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. EA Resilience Is Perfunctory Problem
- Crashing US surveys in 2025 have looked idiosyncratic, as spurious exaggeration of exceptionalism ends. The ESI corroborates the PMI’s resilience in the euro area.
- Price expectations have been trending further above long-run averages without a one-off shock, suggesting European policy is too loose for this stage of the economic cycle.
- EA unemployment remains lower than a year ago, inconsistent with tight monetary conditions. We still see the ECB’s last cut in June, much sooner than the market prices.
2. Warren Buffett’s Increased Stakes in Japanese Trading Houses – Impact on Korean Trading Companies
- In this insight, we discuss how Buffett’s increased stakes in Japanese trading companies could positively impact Korean trading companies.
- In addition, we look back at the past five years and compare how the major Korean trading companies have performed relative to their Japanese counterparts.
- In Korea, we believe that the following 5 major Korean trading companies (POSCO International, Hanwha Corp, LX International, Samsung Corp, and Hyundai Corp) could continue to outperform the market.
3. Steno Signals #186 – The year of the weak USD is upon us
- I wanted to get the German election results before releasing my weekly editorial, and as far as I can judge, we are talking about a middle-of-the-road outcome, which should be seen as a net positive for European assets for now.
- CDU (Conservatives) and SPD (Social Democrats) will be able to form a GroKo (Grand Coalition) with 328 mandates, which is a coalition that could likely find some common ground around spending more and removing the debt brake, at least temporarily.
- A permanent removal of the debt brake will require the backing of an additional party.
4. What Is NPS Buying and Selling in the Korean Stock Market in 2025 So Far?
- KOSPI and KOSDAQ are up 10.2% and 14%, respectively YTD, outperforming S&P 500 is up 2.2% in the same period. so far.
- One of the big drivers of higher share prices of Korean stock market this year has been the strong net buying by the NPS.
- Some of the major stocks that have been net purchased by the NPS so far this year include Samsung Electronics, SK Hynix, LG Energy Solution, Hyundai E&C, and Samsung Biologics.
5. Asian Equities: Asia’s Robust Dividend Yielders
- In today’s uncertain scenario, cash is king. Moreover, the high US treasury yields, which had rendered a dividend yield strategy relatively unattractive, are beginning to decline again.
- In addition to considering today’s dividend yields, we think it’s also imperative to take into account companies’ future earnings potential to assess future dividend stability.
- Screening companies with at least 6% forward dividend yield and 5% forecast EPS CAGR over next 2 years, we arrive at our basket of 23 dividend yielders, 13 from HK/China.
6. Over the Horizon: A Review of Thematic Trends
- Our most prominent theme over the last year has been to BUY HK/China markets. We are still very bullish on these SECULAR BULL markets.
- We have been Bullish on gold and discussed the asymmetry of its price movements given the global tightening starting in 2021/22. Gold will continues to benefit from negative real rates.
- We have been Bearish on Japan since publishing Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend on April 2, 2024. We also remain bearish on India.
7. The Other Risk to World Trade: China’s Mercantilism
- While America’s restrictions threaten the global trading order, China’s outdated, export-reliant model is culpable, too. In exporting its overcapacity, China behaves like a small, open economy, but it is not.
- Given its size, China’s export surges produce outsized effects, triggering protectionist responses. China’s friends in the Global South are scrambling to defend their domestic industries, and not just the West.
- Until China finds a way to recycle its surpluses into investments in other countries, trading partners will suffer the downsides of import competition without any offsets, thus worsening trade tensions.
8. The Week Ahead – Risk Sentiment Intact, For Now
- Peace hopes are higher and tariff fears have subsided for now
- China hosting summit with tech entrepreneurs could boost economy
- Markets becoming complacent over Trump’s policies, uncertainty remains on future developments
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
9. Here Are My Top Macro Ideas
- The first 5 weeks of the year have seen international equities outperforming the S&P 500: European and Chinese stocks have rallied harder than US stock indexes, and certain emerging markets like Chile or Poland are doing even better.
- My main thesis for the first half of the year remains to be positioned with an ‘’International Risk Parity’’ portfolio: long US bonds, and long stocks around the world.
The chart above shows that the US growth exceptionalism might be over. The Aggregate Income Growth series is a great proxy for nominal growth in real time: it includes private sector job creation, workweek hours, and wage growth – effectively reflecting the growth rate of nominal income US workers are bringing home.
10. The Case for Europe
- Europe is outperforming the US in terms of stock market performance this year
- Valuations in the US are high, while Europe is trading at a historic discount
- Expectations for US companies are high, while Europe’s expectations are low, leading to potential momentum shifts between the two regions
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
