Macro

• I wanted to get the German election results before releasing my weekly editorial, and as far as I can judge, we are talking about a middle-of-the-road outcome, which should be seen as a net positive for European assets for now.
• CDU (Conservatives) and SPD (Social Democrats) will be able to form a GroKo (Grand Coalition) with 328 mandates, which is a coalition that could likely find some common ground around spending more and removing the debt brake, at least temporarily.
• A permanent removal of the debt brake will require the backing of an additional party.

• Our most prominent theme over the last year has been to BUY HK/China markets. We are still very bullish on these SECULAR BULL markets.
• We have been Bullish on gold and discussed the asymmetry of its price movements given the global tightening starting in 2021/22. Gold will continues to benefit from negative real rates.
• We have been Bearish on Japan since publishing Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend on April 2, 2024. We also remain bearish on India.

• Space / Cover Story: Is China’s commercial space sector ready to blast off?
• Railways /Analysis: Twists and turns abound for Chinese-built railways in Southeast Asia
• Charities /In Depth: Rule change leaves some Chinese charities starving for funding

• WTI futures fell by 0.5% for the week ending 21/Feb, marking its fifth consecutive weekly drop. Prices fell due to bearish economic data and rising crude inventories.
• WTI options Put/Call volume ratio surged to 1.62 on 21/Feb (Fri) from 0.94 on 14/Feb, as call volume rose by 15.9% WoW while put volume jumped by 100%.  
• WTI OI PCR fell to 0.95 on 21/Feb compared to 0.96 on 14/Feb. Call OI increased by 6.5% WoW, while put OI rose by 6.1%.

• For the week ending 21/Feb, U.S. natural gas prices gained 13.7% on the back of colder weather forecasts, rising LNG exports, and falling inventories.
• Henry Hub Put/Call volume ratio rose to 0.72 on 21/Feb from 0.66 on 14/Feb as call volumes increased by 81.4% WoW, while put volumes surged by 98%. 
• Henry Hub OI PCR rose to 1.04 on 21/Feb from 0.98 on 14/Feb. Call OI rose by 7.1% WoW, while put OI increased by 13.3%.

• Inflation for the first half of February came in at 0.15% bw, given the drop in prices of most agricultural goods.
• The figure was above our forecast of 0.09% bw and slightly below the market consensus of 0.18% bw.
• Our forecast error is explained by a higher-than-expected drop in tomato prices (-25% bw vs. -18% bw).

• The Bank of Korea cut its base rate by 25bp to 2.75%, aligning with expectations, as downside risks to economic growth intensified amid stabilising inflation and slowing household debt.
• Domestic demand remains weak, and US tariff policies constrain export growth. Thus, the 2025 GDP growth forecast was sharply revised downward to 1.5% from 1.9%.
• Future rate cuts will depend on balancing inflation risks, exchange rate volatility, and financial stability, with a particular focus on the impact of global trade policies and domestic political uncertainty.

• Negotiated wages grew by 4.1% in Q4, slowing sharply from Q3, but little changed on the average from 2024 and 2023. It is not yet on an obvious path of improvement.
• Broader labour costs have also slowed and are suggesting unit labour cost growth of around 4% y-o-y, although that would mark an abrupt rise in the quarterly pace.
• Labour costs are growing too fast to be consistent with a sustainable return to the ECB’s inflation target. We expect its easing cycle to end in H1, much earlier than priced.

• European peace optimism driving continental asset prices, especially equities, while Chinese tech stocks sizzle hot in Asia
• US real yields impacting global risky asset markets, with Fed’s dovish reaction function leading to plummeting real yields
• Dollar likely to stay soggy in short term until potential FOMC hawkishness or tariff-related events reignite Trump trades and boost dollar bullishness, while yen strength may not be sustainable due to BOJ policy and yield spread factors.

