Daily Brief Macro: The US Dollar and the Only Chart that Matters! and more

• The US Net International Investment Position (NIIP) as a debtor country has ballooned since the GFC, attracting global demand for US assets, which feeds demand for the dollar.
• Historically high dollar demand has allowed the US to enjoy the benefits of low interest rates and created a historic bull market in US equities.
• As the US continues to use its currency for geopolitical purposes, countries have begun to question dollar hegemony.  The US fights against any country that tries to weaken the dollar

• On Dec. 4, Michel Barnier became only the second Prime Minister in French history to be ousted by a no-confidence vote.

• Precisely one week later, the other major EU economy, Germany, submitted a motion of no-confidence of its own to be held on Dec. 16. What the heck is going on in Europe?!

• The political chaos in France and Germany has the same root cause: a sluggish economy and insurmountable debt levels.

• The biggest takeaway from President Yoon’s address to the nation today was his focus on election integrity and election fraud.
• He was basically implying that the biggest reason for declaring a martial law was due to severe concerns about security breach issues at the National Election Commission.
• One of the clear beneficiaries of President Yoon’s speech today will be the cybersecurity sector.

• Relending / Share cancellation key to ensuring PBOC’s relending tool stabilizes stock market, insiders say
• Chips /In Depth: Chasing chip talent to keep the boom alive
• Preview /Commentary: CEWC will endorse stronger policy support to counter headwinds

• The ECB matched our expectations by cutting its deposit rate by 25bp to 3%. Dovish hopes for a 50bp punch were disappointed, albeit mostly faded in recent weeks.
• Removing the reference to sufficiently restrictive policy was reasonable before reaching neutral, with the appropriate determination language being similar.
• 25bp cuts in January and March would take rates to the upper end of last year’s staff estimates for neutral, which may have risen, justifying not much easing beyond that.

• First Quantum Minerals (FM CN) is a play on African mining assets for copper/zinc with an optionality of resumption of the Cobre Panama mine that could double the share price. 
• We should not assign a high probability to the asset’s resumption and view it as a long-duration, very out-of-the-money call option.
• The company trades at an EV-EBITDA of 9.8x, which is more expensive than some of its peers. However, Cobre Panama’s optionality makes it attractive.

• India’s ethanol policy is driving increasing corn demand both locally and for imports
• India’s corn production is estimated to be around 38 million for the next year
• India primarily imports non-GMO corn from Myanmar and Ukraine for their ethanol industry, facing challenges in meeting the demand due to feedstock tightness and high import duties

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• The SNB cut its policy rate by 50 basis points to 0.5%, surprising consensus expectations for a lesser reduction because of lower-than-expected inflation and subdued economic conditions.
• Inflation projections remain well within the price stability range, with medium-term forecasts reflecting subdued second-round effects, though heightened global and domestic uncertainties may influence future rate decisions.
• The SNB is flexibly prepared to keep easing if inflationary pressures weaken further while maintaining readiness to intervene in foreign exchange markets to manage franc appreciation.