Macro

• Recent tech stock sell-off causing market volatility
• Limited contagion to broader market, some stocks even up
• Potential for more impact as uncertainty around DeepSeek continues

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• Innovation from China’s technology initiatives can provide help to cro ss over productivity but the benefit will likely only be modest due to the downgrading of the private sector.  
• The structural slowdown in capital productivity will dominate. Combined with a peak in the labor force, this is likely the mean trend growth will be below 3% from 2027 onwards.  
• Stimulative fiscal policy can lift actual growth above trend growth, but likely only modestly.   

• Amid U.S. President Donald Trump’s renewed tariff war and the Federal Reserve tempering expectations of a rate cut, Hong Kong stocks opened lower in the Year of the Snake, with the Hang Seng Index dropping more than 2% before recovering the 20,000 mark by midday.
• Despite the turbulence, market consensus suggests that the impact of tariffs is largely priced in, with some tech stocks defying the trend.
• Among major indices, the Hang Seng Index saw its steepest drop of 2.3% in the morning, hitting a low of 19,764 before closing at 20,075.

• WTI futures fell by 2.9% for the week ending 31/Jan on the back of trade policy uncertainty, growing U.S. crude stockpiles, and a strengthening dollar.
• WTI options Put/Call volume ratio increased to 1.31 from 0.85 (24/Jan) last week, as call volume rose by 78.1% WoW while put volume surged by 176.3%.  
• WTI OI PCR fell to 1.00 from 1.01 last week. Call OI rose by 8.9% WoW, while put OI grew by 6.9%.

• The Indian economy is projected to continue growing at a fast pace, with real GDP growth projections of 6.46% and 6.47% in 2025 and 2026, respectively.
• GDP per capita will most likely continue the growth over the next years, surpassing INR – ₹ (Indian Rupee) 140k (almost $1,629.68) in 2026.
• Both total investment (% of GDP) and gross national savings (% of GDP) are forecasted to stay stable until 2026, with both measures standing at around 33%-34% of India’s GDP.

• U.S. and Chinese tech giants are racing to integrate DeepSeek’s large language models into their products, seeking to capitalize on the Chinese firm’s meteoric rise that has rattled the global artificial intelligence (AI) sector.
• As of Sunday, Nvidia Corp., Microsoft Corp., Amazon Web Services Inc. (AWS), as well as the cloud-computing units of Huawei Technologies Co. Ltd. and Tencent Holdings Ltd. have added DeepSeek’s AI models to their offerings, aiming to attract more developers and subscribers.
• Microsoft was the first major player to make an announcement, saying on Wednesday that it had added DeepSeek-R1 to its Azure AI model library and embedded the model into its Copilot chatbot.

• For the week ending 31/Jan, U.S. natural gas prices dropped by 24.4% amid volatile weather forecasts and softening heating demand outlook.
• Henry Hub Put/Call volume ratio increased to 1.50 from 1.05 (24/Jan) the previous week as call volumes fell by 40.2% WoW, while put volumes declined by 14.7%. 
• Henry Hub OI PCR rose to 0.96 from 0.93 from last week. Call OI fell by 17.0% WoW, while put OI decreased by 14.6%.

• We review the 2024 ‘draw the line’ group forecasts for new home sales in China vs what happened, and put it in the context of the past forecasts.
• The ‘wisdom of crowds’ worked well in 2023, but 2024 was another unexpected negative, though not as bad as the surprise of 2022.
• You can now join this year’s ‘draw the line’ for new home sales, part of Real Estate Foresight’s 13th Annual China Property Outlook.

• The contribution of high value-added industries such as biomedicine to China’s total economic inputs rose last month, due primarily to an increase in capital inputs, a Caixin index showed Sunday.
• The Caixin BBD New Economy Index (NEI) came in at 33.8 in January, up 0.3 points from the previous month.
• That indicates that new economy industries accounted for 33.8% of China’s overall economic inputs.

• Exports /In Depth: Beijing’s ban on mineral exports to U.S. leaves traders scrambling
• DeepSeek /: Tech giants dash to include DeepSeek’s AI into their offerings
• Rail /: Expanded Russian customs checks disrupt China-Europe rail logistics

• Happy Sunday, everyone, and welcome to our weekly editorial on all things macro.
• Everyone I’ve spoken to today has asked me, “How would you go long the USD at the Wellington open?” That, in itself, says a lot about sentiment.
• I’m currently making my way home from the U.S. after meeting with a ton of investors over the past three days, and I’ve come away with the view that a weaker USD is now the pain trade.

