Macro

• Updated inflation basket weightings can shift the inflation outlook without any new fundamental shock. The seasonal and trend outlook is unaffected by the 2025 update.
• Although our forecast is broadly unchanged, this still mitigates the risk that reduced weights on energy and sanitation utilities dampen the surge in April and July forecasts.
• This outcome further emboldens our confidence in our above-consensus forecast. We also note that the average import intensity is now weighted near historic lows.

• Happy Monday from Copenhagen! We have a six-month stopgap funding deal in place in the U.S. until September, but no new debt ceiling legislation.
• So, despite a shutdown being avoided, we are not yet talking about a new mountain of debt.
• This is why I think the late-Friday reaction in bond yields was somewhat overdone.

• The fracturing of political alliances is a growing risk factor for markets and therefore models.
• Central Banks (Monetary Policy) have been the main source of risk / relief since the 2008 GFC
• Since BrExit (2016), political instability has been a growing factor, rewriting trade, fiscal policy and more.

• The latest policy signals show that Beijing is more serious about boosting consumer demand. But these still fall short of the much-needed rebalancing of the economy from investment towards consumption.
• Promised support should  maintain growth this year but Beijing’s reluctance to go further probably stems from the need to keep its fiscal powder dry, given the uncertainty emanating from Washington.
• Better-Than-Expected economic data would have validated its cautious approach. Yet, given continued patches of persistent weaknesses, the costs of inaction will grow

• Asia’s base oils prices extend rise versus feedstock/competing fuel prices.
• Increasingly firm margins coincide with closed arbitrage to more distant outlets like Americas, and less feasible arbitrage to logistically-closer markets like India and Middle East.
• Firm margins and closed arbitrage point to tight supply.

• Seasonal boost in US base oils demand could be more muted than expected, with uncertainty about end-user consumption incentivizing buyers to maintain lower stocks.
• Seasonal rise in demand typically cuts surplus supplies and often coincides with plant maintenance work, like this year.
• Stronger demand and tighter supply typically give refiners more leverage to adjust prices to reflect those firmer fundamentals.

• US Group II base oils export prices mostly stay in narrow range vs vacuum gasoil so far this year.
• US’ steady price premium contrasts with strong rise in Asia Group II base oils export price premium to Singapore gasoil prices so far this year.
• US Group I brightstock price rises vs vacuum gasoil so far this year.

• Global base oils values rise vs feedstock/competing fuel prices.
• Firmer base oils values contrast with lower gasoil premium to crude oil, magnifying impact of rising base oils premium.
• Rising base oils premium points to firm supply-demand fundamentals, especially in Europe and Asia.

• Wealth / The Great Wealth Migration: Why the ultra-rich are fleeing Britain
• Payment /: UnionPay partners with Cambodia, Thailand to make payments easier
• Ports /Commentary: Why Li Ka-shing’s Panama ports sale is a good deal

• Asia’s base oils demand could ease, with buyers having already covered requirements for peak-demand season in month of March.
• Typical slowdown in consumption at start of second quarter of year curbs urgency for blenders to replenish supplies.
• Expectations of improving availability in Q2 2025 add to attraction of holding off moves to replenish stocks.

• The EU is dealing with two crucial deadlines related to defence spending.
• The Commission is set to present its full loans-for-arms proposal to a divided European Council on 20 March.
• On 24 March, the ‘old’ Bundestag will step down, making it more difficult to ease Germany’s debt brake.

• The conversation focuses on the current state of the uranium market, with a emphasis on short interest and sentiment towards uranium stocks.
• Guy discusses the reasons behind the consensus short uranium position among hedge funds, and how it originated from thematic responses and shifts in the market.
• Despite the negative sentiment and high short interest, Guy remains optimistic about the potential for a sentiment shift in the uranium market.

