Macro

• 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.

• The US oil and gas rig count fell by 1 to 582 for the week ending on 27/Nov, reporting a third consecutive weekly fall.
• For the week ending 22/Nov, US oil production rose to 13.49m bpd from 13.2m bpd the week prior. US output inched close to its all-time high of 13.5m bpd.
• The number of active US oil rigs fell by two to 477, the lowest since July. Conversely, the US gas rig count rose by one to 100.

• Happy Sunday, friends, and welcome to my straight-to-the-point editorial on everything macro!Just as everyone had concluded that Trump and his (alleged) trade wars would be bond-unfriendly, the bond market has started performing much better—exactly as we suggested would happen following the election results.
• The first major difference compared to 2016, when bonds rioted after Trump’s victory, is that Trump was the clear base case this time around.
• The second major difference is that Trump’s policy mix is not inflationary this time—in fact, it’s quite the opposite.

• Europe’s economic underperformance is overpriced, with labor cost increases exceeding target-consistent levels.
• Current activity trends indicate a nearly neutral monetary policy.
• The Bank of England is expected to maintain its position, while the European Central Bank and Federal Reserve are predicted to cut 25 basis points, with cuts likely to cease early in 2025.

• Trump announced potential tariff policies on social media targeting Canada and Mexico, leading to a weakening in both currencies.
• Trump appointed key members to his economic team, setting the tone for his administration’s policies.
• Markets are anticipating the Fed meeting in December, with expectations of a dovish hold and strong labor market reports.

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

• The past week saw insights on Bank Central Asia (BBCA IJ), Bank Rakyat Indonesia (BBRI IJ), Sariguna Primatirta Tbk PT (CLEO IJ), and Siloam International Hospitals (SILO IJ)
• There were also insights on Aspirasi Hidup Indonesia (ACES IJ), Delta Electronics Thailand (DELTA TB), the upcoming index rebalancing in Thailand, and top picks in the Philippines from Sameer Taneja. 
• 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.

• In October, Mexico received USD 5.723 billion in remittances, accumulating a balance of USD 54 billion so far this year (2.2% YoY).
• This suggests that remittances could reach a record high of close to USD 65.5 billion this year.
• Given the 20% depreciation of the national currency against the dollar along 2024, remittances have increased again in pesos, reaching 1,153 billion pesos.

• Goldman Thinks Commodities Will Outperform in 2025 Gold will rally to a record next year on central-bank buying and US interest rate cuts, according to Goldman Sachs – putting out a price target of $3.000 USD till end of 2025.
• The bank sees a sideways market in crude as its base case.
• The bank sees a sideways market in crude as its base case. “In our baseline forecast, we continue to see oil prices as range-bound, with Brent likely to stay in a $70-$85/bbl range. I

• Trump announced tariffs on countries that would “move away from the dollar” as he expands the tariff threat beyond trade. 
• China’s dependence on US exports have declined since Trump was last in office lessening the impact of any tariff threats.
• Although the dollar still dominates FX reserves, trade invoicing, and offshore debt, its usage has been declining for 15 years. The Russian asset seizure accelerated that process.

• President-Elect Trump has threatened to impose 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on China. Hitherto, US financial markets have remained relatively calm.
• The relationship between the incoming Trump administration and the Fed could be  contentious by tariffs reducing the scope for monetary policy easing due to higher inflation.
• The long-term outcome of tariffs depend on exchange rate movements and willingness of foreign producers to accept lower profit margins. Tougher export conditions could force the Fed to ease policy.

• We would describe our 2025 U.S. equity view as cautious, but not bearish. We expect S&P 500 returns to be roughly flat or low single-digits for 2025.
• The U.S. market is facing a number of “this will not end well” valuation-based warnings.
• We see no immediate bearish triggers that warrant defensive portfolio positioning.

• Q2 FY 2025 sees NR prices hitting all-time high of INR 247/kg
• Revenue of MRF, Apollo and CEAT goes up YoY; of JK Tyre dips
• Tire prices hiked to mitigate impact of NR price rises

• Investors may find insights about the near-term outlook for equities from the bond market, which is showing signs of a short-term turnaround.
• Incoming Treasury Secretary Scott Bessent’s 3-3-3 Plan has excited Wall Street and revived the market’s animal spirits.
• Investors can enjoy the party during this quiet interregnum period into year-end, but January and beyond may be a different story.  

