Macro

In today’s briefing:

CHINA: When Will Stocks Catch Up With Surging Debt Markets?
Great Game – Israel and Hezbollah headed for war?
Navigating Copper’s Contradictions: Short-Term Demand Woes Versus Long-Term Supply Gaps
Actinver – Macro Daily: Inflation 1h-Jun
CrossASEAN Ground Zero – Shopee’s Live Streaming Push, GoTo’s Multi-Pronged Initiatives, and BliBli
CX Daily: China Mulls Tax System Overhaul to Ease Record Local Government Debt
Inflation Watch: What if the Cyclical Prices Are Not Truly Tamed? Lessons from Canada and Sweden
Canada CPI Inflation 2.87% y-o-y (consensus 2.6%) in May-24
UK: The Fiscal Steer for Keir
How To Lose Money Smelting Copper

CHINA: When Will Stocks Catch Up With Surging Debt Markets?

By David Mudd

China’s debt markets are experiencing an historic bull cycle as government and companies take advantage by ramping up issuances this year.
Beijing will use its healthy balance sheet and continued debt issuance to clean up local government debt and simultaneously address the property sector problems.
China’s healthy external position will provide continued support for its currency and debt markets with equity markets to follow in the coming months.

Great Game – Israel and Hezbollah headed for war?

By Mikkel Rosenvold

Clashes between Israeli forces and Hezbollah militants intensified along the Israel-Lebanon border.
The conflict escalated after a Hezbollah rocket attack on an Israeli border town killed four civilians.
In response, Israel launched airstrikes targeting Hezbollah positions in southern Lebanon, resulting in significant casualties and infrastructure damage.

Navigating Copper’s Contradictions: Short-Term Demand Woes Versus Long-Term Supply Gaps

By Pranay Yadav

A slowdown in China’s property and manufacturing sectors along with high refining ouput has led to a significant increase in copper inventories, contributing to short-term demand concerns.
Major copper miners face production challenges, risking future supply deficits amid growing demand from the photovoltaic and EV industries.
Asset managers have reduced their long positions in copper due to near-term market conditions, reflecting a cautious outlook on immediate price movements.

Actinver – Macro Daily: Inflation 1h-Jun

By Actinver

Headline inflation increased by 0.21% bw, pressured by agricultural prices, returning to an annual rate of 4.78%.
Core inflation rose by 0.17% bw, returning to an annual rate of 4.17%.
Headline inflation was slightly above our estimate (0.21% vs. 0.19%), because some agricultural products registered higher price increases than estimated.

CrossASEAN Ground Zero – Shopee’s Live Streaming Push, GoTo’s Multi-Pronged Initiatives, and BliBli

By Angus Mackintosh

This week we look at Shopee’s ongoing efforts to turn up the dial on live streaming as TikTok restructures Tokopedia and we look at the product-lead initiatives driving GoTo’s growth.
We also comment on the latest acquisition by Global Digital Niaga Tbk PT (BELI IJ) in the home improvement space as it seeks to increase its omnichannel exposure.
CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.

CX Daily: China Mulls Tax System Overhaul to Ease Record Local Government Debt

China’s Central Economic Work Conference in December proposed the first reforms to the country’s 30-year-old fiscal and taxation system, sparking widespread debate among academics and tax experts.
Tariffs /: ‘Doors are open for discussions’ on EU’s China EV tariffs, German minister says
Landslide /: Landslide in remote part of Central China leaves eight dead

Inflation Watch: What if the Cyclical Prices Are Not Truly Tamed? Lessons from Canada and Sweden

If you know me, you know I have a thing for charts, especially those showing momentum in the macro cycle.
Forget nominal levels; it’s the rate of change that really drives asset markets.
This analysis is chock-full of rate of change charts, just to remind you that we’ve only managed to nudge inflation back to just above target levels—right as the cycle’s rate of change is shifting towards re-acceleration in many places.

Canada CPI Inflation 2.87% y-o-y (consensus 2.6%) in May-24

Canada’s CPI inflation rate in May 2024 was 2.87% year-on-year, exceeding expectations by 0.3 percentage points and reversing most of the slowdown from April 2024.
The Core CPI for the same period was 1.8% year-on-year, surpassing expectations.
The PPI inflation rate was 1.63% year-on-year, indicating contained cost pressures at the production stage.