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• Revised eurodollar forecast up to 116, more bearish on the dollar
• Erosion of US exceptionalism due to tariff policy blowback
• Introduction of new conceptual framework called the dollar tariff smile to understand FX reaction to tariffs

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• Stock market experienced a significant decline on Monday, prompting thoughts of hedging downside risk with options back in February.
• There are still strategies using options to manage risk and repair portfolios, as discussed in upcoming webinar.
• Variant Perception CEO Tian Yang discusses macro environment, impact of Trump’s policies, and the economy in interview with Macro Voices host Eric Townsend.

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•  Dumping of gloves from Malaysia, Thailand, Vietnam into India alleged  
•  IRGMA petitions Indian Government for intervention to stop  
• DGTR recommends ADD on imports of titanium dioxide from China

• Overweight Malaysian equites but hedge against the US dollar. The bias is toward high tech, AI, industrials and consumer discretionary stocks.
• The Malaysian business cycle is set to strengthen. The profit cycle is stabilising. The investment upcycle is supported by rising FDI and infrastructure spending. 
• Expect the Johor-Singapore Special Economic Zone agreement will give fresh impetus by hastening economic integration and moving Malaysia up the value-added chain.

• Discussion about concerns regarding a U.S. recession or growth slowdown
• Analysis of historical mentions of recession in news media compared to current levels
• Evaluation of EM credit market sensitivity to recessionary risks and market moves so far

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• Public markets offer opportunities for long-term growth potential in renewable energy investments
• Infrastructure is essential for decarbonizing power generation and addressing global electricity demand
• Public markets provide liquidity, diversification, income, and potentially better valuations for investing in infrastructure compared to private markets

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• A deal on the German fiscal package has been reached and is expected to be voted through in Parliament next week, leading to higher defense spending and revised growth forecast expectations.
• The massive sell-off in bund yields following the announcement can be attributed to higher ECB policy rate expectations, increased defense spending across the region, and term premium pricing.
• The revision of ECB terminal rate expectations and steepening of the money market forwards have put upward pressure on German yields, but the term premium may gradually fade, leading to a lower yield target of around 240-250 basis points by mid to late this year.

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• Expectations for on-hold decision at upcoming FOMC meeting, with continued emphasis on patience from the Fed
• BoE likely to pause cutting cycle with similar forward guidance, while Bank of Japan expected to skip hiking cycle
• Fed focused on potential inflationary impact of tariffs, balancing risks of growth and price increases in uncertain environment.

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• The mainstream media have focused on the short-term inflationary impact of tariffs, but the longer-term implications are deflationary.  Prevailing conditions are crucial in determining the size of the inflationary impact.  
• The US economy and financial markets became addicted to prolonged fiscal and monetary policy profligacy after the COVID-19 pandemic. Government-related employment adjustment has just commenced under the Trump administration.  
• Fiscal policy will be tightened in 2026 due to expiring tax provisions passed in 2017. President Trump needs sizeable tariff revenues if their extension is not to jeopardise government finances.

• The market’s risk appetite was recently dented by a heightened fears that Trump is engineering a recession.
• Our analysis of current economic conditions shows low recession risk and our base case calls for a growth scare.
• We assess recession odds at one in three and we will continue to monitor the evolution of changes in business confidence and financial conditions to measure future slowdown risk.

• We are intermediate-term cautious about the stock market based on continuing signs of weak breadth.
• In the short run, however, sentiment has become overly bearish and the price momentum unwind that sparked the latest downdraft seems to be abating.
• Our base case calls for a short-term relief rally, followed by a choppy decline into H2 2025.

• Research and agentic workflows in finance are evolving with the use of AI and large language models like ChatGPT.
• LLMs can process information quickly, analyze data, and assist in generating investment ideas, but human oversight is crucial.
• Using a multimodal approach with different LLMs specialized for specific tasks can enhance decision-making in investing and democratize access to sophisticated analysis tools.

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• A review of recent events/data impacting our investment themes or outlook
• More evidence emerging of a regime change in global markets
• What is different this time around from previous bear markets

• China is likely to restart allowing unprofitable tech companies to list on Shanghai’s STAR Market, sources with knowledge of the matter said, showing intensified financing support for technology innovations.
• The Shanghai Stock Exchange has recently told several intermediary institutions that it particularly supports the listing of high-tech firms, multiple sources from investment banks and private equity firms told Caixin.
• It’s clear that regulators are paving the way for reopening the IPO channel to money-losing tech companies, they said.

