Macro

• Outlook for 2025 across commodities sectors discussed
• Bullish view on gold, base metals, and agricultural commodities
• Neutral to bearish outlook on oil prices for 2025 and 2026

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• Export restrictions have impacted the trade between China and the US, with potential for increased support for mineral imports from Canada
• The incoming Biden administration may focus on boosting domestic mineral recovery and supply chain security
• The copper market is facing challenges with potential oversupply, while cobalt prices are set for the worst year in history due to stagnating demand and increasing output.

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

• SGX IO Futures January 2025 contract fell $1.85/ton, closing at $102.55/ton on 6/Dec, with prices trading in a $3.45/ton range.
• Prices traded above the weekly pivot point of $103.20/ton until 6/Dec but failed to breach the R1 resistance at $106.05/ton, reflecting constrained upward momentum.
• Volume Put/Call ratio rose to 1.47; March 2025 expiry saw the highest put volume. Implied volatility increased modestly for December expiry but declined for January and February.

• December S&P 500 futures are up 116 basis points, trading at 6900, with potential levels to watch.
• US Dollar Index is down 11, consolidating 2-year highs.
• January WTI crude oil contract down 68 basis points, remaining in a primary downtrend.
• Additional points discussed include tech companies embracing nuclear energy, the uranium market outlook, and commentary on market trends for gold, bonds, and equities. Each market is assessed for potential trends and indicators that may influence future movements.

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

• The US oil and gas rig count rose by 7 to 589 for the week ending on 06/Dec, rising for the first time in four weeks
• For the week ending 29/Nov, US oil production rose to 13.51m bpd from 13.49m bpd the week prior. US output edged past its record high of 13.5m bpd.
• The number of active US oil rigs rose by five to 482, while the US gas rig count rose by two to 102.

• Not so Outrageous Commodity Predictions Saxo Bank published their annual “outrageous predictions” for 2025.
• I actually found a few theses that I don’t even find that outrageous in its directionaly.
• For example: “The crypto market quadruples to more than USD 10 trillion, the US dollar falls 20% against major currencies and 30% versus gold.

• WTI futures dropped 1.8% for the week ending 06/Dec, as concerns of oversupply in 2025 offset the impact of OPEC extending cuts and rising geopolitical tensions.
• WTI options Put/Call volume ratio jumped to 1.24 from 0.82 (29/Nov) last week, as call volume rose by 19.8% WoW while put volume surged by 81%.  
• WTI OI PCR remained unchanged at 0.88 from last week. Call OI rose by 3.3% WoW, while put OI increased by 3.6%.

• US natural gas prices dropped 8.5% for the week ending 06/Dec, driven by volatile weather forecasts, which predicted a warmer-than-expected winter.
• Henry Hub Put/Call volume ratio fell to 1.06 from 1.47 (29/Nov) the previous week as put volumes fell by 20.6% WoW, while call volumes increased by 10.2%. 
• Henry Hub OI PCR rose to 0.84 from 0.83 compared to last week. Call OI rose by 5.3% WoW, while put OI increased by 6.7%.

• We summarize the sensitivity of high-yield stocks Vale (VALE US) and Fortescue Metals (FMG AU) to the iron ore price. We try to answer what’s priced in at 100 USD/ton.
• We provide sensitivity tables for both stocks based on a range of 90-130 USD/ton. At 100 USD/ton, Vale (VALE US)/Fortescue Metals (FMG AU)  trade at 7.4/6.4% dividend yields.
• Bullish iron ore participants subscribing to the 130 USD/ton forecast can see yields of 16.3%/11.4%. This forecast will be achievable if the China stimulus provides the expected impetus.

• Persistent fiscal deficits have almost become normalised, with politicians hoping that modern monetary theory might resolve their borrowing with private savings and assets.
• Foreign savings are the more likely release valve on discretionary fiscal easing. Pursuing countercyclically loose policy faces inflationary resource constraints even under MMT.
• Revaluations of heterogeneous securities mean higher deficits and debt are not neutral. Fiscal deficits encourage tighter monetary policy amid stagflationary pressures.

• Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
• These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
• While the macro landscape can be complex, we believe it doesn’t have to be intimidating.

• Happy Sunday, everyone, and welcome to my weekly editorial on everything tradable in macro! I was confident heading into last week that the U.S. data releases would bring bond yields lower, and both ISM numbers and NFP aligned with our views.
• The NFP report was much weaker than it appeared, with the median duration of unemployment ticking up—a clear symptom of a low-hiring, low-firing labor market with little momentum for those who lost jobs in recent quarters to find new opportunities.
• Monthly job creation of around 225k is obviously decent, but this figure is skewed by employees returning from strikes and a lack of substantial positive revisions to the abysmal job creation in October.

