This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Positioning Watch – AI (NVIDIA) is overshadowing everything else
- Hello everyone, and welcome back to our weekly positioning watch.
- Equities have been dragged higher over the past week after NVIDIA published yet another earnings surprise, and markets were funnily enough buying into other Tech equities on the back of NVIDIAs earnings – strengthening the argument as to why AI / NVIDIA has proven to be a major driver in the equity space.
- Every single time NVIDIA or other GPU companies’ earnings surprise positively, we are witnessing a subsequent boom in the amount of AI related news, which are rapidly increasing at the moment.
2. Korea Exchange Launches the Disclosure of Corporate Value Up Program on KIND System
- The Korea Exchange introduced the Corporate Value Up program on the KIND website. This is a voluntary system aimed at boosting the corporate value of listed Korean companies.
- Five key investment indicators for the 2,400+ listed Korean companies include PBR, PER, ROE, dividend payout, and dividend yield. The detailed data these indicators can be easily downloaded on excel.
- Corporate Value Up program is a marathon, not a sprint. In this race, the runners (Korean companies) also need some water (such as improvements to dividend/corporate income tax policy).
3. Ifo Watch – Is Germany rebounding against all odds?
- The nationwide figure was released today at 14.00 CET, and despite headline CPI surprising a tad dovish compared to consensus of 0.2% MoM, we had the right lean on overall price pressures with rates markets clearly viewing the report as hawkish news with the longer end of the yield curve selling off.
- In general regional figures showed a slight dovish surprise in headline terms, which is de facto the mandate of the ECB, but core prices and key components of the HICP basket were not a pleasant surprise for policymakers, which will likely weigh on the rhetoric from ECB in their June meeting.
- Notably we saw a slight hawkish surprise in the HICP figure compared to CPI, as the categories recreation and culture and restaurants and hotels weigh relatively more in HICP compared to CPI, while food prices weigh less.
4. How to Spot A Market Top
- We are not overly concerned about the capitulation of a prominent Wall Street bear on an intermediate-term basis.
- Stock prices are advancing on stable interest rates and continued economic and earnings growth.
- However, the stock market is showing some signs of bullishness exhaustion and it’s vulnerable to a short-term pullback.
5. Steno Signals #101 – Introducing the Washington DC Crypto Put!
- It’s been a break-through week for Crypto bros in many ways.
- First, the SEC made a massive u-turn and approved the spot ETH ETF and then Donald Trump fully endorsed the crypto space in his speech at the Libertarian Party forum over the weekend.
- Crypto has broken through to K-street and on top of the obvious positive side-effects, a BTC or an ETH is now becoming a politicized asset.
6. Portfolio Watch – Adjusting equity and commodity risks as the reflation story stalls
- Hello everyone, and welcome back to our weekly portfolio watch, where we shed light on the most important factors driving our Macro and Crypto portfolio over the past week.
- Macro Portfolio – Reflation bets have lost momentumWe have been banging the drum on a combination of slightly higher prices and a continuation of the rebound in manufacturing on a more global scale, placing bets in broad commodities and cyclical equities like Materials.
- The recent rally in BCOM has however been put to a halt over the past week, and it looks like we are in for a smaller correction in industrial metals, where clustering risks have turned more profound in copper and silver especially, as right about everyone has placed longs in the copper July contract.
7. FSC Head Remarks Short Selling Could Resume in 1Q 2025 and Launch of Financial Investment Income Tax
- On 27 May, Lee Bok-Hyun (Head of FSC) remarked that short selling of stocks in Korea could resume sometime in 1Q -4Q 2025.
- The centralized system to detect short selling of stocks in Korea on a live basis could be completed as early as 1Q 2025.
- The financial investment income tax is likely to be LAUNCHED in January 2025, which could negatively impact the local stock market.
8. China’s Housing Market: Heading Closer Towards an Eventual Bottom
- Beijing has announced a range of measures to stabilise China’s housing market, including dealing with unsold inventory through government purchases and boosting demand via lower mortgage downpayments.
- A return to the 2016-2020 boom in housing activity is unlikely, while an extended L-shaped period of healing appears to be a plausible baseline scenario.
- Improvement in homebuyers’ confidence will be crucial in achieving a market bottom, particularly lower concerns about the financial health of developers and non-delivery risks for new homes.
9. Litigation Funding as an Asset Class
- Litigation funding offers third-party financing for lawsuits in exchange for a share of the settlement or judgment.
- It has emerged as an attractive asset class due to high returns and diversification benefits.
- The market is driven by institutional involvement, technological advancements, and the rise of ESG litigation.
10. Energy Cable: A new supply side crisis brewing in Nat Gas space?
- The natural gas trade has started to move in recent weeks as the supply side looks constrained again.
- While the current situation doesn’t exactly mirror 2021, there are some similarities when we look more closely.
- Firstly, given the new supply outlook post-energy crisis, we believe there are no fundamental reasons for TTF natural gas to trade in its pre-crisis range.
