Macro

• In this analysis, we provide a back testing analysis of the end of mandatory lock-up periods monthly data in Korea in the past six months.
• All in all, this end of mandatory lock-up period monthly data continues to provide some alpha generating results.
• In the past six months, they have tended to work better in periods when KOSPI declines rather than in periods when KOSPI rises. 

• Despite trade and other frictions between Washington and Beijing, the two sides have set up mechanisms for regular high-level exchanges and other guard rails which reduce risks. 
• However, as more big powers turn hawkish on defence and trade, other Asian exporters may end up being collateral damage from anti-China protectionism. 
• Closer to home, the ongoing Myanmar conflict is reaching an imminent turning point as the risk of China getting involved increases and the fighting becomes more intense.

• With all eyes on the Middle East for the past weeks and months, we haven’t focused as much on the ongoing war in Ukraine.
• In the big picture, not much has changes on the frontline despite continued heavy losses and a Russian election.
• But now I think it’s time for investors to re-adjust their assessment of the war and consider contingencies for the path ahead.

• China’s first quarter growth of 5.3% comes amidst a slew of other positive data releases, including an improvement in fixed asset investments and a turnaround in net exports. 
• But a closer examination suggests that momentum remains weak; the recovery was boosted by Lunar New Year spending, which showed signs of fading by March. 
• Overcapacity and trade tensions remain major headwinds for any export-led recovery; even as property sector misery continues to dampen purchaser sentiment.  

• The PMIs mostly revealed surprise resilience in April, albeit with the US disappointing. Divergent surprises may reflect excessive spread changes in policy expectations.
• Residual seasonality may exaggerate current strength and unwind in the summer, but stability in unemployment trends still suggests global monetary policy is not that tight.
• Persistent excess demand requires tight conditions to be sustained. The BoE MPC seems desperate to cut, but resilience should delay it, including relative to Fed pricing.

• In our April monthly, we highlighted the combination of fading impulse for momentum stocks (principally tech) and the need for tax related selling in the trading/retail space coming against a background of a correction in the short term bull phase within the longer term bond bear market.

• Since the beginning of March, US 10 year yields have gone from 4% to around 4.6%, unwinding the Fed Pivot language that emerged to ‘explain’ the earlier rally.

• In our view that was an unlikely ex-post narrative, as is the one emerging now that the Fed will not cut at all.

• Singapore’s CPI inflation in March 2024 dropped to 2.7% year-on-year, which was lower than the market consensus of 3.0%, showing a significant moderation of price pressures.
• The inflation rate is 1.34 percentage points below the one-year average.
• This data highlights a persistent disinflationary trend in Singapore.

• Hello everyone, and welcome back to our weekly positioning watch, where we as usual will dive into positioning and sentiment data to provide you with the latest overview of crowded trades and where the markets are leaning.
• This week we dig into how the rise of volatility (and volatility of volatility) has affected market positioning, if the recent weakness in equities has shaken around positioning (hint: it has) and the recent developments in rates pricing, where the outcome space for the DEC2024 SOFR contract has turned significantly more uniform in hawks’ favor.
• The VIX recently woke up after a long period of being range-bound between 12.5 and 15, surging on the back of weakness in equities as tax payments have been due in April combined with a slightly hotter than expected CPI report and hawkish remarks from Powell.

• Fund Managers Are Long Commodities Again Be careful if you’re heavily long commodities at the moment.
• The Bank of America survey usually always works as a great contra sentiment indicator.
• If fund managers are heavily long commodities – prices tend to top out.

• Strong dollar not seen as a problem for the US or the Fed, more concerning for the rest of the world
• Unlikely to see coordinated global intervention due to high hurdles and lack of exceptional circumstances
• Dollar CNY stability due to PBOC holding it down, may welcome cooling pressures on the currency from Japan and Korea verbal interventions

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Investors have become more hawkish about the outlook for Fed policy compared to Federal Open Market Committee (FOMC) members for the first time since the infamous taper tantrum in 2013
• Engineering a policy pivot away from higher for longer rhetoric towards policy rate cuts will provide a communication challenge if sticky service sector inflation persists.
• Profligate fiscal policy complicates the Fed’s prospective conduct. The required measures for sustainable fiscal policy are off-limits, raising the possibility of higher inflation to stabilise the debt-to-GDP ratio.    

• The past week saw insights on Medikaloka Hermina (HEAL IJ), PT Avia Avian (AVIA IJ), Vinfast (VFS US), CP FOODS (CPF TB), and Johor Plantations IPO.
• There were also insights on Singapore REITS, 14 stocks to own in ASEAN from Dr. Andrew Stotz, CFA,  CrossASEAN Ground Zero looking at ROTI, Indonesian Hospitals and the Tower sector. 
• 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.