• Oil markets in 2024 experienced slow supply and demand growth after years of high volatility
• Heading into 2025, demand is reaccelerating faster than supply, leading to a bullish outlook
• With low inventory levels and a modest supply deficit expected, prices are likely to gradually rise to low 80s Brent basis

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• Rubber production in December suffers a loss of 30%  
• Yokohama Rubber plays Good Samaritan in hour of crisis  
• CMO enabling FSC Certification for Thai rubber for EUDR

• Trump prioritizes reducing US trade deficit by urging nations with trade surpluses to increase oil and gas purchases or face tariffs
• To reduce bilateral deficits, US would need to significantly increase oil and gas exports to Europe, China, South Korea, and Japan
• Trump administration aims to accelerate US oil and gas production growth to meet demand and potentially lower costs for producers to achieve goals of reducing trade deficit and increasing energy exports

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• Concerns about the end of US equity exceptionalism could lead to potential weakness in the dollar
• Deepseek model challenges US exceptionalism in tech and could impact equity markets
• Despite volatility, US equity market still strong, but potential for more bouts of volatility ahead

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• 2024 was a record year for ETF flows, with $1.1 trillion in inflows, resulting in 32% global asset growth
• Eric Balcunas discusses the impact of John Bogle on lowering fees in the industry, estimating savings of $1 trillion for investors
• Innovations in the ETF market include leveraged and crypto exposure ETFs, with predictions of continued growth in the industry reaching $35 trillion by 2034

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• Uncertainty around AI breakthroughs in non-US companies adds a layer of uncertainty to US tech stock valuations
• Impact of AI disruption on emerging markets is uncertain, with potential benefits from democratization of technology but challenges in AI preparedness
• EM fixed income assets may be impacted by market relationships and US equity valuations in response to AI breakthroughs

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• The U.S. oil and gas rig count rose for the first time in eight weeks, as it rose by 6 to 582 for the week ending 31/Jan.
• For the week ending 24/Jan, U.S. oil production fell to 13.24m bpd from 13.48m bpd the week prior.
• The number of active U.S. oil rigs rose by 7 to 479 while gas rigs dropped by 1 to 98. U.S. producers added four rigs in New Mexico.

• Colleagues in the US made an important change to their Fed forecasts this year
• Market sentiment may be jittery in February, with focus on global tech stocks and testing US Exceptionalism narrative
• US Employment report at the end of the week is extra important to watch, with expectations for benign data, but potential risks and noise in the report due to factors like wildfires and updates to population estimates for the household survey.

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• The Fed kept policy rates unchanged as expected, but Chair Powell’s press conference provided key insights on the Fed’s stance
• The Fed’s focus on inflation and asymmetric reaction function suggests a possible delay in further rate cuts
• Range-bound rate environment post-Fed meeting favors short gamma strategies for volatility sellers, while yield curve trading strategies may lack carry opportunities

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• Substantial reduction of tax rates for all income-tax payers will provide a robust boost to private consumption (PCE) in FY26, while reduction/rationalisation of customs duties boosts FDI and exports, medium-term. 
• Commitment to reduce public debt to 47% of GDP by FY31, and taking FY26 fiscal deficit to 4.4% of GDP, likely to be met comfortably, as nominal GDP outperforms assumptions. 
• Major support to labour-intensive exports (including tourism), and incentives for states to improve urban governance and power distribution, are forward-looking measures, as are bolsters for battery manufacturing. 

• DeepSeek’s recent launch of a free-to-air artificial intelligence app without the need for high computer processing power has raised concerns about American technological superiority in the realm of AI.  
• While technology made significant contributions to US equity outperformance due to very high operating margins, other sectors have contributed via shifting investor preferences towards entities that deploy capital more efficiently.
• Fiscal prudence rules in the Eurozone could undermine the region’s economic outlook. Cautious private sector activity in Germany undermines potential growth, boosting the attraction of US investment by German companies.

