 2023 came to an end.
Given our contrarian nature, we were far from convinced by this swift market move. We believed it was only a matter of time before reality would set in, and it appears that 2024 has indeed brought a harsh awakening for complacent optimists.

A Pause That Refreshes the Uptrend

By Cam Hui

The stock market is poised for a period of consolidation or pullback after a powerful breadth thrust.
We remain bullish on equities as such episodes of strong price momentum have usually led to higher prices 6–12 months ahead.
In the short term, we advise against traders trying to short this market as downside risk is probably limited.

U.S. Debt Watch: Biden Lost $17B the First Day of 2024

By Anne Sandager

The U.S is at risk of a partial government shutdown beginning Jan. 19th of departments responsible for Agriculture, Energy/Water, Military Construction/Veterans Affairs and Transportation.
However, investors need not be overly concerned. Both Democratic and Republican leadership are incentivized to get a deal done, so even if a partial shutdown were to commence, it will be short lived with little impact on markets.
Republicans are keen on securing funding for the U.S-Mexico border and improve their image as a party that can actually govern. Democrats, meanwhile, need to eliminate the 1% across-the-board cut to non-discretionary spending imposed on Jan. 1st. These factors provide ample motivation for lawmakers to get spending bills done.

Positioning Watch – Risk aversion is back?

The latter half of 2023 was all about the soft (perfect) landing narrative, which made markets party like there was no tomorrow.
It almost looked like people forgot about risks, but positioning data has turned a bit at the end of December / start of January, which hints at a risk aversion comeback.
Could 2024 be the year when asset prices are no longer determined based on interest rates alone?

Steno Signals #81 – Fed member promises that QT is effectively already over

Quote of the week:“So, given the rapid decline of the ON RRP, I think it’s appropriate to consider the parameters that will guide a decision to slow the runoff of our assets. In my view, we should slow the pace of runoff as ON RRP balances approach a low level.”– Lorie Logan, FOMC member at the annual meetings of the International Banking, Economics and Finance Association and the American Economic Association.
The above quote was delivered on Friday in a speech by Dallas Fed president Lorie Logan and it may prove to be the most important quote by a central banker in 2024 so far.
Effectively, the quote is a promise that QT is already history as the impact of Fed policy on liquidity / bank reserves will remain neutral to slightly positive from here, which is essentially what we have told clients for a while now.

USD-flation Watch: Still not softening as much as Europe

The inflation release on Thursday is the most important release of the week and we find consensus to be decently aligned with the underlying trends in US inflation.
Core inflation is trending around 0.3% MoM in the US and we see no reason for a sharp change in that trend given our price observations and models, and we only see a minor hawkish tilt in our models compared to consensus, but expect the MoM core inflation to print accurately above 0.3%.
The consensus change for the MoM core inflation is very close to 0.25% given the expectation of 3.8% YoY inflation.

CrossASEAN Ground Zero – GoTo’s Sustainability Verified, 2W EVs, and the Stormy Year Ahead

By Angus Mackintosh

CrossASEAN Ground Zero is a new thematic weekly product that will focus on key Southeast Asian digital themes and technology trends with a core focus on Indonesia.
This week is focused on GoTo’s sustainability credentials and the recent scientific validation of its emission targets.
2024 will also see a ramp-up of Indonesia’s 2W EV charging infrastructure to power growth in numbers. We also look at key themes in 2024 for the digital economy.

Scandi-flation Watch: Finally a bit of respite?

Welcome to our Scandi inflation watch.
Based on public demand, we will release our SEK and NOK inflation views on a running basis as well.
December is typically a seasonally weak inflation month in Norway with declines in Clothing and Footwear prices, Food prices- and health prices.

US Employment Data Confirms a Weakening Economy

By Rikki Malik

The December US Employment report shows a weaker outlook than the headline suggests.
A loss of over 1.5 million full-time jobs in December.
Excluding government jobs, an exceptionally low number of new full-time jobs were created over the last year.

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Jan 08

Daily Brief Macro: 2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 3 and more

In today’s briefing:

2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 3
What Growth Stock Price Action Reveals About Rate Expectations
Charting Beyond the Sanguine Stock Market
Liquidity Outlook Supportive for Risky Assets as Stubborn Yield Curve Inversion Requires Resolution
[TW2] US Equities Stutter as Sentiments Ease in Election Heavy Year (W/E 5th Jan 2024)
Will Relapse of Eurozone Inflation Propel Euro Against the Dollar?