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• Peace hopes are higher and tariff fears have subsided for now
• China hosting summit with tech entrepreneurs could boost economy
• Markets becoming complacent over Trump’s policies, uncertainty remains on future developments

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• Fed is unlikely to cut rates in the near term, with a majority of participants pointing to a still restrictive policy stance
• Front end treasury yields are anchored by Fed’s current stance, leading to low range volatility and ongoing support for the treasury market
• Discussion on balance sheet policy suggests QT may end earlier than expected, with reinvestment of MBS proceeds likely to be in T bills, potentially impacting term premium and yield curve dynamics

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• KOSPI and KOSDAQ are up 10.2% and 14%, respectively YTD, outperforming S&P 500 is up 2.2% in the same period.  so far. 
• One of the big drivers of higher share prices of Korean stock market this year has been the strong net buying by the NPS.
• Some of the major stocks that have been net purchased by the NPS so far this year include Samsung Electronics, SK Hynix, LG Energy Solution, Hyundai E&C, and Samsung Biologics.

• The first 5 weeks of the year have seen international equities outperforming the S&P 500: European and Chinese stocks have rallied harder than US stock indexes, and certain emerging markets like Chile or Poland are doing even better.
• My main thesis for the first half of the year remains to be positioned with an ‘’International Risk Parity’’ portfolio: long US bonds, and long stocks around the world.

• The chart above shows that the US growth exceptionalism might be over. The Aggregate Income Growth series is a great proxy for nominal growth in real time: it includes private sector job creation, workweek hours, and wage growth – effectively reflecting the growth rate of nominal income US workers are bringing home.

• Apollo posts better profits than leader MRF in Q3 FY 2025
• JK Tyres faces the worst fall of 75% in net profit 
• Raw material prices look flattish in Q4 and demand robust\

• U.S. oil and gas rig count rose by four for the week ending 21/Feb, marking the fourth straight weekly gain and bringing the total to 592—the highest since June.
• For the week ending 14/Feb, U.S. oil production held steady at 13.49 million bpd, showing little change from the previous week.
• The number of U.S. oil rigs rose by 7 to 488, while gas rigs fell by 2 to 99. The rig count in the Permian basin remained unchanged at 304.  

• US-Dollar Reversal Incoming? The signs become more that the USD is topping out. This is the result of our latest currency-assessment.
• Particular interesting could be setups in AUDUSD as well as CADUSD – two currency pairs that have been hit the hardest by the strong USD-cycle over the last months.
• Both pairs trade at multi-year support and are heavily oversold across all metrics.

• The past week saw insights on Grab Holdings (GRAB US), XL Axiata (EXCL IJ), Siam Commercial Bank (SCB TB), Delta Electronics Thailand (DELTA TB) and Minor International (MINT TB).
• There was also a macro insight on Indonesia and sector insights on Indonesian Banks and rubber, as well as a company visit note on Boustead Holdings (BOUS MK). 
• 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.

• Switzerland’s economy is projected to show moderate growth in 2024, 2025 and 2026, with real GDP growth rates of 1.34%, 1.34%, and 1.80% respectively, an improvement compared to 2023’s slow growth of 0.75%, according to the IMF.
• In addition, Real GDP per Capita is expected to increase from CHF 87,577.63 in 2022 to CHF 89,415.98 by 2026.
• Total investments are projected to stay steady at around 24%-25% of GDP, a small decrease from 26.41% in 2021.

• In today’s uncertain scenario, cash is king. Moreover, the high US treasury yields, which had rendered a dividend yield strategy relatively unattractive, are beginning to decline again.
• In addition to considering today’s dividend yields, we think it’s also imperative to take into account companies’ future earnings potential to assess future dividend stability.
• Screening companies with at least 6% forward dividend yield and 5% forecast EPS CAGR over next 2 years, we arrive at our basket of 23 dividend yielders, 13 from HK/China.