• The current environment suggests that traders should adopt a strategy of “buy the dip and sell the rips”.
• The combination of negative surprises during earnings season and potential bearish policy announcements when the market is overbought will put downward pressure on stock prices.
• On the other hand, investors should trust the stock market vigilantes to activate the Trump Put in the event of a market downdraft. 

• Breadth indicators are flashing early cautionary signals for U.S. equities, but these signals can often be early in calling a major market top.
• A review of other indicators on different investing dimensions are either benign or cautious.
• We interpret this as the warning of a possible major market top in Q1 or Q2. Investors should monitor risk appetite indicators for tactical signs to turn cautious.

• Fenix Resources (FEX AU) delivered impressive results for Q2 2025. Sales increased by 71% QoQ and 68% YoY, driven by the ramp-up of the Shine iron ore mine.
• The Beebyn-W11 mine, projected to ramp up production to 4 million tonnes from the current 2.5 million tonnes, is anticipated to receive final mining approval in the current quarter.
• Trading at 5.9x FY25e PE with 57 mn AUD in net cash, which accounts for 27% of its market capitalization, the stock is worth a look. 

• The 2.3% increase in Q4 GDP is little weaker than consensus expectations surveyed. But the data was supported by a significantly stronger than expected 4.2% rise in consumer spending
• Consumption keeps the pace of growth solid. Core PCE prices at 2.5% are on consensus, showing inflationary pressures moderately above target.
• Final sales rose by 3.2%, meaning a negative of 0.9% from inventories, and weak inventory growth in Q4 provides potential for a bounce in Q1 2025.

• Brazil debt market has two domestic crises including inflation and fiscal policy, rather than a spillover from the U.S. 
• Restrictive BCB policy helps produce some disinflation, which allows some rate cuts in H2. Brazil risk premium will likely be reduced latter in the year if a narrower bond spread. 
• However, Brazil crisis over fiscal policy would not be fixed, which is the 2 precondition for a more dramatic narrowing of bond spreads versus the U.S.  

• Despite the income tax cut, the FY26 budget is likely to be contractionary.
• Continued fiscal consolidation could require some costly trade-offs, if the recent budgets are any indication.
• To achieve the planned fiscal consolidation without significantly impacting growth, the government needs to re-assess the expenditure mix.

• We see the review of the phase 1 U.S./China trade deal being adverse and President Trump’s carrot and stick approach leading to a 10% rise in tariffs on China imports. 
• We eventually see a phase 2 U.S./China trade deal Q4. The main alternative scenario is that China could show goodwill to resolve illegal Fentanyl movements from China to the U.S.   
• Coupled with the Tik Tok sale, This can lead to spring hopes that a phase 2 U.S./China trade deal can be reached and a more full-scale trade will be avoided.  

• A review of recent events/data impacting our investment themes or outlook
• The narrative change around US tech spending on AI has potentially positive implications for Chinese technology shares
• India sets the stage for interest rate cuts and the budget cuts taxes for the middle classes to boost consumption 

• The book discusses new arguments for investing in gold in the modern era, including the threat of cyber financial warfare.
• The hosts discuss the book’s exploration of notable advocates and critics of gold investment, including Milton Friedman and Roubini.
• Emphasizing the new arguments in favor of gold investment in the 21st century alongside traditional reasons

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• Inflation, particularly in housing costs, has been a big theme in recent American life.
• Despite the Fed raising interest rates to fight inflation, rent price growth has been moderating.
• Multifamily housing developers are feeling the strain of higher interest rates and a lack of supply due to decreased activity in the market.

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• All eyes will be on Union Budget 2025 which will be presented by the Hon. Finance Minister on February 1st. 
• As GDP growth has been reducing lately coupled with the FIIs sell offs, focus will be on how the government tackles economic growth while keeping the fiscal consolidation in check.
• We expect a balance between the two and do not expect budget to be highly inflationary. However, a cut in potential revenue could be met with new streams like divestments.

• The Trump administration’s early moves show that Asia will face geopolitical and trade difficulties even if the feared tariff increases did not materialise immediately.
• Despite the lack of major trade restrictions in its early days, the administration remains bent on using such restrictions as a tool to achieve geopolitical objectives. 
• Although ASEAN as a whole will be heavily affected, the impact on individual countries is likely to vary according to their respective trade and defence relations with the US.

