Macro

• On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025. 
• For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025. 
• However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025. 

• Rumor has it that President Xi is swaying towards political liberalization
• Facts are that there are too many local representatives with regional differences rejecting Xi’s plan
• Economies will thrive and the current chips shortage maybe overcome under liberalization

• In Depth: Chinese customers sold on ‘elixir of youth’ despite expert warnings 
• Suspect arrested in stabbing of four American college teachers in China
• Executive at ICBC’s Beijing branch investigated for suspected graft

• Since the FOMC decision to remain on-hold in June was unsurprising, the emphasis was on the accompanying statement, dotplot and presser 
• The post-meeting statement tilted somewhat dovishly, but the 2024 median dot skewed more hawkishly
• While a July rate cut remains remote, the odds of a September or November pivot have increased following the June FOMC 

• China policymakers’ deleveraging pressures on property developers have been supplemented by recent common prosperity measures to ensure that “housing is for living and not for speculation”.
• This has raised concerns of a major property developer bankruptcy and questions of whether China’s highly valued property market could finally see a housing bust.
• Chinese authorities have huge economic and political incentives to ensure that deleveraging pressure is followed by support as property developers deleverage.

• The case for a stronger MXNMXN sold off massively following the Mexican election last week but we still view the MXN as a clear-cut ‘trade balance’ play.
• As long as the trade ties between China and the US increasingly necessitate a ‘value-add middleman,’ Mexico remains in an advantageous position, regardless of whether the president is Sheinbaum or Obrador.
• Our PCA model reveals that USDMXN is trading very rich compared to macro factors.

• In May we concluded that: “In May, our models hint of an “Up,Up,Up” environment in inflation, growth and liquidity, which is a decently positive indicator for risk assets, but also for broader reflationary trades returning through the month and into June.” The above conclusion has held true to a large extent and we went against the prevailing consensus driven by the “slowdonistas” when needed during the latter parts of April.
• For June/July, we see an increasing liquidity trend from right about now, while the growth- and inflation cycle cyclically heats up still, while some lagged effects pull in the opposite direction.
• From a market perspective, the overwhelming conclusion is that we will continue in an up, up, up macro regime referring to the liquidity cycle, growth cycle and cyclical price/inflation cycle.

• The catch-up productivity argument would point towards 4-5% growth in China in the 2025- 2030 period.
• We are concerned that the residential property downturn and rewiring of global supply chains will be persistent headwinds for China GDP growth in the coming years.
• The switch to state socialism under President Xi means China is unlikely to have as much productivity pick- up as in Japan and South Korea in their earlier development stage.

• The EIA expects US natural gas production to fall by 1% in 2024 and lifted LNG price forecast for Henry Hub benchmark by 13% for the year.
• OPEC’s 2024 global oil demand growth forecast unchanged at 2.25m bpd. But IEA lowered its projection to 960k bpd from 1.1m bpd.
• Russia, Iraq, & Kazakhstan continued to oversupply despite lowering production MoM in May.

• Australia’s unemployment rate decreased to 4.0% in May 2024, with an addition of 39,700 jobs, demonstrating the resilience of the labour market.
• Economic indicators show a split in recovery, with a strong service sector performance (PMI Services 52.5).
• The robust service sector is offset by vulnerabilities in the manufacturing sector (PMI Manufacturing 49.7) and slow growth in consumer spending (retail sales 0.1% m-o-m in April 2024).

• US CPI inflation for May 2024 was reported at 3.27% year-on-year, the lowest growth rate since February 2024, and slightly below the consensus estimate and the previous month’s figure.
• Despite a decrease in headline inflation, core CPI inflation remained stable at 3.4% year-on-year.
• This stability in core CPI inflation is due to persistent producer price pressures, indicating sustained underlying inflationary pressures.

• Cover Story: Turning research into revenue – China’s quest to bring lab inventions to market
• Peru amends law allowing Cosco Shipping to retain exclusive rights to operate Chancay Port
• In Depth: How Hong Kong could help craft mainland policies for digital assets

• Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
• With incremental news on China’s stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. 
• We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US)  are good plays on the spread.