2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 3

By Rikki Malik

Risk-Reward now skewed towards reward in the Hong Kong market.
Barbell strategy with both high-beta and lower volatility dividend stocks.
Some initial ideas included to add or start a portfolio incorporating HK stocks.

What Growth Stock Price Action Reveals About Rate Expectations

By Cam Hui

A divergence has appeared between the top-down and bottom-up expectations of growth.
The top-down consensus is a soft landing, while the bottom-up consensus is no landing, which could put upward pressure on inflation and interest rates.
Investors need to closely monitor these developments as the market could be rattled by a transitory disinflation narrative and a higher-for-longer monetary policy response.

Charting Beyond the Sanguine Stock Market

By Thomas Lam

The upcoming US elections and eventual Fed pivot may sway the stock market positively
But the different states of the US business cycle can prospectively instigate different equity market outcomes
Hence, it is important to monitor the roughly coincident or almost contemporaneous risk of a recession in the US for potential clues

Liquidity Outlook Supportive for Risky Assets as Stubborn Yield Curve Inversion Requires Resolution

By Said Desaque

The mechanisms that drive yield curve steepening in 2024 will have important implications for financial asset returns, notably lower short-term interest rates have historically favoured bonds versus equities.
Yield curve steepening due to faster economic growth will be bullish for equities due to upward revisions to profit expectations across all sectors of the US equity market.
Depletion of the Treasury’s General Account at the Fed and lower participation in the Reverse Repo Programme will boost financial accommodation in 2024, thereby supporting risky assets.

[TW2] US Equities Stutter as Sentiments Ease in Election Heavy Year (W/E 5th Jan 2024)

By Srinidhi Raghavendra

US equities snapped a 9-week consecutive winning streak. The S&P 500 and the Dow Jones clocked their worst start to a year since 2016.
Crude Oil Futures rallied 4.9% on fears of rising conflicts across the Suez Canal. All other major commodities closed lower during the first trading week of the year.
Half the world population and one-third of the Countries vote in 2024. Seventy countries will hold elections. Portfolio managers must pay more attention to politics than before.

Will Relapse of Eurozone Inflation Propel Euro Against the Dollar?

By Srinidhi Raghavendra

Eurozone is exposed to the risk of inflation relapse on continuing geopolitical risks. Potential energy and goods inflation will force the ECB to defer its rate cuts.
Inflation rose 2.9% YoY reversing a 2-year low (2.4%) observed in November. Core inflation, softened to 3.4% marking its lowest point since March 2022.
US headline job numbers look healthy. Details spell trouble. Payroll data was revised lower by 71k for Oct & Nov. Average work week contracted, and participation rate declined.

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Jan 06

Daily Brief Macro: Regional Economics: Episodic Stresses and more

In today’s briefing:

Regional Economics: Episodic Stresses, Not Prolonged Crises for Asia in 2024
China Will Increase Government Spending to Bolster Economy
EA: Inflation Springs as Energy Fades
Part Six: Commodities: Priced for a Downturn
CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales

Regional Economics: Episodic Stresses, Not Prolonged Crises for Asia in 2024

By Manu Bhaskaran

While there will be economic and geopolitical shocks, we believe that these will cause episodic stresses, not lasting damage to the region’s growth or stability.
Monetary policy, China’s economic performance, and geopolitical conflict will shape the economic outlook for the region, while government policy responses may provide economic upsides.
Thus, we think that the Asia-Pacific region will exhibit commendable economic resilience and modestly improved growth compared to 2023.

China Will Increase Government Spending to Bolster Economy

China will expand government spending in 2024 through a combination of policy tools, Lan Foan, the country’s newly appointed finance minister, said as Beijing steps up efforts to stimulate domestic demand and shore up the economy.
The government will strengthen the overall coordination of fiscal resources, utilizing a combination of special bonds, national bonds, and other policy tools such as tax incentives and fiscal subsidies to moderately expand the scale of fiscal spending, Lan said in an interview published Thursday by official newspaper People’s Daily.
In 2024, the government will maintain a proactive fiscal policy with an appropriate level of fiscal spending increase to send positive signals, said Lan.

