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. A Stock Picker’s Guide to 2025
- Equity markets have performed well in the past two years, with 2024 being another strong year
- Looking ahead to 2025, we explore the impact of inflation, interest rates, and artificial intelligence on the market
- BlackRock’s global CIO discusses the rarity of three years of 20%+ returns, opportunities in AI, and challenges facing investors in the new year.
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2. Lots More on the Global Selloff in Government Bonds
- Term premium is a key concept in measuring bond yields and interest rates
- The global economy is experiencing fiscal pressures and political noise, impacting bond markets
- Central bank asset purchases and sell-offs, along with regulatory reforms, are influencing the bond market and interest rates
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3. China Watch – The Final Piece in the Inflation Puzzle?
- Everything in markets seems to revolve around inflation, inflation expectations, and rising bond yields.
- This makes it the perfect time to revisit our outlook on inflation.
- Inflation is a critical topic because the Fed has become sensitive to prices again, as indicated in both the meeting minutes and the December economic projections.
4. President Yoon’s Approval Ratings Surges to 47%, Gets Arrested, and Declares Rampant Election Fraud
- It has been another wild day in South Korea as Yoon Suk-Yeol became the first sitting South Korean President to be arrested.
- A recent local poll released on 14 January showed that President Yoon’s approval rating surged to 46.6%.
- President Yoon released a letter to the Korean people. The heart of the letter is about the rampant election fraud in Korea and the desperate need to restore election integrity.
5. Steno Signals #180 – Some men just want to see the world burn (but not Trump)
- Happy Sunday, and welcome to my weekly editorial on all things Macro after a tumultuous week! I must admit, I’ve been surprised by the resilience of inflation and the growth momentum in the U.S. economy.
- Both indicators continue to deliver results above median/trend values, suggesting that the U.S. economy is growing in both nominal and real terms at levels typically exceeding historical norms.
- This is precisely why we’ve developed incredibly robust nowcasting models.
6. Five Themes for Asia in 2025 : Bracing for Trump 2.0
- We identify five key themes that will shape Asia’s economic outlook this year. The first theme is Trump 2.0, global tariffs and supply chain diversification.
- Trump 2.0 will be a drag on Asia’s growth, even with targeted tariffs. Outside of China, tariff risks are highest for Vietnam, Japan and South Korea.
- Lower inflation will allow central banks to shift their focus to growth and trigger a deeper rate cut cycle, provided FX weakness is within reasonable limits.
7. Headwinds, Tailwinds in 2025
- This year overweight US dollar, underweight European, Malaysian, Korean and Indonesian sovereign bonds. In 2024 68.9% of our 43 investment recommendation and forecasts made money.
- The key headwinds are dollar strength , Trump’s trade war, the slower monetary policy easing, China, Europe and US valuations.
- Tailwinds include, the strength of the US economy, Trump’s pro-business domestic policy agenda, tame energy prices, India, conflict resolutions and a lighter global election cycle.
8. The Launch of the KRX TMI (Total Market Index) – Korea’s TOPIX Index
- Korea Exchange disclosed the new KRX TMI (Total Market Index) on 13 January. This is a market index that consists of eligible stocks in the entire KOSPI and KOSDAQ markets.
- The KRX TMI index is similar to Japan’s TOPIX index. The KRX TMI index is calculated by adopting a free-float market capitalization weighting method.
- We provide a list of 20 companies in KOSDAQ that could benefit from the launch of the KRX TMI index.
9. 69.8% Of Our 2024 Calls Made Money
- We are optimistic about the outlook for global growth and markets in 2025, despite anticipating turbulence driven by Trump’s policies. Stay overweight US markets, US dollar and Bitcoin. Underweight China.
- Our differentiated business cycle framework investing worked. Of the 43 calls made, on global markets and eleven countries/regions, 69.8% were accurate+ in 2024.
- We predicted the US soft landing , Trump’s re-election, a strong dollar, the US & bitcoin rallies, the European slowdown and TAIX outperformance.
10. Maha Kumbh 2025- How Big Is It for Economy?
- The Mahakumbh Mela 2025, hailed as the largest gathering of the Hindu faith, is set to host an estimated 400-450 million devotees from India and around the world.
- The event’s estimated budget is INR 6,382 crore (USD 800 Mn) for event management and infrastructure development, 72% higher than the budget allocated in 2019 Kumbh.