• A lack of the Fed’s willingness to cut rates will also be positive for fixed rate bonds.
• We will have rising defaults, rising inflation, and the Fed’s lack of willingness to increase rates, all of which will lead to recession in 2026.
• Trump presidency adds to our confidence that there will be policy uncertainty at least in 2025, which is negative for risky assets but positive for US Dollar assets, in general.

• For the week ending 24/Jan, US crude inventories increased by 3.5m barrels, missing expectations of a 2.2m barrel build. Gasoline stockpiles rose, while distillate stocks fell more than expected.
• US natural gas inventories fell by 321 Bcf for the week ending 24/Jan, beating analyst expectations of a 317 Bcf drawdown. Inventories are 4.1% below the 5-year seasonal average.
• Shell’s Q4 adjusted earnings dropped 38.3% QoQ and 49.9% YoY, missing estimates due to weak margins and oil prices. HSBC raised its PT on Chevron but cut it for Exxon.

• In Apr-Dec’24 (3/4th of FY25), the fiscal deficit was only 56% of the FY25 target, and its 12mma was 4.9% of GDP. Seasonality should bring it to 4.7% by end-FY25.
• PIT, CGST and customs revenue grew 11-22%YoY in CY24. Corporate taxes declined, falling 8.33%YoY in Q2FY25, but recovering to grow 3.34%YoY in Q3FY25. The worst is over for EPS growth. 
• The 4qma of the CAD was 0.6% of GDP in Sep’24; a surplus in Dec’24 likely cut the Q3FY25 deficit further. Seasonality should ensure a FY25 surplus (0.2% of GDP). 

• iSNR (Indian Sustainable Natural Rubber) to deal with EUDR  
• INR Konnect to help idling plantations come alive  
• iSNR to fetch a premium of 10-35% in global markets  

• AI news shocked market pricing at the start of the week, but policy decisions proceeded as planned. The ECB, Riksbank and BoC cut by 25bp, the Fed and Chile skipped a step in this cycle while Brazil jumped up 1pp again as it hurries to unwind premature stimulus.
• The BoE dominates next week’s policy calendar with its likely 25bp cut after skipping in December. We expect two hawkish dissents. Sticky flash Euro area inflation and resilient US payrolls are the most critical data releases topping and tailing the week.
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• A more hawkish interpretation of the data in the statement appears to be more a justification for the FOMC’s decision
• There is still scope for renewed Fed easing if either inflation or labor market data weakens, and we will see two months of employment and CPI data
• The most significant adjustment to the FOMC statement was a removal of a reference to inflation making progress toward the 2% objective.

• President Claudia Sheinbaum took office in October, inheriting a delicate economic situation from her popular predecessor Andres Manuel Lopez Obrador.
• Many lower income people in Mexico are benefiting from higher wages and government social programs, but others, particularly middle and higher income earners, feel stagnant economic growth and uncertainty due to US tariff threats.
• The relationship between Mexico and the US, along with Sheinbaum’s plans and the ability to attract outside investment, will be key factors in Mexico’s economic growth under her leadership.

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• Our differentiated business cycle analysis approach to investment strategy and asset allocation is grounded in the real world and covers 11 economies.
• Understanding where a country is in the business cycle is key to investing to generate alpha while avoiding the pitfalls. 
• Investing through the business cycle works. 69.8% of the 43 global investment calls made last year made money. 

• The ECB cut its deposit rate by 25bp for the fifth time as growth remains weak, with GDP stagnating and inflation still expected to ease towards target-consistent levels.
• It believes monetary policy is tight despite 125bp of easing, leaving room for another cut in March. Updated staff estimates of the neutral rate on 7 February are critical.
• However, President Lagarde incredulously rejected calls for stimulative policy. Low unemployment suggests output isn’t below potential, making stimulus inappropriate.

• December’s personal income and spending report will be largely old news, with Q4 totals seen with the GDP report on January 30.
• Our pre-GDP forecasts for a 0.2% rise in core PCE prices and a 0.4% rise in personal income still look valid.
• December personal income is unlikely to rise so sharply, which suggests upward revisions in October and November. 