EA: Inflation Springs as Energy Fades

By Phil Rush

EA inflation undershot expectations for the fourth consecutive month but smashed the downtrend with a 0.5pp rise to 2.9% for Dec-23.
The run of downward surprises means Dec-23 inflation is 0.8pp lower than expected in Oct-23. However, it is close to expectations a year earlier.
Fading energy price disinflation drove the upside move in a timely reminder that all the EA’s other special aggregates remain well above 2%, discouraging ECB rate cuts.

Part Six: Commodities: Priced for a Downturn

By Untying The Gordian Knot

The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.

CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales

Land / In Depth: China’s cash-strapped local governments struggle to revive land sales
PMI /: China services activity picks up, Caixin PMI shows
Funds /: New China Life sets up $1.4 billion fund for property investments

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Jan 05

Daily Brief Macro: Suez Watch: Massively Rising Container Freight Rates and more

In today’s briefing:

Suez Watch: Massively Rising Container Freight Rates, While Dry Bulk, LNG and Crude Rates More Muted
Macro Regime Indicator: Liquidity is everything in January
The Average Return Doesn’t Exist! – Most Professional Forecasters Will Be Wrong Again!

Suez Watch: Massively Rising Container Freight Rates, While Dry Bulk, LNG and Crude Rates More Muted

Takeaways upfront: No container shipping through Suez towards Europe and price increases ahead; Energy and dry bulk shipping is still alive; Expect transportation and apparel to see price increases in Europe; Hedging 2024 portfolios with long Shipping bets and/or long Energy bets make increasing sense.
Happy New Year everyone! Things are escalating in the Red Sea as shipping giants such as Maersk and Hapaq-Lloyd haven’t been convinced by the military efforts in the Red Sea and have now completely avoided transporting goods from Asia to Europe through the Red Sea.
That can be seen in prices which have seen one-way traffic the last week. Freight rates are up >100% this week, and we hear from sources that Maersk is now suggesting an all-in rate of USD 6000 TEU.

Macro Regime Indicator: Liquidity is everything in January

New month, new regime, which means a new asset allocation for the month ahead.
The turn of the calendar once again calls for us to assess our outlook for the 3 main variables of interest: Liquidity, inflation and growth and feed them into our Regime Model and Asset Allocation tool that spits out the Sharpe Ratio optimizing portfolio given the assumptions about the variables of interest.
Remember that you can feed the model with your own forecasts to see which baskets to put your eggs in.

The Average Return Doesn’t Exist! – Most Professional Forecasters Will Be Wrong Again!

By Jeroen Blokland

Professional forecasters, expecting a negative return of 2.5% on average for 2023, missed the S&P 500 Index by a whopping 26%.
And based on their 2024 forecasts, with none of them daring to expect a return of 20% or more, there is an 85% likelihood that they will be wrong again.
Another 20% return on the S&P 500 Index should definitely not be ruled out. Not based on historical return data nor in a bold macro environment.

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Jan 04

Daily Brief Macro: 5 Things We Watch – Freight Rates and more

In today’s briefing:

5 Things We Watch – Freight Rates, Positioning, Liquidity, EUR-flation, Growth
CX Daily: Chinese Carmakers Enter 2024 Fighting Price War, Heightened EV Competition
EUR Inflation Watch – The ECB forecast is OFF by >1.5%-points for Q1

5 Things We Watch – Freight Rates, Positioning, Liquidity, EUR-flation, Growth

Welcome to the first 2024 edition of our ‘5 Things We Watch’, where we as always try to dissect global macro trends, how we see the world and how we trade it.
The overall consensus this year seems to be locked in on a soft landing in the US, but in our view, risks of tail-end events are increasing, making macro more important than ever in order to navigate financial markets in 2024.
Freight rates on routes with destinations in the Mediterranean (both shipments from Middle East and China) have generally been on the rise

CX Daily: Chinese Carmakers Enter 2024 Fighting Price War, Heightened EV Competition

Autos / Cover Story: Chinese carmakers enter 2024 fighting price war, heightened EV competition China’s automakers
Personnel /: China appoints first naval officer as minister of defense
Property /: Year in Review: China’s real estate sector in crisis

EUR Inflation Watch – The ECB forecast is OFF by >1.5%-points for Q1