• We screen for Japanese companies at the extreme ends of their positioning or momentum ranges among active Japan equity funds.
• Low Positioning coupled with Negative Momentum: Nissan Motor Corp and Misumi Group
• High Positioning coupled with High Momentum: ASICS Corp and Kyushu Railway

• Donald Trump’s victory in the U.S. presidential election ignited a wild frenzy in China’s stock market, propelling shares of certain companies to dizzying heights — not due to any tangible link with his policies, but solely because their names vaguely echoed his.

• In the lead-up to Trump’s re-election, Shenzhen-listed Wise Soft Co. Ltd., a software maker, and Sichuan Development Lomon Group (SDLomon), a fertilizer producer, saw their stock prices soar, repeatedly hitting daily trading limits as investors piled in.

• These were part of a wave of “Trump concept” stocks, heavily touted by influencers and livestreamers doling out online stock tips. The pitch was as peculiar as it was effective: the companies’ names, when spoken in Chinese, bore a resemblance to the phrase “Trump wins.”

• A review of recent events/data impacting our investment themes or outlook
• Revisiting some of our old favourites- China, Japan and Gold
• Short-Term trades continue to work but investors only interested in US equities

• Main point: The current positioning picture is becoming increasingly uniform across asset classes: higher US growth, higher USD rates versus EUR/GBP rates, higher USD vs. peers, and higher US equity returns compared to Europe/Asia.
• The risk/reward of taking the opposite bet is starting to look appetizing.

• We have been looking at the explosive increase in US equity positioning for a while, as multiple indicators show that equities are reaching stretched points positioning-wise — CFTC positioning among asset managers skyrocketing, our own data showing increased positioning in US vs. the rest of the world, and surveys starting to indicate that everyone is expecting equities to crawl higher.

• US election outcome and policy proposals causing challenges for emerging markets in 2025
• Expectations for US exceptionalism and potential insularity affecting global trade and growth
• Potential impacts on inflation, monetary policy, fiscal dynamics, and investment environment for EM fixed income in 2025, with short-term opportunities amidst uncertainties.

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

• DXY strength through 1Q25 predicted with positive volatility
• Dollar correlations expected to remain firm, with potential pockets of soft cross correlations
• Systematic FX adoptions models highlight opportunities in FX carry via options, short volume strategy, volume reversal model, and volcurve model for 2025

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

• As part of our series of initiations on copper stocks, Lundin Mining (LUN CN) is another play with a cheaper multiple than Southern Copper (SCCO US) but an inferior ROCE.
• With its most recent acquisition of the Jose Maria copper project in a 50:50 JV with BHP, the mid-size copper-producing company is on its way to growth after 2027.
• Trading at 17x FY25e and 5.0x EV-EBITDA, this is another company in our stable worth exploring. 

• Euro area inflation increased by another 0.3pp in November to 2.3% y-o-y. Headline surprises were small and balanced, but the resilience doesn’t fit dovish pricing.
• Core and services price inflation rates were little changed at above-target levels. They will likely rise again in December and stay too high throughout 2025.
• The ECB believes policy is tight and demand is too weak, allowing it to cut again in December. Gradualism is required to avoid over-easing amid ongoing data resilience.

• Inventory lowest in 13th months
• Arbitrage widens for African and Indonesian rubber
• Frontloading resulted in spike in exports

• Euro area inflation and activity data indicate a need for careful ECB easing. The wide pricing of monetary policy divergence is excessively depressing EURUSD. Schnable’s guidance aligns with contrarian pushback.
• The upcoming week’s calendar is relatively quiet before the usual pre-Christmas rush.
• US nonfarm payrolls are the key highlight, with an expected soft rebound that may lead the Fed to cut by 25bp in December.

• Agriculture / In Depth: Warming climate threatens Chinese farmers’ livelihoods After the Mid-Autumn Festival celebrations ended in Huma, a county at the northern reaches of Northeast China’s Heilongjiang province, farmer Xu Xiujian began harvesting his soybean crop.
• He had planted earlier than usual this year, in line with the spring rains, which had come early in mid-April.
• Xu’s case, while seemingly unremarkable on its own, reflects a much larger shift happening in China’s climate and the impact it is having on the country’s agricultural industry.