• CEMEX (Outperform): today the company concludes the sale of its Dominican Republic assets announced previously on August 2024.
• The net proceeds are close to US$950 M, which is aligned with the company’s strategy to improve its asset portfolio.
• Please note that the Dominican Republic asset sales is part of a ~US$2.2 Bn divestments program identified by CEMEX (CX).

• The Federal Reserve held the federal funds rate at 4.25%-4.50%, pausing after prior cuts in response to stable labour market conditions and still-elevated inflation.
• Inflation has declined significantly but remains above target, with core PCE at 2.8%, justifying a cautious approach to further easing.
• Future rate moves will depend on inflation and labour market trends, with the Fed retaining flexibility. We still expect a final cut in March.

• Mark has 15 years of experience delivering new technology products in a variety of companies and holds a PhD in Computer Science from UCL University of London
• He is the author of the book Taming LLMs and the creator of Podcastify AI
• Mark recapped recent events in the markets, discussed taming LLMs and creating robotic podcasts, and highlighted the success of Bitcoin ETFs

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• After the November rebound, December’s ANTAD SSS closed at 1.2%, one of the lowest figures in the year.
• Meanwhile, total store sales grew by 4.0% YoY. Both figures were also below YTD performance.
• On a 2-year comp basis, performance was also weak, with SSS growing 6.5%, also one of the lowest of the year. For the full year, SSS closed at 4.2%, the lowest post pandemic.

• Trump signed emergency declarations to address energy and minerals inadequacy in the US
• Plans to impose tariffs on Mexico and Canada, pressure OPEC to lower prices
• Unclear what powers these declarations unlock, potential impact on energy and metal projects

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• Let’s start with DeepSeek.
• The trajectory toward singularity may be accelerating faster than previously forecasted.
• With barriers to entry for AI development rapidly lowering and efficiency gains fueling greater demand rather than less, it seems inevitable that this trend will reshape the AI landscape.

• Asia bottomed out in mid January and has been recovering on “Trump tariff” hesitation. But Deepseek’s LLM threatens to upend US AI superiority and has dented the AI investment theme.
• We think the AI story is far from over; the hyperscalers’ investments should continue. We keep faith on the beneficiaries – TSMC and SK Hynix, and on Taiwan in particular.
• Asian equities could run if foreign flows revive on USD moderation. But the earnings season underscores US earnings profile superiority. Asia seems pedestrian in comparison. Watch earnings estimate trajectories closely.

• As we had forecast in Sep’24, the S$NEER has depreciated since the Oct’24 policy statement (despite officially unchanged policy). SS$NEER likely to depreciate further, with SGD reaching S$1.39/US$ by end-Mar’25. 
• The productivity rebound, bolstered by 10%YoY growth in machinery investment in Q3/24, enabled ULCs to moderate, rising just 0.9%YoY economy-wide (slowest in 4 years), helping contain headline and core inflation.
• We expect inflation to remain below 2%YoY in 2025, while real GDP grows 3.2% (above the government’s “1 to 3%” growth forecast), driven by investment and productivity growth in H1.

• We are underweight Chinese equities and the renminbi because our business cycle indicators show the economy is yet to bottom. 
• Troublingly risk aversion among companies and households is becoming entrenched. Xi and the property market crisis are paralysing the private sector and killing entrepreneurial spirit.
• We are  more concerned about the domestic economy and the government’s stance toward private enterprises than Trump’s trade war.

• The Riksbank cut its policy rate by 0.25pp to 2.25%, in line with the consensus forecast, citing weak economic activity and contained inflation risks.
• Forward guidance suggests a cautious approach to future rate cuts, with policymakers closely monitoring the delayed impact of previous reductions on demand and inflation.
• External risks, including geopolitical tensions and economic policy uncertainty in major economies, alongside domestic factors like the krona’s exchange rate, will be key in shaping the future interest rate trajectory.

• The Bank of Canada reduced its policy rate by 25 basis points to 3% and announced the end of quantitative tightening, aligning with expectations, as inflation remains stable around 2%.
• The economic outlook is clouded by external risks, particularly the threat of new US tariffs. Meanwhile, domestic conditions show a soft labour market, weak business investment, and moderate GDP growth projections of 1.8% in 2025 and 2026.
• The Bank has signalled a cautious, data-dependent approach to future rate adjustments, monitoring inflation risks, trade policy developments, and the effectiveness of past monetary easing.