• A sector rotation analysis reveals a market lacking in leadership, divided between a scenario of a rolling rotation from growth to value or a corrective pullback.
• The market faces several cross-asset headwinds from weakening liquidity, a threat of a replay of the yen carry trade unwind and renewed threats to growth from a trade war.
• Our base case scenario calls for a minor correction in the S&P 500.

• The backdrop of synchronized monetary easing by central banks around the world should lead to a global cyclical rebound under normal circumstances.
• However, market internals in the U.S. and Asia are not supportive of the cyclical rebound scenario.
• The market isn’t discounting the very real threat of a trade war, which threatens to derail the current cyclical equity bull.

• Demand for physical gold in London to be transferred to the US has surged due to fears of tariffs being imposed on gold imports by the Trump administration.
• Gold prices have been robust over the past year when measured in other major reserve currencies and Special Drawing Rights, thereby raising questions about the tightness of global monetary conditions.
• Falling US gold reserves will make it more difficult for official institutions to depress prices, thereby raising the influence of other factors in the determination of future price trends.   

• Fortescue Metals (FMG AU) announced disappointing results, with revenues/profits down 16%/53% YoY, disappointing consensus slightly by 4-5%. 
• Capex accelerated to 3.5-3.8 bn USD annually, vs the initial 3.2-3.5 USD. The company reduced its decarbonization capex to 400-500 mn USD from the initial >700 mn USD. 
• Fortescue Metals (FMG AU)  dividend payout ratio has reverted to its base level of 65%, yielding a modest 5.3% based on H1FY25’s 50-cent distribution.

• Antofagasta PLC (ANTO LN)  delivered robust 2024 results, showcasing an 11% EBITDA increase to $3.4 billion and significantly expanded margins to 52%, exceeding many industry peers.
• Antofagasta’s 2025 capital expenditure is projected to increase to $3.9 billion (from $2.4 billion in 2024), supporting production growth to 900,000 tons (vs current 660k tons) by 2029-30. 
• Antofagasta’s valuation, at 27.2x P/E and 7.2x EV/EBITDA, appears elevated. Southern Copper (SCCO US), offering superior return on capital employed (ROCE), presents a more attractive investment profile.

• India’s economic future continues to be hotly debated, not least because of Prime Minister Modi’s vision to make it a developed economy by 2047.
• Unfortunately, economic trends haven’t played along. The stellar post-pandemic growth recovery has given way to an abrupt slowdown, led by falling private consumption growth.
• We chat with eminent Indian scholar and noted journalist, Niranjan Rajadhyaksha, on the opportunities and challenges facing India.

• A review of recent events/data impacting our investment themes or outlook
• China rally continues in the tech sector as investors “discover” the value
• More evidence that the USD has peaked while gold continues to be at risk of a stock market correction

• Autos /: Chinese carmakers expand into growing Central Asian markets
• Corruption /: Former ICBC banker gets suspended death sentence for graft
• Meituan /: Meituan to provide social security benefits for delivery riders

• For the week ending 14/Feb, U.S. crude inventories increased by 4.6m barrels, exceeding expectations of a 3.2m barrel build. Gasoline stockpiles surprisingly fell, while distillate stocks dropped more than expected.
• U.S. natural gas inventories fell by 196 Bcf for the week ending 14/Feb, beating analyst expectations of a 191 Bcf drawdown. Inventories are 5.3% below the 5-year seasonal average.
• Occidental’s Q4 adjusted EPS rose 8.1% YoY, beating estimates by 18.1%. However, it posted a net loss of USD 297 million. Wolfe Research, UBS, and Susquehanna raised price targets.

• Indonesia’s Growth Concerns: Questioning the reliability of Indonesia’s steady 5% GDP growth, highlighting high real lending rates and the need for interest rate cuts to spur private investment.

• Japan’s Economic Weakness: Stripping out net exports, Japan’s GDP growth is flat, with rising wages squeezing profits, raising concerns about economic sustainability despite positive headline figures.

• Thailand’s Investment Issues: Thailand’s GDP growth of 2.5% masks weak private sector investment, with public spending driving growth but failing to translate into meaningful private sector expansion.