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

UK: The Fiscal Steer for Keir

Labour still seems set to win the UK’s 4 July general election with a manifesto that avoids its likely response to the fiscal pressures it inherits.
Duty increases will probably start occurring, rather than rolling cancellations, while tax thresholds stay frozen and capital gains are taxed more despite increasing distortions.
The tax burden will continue trending higher, with only slight uncertainty in the extent. This stability may keep encouraging companies and high earners to leave the UK.

How To Lose Money Smelting Copper

By Massif Capital Research

Investing in copper and copper miners represents a significant opportunity for investors over the next ten to fifteen years.
But the market is more complicated than most believe, and success will require not only an understanding of the entire supply chain but also a willingness to be active.
In this post, we look at the role smelters play in the copper value chain.

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Jun 25

Daily Brief Macro: India: Record Exposure Gives Rise to Caution and more

In today’s briefing:

India: Record Exposure Gives Rise to Caution
US Crude Oil Output at Risk as Rig Count Plummets
Mexico: GEM Funds Wrong-Footed After Election Results.
The Week That Was in ASEAN@Smartkarma – Prodia’s Cure, Ace Hardware, and Erajaya’s Growing Volumes
Strengthening Risk Management in the Booming Private Credit Market
France: Redefining ‘The Right’
Energy Cable: Bullish Oil, Bearish Nat Gas, and Especially Metals! Here’s Why!
Fund Managers Reduce Commodities Again
China’s Excess Production over Domestic Demand
The Week At A Glance: Time to bet against the USD?

India: Record Exposure Gives Rise to Caution

By Steven Holden

The average Indian allocation among active GEM funds broke through the 15% barrier at the start of 2024, despite an increasing underweight versus the benchmark index.
Valuation-Driven Underweight: The average weight versus the iShares MSCI EM ETF hit record underweights of -2.44%, with only 27.6% of funds positioned overweight. EM Value funds hit record -8.7% underweight.
HDFC Bank is the most widely held stock, owned by 60.5% of funds, while a majority of Indian names, such as Reliance Industries, are underweighted by active GEM funds.

US Crude Oil Output at Risk as Rig Count Plummets

By Suhas Reddy

US oil rig count falls to 485 as of the week ending on 21/June, its lowest since January 2022.
US oil and gas rig count is falling as producers prioritize shareholder returns over increasing output.
Rising labour and equipment costs along with macroeconomic uncertainties further discourage producers from adding rigs.

Mexico: GEM Funds Wrong-Footed After Election Results.

By Steven Holden

Mexico has seen increased inflows and exposure over the past 3-4 years, with funds invested reaching an all-time high of 94.6% and average holding weights climbing to 3.93%.
The percentage of active EM funds overweight the benchmark rose from 20% in 2011 to over 69% last month, making Mexico the largest overweight compared country peers.
Grupo Financiero Banorte and Wal-Mart de Mexico are key contributors to the net Mexican overweight, with Banorte seeing increased exposure of +4.26% of funds in the last 6 months

The Week That Was in ASEAN@Smartkarma – Prodia’s Cure, Ace Hardware, and Erajaya’s Growing Volumes

By Angus Mackintosh

The past week saw insights on Ace Hardware Indonesia (ACES IJ), Prodia (PRDA IJ), Erajaya Swasembada (ERAA IJ), and Barito Renewables Energy (BREN IJ).
There was also a macro insight on Indonesia macro, as BI elected to keep interest rates on hold, and an insight looking at Saingapore’s biggest movers in 2Q2024.
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.

Strengthening Risk Management in the Booming Private Credit Market

By Albert Maass

Private credit’s rapid growth necessitates enhanced risk management due to increased capital inflows and limited high-quality investment opportunities.
Focus on credit risk, liquidity risk, and interest rate risk, ensuring thorough due diligence and stress testing.
Employ advanced risk models, foster strong risk culture, leverage technology, and stay updated on regulatory changes for sustainable market positioning.

France: Redefining ‘The Right’

By Alastair Newton

The centre maintained its position in the European Parliament elections.
The unexpected general election in France is contributing to the rise of the ‘far right’.
The EPP’s post-election negotiations in Brussels are also strengthening the ‘far right’, which is reshaping conservatism in Europe.

Energy Cable: Bullish Oil, Bearish Nat Gas, and Especially Metals! Here’s Why!

By Ulrik Simmelholt

We start with crude oil, where positions in crude oil futures have returned to Covid-19 pandemic levels, which we believe is overly bearish.
The economy is normalizing with rising travel and growing consumer energy demand.
Despite this, the futures market’s bearish sentiment seems misaligned with these positive economic indicators.