• Labour’s new long-term growth plans have merit but limited short-term impact, as infrastructure and investment projects take years to deliver economic benefits.
• Despite policy rhetoric, the UK economy is structurally struggling, with GDP stagnation, persistent inflation, and fiscal constraints limiting immediate growth prospects.
• Political motives overshadow immediate economic substance, as ambitious projections serve electoral strategy rather than offering near-term economic transformation.

• Howard Marks correctly called the dot com bubble in the early 2000s
• The 1990s were a placid period for credit investors but a hot time for equity investors
• Being too far ahead of your time in predicting market trends can be painful and indistinguishable from being wrong

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• AI investors were shocked by China’s DeepSeek successfully matching the performance of OpenAI’s GP4-o1 at a fraction of the build cost and despite export restrictions.
• Innovating a more productive use of capital does not negate the potential gains from increasing processing power. Either way benefits the economy with faster AI progress.
• Foundation model IP needs better protection against the attack of cloning distillation techniques to reap a return on investment while pushing the performance frontier.

• For the week ending 24/Jan, U.S. natural gas prices gained 2% amid volatility driven by colder weather forecasts and increasing LNG exports.
• Henry Hub Put/Call volume ratio fell to 1.05 from 1.18 (17/Jan) the previous week as call volumes rose by 7.2% WoW, while put volumes declined by 4.3%. 
• Henry Hub OI PCR inched up to 0.93 from 0.92 from last week. Call OI grew by 4.4% WoW, while put OI increased by 5.5%.

• Global markets will be driven by policies and current valuation in 2025, especially new Trump administration policies.  
• Trump could jawbone markets for a lower value of the USD and lower oil prices, which could have a temporary modest impact (joint US/Japan FX intervention is possible)
• But the structural drivers are much more important.  Meanwhile, an overvalued U.S. equity market is vulnerable to a 2018 style correction on any major bad news that could then trigger

• WTI futures fell by 3.5% for the week ending 24/Jan on the back of downward pressure from Trump’s hydrocarbon output policies and brewing trade disputes.
• WTI options Put/Call volume ratio fell to 0.85 from 1.28 (17/Jan) last week, as call volume rose by 8.3% WoW while put volume decreased by 28.4%.  
• WTI OI PCR rose to 1.01 from 1.00 last week. Call OI rose by 5.7% WoW and put OI increased by 7.3%.

• India Real Estate, South Korea Financials and Turkey Financials see big increases in ownership in 2024.
• South Korea Materials, China Technology and China Health Care saw investment levels decline.
• Sk Hynix saw the largest increase in fund ownership, but which stocks saw large decreases, and which look set for a promising 2025?

• Exposure levels and ownership reaches record highs for active GEM funds in GCC countries, yet 30% of funds remain without exposure.
• Saudi Arabia and the United Arab Emirates dominate the ownership picture, with both at record high investment levels, driven by the Financials and Real Estate sectors
• Al Rajhi Bank is the most widely held stock, with a top tier including Emaar Properties and Aldar Properties surging to record levels of investment in 2024.

• Small cap Emerging Market funds have outperformed their large-cap peers over the past 10 years.
• Yet small and midcap exposure decreased to near record levels last year, in spite of managers maintaining an overweight position versus the benchmark.
• We screen for well owned and small/midcap stocks that are showing strong momentum among managers.

• Happy Sunday, and welcome to my weekly editorial on everything macro and markets.
• We are now at the final innings of the inauguration week, and oh boy did it surprise and entertain right about everyone (including me).
• From full-blown tariffs from the get-go being the base case, a Trump meme coin being launched into the week and a government sponsored Bitcoin reserve (or at least a clear reference to the crypto space during his first week) to barely any mentioning of crypto, no immediate tariffs on China and very accommodative policies on the fiscal side, which makes the 3% deficit target proposed by Scott Bessent look unrealistic at best.