• Sustaining the Q1 rebound in April suggests economic trends have improved in 2024 to about 0.3% q-o-q for demand and 0.4% for supply amid slightly rising unemployment.
• The fading positive supply shock from falling energy prices should slow those trends before policy aligns at neutral such that both trends converge at 0.3% q-o-q in 2025.
• Easing before expectations have re-anchored with the target risks excessively high inflation, compounding the UK risk of rates reversing higher relative to other countries.

• Hot on the heels of watching Powell’s press conference, which pushed back slightly against renewed rate-cut optimism, it’s clear that the Fed is playing a cautious game.
• Despite the soft inflation data this morning, they significantly changed the dot plot.
• They likely believe the CPI report was noisy due to a sudden deflation in transportation.

• The Bank of Thailand maintained its Policy Rate at 2.5%, with a 6 to 1 vote, reflecting a cautious approach amid structural challenges and ongoing economic uncertainties, particularly in the export sector.
• It projects economic growth at 2.6% in 2024 and 3.0% in 2025, driven by strong domestic demand, tourism recovery, and accelerated government disbursements, while structural impediments continue to weigh on export performance.
• Inflation should gradually increase towards the target range by the fourth quarter of 2024, with headline inflation projected at 0.6% for 2024 and 1.3% for 2025, necessitating careful monitoring of external and domestic factors that could influence inflation dynamics and future policy decisions.

• The CPI report today was admittedly softer than our initial hawkish forecasts, with headline coming in unchanged at 0.0% MoM vs 0.1% expected while core came in to the soft side of 0.2% MoM vs 0.3% expected.
• Our anticipation of rising goods-flation didn’t play out fully, and while shelter re-accelerated as we forecasted, core services disinflated heavily in May due to auto insurance costs declining.
• The main culprit behind the dovish CPI report was the sudden drop in Motor Vehicle Insurance (chart 2.b), which has so far been printing at trend MoM levels around 1-1.5%, lifting headline inflation by 0.03-0.05% consecutively.

• India’s CPI inflation for May 2024 was 4.75% year-on-year, lower than the predicted 4.9%, and the lowest since May 2023.
• There has been a slowdown in CPI inflation and subdued wholesale price movements, especially in the manufacturing sector.
• This suggests a potential easing of inflationary pressures, which could provide economic relief and lead to adjustments in monetary policy.

• China’s CPI remained stable at 0.3% year-on-year in May 2024, indicating modest inflationary pressures.
• Despite this stability, the CPI was slightly above the one-year average.
• Other economic indicators, such as declining new house prices and robust monetary and credit growth, suggest potential future inflationary dynamics.

• This week we look at Grab’s ESG qualities and its recent report along with Vingroup’s plans to start EV ride-hailing in Indonesia on top of Vinfast‘s commitment to manufacturing. 
• We also look at how the digital payments space is developing in Indonesia and Vietnam with Momo and Evermos’s differentiated social commerce strategy in Indonesia helping to foster entrepreneurialism. 
• CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.

• Take aways: Alignment in OPEC is crumbling but the short-term risk-reward is
• STRONG Riyadh Accord coming to the rescue? Natural Gas markets remain tight and the bullish price action CONTINUE.
• Another week of increasing freight rates OPEC’s cohesion is becoming increasingly fragile due to the necessity for deep supply cuts to sustain oil prices.

• Welcome to this weeks Great Game, which is obviously very much focused on the European elections.
• We also cover the ongoing EV war and the massive heatwave in India, which could have huge ramifications for certain commodities.
• Right-Wing Swing in European Parliament Elections. 

• Crude oil prices crater as OPEC meeting outcome fails to support oil prices. Despite OPEC+ extending larger cuts until end-2025, prices fell on fears of excess supply.
• Henry Hub Gas prices rose sharply last week driven by expectations of a hotter-than-expected summer in the US & Outages in Norway.
• Energy majors fell sharply on 3/June and ended the week in the red. BP and Exxon Mobile were downgraded. Berkshire ramped up holdings in Occidental.

• The UK unemployment rate increased to 4.4% in April amid residual seasonality nearing its peak. Underlying changes are also shrinking so it may not go significantly higher.
• Stabilisation in vacancies and still-low redundancies should prevent a new fundamental shock from depressing labour market activity.
• Total pay growth exceeded expectations again, albeit owing to revisions that skew higher. The slowing to 0.4% m-o-m may also be revised up, but suggests slowing in May.

