In today’s briefing:
- 2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 1
- Rate Cuts: How Much? How Quick? How Real?
- Great Game – Climate, Chips and Corruption!
- The Week That Was in ASEAN@Smartkarma – GoTo & TikTok, BliBli’s Omnichannel, and Malaysian Banks
- Positioning Watch – Are markets ready for Powell Wednesday?
- Energy Cable #49: Ouch …..
- USD-flation Watch: Not a disinflationary home run as in Europe
2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 1
- Risk reward favours this shift in allocation between these markets.
- Japan will suffer from base effects on economic data and earnings this year as JPY move reverses.
- Year end Positioning could provide attractive entry points for both legs.
Rate Cuts: How Much? How Quick? How Real?
- Western central bankers have made it amply clear that rate cuts are not a given. They remain data dependent. And the data is sending mixed signals.
- Meanwhile markets are opting for selective hearing and are pricing sharp rate cuts soon. Inflation is hard to tackle in general. The last mile gets nasty. Are markets ready?
- Base effects have contributed to the rapid slowdown in inflation. When these base effects fade, the false sense of safety could crater leading to a very different inflation narrative.
Great Game – Climate, Chips and Corruption!
- Welcome to your weekly geopolitical update from the Great Game! With a relatively quiet week in global affairs, we have time to dive into a couple of issues that we’ve been looking at over the past weeks.
- But let’s start at the main stage with the current COP28 summit that’s about to wrap up.
- Will “majlis” sit-downs save the climate?
The Week That Was in ASEAN@Smartkarma – GoTo & TikTok, BliBli’s Omnichannel, and Malaysian Banks
- The past week saw insights on GoTo Gojek Tokopedia (GOTO IJ), Global Digital Niaga (BELI IJ), Malaysian Banks, Indonesian banks, and Indonesian Cigarettes.
- There was also a macro insight looking at Malaysia’s economy, and an update on nickel stocks including Trimegah Bangun Persada (NCKL IJ) and Merdeka Battery Materials (MBMA IJ).
- 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.
Positioning Watch – Are markets ready for Powell Wednesday?
- With Powell taking the stage on Wednesday, likely turning more hawkish in his rhetoric after weeks of financial conditions easing, we have had a look at if we are starting to see signs of markets reversing their ultra-bullish positioning.
- In general markets have taken a bit of a breather from a positioning perspective after the historically bullish sentiment seen throughout November, and people are now starting to hedge their longs based on recent option volumes, with the aggregate US intraday put-call ratio now back solidly above 1.
- Looks like traders are starting to hedge their equity bets going into the central bank bonanza this week.
Energy Cable #49: Ouch …..
- Main take aways: Long utilities in Europe. OPEC looks like losing control with the market. SPR purchases could floor Oil markets here.
- Last week wasn’t the best in terms of our trades in the energy space after an otherwise strong year in our tactical bets placed within the sector.
- We have been stopped out of our natural gas trade and our crude oil long is now in the red.
USD-flation Watch: Not a disinflationary home run as in Europe
- We see US inflation printing roughly 0.15%-points above consensus tomorrow driven by upside surprises in apparel prices, medical care services and used car prices.
- This remains in sharp contrast to trends in Europe where inflation softens faster than expected.
- The upside will be seen in both headline -and core inflation.
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