Fund Managers Reduce Commodities Again

By The Commodity Report

Fund managers recently reduced their broad commodity position as well as energy position, compared to last month, according to the latest BofA survey.
Compared to the long-term z-score, fund managers are now heavily under-positioned in energy but close to neutral positioned in broad commodities.
In a recent note, Goldman Sachs explained their views about commodities if inflation would re-accelerate again – or in detail beat the market estimates and lead to an inflation upside surprise.

China’s Excess Production over Domestic Demand

Classical economist believes in what is called the “Say’s Law” i.e. supply creates its own demand. But the case of China’s excess production disproves this law.
Industry output far exceeds demand and inventory is piling up over the last decade.
Heavy industries such as steel, aluminium, cement, coal, and shipbuilding, are particularly prone to over-capacity as China has been over-stretching its infrastructure development since 2008.

The Week At A Glance: Time to bet against the USD?

Greetings from Europe! The Week At A Glance replaces our Morning Report each Monday as it allows for a deep dive into the economic releases and major tradeable themes for the week ahead.
We see a couple of major tradeable themes in the week(s) ahead.
First, the Euro area data, which is still improving in forward-looking indicators, while spot data remains relatively soft, probably in part due to a plethora of (potential) election risks.

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Jun 24

Daily Brief Macro: Why the November Election Matters to Gold and more

In today’s briefing:

Why the November Election Matters to Gold
Why the Breadth Divergence May Not Be Bearish
VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield
Commodity Analysis – Crude Oil WTI Futures
US Financial Markets Underprice Geopolitical Risks as Equities Flirt With Another Melt-Up
Canadian Economy – June 12, 2024
Greek Economy – May 20, 2024
Comment on Exchange Rate EUR/USD – May 3, 2024

Why the November Election Matters to Gold

The latest CBO fiscal update raises the odds of upside inflation surprises in the coming years, which would be bullish for gold.
The intermediate-term outlook for inflation will largely depend on the outcome of the November election.
We project that a Biden win would be bearish for bond prices and mildly bullish for stock prices. A Trump win would be bond and USD bearish and gold bullish.

Why the Breadth Divergence May Not Be Bearish

Anxiety has been increasing among the technical analysis community over the blatant instances of narrow market leadership and negative breadth divergence.
The bearish consequences of a negative breadth divergence can take over a year to be realized. Instead, they are warnings of bearish conditions than actionable tactical sell signals.
We interpret current market conditions as highly extended that can pull back at any time, but investors should also recognize that the situation could resolve itself in a benign manner.

VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

By Sameer Taneja

We like Vale (VALE US) for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA.
The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio.
The key risk remains the overhang from the Mariana Dam disaster being settled for ~25.7 billion USD (vs. the current market cap of 50 billion USD).

Commodity Analysis – Crude Oil WTI Futures

According to Graph 1, during the period February 28th , 2024 – May 31st , 2024, a mixed trend was reflected in the prices of crude oil futures amid fluctuations.
During the period under consideration, there was a notable increase in the price of crude oil until April 8th , 2024, whereas thereafter crude oil prices followed a downward trend returning to the levels seen at end of February 2024.
The MA- 10 was recorded to perform higher than MA-20 from the beginning, whereas on April 23rd the MA-20 took over and started trading above the MA 10 until the end of the period under consideration.

US Financial Markets Underprice Geopolitical Risks as Equities Flirt With Another Melt-Up

By Said Desaque

US equities have discounted the arrival of a lower federal funds rate (FFR). Upbeat corporate profit expectations and a lower FFR could easily produce an H2 equity market melt-up.
Financial markets have largely ignored geopolitical risks. Holding assets in Western financial institutions now has counterparty risks. High budget deficits driven by defence spending are bearish for productivity and profitability.
The appetite of private investors to buy longer-dated Treasuries will be tested by the arrival of persistently large budget deficits. Notably, the outlook for foreign participation is less certain.

Canadian Economy – June 12, 2024

In the first quarter of 2024, Canada’s economy managed to grow by 1.6% (QoQ).
This growth is mainly attributed to real private and final consumption expenditures but also to real fixed capital formation as they increased by about 1.2% to 1.6% (QoQ) each.
Net exports slightly fell from 0.17% of GDP in fourth quarter of 2023 to 0.13% in the first quarter of 2024.