• Equities are facing difficulties due to unpredictable trade policies and retaliations, which are affecting profit forecasts. Despite this, hard data remains strong, although low airfares are impacting the US CPI. There has been a decrease in optimism about Europe.
• The Federal Reserve and the Bank of England are likely to maintain current interest rates in the coming week as there are no clear signs of a downturn. Two MPC members are expected to dissent for a 25bp cut to avoid acknowledging a previous error.
• Other upcoming announcements include those from the Bank of Japan, the Swiss National Bank, and the Riksbank.

• Volatility in US trade policy continues a cleaner tightening trend against China in the well-established tech war. Tariffs are a tool, but so are export restrictions.
• China expanded restrictions on rare earth mineral exports to license critical materials like tungsten. The West lacks friendly suppliers and struggles to develop alternatives.
• European defence investments may flounder. Japan and Korea may also suffer, so they can indirectly frustrate the US. Aggressive trade policy hits volumes as well as prices.

• Zeon will develop BR and Yokohama will make tires with it
•  Facility to be installed at Zeon’s Tokuyama Plant in Shunan City in Japan
• Trial production scheduled for 2026 and mass production by 2030

• For the week ending 07/Mar, US crude inventories increased by 1.4m barrels, missing expectations of a 2.1m barrel build. Meanwhile, gasoline and distillate stockpiles fell more than expected.
• US natural gas inventories fell by 62 Bcf for the week ending 07/Mar, lower than analyst expectations of a 46 Bcf drawdown. Inventories are 11.9% below the 5-year seasonal average.
• SNB Capital and United Securities cut Aramco’s price targets. TotalEnergies CEO expects LNG prices to decline by decade’s end.

• Norges Bank repurchased sizable stakes in BP, Chevron, Exxon, Halliburton, and SLB after fully exiting these positions in Q3, mirroring its Q2 buying spree.
• Mediolanum International Funds sold its entire BP stake, Westwood Global Investments exited Shell, and Old Mission Capital divested from TotalEnergies.
• BlackRock, State Street, and J.P. Morgan reduced their stakes in Chevron, while BNY Mellon and UBS Group increased their holdings.

• Home appliance / China’s home appliance exports grow as makers eye emerging, high-end markets
• Stocks /: China’s Two Sessions report boosts investor confidence, as stocks upgraded to ‘overweight’
• Power /In Depth: Chemical plant with its own power grid proves viability of disruptive model

• Investors are scrambling for safety as tariffs reshape the global financial order.
• Capital is flowing into short-term Treasuries at an increasing pace.
• Gold has been a steady haven, but will bitcoin also emerge as a safe haven.

• Market volatility continues, with futures down across the board
• Atlanta Fed’s GDP nowcast turns negative for the first time since 2022
• Winners in the market so far this year include gold, European stocks, and bonds

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• Hello, and welcome back to our weekly editorial on commodities and geopolitics.
• Trump is keeping us busy yet again, threatening to impose another 25 percentage points (which was pulled back a couple of hours later, as usual) on top of the steel and aluminum tariffs, targeting the Canadian car industry at the same time.
• By now, it’s very clear that his main agenda is to move jobs and factories to the U.S. by limiting imports—but the question remains: will he actually follow through?

•  EC publishes 11 commodities’ scenarios including rubber  
• Non-SME operators, dealers tasked with due diligence onus  
• German Rubber Association criticism fails to make impact  

• Total Imports to the US from Canada were around $420bn in 2024, so as a rough approximation the 25% tariff will generate around $90bn of revenue for the External Revenue Service, which importantly goes straight to the Treasury. (Energy is only tariffed at 10%).

• Within that $420bn, raw materials such as Oil and Gas, Iron and Steel, Wood and Aluminium account for around 40% of the total.

• This is the basis of the ‘you need us more than we need you’ argument all over social media as well as the ‘tariffs will cause inflation and destroy the economy’ arguments being advanced as much for political as economic reasons. 

