1. Increase in Trading of Inverse ETFs in Korea Post Temporary Ban on Stocks Short Selling
- In this insight, we discuss the increase in trading of inverse ETFs in Korea post the temporary ban on stock short selling.
- From 6th to 14th November, individual investors made net purchases of 46 inverse ETFs worth 3.7 trillion won. Local institutions also made net purchases of 1.6 trillion won.
- On the other hand, foreigners net sold 5.8 trillion won worth of inverse ETFs.
2. Steno Signals #73 – An Abysmal Impulse for 2024
- Happy Sunday and welcome to our flagship editorial! As per usual we take you for a chart-heavy guided macro tour around major asset classes.
- Conclusions up front: – The credit impulse for 2024 looks abysmal– Rates volatility is likely going to rise sharply again– Equities still look (too) expensive on most parameters – JPY and CNY trends to continue worsening– Oil bulls have less to cheer about than Nat Gas bulls
- Momentum in 2023 saw a positive impulse from 1) lower input costs for production due to lower commodity and energy prices than in 2022 and 2) Easing financial conditions due to higher multiples and an easing momentum in rates.
3. EUR Watch: Damned if You Do Until You Are Damned if You Don’t
- EUR assets will suffer if the activity levels rebound too quickly due to a lack of elasticity in the commodity/energy supply in Europe.
- The EUR (and EUR assets) have suffered from a damned if you do, damned if you don’t a scenario in recent years as the scarcity of energy has taken center stage in the pricing of everything from the EUR, to EUR discount rates and EUR risk assets.
- Low volatility in energy prices allows energy-sensitive industrials to brighten up the outlook, which is initially good for the EUR, but the problem is just that there is a potential negative embedded feedback loop in that journey.
4. Positioning Watch – The Cocktail of Heavy Logs in Both Equities and Bonds
- Hello everyone, and welcome back to our weekly positioning watch, which due to delays in the CFTC data has been postponed to today (data was available yesterday evening).
- Almost as usual, markets find themselves in an odd position, as they await the next big event to move price action after Powell’s latest shocker a couple of weeks ago coupled with a severe sell-off in bonds in recent weeks.
- Today’s CPI report will likely not change a whole lot, but equity markets may continue their run upward if we are right in our prediction from yesterday (more on that here).
5. Energy Watch: Time to Buy Oil Again?
- Conclusions up front: – We agree with OPEC that the demand side seems to be doing decent; paper markets are net short oil again.
- Our model is approaching the buy zone despite the recent weakness seen in Oil.
- The big risk to our model is a supply increase from an exhausted Saudi Arabian one-man-army.
6. USD CPI Watch: The tricky path to 2% despite a soft report
- Another CPI report, another preparation piece, where we as always share our thoughts on the coming report, what to expect next, and how far the Fed is from their all-important mandate of 2% inflation.
- Main conclusions/notes upfront: 1) The path to 2% is tricky or almost impossible for the next 6 months.
- CPI needs to average 0% MoM, which does not seem feasible.
7. Five Bullish Risk Reversals You May Have Missed
- We’re old enough to remember how the market was panicked about a U.S. recession and a rising term premium in the Treasury market.
- Since then, a series of positive technical, macro and fundamental reversals have occurred to alleviate those concerns.
- These reversals of an extremely bearish psychology are bullish for risk assets.
8. UK CPI Watch: No Path to 2% Unless Inflation Deflates on a Monthly Basis
- Welcome to our short and chart-packed preview of UK inflation out tomorrow morning.
- Extreme base effects are at play in October due to energy price revisions in October 2022
- Housing and household services are about to turn negative year over year
9. US Inflation: First Take!
- Disinflation Lives! US consumer prices were unchanged in October. As a result, headline inflation dropped to 3.2%. Core inflation declined to 4.0%, the lowest level in two years.
- However, like last month, the underlying data look less upbeat. The 3-month annualized Core Services excluding Housing CPI has risen for four(!) consecutive months and reached 4.9% in October.
- The disinflation narrative remains intact, opening the door for the Fed to proactively lower interest rates. But it remains doubtful whether Powell & Co. are truly inclined to do so.
10. 5 Things We Watch: Trump, Electricity, CPI, Crude Oil, Fixed Income
- This week we start out by looking at Trump’s chances of getting reelected then move on to European electricity markets after that we’ll discuss yesterday’s CPI print before moving on to crude oil and then ending with fixed income positioning.
- President Biden’s approval ratings continue to sour as the country heads into potential Oil price headwinds and numerous unsolved foreign policy challenges.
- The Biden camp has launched a number of PR offensives during 2023 – most notably the coining of “Bidenomics”, but none have managed to close the gap, which has even accelerated since summertime.
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