Greek Economy – May 20, 2024

The 2024 GDP projections for Greece show a 2.07% growth rate, so that Real GDP would reach €198.512 billion, lower than the previous projections of €199.205 billion.
In 2024, the IMF, OECD, and EU forecast an average growth rate of 2.07% for 2024 and 2.24% for 2025.
The Public Debt is projected to increase from € 356.695 billion to €362.856 billion in 2024 but with a lower Debt-to-GDP ratio than the previous year of 156.3% (161.9% in 2023).

Comment on Exchange Rate EUR/USD – May 3, 2024

During the period under consideration, i.e. April 3rd, 2024 to May 3rd, 2024, the EUR/USD pair posted both downward and upward swings.
In the beginning, it faced a slight increase, while from April 9th until April 18th the pair faced a sharp decrease.
After that, it fluctuated sideways and by the end of the period the pair traded at a higher level but still below the price level of the start of April.

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Jun 22

Daily Brief Macro: Liquidity Watch: The $ liquidity outlook remains solid for Q3 and more

In today’s briefing:

Liquidity Watch: The $ liquidity outlook remains solid for Q3
Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 21 Jun 2024
[ETP 25/2024] Energy Majors Bounce Back; Their Expansion Spree Continues
UK: Retail Seasonally Recovers in Dry May
CX Daily: Rough Market Doomed Syngenta Listing Plans
HEW: Bias Determines Data Dependence

Liquidity Watch: The $ liquidity outlook remains solid for Q3

The liquidity outlook always makes for interesting discussions and after a few minor hiccups in liquidity proxies both in the USD space and the GBP space, we are getting increasingly cautious central bank behavior to see in the liquidity space.
We therefore see generally benign liquidity conditions ahead for H2-2024 in sharp contrast to predictions from the nay-sayers!Let’s have a look at the details.
Liquidity conditions have generally improved since the drawdown during tax season in April/May and we are trending higher now.

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 21 Jun 2024

By Dr. Jim Walker

China’s Economic Performance: Despite negative media reports, China shows strong year-on-year growth in industrial production and retail sales, outperforming other major economies.
Misreported Inflation: China meets the 2% inflation target better than most, with misconceptions about deflation being clarified in recent reports.
Japan’s Economic Struggles: Japan’s export growth appears positive in yen but declines in USD terms, reflecting weak domestic demand.

[ETP 25/2024] Energy Majors Bounce Back; Their Expansion Spree Continues

By Suhas Reddy

The gap between OPEC and IEA’s oil demand forecasts widened: OPEC kept its 2024 forecast at 2.25m bpd, while IEA lowered its forecast to 960k bpd from 1.1m bpd.
Europe’s attempt to cut Russian LNG imports grows stronger, as the French Senate Committee recommends cutting Russian dependence.
Since 17/June, Energy majors began recovering. Berkshire increased its holdings in Occidental, while Shell expanded its LNG market access by acquiring Pavilion Energy.

UK: Retail Seasonally Recovers in Dry May

UK retail sales more than fully recovered from April’s crash in May, although neither move looks like a fundamental signal. The early Easter explains half the volatility.
A return to a seasonably average number of rainy days and warmth explains the other half of May’s resurgence and possibly most of the substantial surprise to the consensus.
Consumer weakness seems asymmetrically relevant to the dovishly biased MPC. The rebound will not prevent it from announcing a premature rate cut in August.

CX Daily: Rough Market Doomed Syngenta Listing Plans

Syngenta / In Depth: Rough market doomed Syngenta listing plans
Boeing / Boeing’s setbacks open the skies for China’s C919 to take off
Russia-North Korea / Russia and North Korea have ‘normal needs’ to develop their relationship, China’s Vice Foreign Minister says

HEW: Bias Determines Data Dependence

Services inflation exceeded expectations in the EA and the UK, leading to the BoE’s first rate cut from June to August. Retail sales also saw a resurgence.
Monetary policy decisions are due next week for Sweden, the Philippines, Mexico, and Colombia.
Data highlights for the upcoming period include inflation in the US, France, Italy, and Spain, along with the Euro area’s ESI.