• Subsidy / In Depth: Why individuals may need to shoulder more of China’s social insurance burden 
• Law /Analysis: Why so few people are found not guilty in China
• IPOs /: China may restart allowing unprofitable tech firms to list, sources say

• The recent decline in US equities only smells like a recession, might not taste like one yet
• Broader and timelier measures of the economy do not seem to be as soggy as the early indications from headline GDP at this time
• My weekly Recession Odds indicator, which takes into account a range of indicators with diversified coverage, offers another angle on the ongoing recession debate

• CPI inflation receded to 3.6%YoY in Feb’25, as big MoM declines in vegetable prices brought F&B inflation down to 3.8%YoY. Tame food inflation will allow 3.2%YoY headline inflation in Apr-Dec’25. 
• Energy deflation will end in Mar’25, and non-food inflation will edge up marginally, but food inflation likely to be lower than 3.5%YoY for the next half-year amid tame vegetable inflation.
• Policy rate to decline 25bp at each of the next 3 MPC meetings, and another 25bp by Dec’25. Normalized interest rates will enable RGDP’s return to 8% growth in FY26. 

• After analyzing their annual results, presentations, and conference call transcripts, we summarize the supply mine-by-mine and market commentary gathered from twelve major listed copper producers (40% of global production).
• Copper supply growth is expected to be 3% YoY 2025e, resulting in a deficit of 250,000 tons (>1 million tons in 2029), while inventories currently cover a week’s global demand. 
• With the cost curve at the last decile around $4.5$/lb, the copper price is supported greatly despite the system’s high inventories. 

• Industrial activity fell -0.4% MoM in January, accumulating four months of contraction.

• Even though companies in the US anticipated tariffs by importing a record of intermediate goods, this was not reflected in domestic manufacturing.

• Industrial activity came in below our expectation and the market consensus, both at 0.1% MoM

• The upwards trend in monthly US inflation of the past several months broke in February with a surprisingly steep slowing to 0.2% m-o-m, although airfares drove the downside.
• Drift in consensus expectations is not yet obviously broken, with this outcome 0.2pp above forecasts from a month ago. A rebound after Easter remains likely.
• Disinflation is unlikely to dissuade the Fed from holding rates in March. We doubt soft surveys will translate to recessionary conditions, so we still see no more Fed cuts.

• Batteries / In Depth: China’s EV sector enters new frontier with solid-state batteries
• Sea /Environmentalists sound alarm over sea reclamation project
• Property /Analysis: Will China’s major cities propel a housing market recovery?

• The tire majors losing volume   
• Smaller tire makers gaining prominence   
• Most tire majors saw flat or drop in profits

• US headline inflation was lower than consensus but in line with our view that Trump’s policies will be disinflationary. Core CPI inflation (3.1%YoY in Feb’25) was at a 46-month low. 
• Trump has kept crude oil prices well contained (near US$70/bbl, down 17%YoY), an important factor helping to lower headline and core inflation. DOGE impact on spending/job cuts will flow in. 
• Inflationary impact of import-tariff hikes will be modest (imports are only 20% of GDP), with greater disinflation from oil and DOGE. We expect FedFunds to fall to 3.5% by end-2025. 

• The Bank of Canada cut the policy rate by 25 basis points to 2.75%, in line with expectations, as heightened US trade tensions introduced downside risks to economic activity despite stronger-than-anticipated GDP growth.
• Inflation remains near the 2% target but is expected to rise to 2.5% in March due to the expiry of temporary tax measures, while concerns over tariffs have lifted short-term inflation expectations.
• The Bank will closely assess the balance between weaker demand and higher cost pressures, maintaining a data-dependent approach to future rate decisions, with inflation expectations and trade policy developments being key determinants.

• The US has entered the first leg of its bear market.  Administration officials have taken a “no pain, no gain” stance, with policy priorities taking precedence over market moves.
• Sequencing problems start as tariffs and DOGE policies are enacted first, which negatively affect inflation and economic growth.  Atlanta Fed GDPNow forecasts a recession within a year.
• Asian markets will be pulled down as part of the US risk-off trade.  Regarding relative performance, HK/China will benefit from the underweight exposure of foreign funds and better valuations.