• The National Institute of Statistics and Geography (INEGI) confirmed that economic activity closed 2024 with an annual growth rate of 1.5%.
• In this context, we will be revising our 2025 growth forecast from 1.2% down to 0.8%, while maintaining our forecast for 2026 at 1.9%.
• We anticipate a successful renegotiation of the USMCA, though not without some ups and downs during the process.

• We estimate that inflation for the first half of February will come in at 0.09% bw, due to the drop in agricultural prices.
• Inflation for this period is typically around 0.17% bw.
• Our low estimate is explained by a -4.93% bw generalized decline in agricultural prices, specifically among tomatoes and onions.

• This week, the flurry of hawkish UK data extended into a torrent, with unemployment, wages, inflation, retail sales, and the flash PMI drowning dovish assumptions. Repriced rates don’t reflect the reality in the macro data where reversing hikes may be needed.
• Final Euro area inflation data and monetary policy decisions from Korea and Thailand are highlights incapable of changing global narratives. Negotiated EA wage data, policy speeches, and Trump’s regular shouting into the void may dominate instead.
• Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to [email protected]).

• Year-on-year increase of 11.06% in NR production in 2024
• Ivory Coast once again upstages Thailand in imports
• Seed collection and sales to nurseries turn revenue spinner for smallholders

• OPEC kept its 2025 and 2026 oil demand growth forecasts steady, while EIA and IEA raised their estimates for 2025 by 3% and 4.8%, respectively.
• EIA sees India leading oil demand growth, with consumption rising 0.3m bpd in 2025 and 2026, while China’s demand is expected to increase by 0.2m bpd over the same period.
• Among the nine OPEC members with quotas, production fell 107k bpd MoM to 21.23m bpd, just below the 21.24m bpd target. Saudi Arabia led the decline in output.

• Meituan / In Depth: Meituan hopes Middle East expansion will deliver growth
• Central bank /: PBOC’s Pan says reform of IMF quota system ‘critical’
• Bankruptcy /Interview: time is right for China to fix personal bankruptcy legal omission, expert says

• The past decade made investing look easy – 13% returns per year from the S&P 500. But the next ten years are shaping up to be a whole different story.
• Even if you make some pretty optimistic assumptions, US stocks are likely to return a mere 5% per year, with risks tilted to the downside.
• Using a structured process, identified scenarios based on the three key forces that drive long-term stock returns: dividend, earnings growth, and changes in valuations.  

• Since October, FIIs have sold US$24.2 bn Indian stocks. DIIs have bought US$36bn. The market has been supported by the latter, benefitting from steady SIPs – now at US$3bn monthly.
• India households’ historical under-ownership of equities and the steady decline in interest rates and returns from property turned domestic investors towards equity. With Indian equities declining steadily, that could change.
• Looking at DIIs’ sector-wise ownership, we think if domestic MFs are forced to sell, then industrials, consumer discretionary, materials and to a lesser extent, financials could be at risk.

• Perfect is a software company focused on bringing an omnichannel experience for enterprises and consumers within the broader beauty space.
• The company has 708 brand clients (up 3% Y/Y) and ~977k subscribers (up 17% Y/Y) as customers.
• Although top-line growth slowed to ~11% from 16% at IPO in late 2022, Perfect is FCF positive, has more than $160 million in cash, zero debt, and is trading at ~3.4x 2025E revenue.

• If the Fed convinces the market that it is leaving the door open to easing and sees Fed Funds reduction multi-year, then 2yr could hold onto a small discount .
• 10yr yields will likely maintain a small to modest premium to 2yr.
• Funding will keep 10yr Treasuriies elevated unless a slowdown in the economy is evident, but the 10yr budget bill now looks like it will produce a budget deficit in 2026-27.

