In today’s briefing:
- Portfolio Watch: Markets sniffing out the Chinese resurgence case
- Steno Signals #91 – No more recessions ever!?
- Multi-Faceted Factors Driving Gold Prices Higher in a Great Debasement and Geopolitical Trade
- Gold and Bitcoin Rallye & CTA Positioning Update
- The Week That Was in ASEAN@Smartkarma – SingTel & Optus, Jollibee Foods, and 14 Thai Stocks
- Monday Macro – Asset allocation update, the Nvidia show, stubborn rates, and Gold
- G5 Rates Watch: Mirror mirror on the wall, who’s the biggest interest rate cutter of them all?
- Energy Cable #61: Commodities are breaking out #2!
- EA: HICP Converging Close to 2%
Portfolio Watch: Markets sniffing out the Chinese resurgence case
- Macro Portfolio: Markets sniffing out the Chinese resurgence case. Our conviction in pro-cyclical trends have been confirmed in markets this week, and the case for a Chinese revitalisation is becoming increasingly stronger.
- The continued surge in Copper this morning is noteworthy, particularly given the buildup of inventory by China in the past few months.
- An increasing stockpile can be a positive indicator, especially if it results from a deliberate effort by China to restock in anticipation of an economic stimulus.
Steno Signals #91 – No more recessions ever!?
- Happy Sunday from Sunny Copenhagen and welcome to our flagship editorial! Is the business cycle dead?
- It is a fair question to ask after what seems like years of recession chasing once again ending in tears for the macro bears.
- This sublime graphic created by the great Lee Coppock is exceptionally telling.
Multi-Faceted Factors Driving Gold Prices Higher in a Great Debasement and Geopolitical Trade
- Theories to explain gold price movements have a long history. Since the GFC, gold has increasingly become a proxy for rising risks of sovereign debt default and fiat money debasement.
- Floating exchange rates made gold prices very sensitive to changes in US monetary conditions via a robust inverse relationship lasting until the GFC when new theories began to emerge.
- There are numerous buyers augmenting gold demand, including central banks, retail investors and hedge funds. Weaponisation of the US dollar has increased the attraction of gold in international reserve management.
Gold and Bitcoin Rallye & CTA Positioning Update
- Gold and Bitcoin prices both remain massively supported by easing financial conditions and a bunch of liquidity in the market.
- While the Fed Funds Rate remains high at 5,5% – liquidity conditions in the market is what really matters for both safe haven assets.
- Meanwhile, J.P. Morgan announced that gold is their number one pick in the commodities market. According to them, the price has room to rise towards $2.500.
The Week That Was in ASEAN@Smartkarma – SingTel & Optus, Jollibee Foods, and 14 Thai Stocks
- The past week saw insights on Singtel (ST SP) and Optus, Jollibee Foods (JFC PM), MK Restaurants Group (M TB) and Agung Podomoro Land (APLN IJ).
- There was also a thematic insight looking at the rise of BNPL, a sector piece on APAC Luxury, and 14 stocks to own in Thailand from Dr Andrew Stotz, CFA.
- 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.
Monday Macro – Asset allocation update, the Nvidia show, stubborn rates, and Gold
- I’ve promised to keep updating my asset allocation tables every couple of months – and, on cue, here they are!
- They come in two guises. The first, below, is my overall take on the range of asset classes. There aren’t any changes this time. I’m still wary of equities, especially US equities, though, paradoxically, if I must own US equities, I would rather own the really big mega-cap tech names.
- I have a neutral position overall in equities, which implies a 60/40 equities/bonds balance, which hasn’t changed for a while – I wouldn’t be racing to put even more money to work in equities.
G5 Rates Watch: Mirror mirror on the wall, who’s the biggest interest rate cutter of them all?
- The central bank outlook looks surprisingly uniform as the market has homed in on June as the first timing for the cutting cycle from most major central banks (except the BoJ).
- Markets feel certain that the SNB and the ECB cuts in June (we agree), but Fed, RBA, BOC and BoE pricing is closing on 50/50 calls after a series of sticky inflation numbers from North America.
- The Fed is priced hawkishly relative to the 75bps dot plot for 2024, while the ECB is the most dovish central bank in forward pricing for 2024 but yet falls short of the 100bps hinted by the Greek member Stournaras last week.
Energy Cable #61: Commodities are breaking out #2!
- Last week we wrote about the price action in commodities and the week ended in some strong gains across the space.
- Our portfolio remains tilted strongly towards cyclical / inflationary bets such as materials and crude.
- For the whole portfolio click here: Steno Research Portfolio.
EA: HICP Converging Close to 2%
- In the final print, headline EA inflation was confirmed as slowing by 0.2pp to 2.6%. The 0.1pp of upside from the flash was genuine and even worse in services.
- January’s divergence in the underlying inflationary impulse was resolved with clustering nearer 2%, potentially consistent with a sustainable return to the inflation target.
- Lower energy costs may flatter the picture, while strong services inflation suggests wage growth remains too high. We still see the ECB’s first cut rolling to September.
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