• Donald Trump has abandoned the US-led international order, attempting to reshape global trade and finance.
• This shift could have negative implications for East Asian economies.
• East Asian economies may be forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

• Happy Monday, and welcome to our editorial on everything macro! This is the place where we challenge the consensus narrative to uncover the best risk/reward trades and views in the world of macro.
• The tariffs, despite all the bizarre flip-flopping, are going live to some extent this month.
• We know that China has been hit with two rounds of 10%-point tariffs, while Mexico and Canada are facing 25% tariffs (with numerous exemptions).

• For the week ending 07/Mar, U.S. natural gas prices surged by 14.7% on the back of colder weather forecasts, rising LNG exports, and supply constraints.
• Henry Hub posted its biggest weekly gain since January, hitting a 26-month high during the week ending 07/Mar. Prices closed above the 9-day and 21-day moving averages.
• Henry Hub OI PCR was 1.00 on 07/Mar, unchanged from 28/Feb. Call OI rose by 8.7% WoW, while put OI grew by 8.6%.

• WTI futures fell by 3.9% for the week ending 07/Mar, marking its seventh consecutive weekly drop. Prices fell due to trade tensions, rising U.S. crude inventories, and demand concerns.
• The U.S. rig count fell by one to 592, ending a five-week gain streak, with oil rigs unchanged at 486 and gas rigs down by one to 101.
• WTI OI PCR fell to 0.91 on 07/Mar from 0.98 on 28/Feb. Call OI increased by 13.1% WoW, while put OI rose by 5.3%.

• Geopolitical risk and central bank purchases continue to support gold demand, but rising Treasury yields present headwinds. Physical imports to the U.S. are plateauing, easing supply constraints.
• Gold prices are facing resistance at USD 3,000/oz, with technical indicators suggesting potential consolidation before further upside. Historical patterns indicate similar conditions led to stagnant prices.
• Gold leasing rates have normalized, signaling reduced supply stress. Previous spikes above 5% indicated a temporary supply shock, but the recent decline suggests a more balanced market.

• Iron ore majors guide flattish growth for 2025, while China continues to have strong iron ore imports (4.2% YoY for CY24), despite weak steel production (-1.1% YoY). 
• Significant capacity growth commences in CY26 with the ramp-up of Rio Tinto Ltd (RIO AU)’s Simandou project, equivalent to 6% of global seaborne trade ~100 million tons.  
• We believe the iron ore price will be rangebound until 2026 (between 100-120 USD/ton), after which it is highly probable that it will decline to 80-90 USD/ton.

• The Chinese economy is yet to bottom and the corporate sector’s troubles are far from over. The same goes for the property sector. Consumers are still risk averse.
• Trading Post has a neutral stance on equities as an asset class but is a selective buyer of certain stocks and growth sectors.
• These include AI, high tech – software and hardware, robotics and electronics. An underweight on consumer discretionary,  property and export cyclicals as well as bonds and the rmb maintained.

• Iron ore futures declined by USD 1.75/ton last week, closing at USD 100.45/ton on March 7, trading within a narrower USD 3.90/ton range.
• Technical indicators confirm bearish momentum, with a death cross, MACD signaling weakness, and RSI nearing oversold conditions at 36.61.
• Market sentiment remains fragile due to China’s steel production cuts, declining imports, and escalating U.S.-China trade tensions, despite potential stimulus measures.

• Fiscal / Cover Story: China plans fiscal overhaul to fix crisis in local government finance
• Cranes /In Depth: Power lines push endangered birds to the edge
• CPI /Drop in China CPI fuels deflation concerns

• As the trade war unfolds, more market volatility seems likely. In the 2018 episode China and Korea drove Asian drawdown. But today, China exports far less to America than earlier.
• The 2025 trade war is more expansive, with larger tariffs being imposed. In 2018, the defensives and non-tradables outperformed. Similar sectors, but not the same markets could do well now.
• Our Capital Preservation Basket presents eight cheap stocks with domestic revenue exposure and earnings estimate increases over past six months. They are from HK/China (5), Philippines (2) and Korea (1).