• Inflation data has been hotter than expected, remaining stubbornly above 3%
• Demand in the economy has been robust, with strong retail sales and job reports
• Richmond Fed President Tom Barkin discusses potential factors influencing inflation and the need for offsetting housing strength in the economy

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Welcome to our weekly “the week at a glance” publication where we dissect the most important central bank meetings and key figure releases in a short and sweet format.
• This week we focus on PCE prices, European PMIs and the Bank of Japan.
• Event 1: European PMIs (Tues): A lukewarm, but positive, surprise.

• Calmness returned to pockets of cross asset markets last week.
• The long end of the US yield curve got off its highs, crude got back under USD 90 and equities are left as the only truly hurt asset with SPX dipping under 5k for the first time since Feb.
• Month-to-date, Energy remains the only sector in green, underlining what we have been saying since the inception of this newsletter

• Ben Bernanke’s review of forecasting at the Bank of England raised many suggestions. We hope the BoE doesn’t dodge two aspects critical to improving its guidance.
• Inflation expectations are poorly captured in forecasts, contributing to misguided market views and leaving MPC members open to attack when critiquing surging wages.
• MPC rate expectations would best replace the conditioning rate path. Absent that, market rates are better than alternatives so that path should not be de-emphasised.

Note: This is part of an external compendium of responses to the Bernanke review.

• Fears of a repeat of the 1970s inflation cycle are overblown. Inflationary expectations are well anchored and the pace of wage increases are decelerating.
• However, the IMF has warned of the risks of the deteriorating U.S. fiscal picture and investors have to acknowledge that we are in an age of fiscal dominance.
• For investors, the evolution of risk appetite will depend on changes in inflationary expectations and term premium.

• Stock prices have had to contend with a trifecta of woes: Fear of a hawkish pivot by the Fed; Strong USD; and Geopolitical risk and rising oil prices.
• The stock market is very oversold and ripe for a relief rally. The key question is: does the bounce represent a durable bottom or is there more downside ahead?
• As investors and traders wait for the inevitable bounce, here are what we are watching.

• China is preparing something BIG. That seems more and more obvious to me by the week now. The question is what that BIG thing is.
• China reported a strong 5.2% YoY Q1 despite troubles on the ground, local financial institutions are hoarding bonds because of a weak credit demand growth picture and the Chinese authorities seem to be stockpiling like crazy.
• We have seen plenty of tin-foil theories speculating in the reasons behind those Chinese actions, but maybe China is just preparing a major one-off devaluation of the CNY?

• Headlines in the beginning of 2024 were dominated by shipping and logistic troubles but over the last months that has almost died completely down.
• With “no news” we continue to see spill-overs to goods inflation in coming months.
• In general freight rates have been falling since Jan high but still remain some 50% above 2023 levels

• Tax receipts post-tax day are tracking about 15% above last year’s pace, below 2022 levels.
• Increase in electronic filings leads to quicker processing of tax receipts.
• TGA balances have increased by $250 billion to $930 billion, in line with 2022 trends.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Welcome to our weekly Portfolio Watch.
• We have returned -0,87% in our Macro Alpha Portfolio this week as of the time of writing, which is a decent return profile given the drawdowns seen across the asset universe.
• We have been sitting on our hands due to the trickiness of timing the missiles flying back and forth in the Middle East and due to our lack of conviction that the timing is right to re-enter riskier bets.

• I harness my hybrid nowcasting framework to track the growth prospects of the G3 (US, Euro Area and Japan) economies
• Overall, G3 real GDP growth seems to be tracking potentially slower, though uneven across the individual economies, in 1Q 2024
• My nowcasts imply that the G3 economies are unlikely to wiggle uniformly in the first-half of 2024 on balance

• Federal Reserve “shocks’ markets by taking early rate cuts off the table
• New tactics in the Russia/Ukraine war do not bode well for lower oil prices
• China releases  Q1 GDP data  which is “stronger” than expected 

• Global Liquidity has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand
• Three factors are dragging Global Liquidity — the US Fed, the PBoC and the rising MOVE Index
• Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end

• Strong start to 2024, but majority underperform: Average returns of 7.6% lags the SPDRs MSCI ACWI ETF by -0.33%, with 44% of funds outperforming.
• USA Technology Drives Returns: US Tech sector accounts for 1/4 of total returns in Q1. China & India Financials a drag on performance.
• Apple and Tesla Positions Outperform: Underweights in both stocks help claw back losses made due to NVIDIA underweights.