• Xi’s Tech Summit: China’s Wake-Up Call: On Monday, February 17, Xi Jinping sat down with China’s tech elite in what looked like a serious course correction. Jack Ma (Alibaba) was there. So was Ren Zhengfei (Huawei). But one key figure was missing: Robin Li, Baidu’s CEO. His absence sent Baidu’s stock into a tailspin, wiping out billions in market value before state media scrambled to calm investors down.

• Trump’s Tech Playbook: No More Playing Defense: Beijing is watching what’s happening in Washington—and it doesn’t like what it sees. The Trump administration is moving fast, rolling back regulation, cutting deals with industry giants, and pushing AI, semiconductors, and defense tech like it’s the new space race.

• Baidu’s Stock Crash: A Symbol of China’s Problem: The Baidu selloff shows that investors are still nervous about China’s real stance on tech. It’s one thing to invite Jack Ma back into the room—it’s another to convince the market that Beijing is serious about letting private companies thrive again.

•  Export earning crosses US$1 billion in 2024, up 7.66% from 2023  
• Local downstream producers appalled over rubber yield fall  
• Domestic tire industry in a bid to consolidate  

• Episode number eight of the Barbarians podcast on Valentine’s Day, February 14, 2025, featuring guest Kevin Jang, CIO of Virgo Digital Asset Management
• Kevin’s background includes experience in trading fixed income markets and digital assets, providing valuable insights on correlations between traditional macroeconomics and digital assets
• Discussion on recent market events such as blowout jobs numbers and higher than expected CPI, signaling a potential turning point in the markets and a shift in investor sentiment

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• UK CPI inflation jumped 0.2pp beyond expectations to 3% y-o-y in January amid broadly excessive price rises, to the extent that the median annualises at almost 6%.
• Underlying pressures have been trending higher since easing began, and the headline rate is set to keep rising, albeit with little change before the BoE’s likely cut in May.
• Demand growth keeps unemployment low, suggesting monetary conditions are too loose for tight cyclical pressures. We expect rate hikes in 2026 to reverse premature cuts.

• The Monetary Policy Committee reduced the OCR by 50 basis points to 3.75%, in line with expectations, citing declining inflationary pressures and significant economic slack, with further cuts likely through 2025.
• While near-term inflation may experience volatility due to exchange rate depreciation and higher fuel costs, core inflation and inflation expectations remain well-anchored around the target midpoint.
• Global risks, including trade policy uncertainty and geopolitical fragmentation, pose downside risks to growth. Still, the Committee remains confident that maintaining inflation stability will provide flexibility to respond to future shocks.

• Casinos / In Depth: Casino plan could put Thailand behind only Las Vegas and Macao
• Consumption /In Depth: China’s policymakers target consumption to kick economy into gear
• Energy Insider /: BYD crushes rivals in global EV sales, oil producing ship that captures its own emissions unveiled

• Bank Indonesia held the BI-Rate at 5.75%, in line with expectations, maintaining a cautious stance as inflation remains within target and global financial uncertainty persists.
• The central bank reinforced macroprudential measures to support credit growth and external stability, including expanding the KLM programme and strengthening foreign exchange policies.
• Future rate decisions will be data-driven, with further easing contingent on inflation stability, Rupiah resilience, and global financial market developments, particularly the trajectory of US monetary policy.

• For the week ending 14/Feb, U.S. natural gas prices gained 12.6% on the back of colder weather forecasts, rising LNG exports, and falling inventories.
• Henry Hub Put/Call volume ratio dropped to 0.66 from 1.33 (07/Feb) the previous week as call volumes surged by 102.1% WoW, while put volumes inched down by 0.2%. 
• Henry Hub OI PCR rose to 0.98 from 0.97 (07/Feb) last week. Call OI rose by 5.2% WoW, while put OI increased by 6.5%.

