Macro

• In 2025, the NPS could purchase significant amounts of Korean stocks (at least 25 trillion won) which could act as support in the domestic stock market. 
• At the end of September 2024, NPS’s domestic stock portfolio was 12.7% of its total assets, a 2.2% lower than NPS’s domestic stocks target at the end of 2025 (14.9%).
• The top five net purchases by the NPS and local pension funds of Korean stocks in the past one month include Samsung Electronics, Kakao, SK Innovation, Hyundai Motor, and SEMCO.

• The Federal Reserve recently cut interest rates by 25 basis points, unveiling new year expectations for inflation and economic growth.
• San Francisco Fed President Mary Daly discusses the current state of the labor market, the impact of AI on productivity, and the importance of data and evidence in making policy decisions.

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• WTI futures fell 2.6% for the week ending 20/Dec, pressured by weak economic data, a robust dollar, and the Fed’s hawkish outlook on rate cuts in 2025.  
• WTI options Put/Call volume ratio fell to 0.95 from 1.15 (13/Dec) last week, as call volume dropped by 52.5% WoW while put volume decreased by 60.8%.   
• WTI OI PCR rose to 0.87 from 0.85 last week. Call OI fell by 18.5% WoW, while put OI declined by 16.3%. 

• EVs / Cover Story: Baidu-Geely joint EV failure reflects treacherousness of Chinese market
• Central bank /Exclusive: Singapore’s central bank chief on crypto, AI and battling inflation
• Outlook /: Four things to know about China’s 2025 economic outlook

• 40-45% of production forest areas in Vietnam certified for sustainable  management 
• VRG sold over 800 tons EUDR rubber netting an additional US$250/ton
• Member firms abroad readying to sign contracts on EUDR rubber

• US natural gas prices surged by 14.3% for the week ending 20/Dec, driven by rising LNG exports, favourable long-term weather forecasts, and stronger-than-expected declines in natural gas stockpiles.
• Henry Hub Put/Call volume ratio fell sharply to 0.60 from 1.10 (13/Dec) the previous week as call volumes surged by 228.8% WoW, while put volumes increased by 77.6%. 
• Henry Hub OI PCR inched up to 0.84 from 0.83 compared to last week. Call OI rose by 5.3% WoW, while put OI increased by 6.0%.

• Wall Street sell-side analysts discuss feedback and questions policies regarding oil price divergence in 2025
• Consensus view among analysts suggests bearish sentiment in equity energy investors compared to forecasts
• Market projections indicate potential tighter global oil balances and reduced likelihood of disorderly price collapse following OPEC meeting in early December 2024.

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• The discussion focused on the importance of politics over economics for emerging markets in 2025, with a specific emphasis on fiscal trajectories.
• Lessons learned include the need to expand imagination of possible scenarios, the impact of specific country situations on returns, and the caution against following consensus trades.
• Market outlook for early 2025 is expected to be choppy and driven by policy announcements, with a key event being the US Inauguration Day on January 20th leading to potential market adjustments.

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• Operators high on quantum jump in exports to Malaysia
• VRA Secretary-General says Vietnam keen on fully meeting EUDR
• Major challenge variety of sources including imports and mixing

• Happy Sunday from me! This will be the last update before the festive season, and I hope you will have a relaxed and enjoyable time with your loved ones.
• It has been a big year for me personally with the launch of Asgard-Steno Global Macro.
• Despite Powell pulling the rug from under the Christmas rally, we are off to a decent start and expect to deliver strong returns in choppy markets in 2025, where the macro direction will be challenged by several factors.

• Happy Friday! Every week, we dive deep into macro trends, analyze asset movements, and uncover the best value plays in the world of macro.
• These insights are shared with hedge funds and institutional clients, and each Friday, we’re bringing them directly to you.
• While the macro landscape can be complex, we believe it doesn’t have to be intimidating.

• Global transition to low carbon economy discussed in the second episode of the Infrastructure miniseries
• Key areas of investment include electrification, renewable power plants, electric vehicle charging stations, and clean fuels
• Importance of public and private investment in infrastructure to enable energy transition and decarbonization, with a focus on long-term growth opportunities like data centers and mining infrastructure

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• While the sentiment around the “long US equities trade” seems to be extended and due for a correction, the bearish positioning in commodities and energy is reasonable and we also expect this trend to continue for a little while.
• The latest BofA fund manager survey showed how extreme the position is currently and how little cash professional investors currently have to allocate.
• FMS cash level fell from 4.3% to 3.9% of AUM, matching the lowest level since Jun ’21.