• After a period of economic and political turbulence, Malaysia is now re-entering the spotlight, performing admirably in attracting technology-focused investments.
• The success in luring semiconductor and data centre investments is not down to pure luck; policymakers have worked hard to ensure that the country friendly to global tech business.
• If momentum on business investments and policy reform can be maintained, the country may be on the verge of a virtuous cycle that helps it escape the middle-income trap.

• Welcome to our concise weekly overview of key events, expectations, and positioning strategies.
• This week, we focus on the Federal Reserve meeting, US inflation data, and the crucial Bank of Japan meeting.
• As usual, the most crucial forward-looking inflation evidence is found in the NFIB report released ahead of the CPI report.

• Reading between the lines, the resignations of two senior officials of the New Capital Authority strikes us as a de facto sacking. 
• While there may be gripes with the pace of delivery in developing Nusantara, the fundamental problem remains that the economics of the new capital are unfavourable. 
• Incoming president Prabowo should also not be assumed to continue placing the same priority on Nusantara as his predecessor Widodo currently does. 

• Champion Iron (CIA AU) reported an inline result for FY24, with revenue/profits up 9%/16% YoY.  Q4 revenue/profits were -28%YoY/-73%YoY due to lower pricing on 60% of volumes in transit. 
• The company-guided production volumes have reached the annualized 15 mnt mark, but logistics continued to be challenging in Q1. Easing is expected in August, and base case a 1.5-year destock.
• The name carries some risks trading at 7x PE FY25 (March end), but it could be one to watch in case the 65-62 spread widens.

• Discrepancies between establishment and household job surveys highlight economic stress; full-time employment declines, indicating households remain stressed even as non-farm payrolls rise.
• Subsequent bond yield movements, particularly the persistent inversion of the 30Y-2Y spread, reflect investor skepticism about long-term economic stability and delayed rate cuts.
• Upcoming U.S. elections and this week’s economic reports, including the May CPI and revised Federal Reserve projections, may push rate cut expectations even further ahead.

• Unpredictable Corn Supply from South America The grain supply from South America, especially corn, is among the most unpredictable globally.
• During the 2022-23 season, Argentina’s corn production dropped by nearly 29% due to drought, but then surged by 26% in the 2023-24 season, influenced by the El Niño phenomenon.
• Similarly, favorable weather conditions boosted Brazil’s corn production by approximately 17% in 2022-23. However, in 2023-24, it declined by 16% due to varying weather patterns.

• The past week saw insights in Sumber Alfaria Trijaya Tbk Pt (AMRT IJ), CP Axtra (CPAXT TB), and Jardine Matheson Holdings (JM SP).
• There were also macro insights on inflation in Thailand and the Philippines, a sector view on EVs in ASEAN and the 14 top picks in ASEAN from Dr. Andrew Stotz.
• 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.

• Labour’s flagship energy proposals have received a considerable amount of criticism, some of which is purely political.
• There are numerous legitimate and significant doubts about whether the party can fulfill its proposed agenda.
• This agenda is crucial for the decarbonisation process and the overall economic prospects of the UK.

• “Strong” non-farm payrolls number a catalyst for another hit to commodities
• Oil positioning is now very supportive for prices with non-commercial buying levels close to  five-year lows.
• Copper may have more short-term downside with speculative interest still high

• The outlook for global liquidity in H2 depends on the willingness of the Fed to lower its policy rate based on data dependency.
• The Bank of Canada reduced its policy rate by 25 basis points this week, offering forward guidance for further cuts, but the European Central Bank was not offering such assurances. 
• US quantitative tightening was not causing a scarcity of reserves in the banking system, according to the latest Senior Financial Officer Survey, making cessation dependent on the real economy.

• We analyzed the U.S. economy and markets from the perspective of three trading desks. The bond and commodity markets are signaling weakness while equity markets are signaling growth.
• Investors should distinguish between economic growth deceleration, which would stand in direct contrast to bottom-up Street expectations of rising EPS estimates, and disinflation.
• A growth deceleration would pose headwinds to equity price gains, while disinflation would be a positive factor.  