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Jun 21

Daily Brief Macro: Monthly Monitor: China Activity Data (May 2024) and more

In today’s briefing:

Monthly Monitor: China Activity Data (May 2024)
Revisiting the Japanese Market – Time to Increase Allocations?
CHINA: Do You Like AI? BUY Utilities!
CX Daily: Maternity Wards Are Latest Victim of China’s Falling Birthrate
BoE Rolls Hints to August
Indonesia Policy Rate 6.25% (consensus 6.2) in Jun-24
Norway Policy Rate 4.5% (consensus 4.5%) in Jun-24

Monthly Monitor: China Activity Data (May 2024)

Weak industrial output and urban fixed asset investment pose concerns to the health of the economy
The beat in retail sales is likely due to holiday season in May and thus its significance should be discounted
Going forward, we expect these three activity data to be weak unless the authorities launch more fiscal and monetary stimuli.

Revisiting the Japanese Market – Time to Increase Allocations?

By Rikki Malik

The main Japanese indices have been moving sideways this year
Continued weakness in the JPY has diminished returns in USD terms
Technically the market has similar weak underlying breadth as the US market

CHINA: Do You Like AI? BUY Utilities!

By David Mudd

AI is poised to drive a large increase in power consumption on the mainland. Data demand from generative AI necessitates more data centers and consequently more power.
China energy consumption is at the beginning of a super cycle as AI becomes integral to everyday corporate and eventually personal lives.
China’s clean energy names will benefit from the China’s energy strategy as its power needs from data centers surge.

CX Daily: Maternity Wards Are Latest Victim of China’s Falling Birthrate

Maternity / In Depth: Maternity wards are latest victim of China’s falling birthrate
Flood / Fatal flooding leaves 13 dead in South China
Monetary policy / China’s monetary policy will stay ‘accommodative’ despite deflated data, PBOC chief says

BoE Rolls Hints to August

The BoE unsurprisingly maintained the Bank rate at 5.25% with only two dovish dissents. However, the decision was “finely balanced” for probably at least four others.
August is explicitly identified as an occasion to review the Bank rate in light of the forecast round. High services inflation is being downplayed in at least the interim.
We see a lower hurdle to an August cut, reinforcing our call for that, although we still see it as a premature step that risks a reversal through rate hikes in 2025.

Indonesia Policy Rate 6.25% (consensus 6.2) in Jun-24

Bank Indonesia kept the BI-Rate unchanged at 6.25%, aligning with market expectations to manage inflation and stabilize the Rupiah amid global uncertainties.
Future interest rate decisions will be influenced by global financial market dynamics, particularly US monetary policy shifts, and the strong performance of the domestic economy driven by robust consumption and investment.
Ensuring Rupiah stability and maintaining inflation within the 2.5 ± 1% target range remain central to Bank Indonesia’s strategy, supported by monetary, macroprudential, and payment system policies to foster sustainable economic growth.

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

Norway Policy Rate 4.5% (consensus 4.5%) in Jun-24

The Norges Bank kept the policy rate at 4.5%, aligning with expectations, to maintain a tight monetary stance amid high but slowing inflation.
Despite low growth, economic activity exceeded projections in Q1, and employment remains high, supporting household consumption and overall economic stability.
While inflation has slowed, it remains above target, necessitating the continuation of a tight monetary policy; adjustments will depend on inflation trends, economic growth, and global factors.

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

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Jun 20

Daily Brief Macro: China Economic Scenarios and more

In today’s briefing:

China Economic Scenarios
EM Watch: Is the Chinese copper demand down 40%?
Positioning Watch – Increasing the BETA risk?
Scandi Watch: Stay long NOK (and pay NOK rates) into Norges Bank
CX Daily: Alipay and WeChat Pay’s Smaller Peers Struggle Amid New Crackdown
UK Services Air-Lifts Dovish Pressure
US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

China Economic Scenarios

Uncertainty about China’s growth outlook over the next 1-2 years has increased with the government undertaking a tricky transition toward sustainable growth and a more active regulatory environment
Further fiscal policy stimulation will be required to keep growth on track to hit 5.0% in 2024
We do not feel that China’s equity market is cheap enough yet to reflect these risks, while domestic investors are not being supported by excess money supply growth.

EM Watch: Is the Chinese copper demand down 40%?

Welcome to our weekly EM and Metals editorial.
It’s hard not to talk about China again this week, given the importance of the metals trade for global inflation expectations.
Our live assessment of the Chinese recovery continues to paint a stalling picture in Real Estate, exemplified by the physical copper demand being on the edge of a precipice, while the pollution based metrics hint of a continued surge in industrial production into June.

Positioning Watch – Increasing the BETA risk?