• German fiscal announcement leads to increase in bond yields and euro rally
• US implements 25% tariffs on Canada and Mexico, additional tariffs on China
• China retaliates with tariffs on US energy products and adding American firms to unreliable entity list

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• Brent oil price is currently 7% below fair value with short-term technical indicators in oversold territory
• Forecast predicts Brent oil to average $73 in 2025, with a surplus in global oil market of 1.3 million barrels per day
• Market consensus diverges from forecast, with disagreements on oil balances and optimism towards non-OPEC supply growth

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• US equities have struggled to maintain the strong gains from 2024 due to bearish retail sentiment and poor performance of market leaders. Softer US economic data has also undermined sentiment.
• US tariffs will be disruptive to the global economy.  Their impact on Europe is amplified by geopolitical tensions, while US core inflation trends will impact Fed policy conduct.
• Foreign central banks will ease their respective policy rates due to the imposition of US tariffs, while the exact magnitude of easing will be determined by their severity and timing.

• Recent news of a fiscal U turn in Germany has been a game changer, with a proposal for a large infrastructure fund and increased defense spending
• This shift in European fiscal policy has led to a more constructive view on the Euro dollar, with potential for it to reach 112 to 114 area
• Regional investment focus on cheap high beta candidates within the euro bloc, with potential for the broad dollar to be biased to the downside due to US exceptionalism fading and European growth stepping up

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• Resilient data led to hawkish monetary policy guidance, consistent with our bullish Euro view. Fiscal announcements have super-charged that move, so we dropped our call.
• European Commission statements are an upper bound on loosening while Germany’s plans are not yet legislated. Extra defence spending on imports will also damp the Euro.
• Sentiment has flown too high. US trade policy seems set to hit Europe soon, potentially melting sentiment and sending the Euro plummeting back to Earth like Icarus.

• Output hits 2.04 million tons and exports 1.6 million tons in 2024  
• ANRPC anticipates Indo rubber production to slip by 9.8% in 2025  
• Chinese tire firms pitching tent in Indo may benefit from trade war

• Breakout Time in Oil and FX During the last week there occurred many breakout patterns as the volatility in financial markets has risen significantly after president Trump introduced tariffs on Mexico and Canada.
• The Ukraine-drama also doesn’t really help to calm market participants at the moment either.
• We just highlight the technical pattern and add a few words about our current framework and how we view these markets at the moment. 

• From a business cycle perspective, Trading Post is overweight global equities, and underweight sovereign bonds. Within global equities the bias is towards growth and momentum stocks.
• In favour are industrials, energy, European & US defence, tech hardware companies and consumer discretionary in the second half of the year, along with export cyclicals.
• Expect the Fed to cut interest rates once this year and the ECB by 125bp in total and for the BoJ to raise by 75bp. 

• The past week saw insights on Sea Ltd (SE US), Astra International (ASII IJ), Cisarua Mountain Dairy (CMRY IJ), Central Pattana Pub (CPN TB), and CapitaLand Ascendas REIT (CLAR SP) 
• There were also insights on Indo Tambangraya Megah (ITMG IJ), Bumrungrad Hospital Pub Co, Philippine Stock Exchange (PSE PM), IHH Healthcare (IHH MK), and Sheng Siong (SSG SP).
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom, from across Southeast Asia.

• A review of the market’s technical conditions and macro backdrop is supportive of a long-term stock market top.
• The good news is, in the absence of an active policy to engineer a slowdown, there is no recession in sight.
• Our base case calls for an adjustment of growth expectations and a garden-variety bear market, which typically sees a drawdown of 20–30%.

• The S&P 500 fell last week to test support at the 200 dma.
• Many elements of a tactical bottom are there, but not all.
• Cutting through all the news-driven noise, we believe the stock market is poised for a relief rally, though it may be in need of a final sentiment flush.