Daily Brief Macro: Positioning Watch – The US Exceptionalism Story Is Back in Play! and more

• Main point: The current positioning picture is becoming increasingly uniform across asset classes: higher US growth, higher USD rates versus EUR/GBP rates, higher USD vs. peers, and higher US equity returns compared to Europe/Asia.
• The risk/reward of taking the opposite bet is starting to look appetizing.

• We have been looking at the explosive increase in US equity positioning for a while, as multiple indicators show that equities are reaching stretched points positioning-wise — CFTC positioning among asset managers skyrocketing, our own data showing increased positioning in US vs. the rest of the world, and surveys starting to indicate that everyone is expecting equities to crawl higher.

• US election outcome and policy proposals causing challenges for emerging markets in 2025
• Expectations for US exceptionalism and potential insularity affecting global trade and growth
• Potential impacts on inflation, monetary policy, fiscal dynamics, and investment environment for EM fixed income in 2025, with short-term opportunities amidst uncertainties.

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• DXY strength through 1Q25 predicted with positive volatility
• Dollar correlations expected to remain firm, with potential pockets of soft cross correlations
• Systematic FX adoptions models highlight opportunities in FX carry via options, short volume strategy, volume reversal model, and volcurve model for 2025

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

• As part of our series of initiations on copper stocks, Lundin Mining (LUN CN) is another play with a cheaper multiple than Southern Copper (SCCO US) but an inferior ROCE.
• With its most recent acquisition of the Jose Maria copper project in a 50:50 JV with BHP, the mid-size copper-producing company is on its way to growth after 2027.
• Trading at 17x FY25e and 5.0x EV-EBITDA, this is another company in our stable worth exploring. 

• Euro area inflation increased by another 0.3pp in November to 2.3% y-o-y. Headline surprises were small and balanced, but the resilience doesn’t fit dovish pricing.
• Core and services price inflation rates were little changed at above-target levels. They will likely rise again in December and stay too high throughout 2025.
• The ECB believes policy is tight and demand is too weak, allowing it to cut again in December. Gradualism is required to avoid over-easing amid ongoing data resilience.

• Inventory lowest in 13th months
• Arbitrage widens for African and Indonesian rubber
• Frontloading resulted in spike in exports

• Euro area inflation and activity data indicate a need for careful ECB easing. The wide pricing of monetary policy divergence is excessively depressing EURUSD. Schnable’s guidance aligns with contrarian pushback.
• The upcoming week’s calendar is relatively quiet before the usual pre-Christmas rush.
• US nonfarm payrolls are the key highlight, with an expected soft rebound that may lead the Fed to cut by 25bp in December.

• Agriculture / In Depth: Warming climate threatens Chinese farmers’ livelihoods After the Mid-Autumn Festival celebrations ended in Huma, a county at the northern reaches of Northeast China’s Heilongjiang province, farmer Xu Xiujian began harvesting his soybean crop.
• He had planted earlier than usual this year, in line with the spring rains, which had come early in mid-April.
• Xu’s case, while seemingly unremarkable on its own, reflects a much larger shift happening in China’s climate and the impact it is having on the country’s agricultural industry.