• The US has ramped up its tariff threats months before Trump even takes office.  The newly appointed trade representative is a China hawk with some questionable policies ideas.
• China has reduced its dependency on US exports by half over the last several years and is better prepared to handle trade negotiations.
• Although previous trade negotiations during Trump’s first term lasted more than a year, most of the tariffs were never imposed. 

• The US has ramped up its tariff threats months before Trump even takes office. The newly appointed trade representative is a China hawk with some questionable policy ideas. 
• China has reduced its dependency on US exports by half over the last several years and is better prepared to handle trade negotiations.
• Although previous trade negotiations during Trump’s first term lasted more than a year, most of the tariffs were never imposed.

• Last week, we missed an intriguing story that several clients have asked us to explore.
• China issued $2 billion worth of USD-denominated bonds, which might not seem groundbreaking at first glance—it’s not uncommon for China to issue bonds in dollars.
• However, two aspects of this issuance stand out:The Venue: These bonds weren’t issued in the typical financial hubs like New York or Shanghai but in Riyadh, Saudi Arabia—a first of its kind.

• JP Morgan’s base case outcome for 2025 euro rate outlook is positive, with a focus on growing euro economy and inflation reaching 2%
• French political uncertainty may cause modest widening in intra-EMU spreads, but overall outlook remains positive
• German swap spreads expected to stay range bound with modest widening bias, driven by technical flows and repo rates

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

• AI boom reflected in record fund ownership in ASML Holding NV (ASML NA), NVIDIA Corp and Taiwan Semiconductor (TSMC) (2330 TT).
• The ‘Magnificent 7’ group of stocks have hit a record underweight of -6.83% below the MSCI ACWI index.  They collectively account for 11.2% of the average Global fund.
• Recovery Stocks: The old guard of At&T Inc (T US), International Business Machines (IBM US) and General Electric (GE US) appear to be gathering some support from active Global funds.

• Gloomy PMI data increasingly appear noisy as the equivalent ESI surveys broadly reveal resilient output and employment across sectors and countries.
• Price expectations are also at or above their long-term averages, signalling sticky inflationary pressures rather than any dovish shock to below-target levels.
• The ECB faces a consistent hawkish signal in a mirror of the dovish dataset that pushed it to cut in October. It should resist a 50bp cut in December, supporting EURUSD.

• For the week ending 22/Nov, US crude inventories fell by 1.8m barrels, beating expectations of a 1.3m barrel decrease. However, gasoline and distillate stocks rose more than expected.
• US natural gas inventories fell by 2 Bcf for the week ending 22/Nov, missing analyst expectations of a 4 Bcf decline. Inventories are 7.2% above the 5-year seasonal average.
• Analysts raised their 12-month price targets on Chevron while trimming their targets for Exxon and Occidental. Both JP Morgan and Morgan Stanley reiterated their Overweight ratings on Reliance Industries.

• Insurers / In Depth: China’s insurers prepare to shine a light into their financial black box
• Plastic /: China proposes U.N. plastic pollution treaty ‘respect nations’ circumstances’
• Stocks /: Why Trump’s rise sounded like a sure bet for China’s small-cap stock investors

• We just received the meeting minutes from the November FOMC meeting, which include two important takeaways on liquidity—both of which are positive.
• We have been highlighting for some time that markets are trading close to pain thresholds in USD liquidity (and below them in EUR liquidity).
• The Fed is now acknowledging the need for a “put” on liquidity levels.

• INROAD project prompts Tripura to extend CM’s Rubber Mission
• Nagaland aims to cover 30,000 hectares with rubber by 2030
• Northeast starts getting saplings from its own nurseries

• The recent threats of heavy tariffs on Canada and Mexico appear to be aimed at pressuring those governments to address U.S. concerns regarding immigration and drug enforcement.
• While it’s unlikely these tariffs will materialize, the threat serves as a strong incentive for both countries to take action on closing the border and curbing the flow of fentanyl into the U.S. Trump has effectively imposed a hard deadline of January 20th for these efforts, signaling a stark departure from the Biden administration’s earlier carrot-based approach, which focused on incentivizing Mexico with financial support to manage border issues.
• In contrast, Trump is clearly opting for the stick over the carrot.