• We are intermediate-term bullish, but disturbing signs are appearing under the hood that not all is well in the short run.
• We interpret current conditions as a weak bull pushing price upward, but the market is fragile and can pull back at any time.
• Our base case calls for stock prices to grind upward, albeit in a choppy manner over the next few weeks.

• Happy Sunday from a windy Copenhagen!We’ve been yammering about the copper buildup on Chinese exchanges for months.
• Was it a strategic decision to hoard copper reserves?
• Were the Chinese waiting to offload this copper until the CNY devalued, or a result of the physical demand in the Chinese economy nosedived off a cliff?

• The UK economy is emerging from the dual shocks of the pandemic and the subsequent energy crisis, transitioning into a period of declining inflation and stabilizing output.
• Recent data shows positive economic activity trends, with GDP growth mainly driven by the services sector, while the first quarter of 2024 registered the highest quarterly growth since mid-2022.
• A positive outlook for inflation and interest rates is expected to boost economic confidence, increase consumer spending, and ease costs for businesses.

• The latest job report just dropped, and it’s music to our ears—solidifying our thesis once again.
• A few highlights:Construction Hiring: Markedly up again.
• This is a strong cycle signal, indicating robust economic activity.

• In 2023, China’s Economy managed to grow by 5.2%.
• This growth is mainly attributed to final consumption expenditure which accounted for the 4.3% growth of the total 5.2% expansion.
• Significant contribution to growth also had the investments with 1.5% contribution and especially the public sector. 

• Asian PMIs and US Economic Concerns: India leads the region with a strong PMI of 57, while Hong Kong reports a decline. The US PMI is troubling, with new orders dropping significantly, reflecting declining demand in the trucking industry.
• Indian General Election Results: The BJP performed weaker than expected, contrary to exit polls. Despite the NDA retaining power with Modi as Prime Minister, economic activities and projects remain strong, indicating positive economic growth.
• Economic Outlook and Upcoming Reports: India’s GDP growth remains robust with projections up to 8.4%. An upcoming China report aims to provide new insights, potentially altering perceptions formed by mainstream Western media.

• The ISM figure for May surprised negatively Monday, admittedly a short-term setback for the whole reflation story we have laid out over the past months.
• There are however signs that we could be in for a VERY hot summer/autumn in manufacturing terms, and market pricing in cyclicals vs defensives are still showing support for materially higher ISM manufacturing levels around 56-57.
• Chart 1a: Cyclicals vs Defensives. It might seem surprising to discuss the ISM reaching 56, but there are intriguing signs from high-beta economies like Sweden, Germany, Canada, and South Korea.

• The European gas market panics despite 70% storage levels after Norwegian outage.
• Disruption exposes Europe’s vulnerability due to reliance on few gas suppliers. Norway supplied 30% of Europe’s gas in 2023.
• Rising demand from Asia eating up some of Europe’s gas imports. Competition between the two continents to intensify as global demand picks up.

• Logistics / In Depth: Logistics is getting pricy in China, but reform will be a long haul 
• AI /Stanford students apologize after being accused of copying Chinese AI model
• PMIs /Analysis: Why China’s manufacturing PMIs went in different directions in May

• The nonfarm payroll additions significantly exceeded expectations, indicating a strong labour market which could potentially boost consumer spending and economic growth, even as the unemployment rate rose to 4.0%.
• Average hourly earnings increased and private sector employment growth was robust, both factors contributing to economic stability.
• However, mixed indicators from retail sales, production, and the manufacturing sector suggest the presence of underlying economic challenges.

• The ECB and Bank of Canada have implemented the anticipated rate cuts, with future actions dependent on further data. Despite a surge in US payrolls and wages, Europe cannot depend on decoupling inflation to justify the risky rate cuts without a recession.
• The upcoming Fed decision is the primary focus, with the associated dot plots expected to indicate two cuts in 2024.
• Other decisions are expected from Thailand and Peru, while updates on the UK macroeconomic environment will come from labour market and GDP data.

• Thailand’s CPI inflation in May 2024 was 1.54% year-on-year, exceeding consensus estimates, suggesting rising consumer demand and price pressures.
• The Core CPI inflation remained at 0.39% year-on-year.
• Goods pipeline pressures are contributing to the headline, as shown by the 3.36% PPI inflation in April 2024.

