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. Global Commodities: The art of keeping up with yesterday and avoiding tomorrow
- Output hikes announced in fourth quarter
- Various commodities including copper, natural gas, and grain oilseeds have experienced sharp declines
- Oil prices influenced by economic indicators, strong underlying demand, and declining global visible oil inventories
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2. Korea Exchange Plans to List Additional 39 Stock Futures and 6 Stock Options
- On 12 September, the Korea Exchange announced that it plans to list additional 39 stock futures (27 KOSPI and 12 KOSDAQ) and 6 stock options on 4 November.
- With these listings, the stock options will also be available for most of the top stocks in the stock market, including Samsung Biologics and Samsung Life Insurance.
- Given that shorting of stocks is still essentially banned in Korea, the use of stock futures and options are likely to be increasingly used by investors to improve risk management.
3. Don’t Shoot the Piano Player
- The undulating prospect of a 25bps or 50bps cut at the September Fed meeting coupled with a foggy future rate path is weighing on market sentiment
- The state of financial market conditions–broadly and narrowly defined–may abruptly influence the outcome of upcoming Fed meeting/s, or vice versa
- My weekly estimate of market leverage in the US hedge fund sector in total, which remains elevated at this time, warrants more attention
4. Positioning Watch: Markets Are Positioned for Softness (in Rates)
- Hello everyone, and welcome back to our weekly positioning watch.
- A lot is happening in markets ahead of what could be a significant turning point in sentiment, with the August CPI report landing in our inboxes at 14:30 CPH time.
- The debate between Harris and Trump seems to have set the tone in markets leading up to the event, with the USD selling off as markets agree that Trump is likely the more bullish of the two on USD.
5. EM Watch: The Non-Feasible Return of the EM Carry Case Amidst a Global Slowdown
- Welcome to our weekly EM Watch, where we examine Emerging Markets (with a particular focus on China) through the lens of Western investors.
- It’s been a rough month for anything linked to China, including industrially sensitive commodities.
- According to one of the most reliable live gauges of Chinese energy demand—the Singapore Gasoil-Dubai Crude Crack Swap—we are still on a slippery slope toward weaker demand from China.
6. Steno Signals #116 – Here comes the dash for USD cash!
- Happy Sunday, folks—if you can stay upbeat in the current market environment, that is.
- We have had September 100% spot on, and the developments late on Friday support our notion that a dash for USD cash will arrive through the month.
- The USD started rebounding alongside the sell-off in commodities and risk assets, following Waller’s appearance during the FOMC Q&A.
7. EM Watch: China was WEAKENING even before the decline in Western demand
- Since July, US macroeconomic momentum has weakened substantially.
- We are now back on a negative trajectory for cyclical growth, with signs of fading momentum in some service sectors, including leisure and hospitality.
- In the spring, we observed a significant build-up of orders relative to inventories as manufacturers sought to bypass the latent pressure from trade tariffs by front-loading activity.
8. China Equities: More of the Same
- We are strategically underweight China Equities in global and EM equity baskets, due to the structural slowing of growth and low EPS prospects.
- Event risk around the U.S. presidential election will also start to be considered.
- Further targeted policies from China authorities could cause intermittent trading driven short-covering, but aggressive game changing policy would be required to sustain a rally.
9. How to Trade the Seasonal Weakness
- The stock market is due for a period of sloppiness and corrective action in the next two months
- However, macro and technical indicators do not point to a major market top.
- We have outlined a number of bullish tripwires for traders to take advantage of a pending sale on stock prices and buy the dip.
10. US: Harris Wins the Presidential Debate Hands Down, but Impact on Race Still Mild
- In possibly the only Trump-Harris presidential debate, VP Kamala Harris clearly won, according to polls/focus groups conducted by FoxNews and CNN, as well as the vast majority of commentators.
- Harris largely remained focused on centrist positions, and was able to bait Trump into angry outbursts and digressions away from his key talking points. The economy remained her Achilles Heel.
- Weakness on the economy, and the failure to highlight her “freedom” theme, meant that Harris didn’t score a slam dunk. The race is a dead heat, Harris a nose ahead.