• China’s GDP Performance: China’s first quarter GDP growth exceeded expectations at 5.3%, sparking debates about data accuracy and manipulation.
• Singapore’s Economic Revisions: Singapore’s initial growth estimate of 0.5% was later revised down to 0.1%, underscoring challenges in producing accurate forecasts.
• Regional Trade Dynamics: While China reported a contraction in exports, a closer look revealed modest export growth. Japan and Korea struggled with declining exports and imports, highlighting challenges in domestic demand.

• Despite no policy decisions this week, hawkish moves continued as UK price and wage inflation exceeded expectations and FOMC comments suggested another rate hike. The belief remains that the BoE should cut later than the Fed.
• The upcoming week is expected to be quiet for monetary policy announcements, with the BOJ and Bank Indonesia being the main ones.
• The flash PMIs are the data highlight of the week, along with the Q1 GDP, March PCE and durable goods data from the US.

• Geopolitical tensions and worries about inflation are overshadowing intrinsically bullish market sentiment and decent earnings reports.
• Contrary to what has become the latest market muse, higher interest rates do not explain the resilience of the US consumer and economy.
• China’s data dump raises serious questions about its true underlying growth momentum, suggesting that its consumers will continue to buy gold.

• Welcome to this week’s edition of our EM-focused weekly editorial.
• This week, we’ve decided to look into the reemerging weakness in Asian FX, and how this corresponds with the still strong momentum in gold prices.
• Gold rallies have historically coincided with a weaker USD.

• Macro is truly back with central banks and pricing of policy rates back on the top priority list amongst traders and investors.
• Powell’s remarks from yesterday confirmed fears of the Fed deviating from their promised rate cuts back in December, and the question will now be, whether they will cut rates at all.
• A pivot from a pivot is tough, but it might be exactly what’s going to happen.

• Strong start to 2024 as majority outperform: Average returns of 3.3% beat the iShares Asia Ex-Japan benchmark, with 66% of funds outperforming.
• Technology Sector Drives Returns:  Taiwan and South Korean Tech contribute the most to returns, whilst China Financials and Healthcare drag on performance.
• HDFC Bank and AIA Group costly: Both stocks are among the top overweights among Asia Ex-Japan investors.  Poor performance this quarter cost managers ~ 50bps in losses versus the benchmark.

• Hawkish surprises in the UK and US data pushed back rate cut pricing. Dovish comments from Bailey still weigh on BoE rates, inappropriately keeping pricing below the Fed.
• Underlying inflationary pressures are worse in the UK, where wage growth is persistently high and not backed by productivity, causing the UK’s services inflation to be higher.
• Prevailing policy settings don’t seem set to drive down UK inflationary pressures before the US. Unemployment is trending similarly, suggesting similar monetary tightness.

• Australia’s unemployment rate in March 2024 increased slightly less than predicted, showing relative stability in the labour market.
• The 3.84% unemployment rate is still higher than both the one-year and long-term averages.
• Employment decreased, indicating a weaker demand in the labour market.

• Strong start to 2024 as majority of GEM funds outperform: Average returns of 2.8% beat the iShares MSCI EM ETF by 0.66%, with 63% of funds outperforming.
• Technology Sector Drives Returns: Technology sector the key contributor to returns, with TSMC accounting for just over half of total fund returns on the quarter.
• Active vs Passive: Q1 performance adds to GEM active fund’s impressive record of outperformance. 5-year average GEM fund returns are +7.4% ahead of the benchmark iShares MSCI EM ETF.

• Welcome to a short and sweet Scandi special.
• After years of working at the biggest bank in the Nordics, I have developed a strong understanding of the rate path model of Norges Bank and we have developed a “cheat sheet” that can live track the path, if it was to be hypothetically updated daily.
• The overwhelming conclusion is that the path has shifted in a dovish direction since the MPR-1 meeting in March in contrast to global developments.

• The massive rally in the price of gold coincided with Fed Governor Waller’s speech, in which he stated that he believes the Federal Reserve should buy more T-bills.
• Many market pundits argue that changing narratives explain historical gold rallies.
• But digging a bit deeper reveals that, especially since the Great Financial Crisis, the narrative behind gold’s strong performance has been the same and getting stronger.