- Kumbh Mela could generate financial transactions totaling INR 2–2.5 lakh crore (USD 25–30 billion) over 45 days. This accounts for an estimated 0.5–0.8% of the country’s GDP.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Global Rates: European rates market update
- Market conditions have shifted with increased rates against reduced liquidity, leading to recent sell-offs.
- Despite market noise and uncertainty, the outlook remains constructive on intra-EMU spreads and Euro Area government bond supply for 2025.
- The UK market has seen significant sell-offs in 10-year gilt yields, influenced by fiscal policies and US market dynamics, with expectations of further easing by the Bank of England.
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2. Steno Signals #179: A handful of trades for 2025
- Happy Sunday, and welcome to our weekly editorial on all things macro markets.
- In full transparency, we’ve been a few weeks early on our bet for lower bond yields, which slightly wrongfooted our risk asset view heading into Christmas—after being on a remarkable roll for several months.
- We remain puzzled by the resilience of bond yields (and the USD) despite softer economic surprises and flattening inflation expectations.
3. The Week Ahead – Happy New Year?
- Central banks in the US, Europe, and Asia have made policy rate announcements, with the Fed in the US easing rates and the ECB expected to continue cutting rates.
- The US economy is expected to see slowing growth momentum in the coming year, with concerns about policy risks from the incoming Trump administration.
- In Asia, Japan is forecasted to experience above potential growth with rate hikes, while China continues to struggle with low inflation and credit growth.
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4. Trump’s Messy Governing Challenges
- We reiterate our belief that in the absence of a recession the S&P 500 should register low single-digit gains for 2025.
- However, the emergence of policy implementation risk by the incoming Trump Administration makes us believe the market will experience several volatility shocks during the year.
- Be prepared for a choppy but mildly positive year for stock prices in 2025.
5. Another Way to Skin a Cat?
- Although data interpolation has a long history, the various linear and nonlinear techniques have pros and cons
- I introduce a hybrid technique to interpolate monthly US inflation-adjusted GDP going back to 1947
- My monthly GDP nowcast through November seems consistent with some growth moderation on a three-month and six-month basis
6. CrossASEAN Indonesia Strategy – Parting Clouds
- The Indonesian stock market was down 2% over the last year despite a flurry of inflows in the summer but this year looks interesting with a new government in place.
- GDP growth forecasts are more optimistic for 2025 and government stimulus should help to drive higher consumption, with FDI driven by more value-added investments in the EV-related projects.
- Increasing digitalisation of the economy and greater use of AI will drive profitability and data centre growth. Interest rates are expected to fall -50-100bps which should also be supportive.
7. CrossASEAN Ground Zero – Let the Quest Begin
- We look at the major themes and challenges for listed tech stocks in Southeast Asia including Sea Ltd, GoTo Gojek Tokopedia, Grab Holdings, Global Digital Niaga (BELI), and Bukalapak.
- Profitability remains the key quest all in 2025, with only Sea Ltd achieving this in a true and sustainable manner, with Grab moving closer ahead of GoTo, BELI, and BUKA.
- Increasing take rates through seizing more of the value chain in logistics and advertising is another trend, with Fintech a core focus in shifting the needle on profitability and cross-selling
8. Korea Value Up Index: Winners and Losers in 2025 YTD
- In this insight, we discuss the details of the share price performances of the Korea Value Up Index (especially among the index constituents) this year.
- It appears that many traders are buying beaten up, higher beta stocks in Korea that were excessively pushed to much lower levels last year.
- Among the top 20 best performing stocks in the Korea Value Up Index this year, 15 of them (75% of the top 20 stocks) are listed on KOSDAQ.
9. 5 Major Potential Policy Changes in the Korean Stock Market Pushed by the FSC in 2025
- On 8 January, the Financial Services Commission (FSC) announced 5 major potential policy changes in the Korean stocks market which could get implemented in 2025.
- The mandatory lock-up periods for the institutional investors could result in the institutional investors that are active in Korean IPOs to reassess their trading strategies on newly offered issues.
- Choi Sang-Mok was the most important government official spearheading the numerous financial reforms in Korea. Now that he is the acting President, he is likely to accelerate these financial reforms.