• Canada’s unemployment rate in May 2024 increased to 6.2%, marking the highest since January 2022, due to a weakening labour market despite modest employment gains of 26.7 thousand.
• Simultaneous economic data showed declining retail sales, stagnant GDP growth, and a shrinking manufacturing sector.
• This data indicates a wider economic stagnation, suggesting the need for proactive policy measures.

• China’s total population declinied by 850K or 0.06% and 356K or 0.02% respectively in 2022 and 2023. Total population growth is projected to be negative in years to come.
• The negative population growth raises questions about China’s long-term economic growth prospects. 
• This article addresses the impact of China’s demographic trends on medium- to long-term economic growth and draws comparisons from other Asian economies such as Japan and South Korea

• SHFE silver premium over COMEX silver has escalated to 7%, exacerbated by falling SHFE silver inventories, indicating a deepening shortage in China.
• Surging demand from China’s rapidly growing solar industry and renewable data centers is deepening the global silver deficit, now projected to continue at record levels for a fourth year.
• The strong bullish outlook for silver suggests that the bullishness in silver prices is likely to continue in the near-term.

• Continued strong gold demand from central banks, especially the People’s Bank of China, drives gold prices up despite high interest rates, challenging conventional expectations.
• Weakening economic indicators in the US, like falling job openings and PMI, increase likelihood of rate cuts, potentially elevating the Gold-Silver Ratio (GSR) even in a lower interest rate environment.
• Anticipating a recession in late 2024, the paper describes a strategic long stance on GSR, leveraging price divergence in gold and silver amid economic slowdown. 

• The ECB cut its policy rates by 25bps in June as stability in its inflation forecast provided sufficient confidence of success for all except one policymaker.
• Recent resilience has left enough doubt for the ECB to resist signalling this step as being the first on an easing path. It needs data to clear the uncertainty obscuring the path.
• Cuts outside recessions are often reversed, and the ECB is prone to mistakes. However, we expect another ECB rate cut in September, contingent on the Fed cutting then too.

• The ECB has cut key interest rates by 25 basis points, reflecting an improved inflation outlook and the effective transmission of previous rate hikes, maintaining restrictive financing conditions.
• Future interest rate decisions will be data-driven and flexible, based on ongoing assessments of inflation, economic data, and the strength of monetary policy transmission, without pre-committing to a specific rate path.
• Economic and financial risks, including geopolitical tensions and global trade dynamics, will influence the ECB’s policy adjustments to ensure the stability and effectiveness of monetary policy transmission.

• Switzerland’s unemployment rate rose to 2.4% in May 2024, indicating potential labour market weakness.
• Mixed economic indicators such as negative consumer confidence and contracting manufacturing activity were observed.
• Despite these challenges, modest GDP growth and robust retail sales were reported, suggesting underlying economic challenges.

• The ruling BJP suffered major losses in the recent elections. It fell short of an overall majority and will have to rely on regional partners to form the next government. 
• Consolidation of the anti-BJP vote under the aegis of the INDIA coalition delivered dividends, but voters also were not enthused by Modi’s economic and social campaign rhetoric. 
• Expect short-term uncertainty as the major blocs attempt to cobble together parliamentary majorities. But more political checks and balances would be good for India. 

• Recent signs of economic weakness in the US is a believable narrative for the current weakness
• OPEC +  announcement on increasing production adds to the noise
• Weakness spreads from the energy sector to other commodity sectors

• The National Democratic Alliance (NDA) led by PM Narendra Modi won its 3rd consecutive parliamentary majority (293 seats) although BJP fell short of a majority (unlike in 2014 and 2019).
• Modi will take office on Friday, but will be dependent on the 16 and 12 MPs of Chandrababu Naidu’s TDP and Nitish Kumar’s JD(U) respectively, CMs of Andhra and Bihar. 
• Naidu is an economic reformer, who’s likely to support labour-market reform and privatisation. BJP’s social agenda (UCC, single nationwide election) will need to be shelved, but economic reform will advance. 