• The final EA HICP inflation print confirmed the downside surprise to 2.4% from the flash release. Progress gets more challenging as energy and food base effects wear out.
• Although services inflation is stuck at 4%, that is far better than the UK’s 6%, and the median inflationary impulse is broadly settling below the ECB’s target.
• Labour costs might remain inflationary, but the ECB seems to have sufficient confidence to cut in June unless the data surprise significantly to the contrary.

• UK CPI inflation exceeded the consensus by 0.1pp as it only slowed to 3.2% in March, as we forecasted. Services inflation stuck at 6%, and high-frequency impulses increased.
• Persistently high pay settlements sustain wage and underlying price inflation above target-consistent levels. We only see services slowing below 4.5% in September.
• We expect the BoE to cut in November after the ECB and Fed. Further resilience in UK and global data could still cause all three to roll back even further.

• Welcome to the weekly Great Game, which is obviously dedicated to the situation in the Middle East.
• We covered Saturday’s attack on Israel in our Debrief, so in this post, I’ll try and look a bit ahead and give our take on what may lie ahead – both in the Israel/Iran conflict, but perhaps even more importantly in the Red Sea deadlock.
• Understanding Iran’s strikeSituation:On Saturday evening, Iran attacked Israel in response to the April 1st bombing of the Iranian embassy in Damascus.

• The gap between the CPI and PCE price index adds another layer of complexity to the continuing data scrutiny     
• The extent and duration of the CPI-PCE convergence tend to vary across time periods and different economic environments   
• Also, the details from the latest CPI print, while tentatively less favorable, bear watching   

• During the period under consideration, i.e. February 28th 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
• The MA-10 line at the beginning of the period considered was moving above the MA-20 line.
• From March 7th until March 22nd the MA-10 line trend changed and was moving below the MA-20. 

• UK unemployment jumped surprisingly far in February 2024 to hit 4.2% as employment fell. More long-term jobless suggests this is neither a new shock nor too disinflationary.
• Average earnings growth surged by 0.7% m-o-m, meaning the wage bill still rose despite fewer jobs. Regular pay growth is in rude health at 6% y-o-y or 2.1% in real terms.
• Wage settlements are stuck at 5%, with a skew higher into April. Embedded inflation expectations are too high and demand tight policy despite some cyclical softening.

• Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
• Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
• We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.

• The latest US inflation print is emblematic that economies worldwide will face difficulties in achieving the “last mile” of disinflation. 
• Volatile food and energy prices, as well as geopolitical disturbances to supply chains, will continue to cause problems for Asian central banks. 
• Despite continued tightness in monetary policy, we still expect Asian economies to grow respectably in 2024. 

• President Yoon Suk Yeol suffered a major political setback in the recent parliamentary polls, with the main opposition party winning a clear majority in the National Assembly. 
• Simmering public discontent from rising costs of living and doctors’ strikes to protest against Yoon’s plan to increase medical school intake drove voters to the opposition. 
• Yoon’s parliamentary defeat and the contrasting domestic policy agenda of the Democratic Party means greater political paralysis ahead.

• Canada’s annual CPI inflation rate in March 2024 increased to 2.9%, matching market expectations and marking the highest growth since December 2023.
• Despite this, disinflation has resulted in the current rate being 0.42 percentage points below the one-year average.
• The core measures continued to slow down, more than what was anticipated.

• Qingming holiday sending surpasses  2019 levels on an absolute and per capita basis
• A further relaxation of housing measures spurs increased mortgage demand
• Two steps forward, one step back -typical signs of a bottoming-out economy.

• Happy Monday and welcome to our short and sweet coverage of the data calendar for the week ahead.
• We try to map the events with market moving potential and exploit weaknesses or skews in the economic consensus around them.
• This week we see strong upside to US retail sales, Chinese GDP, while soft downside to the UK CPI figures.

• CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.
• We look at Indonesian Hospitals, as Saratoga buys into Brawijaya Hospital focusing attention on the space. We also look at leading mass-market bread maker ROTI as KKR seeks an exit.
• We also look at the telecom tower space as transactions on the Philippines heat up and examine the current state of play in Indonesian towers. 

• Corn prices are presently being pressured by ample supplies owing to the record US harvest.
• Corn prices face an upside risk owing to elevated demand for ethanol and supply uncertainty from the South American harvest.
• Premium for long-dated corn futures over near-term futures is on the rise. A calendar spread can be used to express this view. 

• The centre appears likely to maintain control in the forthcoming European Parliament elections.
• However, a strong showing by nationalist parties, particularly in France and Germany, may impede Europe’s economic recovery efforts.
• This could be particularly problematic given the presence of new external threats.