10. 2025 High Conviction Idea: The Case for a Rotation Out of India into HK/China Part 2
- Risk reward favours this shift in allocation between these markets
- Weakness in HK/China markets in Q1 as President Trump takes office will provide an opportunity
- China continues to incrementally promote consumption as the new lever of growth
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. The 10 Most Interesting Things We Learned on Odd Lots in 2024
- Private credit is transforming the world of debt, creating concerns for investors and the broader economy
- Chicken wing prices are volatile due to the poultry industry focusing on breast meat demand, making wings a fall-off product
- Companies like Elf Bar evade FDA regulation by flooding the market with products and rebranding under different names
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2. HONG KONG ALPHA PORTFOLIO (December 2024)
- Hong Kong Alpha Portfolio returned 5.23% in December and outperformed the benchmark by 5.92%. The portfolio has outperformed Hong Kong indexes by 10.36% to 14.38% since its inception on 10/01/24.
- About 80% of the portfolio’s excess returns have been from alpha generation. The portfolio has no exposure to Real Estate, Healthcare, Materials, or Energy at this time.
- At month end, we sold ZhongAn Online P&C Insurance C (6060 HK) , China Longyuan Power (916 HK) , CRRC Corp Ltd H (1766 HK), and Weibo (9898 HK) .
3. 2025 Regime Update: How Does the Opening Scene of 2025 Look?
- Hello everyone—we hope you enjoyed the holiday season and had a wonderful Christmas.
- The festive season has been relatively quiet macro-wise, with only a few comments from the PBoC and BoJ.
- However, markets seem unwilling to move until there is news on the USD front, which has been driving almost all assets since December.
4. Steno Signals #178 – Brace yourselves, liquidity is coming!
- Happy New Year, friends, and welcome back to the Steno Signals editorials! My apologies for the silence over the past few days—I celebrated New Year’s Eve (and my 35th birthday) battling a nasty pneumonia, which has taken some time to recover from.
- Thankfully, I am finally better and wanted to share my 2025 thoughts on liquidity with you, as I find myself disagreeing quite a bit with the current semi-bearish consensus.
- We experienced an almost equally “tight” year-end as the tight quarter-end back in September.
5. Surging Share Buybacks in Korea in 2024
- Capitalizing on the lower share prices combined with the government’s pressure for Corporate Value up improvements, the share buybacks surged in Korea in 2024.
- As of 27 December 2024, the total treasury shares planned acquisition amount by Korean companies increased by 215% YoY to 11.83 trillion won in 2024.
- There have been some mixed share price performances among the companies announcing meaningful share buyback/cancellation announcements this year.
6. Contrarian Bargains Among Santa’s Discards
- The stock market is likely to advance during the Santa Claus rally window, which began on December 24 and ends January 3.
- But the rally is attributed to an oversold bounce and marked by narrow leadership. Either the rebound fizzles in January or broadens into lagging issues.
- We identified selected contrarian value opportunities for bulls among Santa’s discards for potential outperformance into January and beyond.
7. Asia Ex-Japan Funds: Stock Positioning Update
- Top holdings remain unchanged: TSMC, Samsung Electronics, and Tencent are almost universally owned. TSMC hits record weights but active funds sell into strength as benchmark weights surpass 10%
- Hon Hai, Hyundai Motor, and Singtel lead recoveries from prolonged declines. Baidu Inc. and Kweichow Moutai see sharp ownership drops.
- Momentum leaders include Accton Technology, CATL, and KE Holdings. By contrast, Axis Bank, PDD, and Reliance face stalling ownership.
8. Estimating Downside Risk
- The U.S. equity is highly vulnerable because of overvaluation and excessive growth expectations, but valuation is not very predictive of returns over a one-year time horizon.
- We estimate downside risk on the S&P 500 in the 20–30% range in the event of a major bear market.
- Despite our concerns, we see no immediate bearish triggers for investors to adopt defensive positioning in their portfolios.
9. Asia Ex-Japan Funds: Country Positioning Update
- China dominates allocations, India and Taiwan are equal 2nd, while South Korea lags a further 7% behind after seeing a big drop in exposure.
- Indonesia leads the ASEAN region, emerging as the top overweight country as a record 79.8% of funds are ahead of the benchmark.
- India sees 62% underweight the benchmark. Vietnam hits new highs in average fund weight (0.97%) and fund participation (34%).
10. End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2025
- We discuss the end of the mandatory lock-up periods for 57 stocks in Korea in January 2025, among which four are in KOSPI and 53 are in KOSDAQ.