• Turbulent fundamentals, volatile weather, and uncertain geopolitics pushed US LNG implied volatility to a 12-month high of 99.47 on 20/Dec. US nat-gas prices have surged 38.2% since November 2024.
• Midstream/MLP ETFs, with low energy price correlation, stood out in 2024 as the only energy ETFs to attract inflows, while producer and refiner-focused ETFs saw outflows.
• The Alerian MLP ETF, has an AUM of USD 9.4 billion. Over the past year, it has attracted net inflows of USD 1.3 billion and offers a yield of 7.8%.

• The past week saw insights on CP Axtra (CPAXT TB), Berli Jucker (BJC TB), Mphb Capital (MPHB MK), and PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (MDIY IJ)
• There were also macro insights on Indonesia and Thailand and further insights on Indo Tambangraya Megah (ITMG IJ), Geo Energy Resources (GERL SP), and the Green Tech space in Singapore.
• 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.

• Federal Reserve and Bank of England both make decisions that are more dovish than expected
• Market pricing reflects uncertainty and potential easing in the future
• Central banks take steps to ensure smooth funding and liquidity in the markets, including adjustments to repo facilities and addressing debt ceiling issues.

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• The Swiss and Canadian central banks cut their respective policy rates by 50 basis points. The former faces currency appreciation and deflationary risks. Canada faces higher unemployment and deteriorating growth.
• The European Central Bank is taking a gradual policy easing path in 2025. Policy outlooks for the Reserve Bank of Australia and Bank of England are more data dependent.
• The Fed cut its policy rate by 25 basis points as expected, but fewer reductions are now expected in 2025 due to a more robust economic outlook compared to September.

• We are subscribers to Occam’s Razor, or the simplest explanation is the most satisfactory, and recent UFOs sightings are of terrestrial origin.
• It’s nevertheless a worthwhile exercise to consider asset return expectations under the scenario of an extra-terrestrial alien invasion.
• Our study of an alien invasion opens the door to discussing return studies. Standard assumptions about returns to bonds and equity risk premiums are useful only up to a point.

• Current market conditions are characterized by a strong S&P 500 that’s near its all-time high and weak breadth. 
• The closest template to these circumstances is August 1972, which is just before the final Nifty Fifty top.
• As the market undergoes its inevitable bounce due to oversold conditions, investors should monitor technical conditions for negative divergences, which could be the signal for a long-term cyclical top.

• Widespread caution around Chinese buying sentiment 
• Weakness in Yuan can pose significant challenge
• Trade data not very optimistic

• Depression / In Depth: Why depression goes undertreated among China’s seniors
• China-Malaysia /: Strengthening China ties would bolster Malaysia’s chip, renewables supply chains, minister says
• Funds /: China expands cross-border funding pilot program for multinationals

• Hello everyone, and welcome back to our weekly positioning update – this week with a strong focus on the moves we are seeing in Fixed Income and forward-pricing at the moment and the subsequent positioning as we head into 2025.
• Markets continue to lean bearish on the Eurozone while upbeat on the US in equity terms, and likely for good reasons as macro data hasn’t given any good arguments as to why one should be upbeat on the Eurozone, and the signs we are getting on European growth in our nowcasts have yet to show up in actual releases – for now, it’s mainly the less China sensitive countries like Spain, Portugal and Greece that are performing macro-wise while Germany, France and Italy suffer.
• GDP growth is surprisingly strong in the first 3 whilst very weak in the latter 3, and given the latter’s weighting in European equity indices, it makes sense why we are seeing hedge funds being long consumer staples, health care and other defensives while scaling down bets on cyclical equities.

• According to Webster the word of the year is Polarization.
• Oxford have Brain Rot and Cambridge have Manifest. Collins have Brat, which was apparently ‘made famous by a Chari XCX album’ (me neither).
• Personally, just as Cozzy Livs (cost of living) was my favourite in 2023, this year really deserves to be ‘Word Salad’, although without Kamala it is unlikely to reappear anywhere near as much.

• For the week ending 13/Dec, US crude inventories fell by 0.9m barrels, missing forecasts. Gasoline stocks rose more than anticipated, while distillate inventories declined more than expected.
• US natural gas inventories fell by 125 Bcf for the week ending 13/Dec, beating analyst expectations of a 123 Bcf drawdown. Inventories are 3.8% above the 5-year seasonal average.
• Major analysts lowered their 12-month PTs on Exxon, SLB, Halliburton, and Occidental. Also, Barclays downgraded its rating on Halliburton to Equalweight from Overweight.