• NR prices stage a comeback but then undergo correction
• Rubber Board convenes series of producer meets to tackle challenges
• Rubber Board proposes a fee to issue NOC to import NR

• Xi Jinping is likely to respond to escalating trade tensions with the US by accelerating the shift from global globalisation to multi-polarisation.
• This shift will require investors to adapt their global perspective and strategies.
• Therefore, the ongoing trade tensions could have significant implications for global investment approaches.

• The past week saw insights on PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia), Aspirasi Hidup Indonesia (ACES IJ), Sarimelati Kencana PT (PZZA IJ), and Singapore Post (SPOST SP). 
• There was also an insight on Erawan Group (ERW TB) and a Malaysian Banks screener from Victor Galliano where he picks out RHB Bank Bhd as a standout value. 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.

• The Fed’s latest report on financial stability indicated elevated valuations for risky assets versus Treasuries, while valuations for residential and agricultural properties are also historically high.
• Residential mortgage and company debt do not pose major risks to financial stability due to high levels of equity in owner-occupied real estate and robust corporate profits. 
• Continued fiscal profligacy poses the greatest threat to the US financial system via the banking system and raising the cost of capital for the corporate sector. 

• This year was one of American exceptionalism and asset return domination, led by the leadership of the Magnificent Seven.
• . We believe Magnificent Seven leadership is likely to fade in 2025.
• We expect that 2025 will be a year of transition from growth to value, large caps to small caps and paper to hard assets.

• Now that Bitcoin has exceeded the psychologically important 100,000 mark, it is becoming evident that the FOMO risk-on stampede is in full force.
• Our review of market internals leads us to conclude that the risk-on FOMO stampede that’s driving the animal spirits is on the verge of becoming exhausted.
• Our base case calls for a brief period of consolidation or shallow weakness, followed by a rally into year-end.

• This is a follow-up to our initiation, Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside. The flagship mine added another 5 years to the existing 3-year mine life. 
• At a 60 AUD/ton operating margin for 1.4 million tons/Yr (assuming 100 USD/ton iron ore price), this is an additional 60-65 mn AUD of cash profit for 5 years.  
• The company has commenced production in the Shine iron ore mine (1.2 mtpa) and will shortly begin production in the Beebyn-W11 mine (1.5 mtpa) in early 2025 after obtaining permits.

• In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the iron ore market remains range-bound, expecting further clarity on the economic stimulus.
• Stocks like Vale (VALE US) and Fortescue Metals (FMG AU) continue to trade at double-digit dividend yields (9-10%), assuming 100 USD/ton.
• With China’s PMI improving, despite high inventories, there is an expectation of a restock for iron ore in the short term. We remain skeptical and continue to see range-bound activity.

• In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the copper market remains range-bound, expecting further clarity on the economic stimulus.
• The market has looked through the PMI uptick due to the seasonal uplift and order inflows in anticipation of Trump tariffs, although equities seem a little more positive. 
• We prefer Southern Copper (SCCO US) in the copper space for its high ROIC and future growth. Check out our recent initiation, Lundin Mining (LUN CN): Cheap Play on Copper. 

• For the second half of November, we forecast headline inflation at -0.08% bw.
• This would bring November inflation to 4.57% YoY.
• Our estimate of -0.08% bw is below the historical 0.07% bw for this period as we identify prices reductions in some agricultural products.

• Happy Thursday, and welcome to our weekly positioning watch, brought to you just before the crucial NFP report tomorrow.
• From what we see across markets, it looks like participants are starting to take risk off the table in equity space ahead of the report.
• Markets have struggled this week to settle on a clear narrative for USD assets, especially USD rates.

• One of the most important questions about the martial law three days ago is why did President Yoon send special forces (297) to the National Election Commission?
• President Yoon may have ordered troops to be deployed to the NEC to get to the bottom of the election fraud since all the important election servers are stored there.
• It is EXTREMELY DIFFICULT to prove an election fraud. Even if President Yoon declares a war on election frauds, he must have extraordinary pieces of data to back this up.

• During Hong Kong’s market correction during November, we noticed that the Put/Call spread stayed below 1 and the skew moved to its lowest level in 3 years both bullish signals.
• Yum China Holdings (9987 HK) share price had a golden cross breakout on December 3, as the casual dining sector in China shows growth going into next year.
• MINISO Group Holding (9896 HK) had a breakout from a falling wedge pattern relative to MXEF.  The gap up in the share price and momentum signals confirms the uptrend.