- The ban on short selling of Korean stocks which is still in place is likely to be lifted on 31 March 2025.
- Some of the companies mentioned in this insight which highlights the end of the major lockup periods could help to narrow down the list of candidates for potential shorting.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. EM Fixed Income: ‘Tis the Season for Volatility
- The discussion focused on the importance of politics over economics for emerging markets in 2025, with a specific emphasis on fiscal trajectories.
- Lessons learned include the need to expand imagination of possible scenarios, the impact of specific country situations on returns, and the caution against following consensus trades.
- Market outlook for early 2025 is expected to be choppy and driven by policy announcements, with a key event being the US Inauguration Day on January 20th leading to potential market adjustments.
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2. San Francisco Fed President Mary Daly Explains the ‘Hawkish Cut’
- The Federal Reserve recently cut interest rates by 25 basis points, unveiling new year expectations for inflation and economic growth.
- San Francisco Fed President Mary Daly discusses the current state of the labor market, the impact of AI on productivity, and the importance of data and evidence in making policy decisions.
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3. Infrastructure mini-series Ep 2: The Low-Carbon Transition: A $100 Trillion Infrastructure Opport…
- Global transition to low carbon economy discussed in the second episode of the Infrastructure miniseries
- Key areas of investment include electrification, renewable power plants, electric vehicle charging stations, and clean fuels
- Importance of public and private investment in infrastructure to enable energy transition and decarbonization, with a focus on long-term growth opportunities like data centers and mining infrastructure
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4. NPS: Portfolio Rebalance Could Lead to Buying At Least 25 Trillion Won in Korean Stocks in 2025
- In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock market.
- At the end of September 2024, NPS’s domestic stock portfolio was 12.7% of its total assets, a 2.2% lower than NPS’s domestic stocks target at the end of 2025 (14.9%).
- The top five net purchases by the NPS and local pension funds of Korean stocks in the past one month include Samsung Electronics, Kakao, SK Innovation, Hyundai Motor, and SEMCO.
5. Global Monetary Easing Cycle Becomes More Idiosyncratic
- The Swiss and Canadian central banks cut their respective policy rates by 50 basis points. The former faces currency appreciation and deflationary risks. Canada faces higher unemployment and deteriorating growth.
- The European Central Bank is taking a gradual policy easing path in 2025. Policy outlooks for the Reserve Bank of Australia and Bank of England are more data dependent.
- The Fed cut its policy rate by 25 basis points as expected, but fewer reductions are now expected in 2025 due to a more robust economic outlook compared to September.
6. Steno Signals #177 – Another ill-timed flip-flop from Jay Powell?
- Happy Sunday from me! This will be the last update before the festive season, and I hope you will have a relaxed and enjoyable time with your loved ones.
- It has been a big year for me personally with the launch of Asgard-Steno Global Macro.
- Despite Powell pulling the rug from under the Christmas rally, we are off to a decent start and expect to deliver strong returns in choppy markets in 2025, where the macro direction will be challenged by several factors.
7. The Darker Side of the Hindenburg Omen
- Current market conditions are characterized by a strong S&P 500 that’s near its all-time high and weak breadth.
- The closest template to these circumstances is August 1972, which is just before the final Nifty Fifty top.
- As the market undergoes its inevitable bounce due to oversold conditions, investors should monitor technical conditions for negative divergences, which could be the signal for a long-term cyclical top.
8. Equity Return Expectations Under An Alien Invasion
- We are subscribers to Occam’s Razor, or the simplest explanation is the most satisfactory, and recent UFOs sightings are of terrestrial origin.
- It’s nevertheless a worthwhile exercise to consider asset return expectations under the scenario of an extra-terrestrial alien invasion.
- Our study of an alien invasion opens the door to discussing return studies. Standard assumptions about returns to bonds and equity risk premiums are useful only up to a point.
9. Here is what we told hedge funds this week – and how we’re trading it!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
10. Three Presidents in One Month in South Korea – What’s Next?
- The acting South Korean President Han Duck-Soo was impeached by the South Korea’s Parliament on 27 December. Choi Sang-Mok (finance minister) is now the new, acting President of South Korea.
- There could be multiple impeachments of acting Presidents in the next several weeks which would be unprecedented and raise further concerns about the lack of political stability in South Korea.
- Amid all this political uncertainty, Yoon Suk-Yeol’s approval rating has been improving sharply to more than 30%.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Strategic Outlook 2025: Winter Is Coming, Can Asia Keep Itself Warm?