• FY 2024-25 H1 witnesses 12% YoY growth in tire exports value 
• Motorcycle tire exports volume up by 37%; Columbia largest importer 
• Bridgestone to invest US$85 million for India expansion 

• US and China treasury yields highlight inflation control challenges, with the Fed’s rate cut fueling market uncertainty.
• Asia’s mixed monetary decisions saw Japan hold rates, while the Philippines’ cuts worsened currency pressures.
• China’s retail sales remain resilient despite lower growth expectations, contrasting with declining real sales in the US.

• The BoE matched widespread expectations again by holding the Bank rate at 4.75%, although the three dissenters exceeded the two we expected (consensus was for one).
• Surprisingly high wage growth is reinforcing the gradualist urge of most members. Softer labour market conditions will likely be used to justify a February rate cut.
• We maintain our call for BoE cuts in February and May before an extended pause that may end with rate hikes to remove accidental stimulus amid high neutral rates.

• The Norges Bank held the policy rate at 4.5%, aligning with the consensus, and signalled potential easing from March 2025, contingent on continued economic moderation.
• Inflation has slowed significantly but remains above target, constrained by high wage growth and business costs; domestic activity has exceeded expectations, while unemployment remains stable.
• The outlook is marked by uncertainty, with risks from global trade policy and domestic inflationary pressures influencing the trajectory of future rate adjustments.

• EVs / In Depth: How shift to EVs risks sidelining auto parts giants
• Toy /In Depth: China’s trendy toy makers march into Southeast Asia
• Delivery /China’s food delivery giants to introduce mandatory rest breaks for riders

• We expect inflation for the first fortnight of December to stand at 0.38% bw, given the rebound in prices following “El Buen Fin” discount season.
• This fortnight inflation would be in line with the increase of 0.38% bw that is typical observed in this period.
• Our forecast is explained by the 0.45% bw increase in core inflation (typically 0.44% bw in the period).

• The Riksbank cut its policy rate by 25bp to 2.5%, meeting consensus expectations and reflecting a total reduction of 1.5 percentage points since May 2024 to support weak economic activity and stabilise inflation near the target.
• Forward guidance indicates the potential for another rate cut in H1 2025, contingent on stable inflation and growth projections, emphasising evaluating the lagged effects of earlier policy adjustments.
• External uncertainties, including geopolitical tensions and trade policy ambiguities, alongside domestic risks, such as the krona’s exchange rate and fragile recovery momentum, will influence future monetary policy decisions.

• Happy Tuesday, and welcome back to our weekly commodity editorial, where we keep you updated each and every week on what’s going on in the world of commodities, energy, and the like!
• It’s hard to talk about commodities without talking about China these days, as we have seen a complete reversal in the Chinese macro scene after we scouted last week for the best commodity plays should the Chinese stimulus come through.
• After all, they used the same wording as they did back in 2008, and it was wise of markets to “cry wolf,” as China would need to publish actual stimulus plans and their size before markets chased the story.

• What happens when an ominously sounding Hindenburg Omen occurs when the market is oversold? The notoriously unreliable Omen is said to have called “ten of the last three market corrections”.
• The market’s reaction to the FOMC decision added to the risk-off market tone. The Fed marked down the number of 2025 quarter-point rate cuts from four to two.
• Four of the five components of our Bottom Spotting Model have flashed buy signals. Two or more simultaneous buy signals have been good long entry points for traders.

• Airlines / In Depth: Even more European airlines drop China routes
• Fraud /In Depth: China fleshes out telecom fraud rules to ensure punishments fit the crime
• Temu /: Temu suffers first big setback as Vietnam suspends its operations

• The final Euro area inflation print for November trimmed its rise by 4bps, rounding it down to 2.2% y-o-y. Revisions were broadly spread over the special aggregates.
• Median inflation remains close to annualising at 2%, although Germany is excessive like the UK. Our projections for underlying pressures softened slightly over the past month.
• In our view, EA inflation will still slow to the 2% target in a few months and stay near there through 2025. Forceful ECB easing could break that benign outlook.

• The Bank of Thailand unanimously maintained the policy rate at 2.25%, aligning with consensus expectations, citing alignment with economic potential and inflation within target expectations.
• Economic growth projections for 2024–2025 remain steady, but uneven sectoral recovery, particularly in manufacturing and SMEs, presents ongoing risks to sustainable recovery.
• Global economic uncertainties, credit growth trends, and the efficacy of government debt-relief programmes in supporting domestic demand and financial stability will influence future policy decisions.