• Unemployment’s rising trend was a dovish crutch broken by stability in December, with the turn in underlying changes repeating the hawkish patterns after Jul-23 and Feb-24.
• An intensification of wage growth to 0.7% m-o-m extended its hawkish trend to return the annual rate to around 6%, meaning no progress on where it started the year.
• Payback in unemployment follows that in GDP, bringing the data to a more consistently hawkish position at the end of 2024. We still only expect a final BoE rate cut in May.

• President Trump’s executive order on reciprocal tariffs has not produced much market reaction, as the proposals will not be delivered to the president until April 1
• The process of Commerce/U.S. Treasury and Homeland Security input is seen reducing the odds of penal tariffs.
• However, uncertainty still exists and the EU in particular is at real risk of threats and implementation in the spring.

• Buy and hold investors should be looking to buy on dip,  and we are structurally long Indian equities. 
• However the attraction of India as a hedge against Trump’s  global trade war and China has diminished. Two reasons. 
• First, India’s disappointing economic performance. Second, Trading Post’s expectations that the trade war will be over sooner than consensus is expecting and that a US-China trade deal will be struck.

• WTI futures fell by 0.4% for the week ending 14/Feb, marking its fourth straight weekly drop. Prices fell due to trade policy uncertainty and rising crude inventories.
• WTI options Put/Call volume ratio fell to 0.94 from 1.18 (07/Feb) last week, as call volume rose by 23.6% WoW while put volume dropped by 1.6%.  
• WTI OI PCR fell to 0.96 from 0.98 last week. Call OI dropped by 16.9% WoW, while put OI decreased by 20.1%.

• Total copper production, excluding Cobre Panamá, was 431,000 tonnes—14% higher than the previous year and exceeding guidance of 420,000 tonnes. Gold production also surpassed guidance at 139,000 ounces.
• Management believes the ICC’s five-month arbitration delay for the Cobre Panama mine, now set for February 2026, is unlikely to affect the pace of negotiations.
• The company trades at an EV-EBITDA of 9.4x, which is more expensive than some of its peers. However, Cobre Panama’s option value materializing makes it attractive (4.7x EV-EBITDA).

• Debt / Cover Story: How to provide relief as personal debt piles up in China
• Private business /: Xi emphasizes private sector’s role in rare meeting with business titans
• Shenzhen /: Shenzhen may report first drop in fiscal revenue since 1990

• The RBA lowered the cash rate to 4.1% as inflation moderates faster than expected, with underlying inflation at 3.2% in the December quarter, supported by easing wage pressures and subdued private demand.
• Labour market tightness persists despite overall economic weakness, with the unemployment rate at 4%, sustained employment growth, and high unit labour costs posing potential inflationary risks.
• The outlook remains uncertain, with global risks including US trade tensions and geopolitical instability, while further rate cuts will depend on continued disinflation and stable labour market conditions.

• Cocoa Price Update Much of the price increase between summer and winter can be fundamentally explained with the decision by the cocoa board of the Ivory Coast (about 35-40% of global supply) not to allow farmers to plant new trees to discipline supply, as cocoa bean prices were too low from its perspective.
• Also contributing were cyclical happenings such as complicated weather occurring, swollen shoot virus and speculation.
• By now, the liquidity (measured by open interest in the futures market) in the cocoa market is quite low, making it almost impossible for smaller retail investors to participate in the market anymore.

• Fed interest rate policies have not followed traditional patterns, with long-term rates decoupling from short-term rates
• The economic shock of Covid-19 has led to increased focus on inflation and uncertainty in the bond market
• Fed Chairman Powell’s actions and fiscal policy responses have contributed to changing economic dynamics and interest rate outlooks

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 editorial on everything macro, where we cut through the noise and deliver contrarian takes on macroeconomics, liquidity, tradeable themes, and everything in between.
• Reciprocal tariffs is a concept you’ll need to familiarize yourself with.
• Despite Trump’s press conference last week being a confusing mess, lacking clarity on geographies, products, and specific tariff/VAT rates targeted in this tit-for-tat approach, the aim seems crystal clear: Trump wants a global response, and it could very well lead to globally lower tariffs and VAT rates.