Hello everyone, and welcome back to our weekly positioning watch.
Our newly invented high-frequency hedge fund positioning data was well received, and we’re working on expanding it to more assets on a running basis.
It’s worth revisiting the points we raised about concentration in broader equity indices.

Scandi Watch: Stay long NOK (and pay NOK rates) into Norges Bank

As Norges Bank gears up for its upcoming meeting on Thursday, all eyes are on the new rate path.
It’s widely expected that the central bank will maintain its current rates, putting the spotlight squarely on the future direction of rates.
Here’s what we can discern from the key components feeding into Norges Bank’s rate path model ahead of the decision.

CX Daily: Alipay and WeChat Pay’s Smaller Peers Struggle Amid New Crackdown

Payment / In Depth: Alipay and WeChat Pay’s smaller peers struggle amid new crackdown
China-Australia / Chinese Premier hails warming ties during Australia trip
Jobs / Higher wages, fewer jobs: The changing face of China’s manufacturing sector

UK Services Air-Lifts Dovish Pressure

UK services CPI inflation exceeded expectations again by only slowing to 5.68%, ruling out a June rate cut by being 0.4pp above the BoE’s forecast, but maybe not much more.
Headline CPI inflation is only tracking 5bps higher, and underlying measures are slowing, albeit not to target, while volatile airfares drive most of the latest upside.
The BoE will probably feel confident enough in its subdued forecast to keep an August cut alive. We still see that as premature but believe the BoE will do it regardless.

US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

By Prasenjit K. Basu

FOMC signalled in Mar’24 that 2.6%YoY core PCE inflation would allow three rate cuts in CY24. They now expect core PCE inflation of 2.8%YoY (above the Apr’24 reading of 2.75%YoY).
Core CPI inflation rose 0.2%MoM in May’24, suggesting a similarly benign outcome for core PCE. US M2 contracted for 16 months (Dec’22-Mar’24), an unprecedented tightening compensating for M2-excesses of Mar’20-Feb’22.
Aggressive QT in Mar-Apr’24 successfully squeezed out inflation, and core PCE inflation will likely stay below 2.6%YoY in H2CY24, allowing two 25bp cuts in the Fed Funds rate in CY24.

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Jun 19

Daily Brief Macro: CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics and more

In today’s briefing:

CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics
Momentum Trading Opportunities In Agricultural Commodities
Energy Cable: Short shipping companies?
Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in Jun-24
EA Inflation Stays Soft Despite Rise
Great Game – Why Tesla is winning the EU-China trade war

CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics

Corruption / Cover Story: China’s sports corruption dragnet casts pall ahead of Paris Olympics
Euro Cup / Chinese brands intend to triumph at Euro Cup 2024
Cyberbully / China rolls out new rules for online sites to curb cyberbullying

Momentum Trading Opportunities In Agricultural Commodities

By Pranay Yadav

Corn futures show high potential for momentum trading, peaking in early-year gains and declining from June, matching seasonal harvest patterns in major producers like China and Brazil.
Over the past five years, momentum trading in soybean futures outperformed other crops with average annual returns of USD 13,600, though 2024 saw significant losses reflecting its counter cyclical performance.
Bearish outlook for corn in 2024 due to increased global production outlook from key regions, bearish shifts by asset managers, and USDA forecasts predicting lower season-average prices.

Energy Cable: Short shipping companies?

By Ulrik Simmelholt

Hello from a sunny Copenhagen where the Euro 24 fever is upon us all.
This week we’ll do a chart heavy analysis on shipping and nat gas.
We were stopped out of our long position in shipping in February due to false reports on a deal with the Houthis that sent the market tanking.

Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in Jun-24

The RBA held the cash rate at 4.35%, reflecting a cautious approach in response to persistent inflation and excess demand pressures, aligning with the economic consensus.
Domestic consumption trends, labour market conditions, and global economic uncertainties will influence future policy decisions, focusing on achieving the 2-3% inflation target by the second half of 2025.
The RBA emphasizes data-driven decision-making and remains vigilant to upside inflation risks, maintaining flexibility in its policy stance to ensure inflation returns to target sustainably.

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

EA Inflation Stays Soft Despite Rise

Final EA HICP inflation at 2.57% in May confirmed the surprisingly strong flash, with services inflation another 5bps above an already resurgent pace at 4.13%.
Underlying inflationary pressures converged across countries at a slightly below-target monthly impulse. Fundamental support from wages should prevent an undershoot.
The consensus increased over the past month, but the gap to our forecast typically remains 0.1pp or less. ECB cuts can continue if its peers follow its dovish path soon.