• Jay Peloski, founder of TPW Advisory and former top-ranked analyst at Morgan Stanley, discusses the tripolar framework of regional integration and competition between Europe, Asia, and the Americas
• Europe faces challenges with common taxation and revenue creation, Asia is increasingly integrated around China, and the Americas have not fully leveraged North America integration and engagement with South America
• Regional competition is seen in key areas such as AI, climate, and defense, with each region vying for economic influence and competitive advantage amid global shifts and challenges

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• An anticipated slowdown in China’s growth in 2025 has implications for other Asian economies, although the mainland’s influence on the region’s growth has lessened over the years.
• In relative terms, Taiwan, Singapore and Vietnam are most exposed to a slowdown in China’s export and GDP growth. Japan, Indonesia and India are least at risk.
• Rising imports and investments from China can potentially be beneficial for inflation and growth in ASEAN economies.

• China’s rise as a global manufacturing hub was fueled by WTO accession in 2001, supported by export-friendly policies, low-cost labor, and rapid infrastructure development.
• A 1994 currency devaluation and a shift to value-added goods boosted productivity as labor costs increased.
• Since the mid-2010s, rising costs and geopolitical factors have driven supply chains to Southeast Asia.

• Greenfield tire production facility to come up in Sindh, Pakistan
• JK Tyre to get US$100 million sustainability loan for expansion
• Sustainability-linked loan a first in India’s tire industry

• President Trump’s inauguration caused volatility in financial markets
• Expectation that Trump will impose significant tariffs on China and other countries
• Fed expected to keep rates on hold at upcoming FOMC meeting

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• Strong gains in oil prices attributed to tightening sanctions against Russia and Iran by outgoing Biden administration
• Market anticipating decline in Russian and Iranian oil exports, with potential disruptions and price increases
• Russian oil exports showing resilience despite sanctions, with logistics and companies excluded from restrictions providing room for maneuvering

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• Basis reflects the US dollar scarcity premium, with a more negative basis indicating greater scarcity
• Positive Euro US dollar basis is primarily driven by short-term tactical cross-border flows, not direct funding dynamics
• Evolution of relative balance sheet dynamics between the Fed and ECB will be a dominant driver of the Euro US dollar basis going forward

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• Mixed steel prices reflected short-term boosts from rising hot metal output and policy support, offset by lingering property sector woes, trade uncertainties, and structural market challenges.
• IO prices consolidated and closed slightly above the 200-day DMA indicating the strengthening of the bullish trend. Bulls risk facing a consolidation or downward correction from these levels. 
• Managed Money, Physicals participants & Others are net short with 129.1k, 5.1k & 18.6k lots respectively across all F&O expiries. Managed Money decreased net shorts while FIIs decreased net longs.

• EM markets reacting to executive orders and remarks from President Trump, particularly focused on tariffs
• EM currencies have shown some strength due to lack of tariff implementation so far
• Market relief since the inauguration, but uncertainty remains around tariff policy and other domestic issues

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• Credit cycles and financial conditions could vary significantly by sector and region during 2025.  Hawkish Fed policy and European political uncertainty complicate the credit outlooks for the US and Europe. 
• Emerging market growth and credit outlooks could be impacted by US protectionism and more hawkish Fed policy conduct.  Corporate and household credit trends are very mixed by individual markets.  
• Upbeat US  corporate sentiment since the election suggests greater appetite for leverage. Returning fiscal rules within the European Union could be the biggest driver of credit trends in the region.     

• Nascent signs of a major market top are appearing even as the S&P 500 tests its all-time high.
• A growing negative breadth divergence and a potential growth shock of mass deportations could sideswipe stock prices.
• The scenario of a major market top in Q1 or Q2 2025 is building. The caveat is these are very early signs of risk.

• The S&P 500 is short-term overbought after breaking out to an all-time high and needs time to digest its gains.
• We expect this will resolve in a period of sideways consolidation or shallow pullback, though Q4 earnings season and the FOMC and ECB rate decisions could induce volatility.
• However, we have substantial concerns over growing signs of negative breadth divergences, which could be signals of a cycle top in either Q1 or Q2.

• This is a follow-up to our initiation on Antofagasta PLC (ANTO LN): Antofagasta (ANTO LN): An Initiation on a Mid-Sized Copper Miner, in which we provide some positive updates. 
• The company guided a full-year copper production of 660-700k for FY25 (in line with expectations) and slightly higher gross YoY costs at the upper end (but better than street expectations).
• The long-term production plan of 900,000 tons by 2027 puts it under 5x EV-EBITDA for FY27 at spot prices (vs. the current 7.8x).