• OPEC+ decided to extend production cuts to the end of 2025. It also plans to ease voluntary output cuts starting this October.
• Easing hints sent oil prices tanking, shedding 5% over two days. Weak demand and ample supply thanks to overproduction by OPEC+ members lend little price support.
• Summer driving season will ramp up gasoline demand. Weather might dampen demand, but panic buying will more than offset the demand pullback.

• The resilience of US inflation relative to the UK and EA has raised talk of decoupling and is feeding monetary policy divergence this summer.
• Price changes are unusually synchronised, and the US looks more likely to be ahead of Europe than breaking away, limiting the potential for sustained differences.
• Correlations remain high across spectral frequencies. A temporary decoupling is possible but would be a generational event that we doubt the fundamentals will justify.

• Philippine CPI inflation in May 2024 reached 3.9% year-on-year, the highest since November 2023, but slightly below the 4.0% consensus and the historic average, indicating moderated inflationary pressures.
• Despite the rising headline rate, core inflation slowed to 3.1%.
• Producer Price Index (PPI) inflation contracted by -0.77% in April 2024, suggesting that reduced upstream cost pressures may temper future CPI inflation increases.

• Lithium / In Depth: Chinese lithium giant’s Chile headache telling of growing global resource protectionism 
• Ukraine /Beijing rebuts claim it is pressuring countries to skip Ukraine peace summit
• Pension /In Depth: China’s pension finance push falls on deaf ears

• Welcome to our weekly EM editorial where we travel across the liquid EM markets in the context of recent developments in USD markets.
• ISM Services jumped back to 53.8—time to put that recession chatter to bed for a few months again?
• Bloomberg’s latest alarmist piece on “business employment dynamics” showing a net job loss in Q3 of last year is probably the worst analysis I have read in a while.

• The Bank of Canada reduced its policy interest rate by 25 basis points to 4.75%, aligning with the economic consensus, driven by increased confidence in achieving the 2% inflation target.
• Economic growth resumed in Canada with a 1.7% GDP increase in Q1 2024, while CPI inflation eased to 2.7%, supported by declining core inflation measures and narrower price increase breadth across CPI components.
• The Bank will closely monitor core inflation, demand-supply balance, and wage dynamics, with the potential for further rate cuts if inflation continues to ease and confidence in reaching the 2% target solidifies, balanced against the risk of prematurely loosening monetary policy.

• ETFs are synonymous with passive investing. It passive investing and beyond. ETFs have been stealing breakfast, lunch and dinner away from mutual funds.
• Active ETFs have jumped from obscurity to ubiquity. >70% of new ETF launches in the US over the last seven years have been active ETFs.
• Active ETFs in the cheapest quintile command AUM of USD 325 billion while those in the most expensive quintile hold merely USD 35 billion.

• China’s economic growth is expected to decelerate from the previous high-growth period in the 2000s and early 2010s. This will have an impact on other EMs. 
• We track the impact from the angles of China’s commodity imports, supply-chain position, and foreign investment.
• Commodity producer countries can be more heavily impacted. The impact on Asia will be mixed, suffering from regional trade, but some supply chains could be diverted away from China.

• Evening from Europe!What a bloodbath in long oil bets today, and we are bleeding alongside the crowd as we are down 5.7% in our long bets in the CLN4 future.
• The OPEC+ meeting over the weekend did not fuel a bullish supply narrative as we can (at best) expect the status quo.
• The supply cuts were prolonged (as was our base-case), but assuming that the cuts will actually be reversed by June or September 2025, which seems to be the forward guidance from OPEC now, we’d have to see a much stronger business cycle in Manufacturing for that to match with the demand side.

• High dividend yield  names continue to outperform the broader market.  Energy and Materials sectors are best performers over the last year.
• Mainland buying has continued to buoy the Hong Kong market even through the pullback in May.
• Short selling is declining and market breadth is increasing supporting rotational buying between sectors.

• Hello everyone, and welcome back to our weekly positioning watch.
• The divergence between market-cap weighted and and non market-cap weighted indices is slowly normalizing, but the impact that NVIDIA (and some of the other big tech firms) has on both broad equity returns is notable with the 5 largest companies in the S&P 500 accounting for roughly 30% of the index by now.
• This does not only have implications for the distribution of returns between bigger indices (Nasdaq vs Dow Jones for instance), but also on indices option volatility, with the VIX ex NVIDIA hitting lows of around 9 in May (2017/2018 lows).