• Greetings from a sunny but windy Copenhagen where we bring you a short but chart heavy edition of the Energy Cable.
• What a week in macro and markets, huh?
• The CPI print out of the US confirmed our tilt towards a reacceleration of inflation and the difficulties Powell faces in getting to the 2% target.

• During the period under consideration, i.e. February 28 th , 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
• The MA-10 line at the beginning of the period considered was moving above the MA-20 line. From March 7 th until March 22 nd , the MA-10 line trend changed and was moving below the MA-20.
• By the end of the examined period, the MA-10 line ended up above the MA-20 line.

• The past week saw insights on Mitra Adiperkasa (MAPI IJ), Ace Hardware Indonesia (ACES IJ), Vinfast (VFS US), The Keepers Holdings (KEEPR PM), and Ocean Gold Philippines IPO.
• There were also macro insights on Indonesia, Singapore, Thailand, and the Philippines, and CrossASEAN Ground Zero on Indonesian Hospitals, ROTI, and Towers in the Philippines, and Indonesia.
• 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.

• Last week’s inflation data surprised market participants on the upside. CPI YoY: 3,2% vs. 3,1% estimate. Core CPI m/m: 0,4% vs 0,3% estimated
• Even larger was the upside surprise in the PPI data. Friends of the 70s double-dip inflation scenario will probably love this chart.
• Take a closer look at the 70s and how inflation recovered before it take of in the late 70s for another rip higher.

• We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run. 
• We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.
• We like Vale (VALE US) for its capital return in large caps, Kumba Iron Ore (KIO SJ)  in midcaps, and Mount Gibson Iron (MGX AU)  in junior miners. 

• Good morning everyone – what a dramatic night in the Middle East and what a couple of days we have in front of us.
• Just a quick update on our take on things.
• Note that this is written Sunday morning CET and that events are still unfolding.

• Tensions between Israel and Iran have escalated, potentially leading to a broader conflict involving major global powers, which could significantly impact global financial markets.
• Immediate market reactions could include a drop in global stock markets, a surge in oil prices, and increased demand for safe-haven assets like gold and the US dollar.
• Multi-Asset portfolio managers need to employ strategies such as reducing risky asset exposure, increasing investments in defensive sectors, and diversifying geographically to mitigate the conflict’s impact on investments.

• Stronger-Than-Expected data forced financial markets to pare expectations of Fed policy easing in 2024. Increased labour supply reduced wage inflation, allowing the Fed to contemplate policy rate reductions this year.
• Immigration can impart short-term economic benefits and assist Fed policy by acting as a safety valve against wage inflation and keeping inflationary expectations well-anchored.  
• Reductions in legal immigration that curb labour supply will lower the marginal productivity of capital as well as the rate of return on equities, particularly if budget deficits remain elevated. 

• Before getting to the financial word, I just briefly want to reiterate that we find a de-escalation most likely between Iran and Israel after the events unfolding over the weekend.
• Our head of geopolitics, Mikkel Rosenvold, released his take earlier.
• Quote of the week: Iran’s Chief of Staff: “Our attack is over, and we do not wish to continue it, but we will respond forcefully if Israel targets our interests.

• The USD has been on a roll since the firm US inflation report earlier in the week and we are approaching the point where European trade balances will be impacted substantially by the rally in (energy) commodities.
• Even European Nat Gas seems to be on the move and pairing that move with the broader rise in Oil and Copper leads to a likely “flip” in the Eurozone trade balance.
• When the Euro-zone trade balance shifts from positive to negative, we typically see an impact on the trend of the EUR, which is probably the last thing the ECB needs right now.

• The S&P 500 violated an uptrend that began in November. The violation resolved with the index is testing initial support nearby at the 50 dma at about 5110. 
• Our analysis of market internals concludes that the decline is nearly done. Sentiment is not sufficiently panicked to be contrarian bullish. Technical conditions are oversold but can become more oversold.
• We interpret these conditions as a stock market that’s undergoing final flush before an intermediate-term bottom is formed. We believe any pullback should be temporary and shallow in nature.

• Should investors worry about the elevated levels of equity valuation? The equity valuation question is a tricky one because it is only useful for investors with long time horizons. 
• Equity returns depend on the evolution of other factors such as the evolution of inflationary expectations and the bond market’s term premium.
• In the short term, stock prices are elevated because of P/E expansion, but as long as earnings estimates continue to rise, downside pressure should be limited.

• Inflationary impulses are alive and well, coming through even in “core” US data
• The Bank of Japan continues to flounder around a JPY strategy
• Are US banks attempting a back-door QE, aided by the Federal Reserve?