- With the US and China distracted from stabilizing the world geopolitical order, flare-ups and stresses will occur more frequently as various actors feel emboldened to undertake risky gambits.
- The world, including emerging Asia, will have to contend with “much higher for much longer” geopolitical risk and its aftereffects on global trade, investments, and financial markets.
- But most economies in the region retain agency to adapt to a more hostile environment by bolstering internal resilience and forming new coalitions of the willing to pursue shared objectives.
2. Investing During an Era of American Exceptionalism
- This year was one of American exceptionalism and asset return domination, led by the leadership of the Magnificent Seven.
- . We believe Magnificent Seven leadership is likely to fade in 2025.
- We expect that 2025 will be a year of transition from growth to value, large caps to small caps and paper to hard assets.
3. Here is what we told Hedge Funds this week – and how we’re trading it!
- Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
- These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
- While the macro landscape can be complex, we believe it doesn’t have to be intimidating.
4. The US Dollar and the Only Chart that Matters!
- The US Net International Investment Position (NIIP) as a debtor country has ballooned since the GFC, attracting global demand for US assets, which feeds demand for the dollar.
- Historically high dollar demand has allowed the US to enjoy the benefits of low interest rates and created a historic bull market in US equities.
- As the US continues to use its currency for geopolitical purposes, countries have begun to question dollar hegemony. The US fights against any country that tries to weaken the dollar
5. Steno Signals #175 – 4 asymmetrical cases for Santa Powell
- Happy Sunday, everyone, and welcome to my weekly editorial on everything tradable in macro! I was confident heading into last week that the U.S. data releases would bring bond yields lower, and both ISM numbers and NFP aligned with our views.
- The NFP report was much weaker than it appeared, with the median duration of unemployment ticking up—a clear symptom of a low-hiring, low-firing labor market with little momentum for those who lost jobs in recent quarters to find new opportunities.
- Monthly job creation of around 225k is obviously decent, but this figure is skewed by employees returning from strikes and a lack of substantial positive revisions to the abysmal job creation in October.
6. The LLM Quant Revolution: From ChatGPT to Wall Street
- A Comprehensive Guide to Building AI-Powered Investment Systems: The application of Large Language Models (LLMs) in quantitative finance, focusing on the current state of LLM technology in financial applications
- I also cover: 1. Comparative analysis of leading models 2. Implementation frameworks for production systems 3. Risk management and quality control considerations
- Key Findings: 1. Multi-model approaches outperform single-model solutions 2. Production implementation requires robust quality controls 3. Model selection should be task-specific within the investment process
7. Bitcoin 100K: Buy or Fade the Animal Spirits?
- Now that Bitcoin has exceeded the psychologically important 100,000 mark, it is becoming evident that the FOMO risk-on stampede is in full force.
- Our review of market internals leads us to conclude that the risk-on FOMO stampede that’s driving the animal spirits is on the verge of becoming exhausted.
- Our base case calls for a brief period of consolidation or shallow weakness, followed by a rally into year-end.
8. Positioning Watch – Is the Santa Rally at risk of being canceled? Not yet..
- Hi everyone, and welcome back to our weekly positioning update.
- I’ve been puzzled over the past weeks of just how much risk assets have been denying the underlying macro trends, and it very much mimics the pattern we saw in Q4 2023.
- Markets are not really responding to macro unless there is a major surprise to either side of the economic consensus as this is the only scenario which can change the expected rate path of the Fed.
9. Geopolitical Flash Update: See you later Scholz!
On Dec. 4, Michel Barnier became only the second Prime Minister in French history to be ousted by a no-confidence vote.
Precisely one week later, the other major EU economy, Germany, submitted a motion of no-confidence of its own to be held on Dec. 16. What the heck is going on in Europe?!
The political chaos in France and Germany has the same root cause: a sluggish economy and insurmountable debt levels.
10. Globalisation: Same, Same but Different
- Contrary to popular belief, the upward trend in global US$ exports, which has been in place since 1948 remains intact. World trade openness too is higher today than pre-GFC.
- US consumers are the richest. However Asian affordability is growing quickly . The region’s share of the global imports is already on par with Europe’s.
- Globalisation is not reversing but evolving. Regional trade is driving world exports while world manufacturing production chains are transitioning from horizontal to vertical integrated.