Great Game – Why Tesla is winning the EU-China trade war

By Mikkel Rosenvold

Welcome to this weeks Great Game, in which we will cover 3 major stories right now – European EV tariffs, the upcoming election in France and the turmoil in Brazil.
EU Tariffs on Chinese Electric Vehicles Situation: The European Commission is expected to disclose this week the tariffs it plans to impose on Chinese electric vehicles (EVs) due to what it says are excessive subsidies.
This move follows Washington’s recent decision to quadruple duties for Chinese EVs to 100%, although Brussels is expected to set significantly lower tariffs.

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Jun 18

Daily Brief Macro: Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail? and more

In today’s briefing:

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?
EU: The Centre Holds… For Now
Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down
The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast
Steno Signals #104 – Get ready for a WAVE of liquidity in July!
Be Careful Precious Metals Bulls & Tailrisk Secular Inflation
China Debt Hangover and Policy Limits
The week at a glance: UK CPI report is taking the headlines together with Le Pen
Actinver – Macro Daily: Inflation 2h-May

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

By Douglas Kim

In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more.

EU: The Centre Holds… For Now

By Alastair Newton

The centre’s position in the European Parliament is generally maintained, but the increased presence of right-wing/hard-right members threatens Ursula von der Leyen’s potential second term.
This political shift could further complicate the creation of policies related to green initiatives and migration.
The potential establishment of a nationalist government in France could exacerbate these complications.

Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down

By Srinidhi Raghavendra

Chinese real estate investments fell 10.1% in the first five months of 2024 YoY. New home prices fell at the fastest pace in more than 9.5 years in May.
Fresh bank lending in China rebounded well expectations in May. Chinese banks issued 950B yuan (v/s 1.36T yuan issued last May) in new loans last month.
China’s consumer inflation held flat in May amid feeble domestic demand, uneven economic recovery, and consumer confidence weakness.

The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast

By Angus Mackintosh

The past week saw insights on Prodia (PRDA IJ) after a management call and AEM (AEM SP) post-management changes, with some economic commentary on Thailand.
There was also an insight on Global Credit Growth from Daniel Tabbush and the CrossASEAN Ground Zero Insight looking at Vinfast (VFS US), digital payments, and social commerce player Evermos.
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.

Steno Signals #104 – Get ready for a WAVE of liquidity in July!

Happy Sunday from Copenhagen! Risk asset investing is typically seen as a winter-sport for good reasons, but July is often up there among the best return months.
It’s as if July heard winter bragging about its stock market prowess and decided to show up in flip-flops, a Hawaiian shirt, and a cocktail in hand, just to prove that even in the heat, it can keep up with the icy competition.
This year is unlikely to be an exception as we will see improving liquidity trends into July, while the bond market seasonality is typically also a lot more favorable due to more benign issuance trends (especially in Europe).

Be Careful Precious Metals Bulls & Tailrisk Secular Inflation

By The Commodity Report

Be Careful Precious Metals Bulls Another friendly reminder that positioning in copper remains super speculative bullish – aka, there is much room for speculators to reduce their bullish bets again.
The same can be said for gold and copper, but not for crude oil.
Once again, there seems to be less demand than people realize – especially from China.

China Debt Hangover and Policy Limits

China has seen a very large increase in total public and private non-financial sector debt/GDP since 2008, which is unlikely to be repeated in the coming decade.
This is curtailing Chinese policymakers’ actions on monetary, credit and fiscal policy to support the economy, and actions risk being less than recent promises.
Thus we remain of the view that China will struggle to meet growth targets and we look for 4.5% growth in 2024.

The week at a glance: UK CPI report is taking the headlines together with Le Pen

Welcome to our weekly “The week at a glance” report released every Monday morning (and replacing our Something for your Espresso every Monday).
We look at the most important releases of the week ahead and address how we are positioned for them.
We have a relatively light week ahead of us in terms of key figure releases but both the RBA and the SNB will set policy rates, while the major key figure release is the UK inflation report ahead of the BoE meeting.

Actinver – Macro Daily: Inflation 2h-May

By Actinver

Big surprise in headline inflation with a -0.20% contraction during the second half of May.
As we expected, the drop was partly due to an atypical price decline in non-core inflation of -0.72% bw.
However, core inflation surprised with a -0.02% bw drop, possibly associated with the effect of the Hot Sale.

