In today’s briefing:
- Technically Speaking: The Early Bird Gets the Worm, China Retail Buys Hong Kong
- Steno Signals #94 – Trading the FAKE business cycle
- Energy Cable: Melt UP in commodities upcoming?
- HEW: Data Keeps Doves Locked up
- The Week at a Glance: US CPI to Surprise Hawkishly Paired with a Surprise Rate Cut?
- The Week That Was in ASEAN@Smartkarma – Ace Hardware’s Lifestyle, AKR Corporindo, and Sai Gon Cargo
- The Cocoa Saga Continues – Be Careful
- Monday Macro: Thoughts on the Next 15 Months
Technically Speaking: The Early Bird Gets the Worm, China Retail Buys Hong Kong
- Hong Kong market is at historically cheap valuations. So what’s new?
- Capitulation bottom in late January/early February dramatically reduced shorts and now long positioning starts.
- China retail buying is taking a cue from China’s government buying programs and SOE company directives.
Steno Signals #94 – Trading the FAKE business cycle
- Happy Sunday and welcome to our flagship editorial!The fake business cycle strikes again.
- In 2022/2023, the market was lured into the recession narrative by a weakening sentiment in various cyclical gauges such as the ISM Manufacturing.
- Classic recession models are designed to try and use the cyclical momentum to assess the health of the broader economy 6-12 months later but the problem is that the cyclical economy is increasingly irrelevant for the economy.
Energy Cable: Melt UP in commodities upcoming?
- Take aways: Booking profits in crude, staying long in broader metals. Crude predicting ISM to turn in 6-9 months time. Sluggish German IP ahead. Last week, we reached our profit level in crude oil, leading us to exit the trade successfully.
- Our outlook remains bullish on commodities, spurred by what we perceive as a reflation head fake.
- This optimism has prompted us to enter a long proxy-position in the Bloomberg Commodity Index (BCOM), as we observe the rally widening across the commodity complex (Chart 1).
HEW: Data Keeps Doves Locked up
- Data releases in the past two weeks have shown resilient trends, with output surveys and payrolls generally exceeding expectations, suggesting that rate cuts should remain on hold due to policy not being too tight.
- The upcoming week is expected to be relatively quiet in terms of data releases, but several countries including the Euro area, Canada, New Zealand, Thailand, Philippines, South Korea and Peru will be making monetary policy decisions.
- The European Central Bank (ECB) is expected to maintain its data dependence approach rather than committing to a rate cut in June.
The Week at a Glance: US CPI to Surprise Hawkishly Paired with a Surprise Rate Cut?
- Welcome to our new “The week at a glance” publication.
- We will briefly guide you on our nowcasts and expectations for key events in the week ahead.
- Short and sweet as you know us! This week we look at the US CPI report, ECB- and BoC meetings and Scandi inflation from Norway and Sweden.
The Week That Was in ASEAN@Smartkarma – Ace Hardware’s Lifestyle, AKR Corporindo, and Sai Gon Cargo
- The past week saw insight on Ace Hardware Indonesia (ACES IJ), AKR Corporindo (AKRA IJ)Sai Gon Cargo Service (SCS VN), Delta Djakarta (DLTA IJ), and Isetan Singapore (ISET SP).
- There was also a macro insight on Malaysia looking at religious tensions plus further insights on Best World International (BEST SP) and Thai Union Group (TU TB).
- 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 Cocoa Saga Continues – Be Careful
- Top Commodity Trader is Long Cocoa Pierre Andurand’s hedge fund bet on higher cocoa prices ahead of a massive surge last month, according to a Bloomberg article.
- Andurand said his firm expects cocoa-beans production globally to be down at least 18% on an annual basis, compared to most analysts’ expectations of 10-11%.
- “This means that we will finish the year with the lowest stocks-to-grinding ratio ever, and potentially run out of inventories late in the year,” he added.
Monday Macro: Thoughts on the Next 15 Months
- I want to start this Monday’s Macro with a very top-down discussion before digging into helpful market data.
- Here’s the thought – we’re entering a potentially dangerous, extended 12-to-15-month period for big macro debates.
- What matters for markets globally is what happens in the US, and what matters in the US is what the US Federal Reserve is thinking.
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