In today’s briefing:
- 2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 4
- The Liquidity Conundrum
- Another Textbook Buy the Rumor Sell the Fact Trade Incoming?
- US: Haley Leads Biden by 8pp; Iowa Could Make It a Trump-Haley GOP Contest
- Positioning Watch – Where to Find Value Currently
- CrossASEAN Ground Zero – BYD in Indonesia, Grab’s Digibank Commitments, and Home Credit Indonesia
- The Week That Was in ASEAN@Smartkarma – Matahari Department Store, Avian’s Glosy, and Vinfast
- Charting Beyond the Global Headlines
- US Policy Watch: Is Trump’s Nomination Done and Dusted After Tonight?
- Energy Cable: 4 Charts that Should Keep Largarde up at Night
2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 4
- A shift in composition needed in a Japanese portfolio this year
- A weaker US and Japanese economy together with a stronger Yen will make sector allocation key.
- Some sectors to avoid or invest in during this next phase.
The Liquidity Conundrum
- The Fed has been running QT for a while and yet there is still abundant liquidity in the financial system.
- Fed’s bond holdings are down $1.3 trillion from their peak (due to QT), yet only half of this supposed tightening has actually impacted bank reserves (aka ‘’liquidity’’) which are down a meagre $0.7 trillion.
- This ongoing ‘’money mystery’’ has caught many off-guard, and it has helped fuel several bullish narratives: the most famous one being that higher ‘’liquidity’’ has supported stock markets in 2023.
Another Textbook Buy the Rumor Sell the Fact Trade Incoming?
- Conditions in the Energy Industry Continue To Worsen The quarterly Dallas Fed Energy Survey highlighted that business uncertainty is worsening again.
- It seems like the past two quarterly reports were only outliers – the trend remains worsening business conditions for gas and oil companies.
- The conflict in the Red Sea started to impact shipping rates. But as we wrote over the past couple of weeks, it is not substantially higher
US: Haley Leads Biden by 8pp; Iowa Could Make It a Trump-Haley GOP Contest
- Trump is likely to win a substantial victory in the Iowa caucuses, with the real contest being for second place between Haley and DeSantis, with the latter banking on Iowa.
- In the New Hampshire primary, Haley has closed the gap with Trump, to near a dead-heat with Christie’s withdrawal. A post-Iowa withdrawal by DeSantis would mean “Advantage Haley’ in NH.
- Haley will likely win at home (South Carolina), with that momentum reducing Trump’s huge organizational advantage on Super Tuesday. A 2-horse GOP race is market-positive, promising a less chaotic outcome.
Positioning Watch – Where to Find Value Currently
- Hello everyone, and welcome back to our weekly positioning overview.
- We’ve been working on some new ways to look at positioning data across asset classes, and we’ll share some of the inaugural charts in today’s piece and will extend them, week by week.
- Markets have more or less traded sideways since the start of the year, as the risk-on party has taken a bit of a breather it seems, despite rate cut expectations becoming even more embedded after the hawkish US CPI surprise last Thursday – strange move, and we’ll be surprised if probabilities don’t reverse within the next couple of price data points.
CrossASEAN Ground Zero – BYD in Indonesia, Grab’s Digibank Commitments, and Home Credit Indonesia
- CrossASEAN Ground Zero is a new thematic weekly product that focuses on key Southeast Asian digital themes and technology trends with a core focus on Indonesia.
- This week we look at the positive responses to the latest changes to policy in support of EV manufacturing in Indonesia which appears to have won the support of BYD.
- We also look at Grab‘s upcoming commitments to digibanks but it looks well prepared and has bigger fish to fry and we also look at Home Credit Indonesia and MUFG.
The Week That Was in ASEAN@Smartkarma – Matahari Department Store, Avian’s Glosy, and Vinfast
- The past week saw insights on Matahari Department Store (LPPF IJ), Adi Sarana Armada (ASSA IJ), PT Avia Avian (AVIA IJ), Vinfast (VFS US), and Genting Singapore (GENS SP).
- There were also Macro Insights on Singapore and Vietnam plus CrossASEAN Ground Zero, which looked at GoTo‘s sustainability credentials, 2W EVs in Indonesia, and themes for the year ahead.
- 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.
Charting Beyond the Global Headlines
- My Global Activity Barometer shows that the sequential pace of economic activity has decelerated in 2Q and 3Q 2023
- The dispersion of the deceleration across countries is potentially becoming more widespread
- This appears to be consistent with the ongoing shift in monetary policy slant globally
US Policy Watch: Is Trump’s Nomination Done and Dusted After Tonight?
- We have gotten a few questions from readers asking if the Republican primary race will be effectively over after tonight’s Iowa caucus.
- The speculation comes after New Jersey Governor, Chris Christie, was caught on a hot mic on Thursday saying that he believed presidential candidate, Ron DeSantis, would terminate his campaign after the Iowa ballot.
- The short answer is no – the Republican primary will still be competitive after tonight, albeit, Trump will be the clear favorite to win the nomination as he is now.
Energy Cable: 4 Charts that Should Keep Largarde up at Night
- Takeaways: Price increases in goods likely to show up in Europe after the Summer
- Watch out for energy prices once we start to fill up for next heating season
- The recent turmoil in freight rates will likely exacerbate the divergence between US and the Eurozone
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