• Maintain structural overweight on Indian equities but hedge against rupee weakness
• While buy and hold investors should be looking to buy on dip, the attraction of India as a hedge against Trump’s  global trade war and China has diminished. 
• That said fundamentals – corporate and bank balance sheets – are strong, the corporate profit cycle is in upswing and the real cost of capital is within the normal range.  

• The U.S. oil and gas rig count rose for the third consecutive week, increasing by 2 to 588 for the week ending 14/Feb.
• For the week ending 07/Feb, U.S. oil production moderately rose to 13.49m bpd from 13.48m bpd the week prior.
• The number of  U.S. oil rigs rose by 1 to 481, while gas rigs grew by 1 to 101. Rig count in the Permian basin rose by 1 to 304.  

• The misinterpretation of the recent Trump/Putin phone conversation by the commentariat partly explains why markets are currently ahead of the curve on Russia/Ukraine issues.
• As long as European leaders continue to deny the state of transatlantic relations, the situation remains uncertain.
• Given the current circumstances, investors should proceed with caution, keeping in mind the principle of ‘caveat emptor’ (buyer beware).

• Eurodollar trading up towards highest level since late January, European equities surging
• Ongoing threat of US tariffs and sticky inflation data partially offsetting positivity
• Discussion with economists on implications of potential peace deal, tariffs, and upcoming UK data in Europe and UK.

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•  Smallholders keep inventories as tire makers make guarded purchases  
• Wintering over, next season may start by March end  
• Indian Government ups Budget allocation for Rubber Board

• The past week saw insights on Kalbe Farma (KLBF IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ), DBS (DBS SP), and Paragon REIT (PGNREIT SP).
• There was also a macro insight on the Philippines, and further insights on DigiPlus Interactive (PLUS PM) and Airports of Thailand (AOT TB).
• 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.

• Strength in January CPI does in part reflect residual seasonality, but continued stalling of progress in yr/yr growth is of concern.
• This revives concerns that the economy may need to slow to return inflation to the 2.0% target, something tariffs are likely to make more difficult.
• Uncertainty is high, but we now expect only one 25bps easing in 2025, which is likely to come late.  We expect the Fed to remain cautious through 2026.

• Baseline assumption of ceasefire between Russia and Ukraine in Year Ahead outlook published in November
• Potential for restarting Russian pipeline gas flows to Europe as part of negotiated end of conflict
• Estimated additional 40 bcm per annum of supply to Europe, impacting TTF price forecast in 2025

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• The gold bull is just starting, with strong upside potential in the coming investment cycle.
• The market is undergoing a regime shift. Gold will be useful to hedge against bond weakness in the coming cycle, which will see small-caps dominate large-caps and value dominate growth.
• Gold mining stocks present a long-term opportunity, but may be vulnerable to a short-term setback.

• The prospects for wider trade wars have risen given the announcements by the Trump administration of reciprocal tariffs and a blanket tariff on steel and aluminium.
• Treasury Secretary Bessent has announced his desire to reduce the US interest term structure across all maturities instead of focusing on short-term interest rates. Less profligate fiscal policy will help. 
• President Trump is committed to a strong dollar policy. Secretary Bessent believes China will be forced to absorb the impact of tariffs via lower export selling prices and profit margins.

• Even as the S&P 500 tests overhead resistance at its all-time high, we are seeing negative divergences everywhere.
• We interpret this as a market poised for a corrective pullback. 
• The most likely bearish catalyst is a negative reaction to a Trump trade war announcement.

• We expect a 0.3% rise in January’s core PCE price index, slower than the 0.4% seen from core CPI, while we expect a modest 0.3% rise in personal income.
• Core CPI rose by 0.446% before rounding in January, but the components of PPI that contribute to core.
• PCE prices were mostly subdued and core PCE prices usually underperform core CPI. Overall CPI rose by 0.5% but before rounding was similar to the core at 0.467%.