• Labour’s dual strategy towards Europe could potentially enhance the UK’s economy.
• Despite the potential benefits, it is unlikely to yield significant results until the end of the next parliamentary term.
• This suggests that even in a best-case scenario, the economic impact may not be immediate.

• Switzerland’s CPI inflation rate was stable at 1.4% year-on-year in May 2024, aligning with consensus expectations and the rate of the previous month, with slight variations from historical averages.
• There was a 0.3% month-on-month CPI increase in May 2024.
• A 0.6% month-on-month PPI increase in April 2024 suggests controlled price transmission and effective measures to maintain consumer price stability.

• Brent crude has weakened by $10 since early April, with the prompt time spread indicating plentiful supply relative to consumption
• Demand for crude oil for combustive fuels like gasoline and diesel is expected to peak towards the end of the decade, while demand for natural gas liquids used in petrochemical production is set to rise
• Preliminary demand data for April showed signs of improvement, with observable oil inventories increasing, particularly in China, due to lower oil prices prompting stockpiling

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

• The Holy Grail of Commodity Trading? If there is a holy grail of commodity trading, I would say it’s becoming a master in reading the movements in the futures forward curve.
• Knowing how futures contracts change and how the curve shifts from contango to backwardation, and vice versa, gives commodity traders a lot of useful info about the physical supply and demand.
• While many market participants argue about the meaning and definition of backwardation and contango, the direction in which the spreads are actually moving is far more important to us.

• The SEC’s approval of 19b-4 forms marks a critical step towards spot Ethereum ETFs, signaling a potential near-term final approval that could drive significant ETH spot buying.
• Despite recent gains following ETF approval news, Ethereum remains a laggard in the crypto rally, underperforming relative to Bitcoin and smaller cryptocurrencies like Solana, BNB, and Dogecoin.
• Bitcoin faces headwinds from an expected influx of supply due to Mt. Gox repayments and losses from the DMM hack, which could pressure BTC prices in the short term.

• Expectation of a 25 basis point cut from the ECB with a focus on delivering on that commitment
• Market pricing in an incomplete cutting cycle, with potential for further easing depending on inflation dynamics
• Long duration valuations attractive in both short and intermediate sectors of the curve, with limited risk of a significant sell-off.

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

• RGDP grew 8.2% in FY24, led by 9% growth in GFCF. Stronger PCE (up only 4% in FY24), aided by rebounding rural consumption, should enable 8.5% RGDP growth in FY25.
• Fiscal deficit contracted to 5.6% of GDP in FY24 (0.3pp of GDP lower than budgeted), aided by soaring direct tax and GST revenues. Lower FY25 deficit should crowd-in private investment.  
• With CPI inflation likely falling below 4%YoY in Q2FY25, we expect a 25bp rate in Aug’24. A 6%-above-normal monsoon should lower food inflation and repo-rate, further boosting FY25 RGDP growth. 

• The ECB is expected to implement rate cuts in June, followed by the BoE in August.
• Additional cuts are contingent on the Fed’s actions starting in September, while inflation is being maintained by excessive labour cost growth.
• There are concerns about premature stimulus causing bubbles like in 1998, and potential rate hikes in 2025 to reverse these cuts.

• The past week saw insights on Ace Hardware Indonesia (ACES IJ), Sumber Alfaria Trijaya (AMRT IJ), Cisarua Mountain Dairy (CMRY IJ), and Barito Renewables Energy (BREN IJ)
• There was also a macro insight into Malaysia’s FDI Outflow and further insight on AMMB Holdings (AMM MK) plus the CrossASEAN Ground Zero and Dr Andrew Stotz‘s top picks. 
• 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.

• Welcome to our short and sweet weekly overview of key events, our expectations and how we position for them.
• On ISM Manufacturing (Monday). Our forecast at Steno Research is 50.2 for the ISM Manufacturing Index, slightly above the consensus of 49.9.
• April’s activity was notably weak due to several factors: tax seasonality which withdrew liquidity, a hawkish build-up of expectations ahead of the early May FOMC press conference, and weak international impulses.