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Jun 17

Daily Brief Macro: Where Now for the Hong Kong Market? and more

In today’s briefing:

Where Now for the Hong Kong Market?
Hawkish Forward Guidance by Fed Fails to Dampen Bullish Sentiment
Tactically Cautious, But Not Bearish
Harvesting Seasonality in Iron Ore Prices Induced by Weather, Inventory Restocking, and Holidays
The Market Gods Present Patient Investors With Three Gifts

Where Now for the Hong Kong Market?

By Rikki Malik

Minimum correction targets have been hit for the Hang Seng Index
Some potential catalysts for the resumption of the bull market
We highlight some suggested sector allocations for the next phase

Hawkish Forward Guidance by Fed Fails to Dampen Bullish Sentiment

By Said Desaque

The Fed’s latest Summary of Economic Projections contained hawkish adjustments to long-term estimates of unemployment and the federal funds rate. Policy may not have been as tight as previously estimated.
The pressure to ease monetary policy in Canada and the Eurozone was more intense due to the prevalence of much higher levels of unemployment compared to the US.
Risky assets will increasingly discount the arrival of a lower FFR, thereby potentially making Chairman Powell reluctant to be more dovish due to fears about another US equity market bubble.

Tactically Cautious, But Not Bearish

A series of negative breadth divergences is signaling caution for the stock market advance.
However, breadth divergence can persist for a long time and these divergences should be regarded as cautionary conditions and not outright sell signals.
Investors should mitigate their long exposure using risk control techniques, such as using trailing stops, or take advantage of the low VIX to buy cheap downside put protection.

Harvesting Seasonality in Iron Ore Prices Induced by Weather, Inventory Restocking, and Holidays

By Srinidhi Raghavendra

SGX Iron Ore prices exhibit seasonality. For select six months being long Iron Ore combined with short positions during other months deliver positive P&L based on back tests.
In line with prices, realised volatility exhibits seasonality too. Options strategies can exploit this to deliver superior alpha & higher sharpe ratio.
Averages confound extreme variances. Monthly iron ore futures price returns are less volatile during the months of December, February, June, October, & March based on range.

The Market Gods Present Patient Investors With Three Gifts

Market conditions are setting up for buying opportunities in three markets. U.S. equities will probably weaken on disappointment over the timing of rate cuts.
European stocks corrected over political turmoil in France that’s likely to be temporary.
China’s announcement that its central bank had suspended gold buying looks like an entry point in the near future.

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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 15

Daily Brief Macro: Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024 and more

In today’s briefing:

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024
CX Daily: How the EU’s New Tariff Hikes Will Affect China-Made EVs
Japan Policy Rate 0.1% in Jun-24
HEW: Backing-Out of Early Cuts
Sweden CPI Inflation 3.7% y-o-y (consensus 3.5%) in May-24

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024

By Dr. Jim Walker

US CPI and Fed: US CPI at 0, potential Fed rate cuts speculated, cautious outlook from Fed.
China Optimism: “Age of Plenty” report shows optimism due to exports, tech, infrastructure.
Global Confidence: China improves, Thailand face declines and political challenges; Japan struggles despite stimulus.

CX Daily: How the EU’s New Tariff Hikes Will Affect China-Made EVs

How the EU’s new tariff hikes will affect China-made EVs
Hong Kong creates task force to investigate university management’s escalating spat
Bankrupt Sichuan Trust seeks investors to bring business back

Japan Policy Rate 0.1% in Jun-24

The BOJ maintained its policy rate at 0.0-0.1%, aligning with expectations and signalling a gradual approach to policy normalization. It plans to reduce JGB purchases over the next one to two years.
Global conditions, domestic economic indicators, inflation dynamics, financial market stability, and government measures will influence future interest rate decisions.
The BOJ’s strategy focuses on sustaining economic recovery and ensuring financial stability, with the flexibility to adjust policies based on evolving economic and financial conditions.

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

HEW: Backing-Out of Early Cuts

FOMC members initially favored only one cut this year, but due to low US inflation, they shifted their view, aligning with the prediction for a September cut. High UK wage inflation and sustained GDP resilience are expected to prevent the BoE from making a cut.
The BoE is expected to make a decision soon, with the accompanying statement likely to maintain support for a cut.
CPI inflation being a tenth above the consensus may not affect the BoE’s decision, but a greater upside could influence them.

Sweden CPI Inflation 3.7% y-o-y (consensus 3.5%) in May-24