• FAQ and guidance documents bring clarity
• Synthetic rubber out of the purview of EUDR
• Allows for rubber suppliers in countries like Vietnam and Indonesia to catch up

• OPEC+ extends crude oil supply cuts to the end of 2026, a year longer than planned. It also pushed its planned output hikes by three months to April 2025.
• OPEC+ revised its output hike plan, reducing monthly increases to 138k bpd over 18 months, down from 180k bpd over 12 months.
• OPEC+ approved a 300k bpd output increase for the UAE, starting in April 2025 through September 2026, delayed from the original January 2025 start.

• Despite core inflation being below its (headline) inflation target of 4% since Dec’23, the RBI has rigidly failed to cut its policy rate, thus constraining RGDP (& EPS) growth. 
• Vegetable inflation (6% of CPI) has indeed surged, but monetary policy can do little to influence that. Vegetable and cereal inflation are likely to moderate sharply now, after strong harvest. 
• We thus expect 75bp of rate cuts in Feb-Jun’25. Near-term RGDP growth will disappoint (7.5% in H2FY25, driven by rebounding government spending), but a rate-driven recovery will occur in H1FY26. 

• The rebound in US payrolls resulted in a disappointing increase in the unemployment rate, leading to the possibility of another 25bp rate cut. Meanwhile, upward revisions to UK employment and unit labour costs are pushing the BoE to maintain the current rates.
• Uncertainty regarding the upcoming ECB decision has lessened, primarily due to the lack of support for a 50bp expectation. The current data does not justify such a move.
• Other economic announcements are expected from Australia, Canada, Switzerland, Brazil, and Peru.

• Birth / In Depth: Why China’s piecemeal child subsidy policy failed to deliver
• Index /: China’s new economy industries gain on record tech, capital inputs, Caixin index shows
• Meat /: Australia’s red meat exports to China fully resume as Beijing lifts ban on final two companies

• In Germany, “debt hawks” are slowly but surely waking up to the reality of their manufacturing industry being brought to its knees.
• In Angela Merkel’s recent book, she pleads for a softer stance on the debt brake, and the political landscape in Germany seems to be softening on the “Schwarze Null” in general, with also the Buba member Nagel now advocating for a softer stance.
• The future government would need a two-thirds majority in the Bundestag and Bundesrat to change the debt brake.

• European bodies agree to dump ‘no risk’ category of countries
• Dec 30 is deadline for endorsing delay by publishing in official journal 
• ETRMA, GPSNR ask European Parliament to solve remaining issues

• France sovereign debt reached a record €3.228 trillion, amounting to 112% of GDP in June, well above the 60% cap set by EU regulations.
• France growing debt have slowly been chipping away at investors’ confidence in French bonds.
• After Macron called a snap election in June resulting in a hung parliament, risk premiums on French 10-year bonds have shot up.

• OPEC+ will meet today (05/Dec), following a postponement from 01/Dec, to decide whether to delay planned output increases further.
• The postponement caused market jitters, with WTI and Brent futures falling 1.1% and 0.6%, respectively, on 29/Nov. The uncertainty eased as the delay was attributed to scheduling conflicts.
• For the week starting 02/Dec, WTI and Brent crude oil futures rebounded, rising 0.9% and 0.8%, respectively, driven by expectations of OPEC+ delaying planned output hikes due to price declines.

• For the week ending 29/Nov, US crude inventories fell by 5.1m barrels, beating expectations of a 1.6m barrel decrease. However, gasoline and distillate stocks rose more than expected.
• US natural gas inventories fell by 30 Bcf for the week ending 29/Nov. Inventories are 7.8% above the 5-year seasonal average.
• UBS raised its 12-month price target on Chevron. Shell and Equinor plan to merge their UK offshore oil and gas assets to create a new company.

• Chips /: Chinese chip firms play down impact of new U.S. export curbs
• Batteries /In Depth: For Chinese battery-makers, Europe is losing its spark
• Stocks /:Rise in foreign investors’ holdings of Chinese stocks was likely modest, fragile, analysts say

• US Focus Shift: Trump’s reelection likely prioritizes domestic issues over international tensions, with potential prolonged high US interest rates impacting global economies.
• Asia’s Resilience: China stabilizes growth, India continues its upward cycle, and regional PMI figures reflect steady economic activity despite global uncertainties.
• Global Divide: Asia holds steady, while US manufacturing contracts and Europe faces deepening recession, highlighting stark contrasts in economic performance.

