1. Steno Signals #74 – Did King USD Just Break?
- The sharp move in USDJPY and other USD pairs towards the end of last week has caught our attention and it arrives on the back of Powell letting go of the steering wheel on USD real rates.
- The weekly credit data from the US economy keeps weakening and we are en route for a credit contraction in the US during Q1/Q2 next year.
- Powell is probably right to let go of the tightness in USD real rates, but the question is whether he could be tempted to take back control in December in a final policy error?
2. KOSPI 200 and KOSDAQ 150 Rebalance Additions and Deletions Announced (December 2023)
- Korea Exchange announced KOSPI 200 rebalance additions and deletions today. There were 14 new additions and deletions (7 each).
- Some surprises in KOSPI 200 rebalance included addition of Seah Besteel and deletion of HDC Hyundai Development.
- There were a lot more additions and deletions in KOSDAQ 150 (34 total additions and deletions). Among the KOSDAQ 150 additions included Neowiz, JNTC, Lunit, and Jeio.
3. The Land of Swaying Yen: Will The BoJ Intervene? How Will Yen Respond?
- Japan faces a raft of economic headwinds which shows up in Yen’s underperformance. BoJ’s job is not one to be envied given near-term issues plus structural challenges.
- Since the start of Sep, the Yen has underperformed the most among currency majors declining to a 33-year low relative to the USD.
- A frail outlook warrants continued loose monetary policy. However, that creates other problems forcing BoJ intervention to support the Yen.
4. Charting Beyond the Euro Area Headlines
- Available data through October implies that prevailing GDP growth is possibly tracking weaker than the prior quarter
- A proxy of household saving propensity seems to be hovering around elevated levels partly because of greater uncertainty
- Notwithstanding the recent disinflationary prints, the most persistent category of HICP inflation appears to be sticky at roughly twice the pre-pandemic average level
5. Fed’s Policy Rate Benchmark Under Scrutiny: Goodbye to the Federal Funds Rate?
- The poor results from the US Treasury’s latest 30-year bond auction highlights limited private investor appetite. Pressure on the Treasury to persist with high levels of short-term borrowing has increased.
- Aggressive quantitative easing and interest on reserves have significantly lowered trading in the federal funds market by US banks, while Federal Home Loan Banks currently dominate lending.
- The Fed’s policy rate could shift to the Secured Overnight Funding Rate. Functionality could be impacted by shifting perceptions about the collateral quality of Treasury securities due to high borrowing.
6. Asia Geopolitics: Following Biden-Xi Meeting, Asia Is a Safer Place For Now
- The Biden-Xi meeting signals a positive phase for lower geopolitical risks in the Asia Pacific. Beijing and Washington are prioritising handling its domestic challenges over ratcheting up competitive activity.
- Taiwan’s presidential polls also motivate China’s “wait-and-see” approach as the Sinoskeptic DPP faces headwinds in maintaining its grip on power.
- Japan’s more nuanced strategy has gained it traction with Asian nations. It is why it is emerging as a real winner in the geo-political game in Asia.
7. How Far Can This Rally Run?
- The U.S. equity rally off the bottom in late October is characterized by strong price momentum and shows a high degree of upside potential.
- Point and figure charting signifies measured objectives indicating percentage gains in the high teens or low 20s.
- We also offer a series of sell signal triggers that indicate possible inflection points in risk/reward potential.
8. 5 things we watch: IFO, US rates, Earnings revisions, USD & Gasoline
- We start off this week’s 5 Things We Watch by having a look at the Ifo survey coming up this Friday in the midst of the Schwarze Null ruling.
- This is followed by talking about US rates and Nvidia earnings and we then move on to talking about the USD while lastly finishing off with gasoline demand.
- This week we are watching out for the following 5 topics within Global macro: IFO, US Rates, Earnings revisions, The USD, Gasoline.
9. Energy Cable #47: Price Always Leads Narrative
- Happy Monday to everybody from a cold and rainy Copenhagen.
- We are now long crude oil again as we find the narrative too bearish given the fundamentals.
- Before we start to talk about our crude oil case, we would like to highlight the volatility in post covid energy markets and how these have benefitted sellers in the futures markets more than buyers keeping storage costs constant.
10. Taiwan: Underowned, Yet Gaining on Peers
- The percentage of Global funds invested in Taiwan hits an all-time high of 57.8%.
- Taiwan has been a key beneficiary of manager rotation alongside India, Argentina and South Korea over the last 6-months.
- TSMC is the dominant stock holding, with 49.8% of funds holding a position and has hit record ownership among Global funds.
Weekly Top Ten Macro and Cross Asset Strategy
Receive this weekly newsletter keeping 45k+ investors in the loop
