Daily Brief Macro: Steno Signals #108 – A messianic Donald and more

• Happy Sunday from Copenhagen after the atrocious assassination attempt in Pennsylvania late Saturday.
• Trump was apparently struck by some fragments but managed to raise his fist and greet his supporters in a strong show of defiance as he was escorted off the stage.
• This incident will undoubtedly dominate the campaign in the coming days and weeks, transforming his appearance at the upcoming Republican Convention into a near-messianic event.

• Morning from Europe! Remember that we release our “Week at a glance” publication instead of the “Something for your Espresso” every Monday before lunch-time.
• Our aim is to digest the release calendar in an actionable way and assess the risk/reward around the macro themes in the context of the economic release calendar.
• This week, we will focus on the US consumer (Retail Sales), UK inflation (CPI) and the EUR rates (ECB meeting).

• The past week saw Insights on Delfi Ltd (DELFI SP), Second Chance Properties (SCE SP), Jollibee Foods (JFC PM, and Vietcombank.    
• There were also macro insights on Indonesia from both Prasenjit K. Basu and Manu Bhaskaran on Indonesia together with commentary on Malaysia macro and Lippo Karawaci‘s Fitch Downgrade.
• 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.

• The Opec secretariat has made a bullish July forecast for oil demand, which deviates from the industry’s near-consensus.
• The industry’s consensus is more aligned with the International Energy Agency’s assessment.
• Given this, the recent increase in the price of Brent crude should be approached with caution.

• European financial markets have been remarkably calm in the wake of political upheaval, particularly in France. Continued weak potential GDP growth lays the foundations for capital migration to the US.
• US political turbulence has not unnerved financial markets, despite inflationary implications of President Trump’s agenda. High retail investor participation in the rally in US equities is sending a warning signal.
• US equities are priced to perfection in absolute valuation and relative to inflation. Secular valuations appear rich relative to history, suggesting a period of consolidation would be a welcome development. 

• Due 16 July, US June retail sale is expected to see a weak end to Q2 from US retail sales, with a 0.6% decline, and a 0.3% decline ex autos.
• Industry data suggests a significant dip in auto sales though trend in autos continues to have no clear direction. Gasoline prices look set to restrain sales values.
• June retail sales seems set to convey an end to economic prosperity and will be sending signal of an upcoming economic down turn.

• Takeaways: Copper diverging from its fundamentals – we continue to hold a bearish outlook as prices and positioning appear disconnected from macro variables
• Inventories in the US are building
• Shipping lanes are easing, and our Trump basket gives you the green light to continue in crude et. al. 

• US oil and gas rig count fell by 1 to 584 for the week ending 12/Jul, after rising by 4 the previous week. 
• US oil rig count fell by 1 to 478, indicating 59 fewer oil rigs as compared to the same week last year. It is at its lowest since December 2021.
• Despite a decline in the US oil rig count, US crude oil production matched the all-time high production of 13.3m bpd for the week ending 5/Jul, according to the EIA.

• BHP and Lundin rumored to be considering a joint bid for Filo Mining in the Vicuna district, an emerging copper super district in Chile and Argentina.
• Lundin Mining owns the most advanced project, Jose Maria, in the region which is permitted and fid ready.
• Argentina now has a supportive business regime, making it an optimal time for development in the region. Lundin Group retains a 33% stake in Filo while BHP owns a 6% stake.

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• Even if it is premature to proclaim the death of manufacturing-led growth, the strategy that drove the success of the East Asian miracles may no longer be easily replicated. 
• The services sector has several advantages such as a large degree of labour absorption and continued momentum in international trade. But there are other limitations. 
• There is little need to place all of a country’s eggs in a single industry’s basket; the menu of policies that are beneficial to both is not a short one.