• Bank Indonesia held the BI-Rate at 6.00%, consistent with expectations, focusing on exchange rate stability and inflation control within the 2.5% ±1% target range amid heightened global uncertainty.
• Strengthened pro-market monetary operations and macroprudential measures aim to attract foreign capital inflows and support credit growth in priority sectors, sustaining financial stability and growth momentum.
• Future policy adjustments will depend on inflation dynamics, external shocks, and capital flow trends, as global risks, such as slower Fed rate cuts and rising US yields, constrain monetary policy flexibility.

• UK inflation matched expectations by increasing to its highest headline pace since March, although this doubled the BoE’s forecast error to 0.2pp (0.1pp in services).
• Only one division contributed much less to the monthly impulse than last year, with the median rate remaining excessive at 3% amid broadly high unit labour cost rises.
• An early December index date will likely be used, weighing on airfares in the short term. Our forecast still gaps higher than others in 2025 despite the consensus rising.

• US natural gas prices rose 6.6% for the week ending 13/Dec, driven by rising LNG exports, despite downward pressure from milder winter forecasts.
• Henry Hub Put/Call volume ratio rose to 1.10 from 1.06 (06/Dec) the previous week as put volumes rose by 21.5% WoW, while call volumes increased by 16.5%. 
• Henry Hub OI PCR fell to 0.83 from 0.84 compared to last week. Call OI rose by 5.4% WoW, while put OI increased by 4.8%.

• UK unemployment stopped rising in October, with the 4.3% rate close to the average of the past 18 months. The underlying trend is only for a slight weakening after strength.
• Employment and hours worked are booming, partly owing to recent revisions. The poor productivity performance raises the hawkish pressure from these activity data.
• Resurgent wages compound the hawkish news as private pay jumps on not-yet-captured public sector settlements. These data torch the dovish case for cutting rates this week.

• PPP / Cover Story: How regulation shake-up cast public-private partnerships into limbo

• Hong Kong /In Depth: Mainlanders flood Hong Kong talent program

• Ji Yue /Baidu, Geely offer limited help to stalled EV brand

• Historic Coffee Price Rally During the week Coffee Futures hit a new all-time high.
• Supply concerns continue to fuel the rally in a strongly backwardated futures market.
• The drought that El Niño weather brought over to Brazil over the last summer continue to be persistent.

• WPI inflation eased to 1.9%YoY in Nov’24, implying that the real policy rate was +4.6%, reining in industrial growth. Using CPI, the real policy rate in Nov’24 was +1.04%. 
• That seeming divergence is mainly caused by vegetable inflation, which moderated to a still-high 29.2%YoY in Nov’24 (from Oct’24’s 42.2%YoY!). Core CPI inflation has remained below 4%YoY since Dec’23. 
• The bountiful winter harvest is likely to prompt a steady moderation in food/headline CPI inflation to below 4%YoY by Apr’25. We expect the repo rate to decline 75bp by Jun’25. 

• Global credit ecosystem remains stable, similar to 2024 outlook
• Tight spreads and low all-in yields support demand in credit markets
• Concerns about non-cash accrual companies in private credit portfolios and potential impact on risk distribution from public to private markets, but overall sentiment remains positive for credit markets.

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

• Welcome to my weekly editorial, where I assess the big-picture macro landscape, explore potential risks, and identify the next narrative for traders.
• Last week, I kept getting pings, rings, and dings from traders eager to discuss whether inflation is poised to make a comeback following the fourth consecutive hot inflation report in the U.S. Admittedly, we’re trending around 3.5% inflation on an annualized basis, which doesn’t look great amidst a cutting cycle.
• Consequently, the market has started repricing the inflation outlook, with the near-term (2-year) outlook once again outpacing the 10-year inflation outlook in inflation swaps.

• The US oil and gas rig count remained unchanged at 589 for the week ending on 13/Dec, after rising by seven the previous week.
• For the week ending 06/Dec, US oil production rose to a new high of 13.63m bpd from 13.50m bpd the week prior.
• The number of active US oil rigs was steady at 482, while the US gas rig count rose by one to 103.

• Over the last week, the FTSE ALL World equities index stalled slightly, losing 0.8% in value, with the FTSE ALL Share index losing a tad more, down a smidgeon under 1%.
• Tech stocks again outperformed, sending the Nasdaq 1.5% higher and taking the index to over 20,000 for the first time ever.
• The S&P 500 edged 0.5% lower, and the Russell 2000 ended the week 2% down. The Magnificent 7 hit new highs as the market-broadening trend evaporated.

