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. Big Fines on Foreign Investment Banks for Naked Short Selling in Korea – Implications
- The FSS mentioned it has uncovered 211 billion won of naked short sales by Credit Suisse and 8 other global banks of Korea-listed stocks between 2021 and 2023.
- The current ban on short selling stocks could be extended to at least 1H 2025.
- The Korean government’s imposing these large fines on the foreign brokers is sending a message to the foreign brokers to not engage in naked short selling.
2. Portfolio Watch – Time for liquidity bets
- Hello everyone, and welcome back to our weekly portfolio watch.
- A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn.
- The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run.
3. Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away
- In this insight, we discuss the use of Smartkarma Smartscore system to screen stocks in KOSPI 100.
- For top 50 companies (in KOSPI 100) in Smartscore rankings, their share prices were up on average 7% YTD. Bottom 50 companies had average share price decline of 7.8% YTD.
- In using the Smartkarma Smartscore system, it may be appropriate to describe it in terms of “WHERE THERE IS SMOKE, STAY AWAY.”
4. USD inflation preview: NO, inflation is not going away folks..
- The monthly inflation reports have proven to be the catalysts for the repricing of USD rates in recent months and we fear another 1-2 sigma event next week.
- Our calibrated nowcasts have settled on the hottest inflation forecast in town, which will likely prove to be a shocker now that USD duration bets are back in fashion.
- Our nowcasts hint at 0.45% MoM headline inflation and 0.38% MoM core inflation, which is well above consensus at 0.3% MoM for both (see full details in chart 7)The uniformity in the early consensus numbers is striking with right about every analyst on earth expecting a 0.3% MoM print, which has oddly turned into the mechanical monthly forecast every single month.
5. Steno Signals #98 – The recession panic is back right as liquidity is returning!
- Happy Sunday from a wet Copenhagen!Let me just admit to it upfront.
- Last week didn’t play out according to my macro thesis.
- The US cycle suddenly showed signs of weakness in surveys, which alleviated some of the pressures in USD rates and in USD versus Asian FX.
6. Macro Regime Indicator May – UP UP UP!
- Welcome to our monthly flagship asset allocation analysis – the “Macro Regime Indicator”.
- Coming into April, we wrote that “The macro environment is turning worse on both inflation -and liquidity metrics, while the growth variable remains positive (measured by the cyclical manufacturing momentum).
- This leaves us in a classic “QT” environment with less obvious “gung ho” risk taking through April compared to the full-on risk positive environment we have seen over the past 4-5 months as continuously flagged and traded via our allocation tools.”Without the growth parameter being a home-run in our models, we mostly got the April correction right and also capitalized decently well on the liquidity withdrawal and the hot inflation report.
7. New Release: Fund Positioning Chart Pack
- Q1 Performance Analysis for active Global EM funds. Country/Sector/Stock Positioning relative to benchmark for Global funds
- Spotlight on Indonesia activity among Asia Ex-Japan investors. Sector Dispersion in USA funds
- Extreme Stock Positioning in UK Small/Midcap funds. Ownership Trends in the Financials sector among MSCI China funds.
8. Energy Cable: Saudis are pushing hard for a new oil bull market
- Freight rates are rising again and it will likely impact USD inflation in Q2 already.
- The Saudis are trying to bring back the oil bulls via keeping the market tight. ‘
- Our models are close to entering a long oil bet again..
9. The Week That Was in ASEAN@Smartkarma – Astra International, Bukalapak, and Bank Negara Indonesia
- The past week saw insights on Bank Negara Indonesia (BBNI IJ), Bukalapak,Astra International,Siloam International Hospitals, Bumrungrad Hospital, Multi Bintang Indonesia, Sai Gon Cargo Service (SCS VN).
- There were also macro insights on Indonesia and Vietnam, and a sector insight on Indonesian banks, and a further insight on Sheng Siong (SSG SP).
- 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.
10. Tectonic Macro Shifts
”Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.”
With this sentence, the Fed announced the tapering of their QT program last week.
The Federal Reserve has been running QT (Quantitative Tightening) since mid-2022: this process is aimed at unwinding the multi-trillion Fed bond holdings accumulated during previous QE episodes