• In this insight, we discuss the potential impeachment of the South Korean President Yoon Suk-Yeol and the implications on the Korean financial markets.
• We would put a 50-60% probability that there is more than 200 votes to impeach the South Korean President Yoon Suk-Yeol right now by the members of the Parliament.
• We would attach about 30-40% probability that at least six justices of the Constitutional Court vote in favor of impeaching President Yoon. 

• Donald Trump threatened punitive tariffs on China, Canada, and Mexico over fentanyl, but this didn’t significantly alarm investors.
• Jamieson Greer’s nomination as USTR also didn’t cause much concern among investors.
• However, Wall Street’s confidence in Scott Bessant’s ability to moderate trade policy could potentially be misguided.

• The OPEC+ meeting is finally taking place after the Kremlin managed to get Zoom working on Windows 7.
• Early reports from delegates suggest that OPEC+ is solidifying a deal to delay a planned 3-month output hike.
• Essentially, OPEC is postponing what could become a bloodbath in physical oil markets.

• Cars / In Depth: Amid China’s EV boom, conventional carmakers cry foul
• China-U.S. /Analysis: How China can prepare for Trump’s return
• Payment /BRICS: Pay cross-border payment system exposed as hoax by crypto currency promoters

• Late Tuesday on 3 December, South Korean President Yoon Suk-Yeol declared a martial law. Several hours afterwards, the South Korean Parliament voted to lift President Yoon’s martial law order.
• By drawing so much attention to the “dangers of the communist party from within Korea and outside,” President Yoon is trying to align himself closer to President Trump. 
• In the near term, the impact on the Korean stock market of the declaration and lifting of martial law is likely to be negative.

• 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

• Happy Monday!Each week, we collect the most important events in the week ahead and provide you with our direction going into them.
• Enjoy!Monday – ISM ManufacturingThe ISM Manufacturing data is due this afternoon, with consensus expecting a rebound from last month’s report, forecasting a figure of 47.6. After reviewing our model library, we see substantial risk/reward in betting on an upward surprise in manufacturing data.
• For instance, our regional PMI model—which uses regional manufacturing prints as inputs—indicates a material increase in the manufacturing PMI today.

• Chips / Cover Story: Chinese chipmakers look to Malaysia to sidestep U.S. tariffs 
• Forestry /: Environmentalists sound alarm over China’s relaxed forest rules
• PMI /: China manufacturing activity continues to build up steam, Caixin PMI shows

• WTI futures dropped 4.6% for the week ending 29/Nov, driven by easing Middle East tensions and higher US gasoline and distillate inventories.
• WTI options Put/Call volume ratio fell to 0.82 from 0.87 (22/Nov) last week, as call volume fell by 17.9% WoW and put volume dropped by 22.4%.  
• WTI OI PCR inched up to 0.88 from 0.86 compared to last week. Call OI rose by 1.3% WoW, while put OI increased by 4.5%.

• SGX IO Futures closed USD 4.17/ton higher for the week ending on 29/Nov. It traded in a range of USD 5.05/ton, which was smaller than the prior week.
• Chinese portside inventories fell 1.5% to 148.5M tons for the week ending 29/Nov. China’s manufacturing PMI for November came in at 50.3, beating analyst expectations of 50.2.
• Seasonally strong demand ahead of the Lunar New Year, improving steelmaker conditions, stimulus hopes, and robust PMI signal continued iron ore price gains.

• US natural gas prices rose 7.5% for the week ending 29/Nov, driven by forecasts of colder weather, rising US LNG exports, and higher heating demand.
• Henry Hub Put/Call volume ratio rose to 1.47 from 1.14 (22/Nov) the previous week as put volumes fell by 56.1% WoW, while call volumes decreased by 66%. 
• Henry Hub OI PCR fell to 0.83 from 0.84 compared to last week. Call OI fell by 14.4% WoW, while put OI decreased by 15.8%.

• Updated UK population estimates and projections drove a 402k upward revision to the employment level while unemployment was broadly unchanged.
• With output and wages unaffected, productivity was weakened into a slight trend decline while implied unit wage costs are 1.3pp higher and stuck above 5% y-o-y.
• Full typical passthrough to consumer prices reinforces the underlying inflation problem. The BoE should discount labour market data and cautiously hold rates in December.

• The Baltic Dry Index (BDI)* settled at around ~1,354.00 points (USD) on December 2nd, 2024 versus ~1,947.00 points (USD) in the beginning of September 2024, which was the release date of our previous blog.
• During the year 2024, the BDI has been trading within the broader range of 1,200 – 2,500 with continuous notable swings along a relative downward trend line.
• In the same period, and so far in the year, the Index has recorded a low on January 17th at 1,306 and a high on March 13th at 2,412.

• Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
• These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
• While the macro landscape can be complex, we believe it doesn’t have to be intimidating.

• The US oil and gas rig count fell by 1 to 582 for the week ending on 27/Nov, reporting a third consecutive weekly fall.
• For the week ending 22/Nov, US oil production rose to 13.49m bpd from 13.2m bpd the week prior. US output inched close to its all-time high of 13.5m bpd.
• The number of active US oil rigs fell by two to 477, the lowest since July. Conversely, the US gas rig count rose by one to 100.

• Happy Sunday, friends, and welcome to my straight-to-the-point editorial on everything macro!Just as everyone had concluded that Trump and his (alleged) trade wars would be bond-unfriendly, the bond market has started performing much better—exactly as we suggested would happen following the election results.
• The first major difference compared to 2016, when bonds rioted after Trump’s victory, is that Trump was the clear base case this time around.
• The second major difference is that Trump’s policy mix is not inflationary this time—in fact, it’s quite the opposite.

• Europe’s economic underperformance is overpriced, with labor cost increases exceeding target-consistent levels.
• Current activity trends indicate a nearly neutral monetary policy.
• The Bank of England is expected to maintain its position, while the European Central Bank and Federal Reserve are predicted to cut 25 basis points, with cuts likely to cease early in 2025.

• Trump announced potential tariff policies on social media targeting Canada and Mexico, leading to a weakening in both currencies.
• Trump appointed key members to his economic team, setting the tone for his administration’s policies.
• Markets are anticipating the Fed meeting in December, with expectations of a dovish hold and strong labor market reports.

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

• The past week saw insights on Bank Central Asia (BBCA IJ), Bank Rakyat Indonesia (BBRI IJ), Sariguna Primatirta Tbk PT (CLEO IJ), and Siloam International Hospitals (SILO IJ)
• There were also insights on Aspirasi Hidup Indonesia (ACES IJ), Delta Electronics Thailand (DELTA TB), the upcoming index rebalancing in Thailand, and top picks in the Philippines from Sameer Taneja. 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.

• In October, Mexico received USD 5.723 billion in remittances, accumulating a balance of USD 54 billion so far this year (2.2% YoY).
• This suggests that remittances could reach a record high of close to USD 65.5 billion this year.
• Given the 20% depreciation of the national currency against the dollar along 2024, remittances have increased again in pesos, reaching 1,153 billion pesos.

• Goldman Thinks Commodities Will Outperform in 2025 Gold will rally to a record next year on central-bank buying and US interest rate cuts, according to Goldman Sachs – putting out a price target of $3.000 USD till end of 2025.
• The bank sees a sideways market in crude as its base case.
• The bank sees a sideways market in crude as its base case. “In our baseline forecast, we continue to see oil prices as range-bound, with Brent likely to stay in a $70-$85/bbl range. I

• Trump announced tariffs on countries that would “move away from the dollar” as he expands the tariff threat beyond trade. 
• China’s dependence on US exports have declined since Trump was last in office lessening the impact of any tariff threats.
• Although the dollar still dominates FX reserves, trade invoicing, and offshore debt, its usage has been declining for 15 years. The Russian asset seizure accelerated that process.

• President-Elect Trump has threatened to impose 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on China. Hitherto, US financial markets have remained relatively calm.
• The relationship between the incoming Trump administration and the Fed could be  contentious by tariffs reducing the scope for monetary policy easing due to higher inflation.
• The long-term outcome of tariffs depend on exchange rate movements and willingness of foreign producers to accept lower profit margins. Tougher export conditions could force the Fed to ease policy.

• We would describe our 2025 U.S. equity view as cautious, but not bearish. We expect S&P 500 returns to be roughly flat or low single-digits for 2025.
• The U.S. market is facing a number of “this will not end well” valuation-based warnings.
• We see no immediate bearish triggers that warrant defensive portfolio positioning.

• Q2 FY 2025 sees NR prices hitting all-time high of INR 247/kg
• Revenue of MRF, Apollo and CEAT goes up YoY; of JK Tyre dips
• Tire prices hiked to mitigate impact of NR price rises

• Investors may find insights about the near-term outlook for equities from the bond market, which is showing signs of a short-term turnaround.
• Incoming Treasury Secretary Scott Bessent’s 3-3-3 Plan has excited Wall Street and revived the market’s animal spirits.
• Investors can enjoy the party during this quiet interregnum period into year-end, but January and beyond may be a different story.