• The past week saw insight on Indosat (ISAT IJ), Mitra Adiperkasa (MAPI IJ), Global Digital Niaga Tbk PT (BELI IJ), Singapore Post (SPOST SP), and IHH Healthcare (IHH MK). 
• There was also a macro insight on Vietnam as well as an index rebalancing piece from Brian Freitas on the Vietnamese market. 
• 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.

• WTI futures rose 6.1% for the week ending 13/Dec, driven by China’s policy easing plans and supply concerns from sanctions on Russia and Iran.
• WTI options Put/Call volume ratio fell 1.15 from 1.24 (06/Dec) last week, as call volume rose by 21.7% WoW while put volume increased by 12.6%.  
• WTI OI PCR fell to 0.85 from 0.88 last week. Call OI rose by 7.0% WoW, while put OI increased by 3.3%.

• January-October 2024 exports yield US$2.54 billion, up 17% YoY
• 405% rise in value YoY in exports to Malaysia during Jan-Oct 2024
• Michelin plans to source rice husks from Vietnam for tire-making

• Flash PMIs for December broadly exceeded expectations in the services sector, with the UK and EA rebounding and the US surging to highs more consistent with hikes than cuts.
• A slight trend rise in the US unemployment rate suggests strength is partly structural but could be noise around cyclical strength. Global rates still don’t look tight.
• We still expect persistent underlying price and wage inflation to truncate easing cycles earlier than most expect, following the norm for cuts without recessions, like in 1998.

• The Syrian civil war has consequences that extend far beyond its immediate vicinity.
• The potential collapse of the Assad regime could significantly impact global issues, including the Russia/Ukraine conflict.
• This collapse could also affect Germany’s debt ceiling reform prospects and the oil industry.

• The UK economy has recently shown signs of stabilizing after a period of stagnation, with a modest uptick in household spending and business investment.
• Government spending and public investment have also provided a temporary boost, contributing to a more positive short-term outlook.
• Nevertheless, multiple risks persist as geopolitical tensions, volatile energy markets, and uncertain global trade conditions continue to threaten stability, while changes in foreign economic policies could weigh on business and consumer sentiment.

• Risk reward favours this shift in allocation between these markets.  
• Short to mid-term concerns on the Indian market warrant this strategic change
• Slowing revenue growth and less government spending leading to decelerating profits which is not yet reflected in market multiples

• In the wake of Trump’s electoral win, market participants have given him the benefit of the doubt and embraced a honeymoon.
• Expectations for equity returns are high and sentiment is becoming frothy.
• Risks are rising, but we would tactically monitor if market technical and sentiment conditions progress in January.

• The continued lack of disinflationary progress in the November CPI and PPI reports is setting up conditions for a hawkish rate cut at the December meeting.
• The big question is how this affects overall risk appetite. Elections of new presidents often set up a honeymoon period characterized by small-cap outperformance, which has been lacking this year.
• Our base case is a rally into year-end, but we would like to see confirmation from better relative performance of high-beta small-cap stocks

• Narrow leadership in the S&P500 has evoked memories of the conditions that prevailed in the late-1990s. US history is littered with periods of even greater concentration of equity market leadership.
• Narrow leadership of the S&P500 reflects the shift in the distribution of corporate profits in favour of larger companies as important sectors within the US economy have become more concentrated. 
• Current valuations of the top 10 S&P500 stocks are lower than the 2000 peak. Exuberant profit expectations present the biggest threat to US equities as opposed to narrow leadership.

• China TSF disappointed expectations, coming in at 2.34 trillion RMB (down 5% YoY), compared to the median forecast of 2.7 trillion RMB by the street.
• Comex premiums significantly strengthened, with alot of market participants turning bullish with the imminent return of Donald Trump to power on the 20th of January 2025.
• We initiated on First Quantum Minerals (FM CN). For more details, read our insight: First Quantum Minerals (FM CN): Call Option on Cobre Panama? 

• A Comprehensive Guide to Building AI-Powered Investment Systems: The application of Large Language Models (LLMs) in quantitative finance, focusing on the current state of LLM technology in financial applications 
• I also cover: 1. Comparative analysis of leading models                2. Implementation frameworks for production systems 3. Risk management and quality control considerations 
• Key Findings: 1. Multi-model approaches outperform single-model solutions 2. Production implementation requires robust quality controls 3. Model selection should be task-specific within the investment process 

• On 14 December, South Korean President Yoon Suk-Yeol was impeached by the National Assembly in a vote of 204 out of 300 seats.
• The Constitutional Court could take about 90-180 days in making the final decision on the impeachment of President Yoon. 
• Now that President Yoon has been impeached, Han Duk-Soo (Prime Minister) will become the temporary acting President of South Korea.