• Donald Trump’s re-election breaks global momentum in green policies. The COP29 flop demonstrated the green bubble’s deflation amid a return of much-needed pragmatism.
• The EU and UK face competitive pressure to soften their few plans to lower emissions. For example, mandating synthetic fuel would pivot clear from China’s EV advantage.
• Preserving the non-green capital stock would reverse some stagflationary pressures. Adaptation remains the answer to climate change, even if many don’t want to hear it.

• In our multi theme portfolios (both managed accounts and in the UCITS strategy we run with Toscafund*) one of the longest and most stable positions has been in the I- Shares Robotics and Automation fund (RBOT) since we see this as an enduring long term thematic.
• However, we have just switched it to a different ETF, the L&G fund, ROBO and the reason for writing this is that the reasons for doing it reflect some important conflicts within markets and within ETFs themselves.
• When we invest thematically, we use baskets (currently in the form of ETFs) in order to diversify our stock specific risk.

• Debt / In Depth: China’s multitrillion-dollar salve for local government hidden debt
• Argentina /: Argentinian President’s ‘chainsaw’ economic reforms catch Elon Musk’s eye
• Jobless /: Hong Kong to require unpaid work for jobless welfare recipients

• Asia is cheap relative to the US – trading at less than 40% of US’s P/BV – but that’s because Asia’s ROE has consistently declined relative to US’s.
• Over the next couple of years Asian ROEs are forecast to revive relative to the US’s but all Asian markets are not forecast to participate in this recovery.
• The “ROE Winners” (rising forecast ROEs) are Korea, Taiwan, India, Malaysia. Indonesia to stay flat but solidly higher than Asian average. We are skeptical of HK/China and Thailand’s ROE recovery.

• USA hits record weights of 56.55% but remains a large underweight.  Europe’s big 4 comprise a +6.75% overweight. 
• Taiwan closes in on China & HK as ownership soars to record highs.  Argentina hits fresh highs as Australia, Brazil and Sweden are increasingly avoided.
• Japan exposure falls to record lows of 4.24% and  India overtakes China as the top EM country underweight among Global investors.

• Short term supply shortage 
• US and EU demand uncertain
• Shipping cost spike in short term ahead of Trump’s tariff drive

• The BJP of Indian premier Modi convincingly won the Maharashtra state elections despite losing ground in the state’s parliamentary seats in the June 2025 general election. 
• The Maharashtra result was not a one-off.  The ruling coalition managed to hold its ground against the previously resurgent INDIA opposition bloc in other state contests.    
• Modi and his party have corrected course sufficiently to stem any electoral bleeding, but risks from economic discontent and corruption-related controversies continue to weigh on public support. 

• Happy Monday! This week is relatively quiet on the economic data front, with the main releases being the FOMC meeting minutes from the last meeting, Core PCE, and European inflation data to round off the week.
• The most interesting development this week is how markets are reacting to the appointment of the new Treasury Secretary, Scott Bessent.
• Yields are down, gold is down, and equities are surging higher.

• Livestreaming / Cover Story: Livestreamed stock tips worry regulators as novice investors rush in
• Trade /Analysis: Southeast Asia gained from Trump’s China tariffs
• Supply chains /In Depth: Trump is already shaking up U.S.-China trade

• Cold Front in the US dominates Natgas Prices During next week another cold front will arrive in the upper part of the US.
• The temperature anomaly is quite negative – accordingly, natgas prices are currently on the rise.
• As seasonally remain bearish and these temperature anomalies occur often during the winter months, we’ll keep our eye on short opportunities in the market.

• The Euro’s trend weakness reflects rate differentials that are already stretched, with ECB cut pricing at the extremes erroneously priced for the Fed two months ago.
• Labour market data matter, and not just to the Fed. Unemployment trends are even more hawkish in the Euro area, and the ECB should clarify the policy relevance of this.
• Seasonality also supports a fading of the fundamental consensus story. EURUSD hasn’t fallen into yearend since 2016, and crowded positioning could compound the reversal.

• Copper is central to global infrastructure and the transition to renewable energy.
• Zambia, a key player in the Central African Copperbelt, holds immense promise for copper investors, boasting some of the world’s richest geological assets.
• This white paper explores Zambia’s copper mining landscape, highlighting the interplay of global demand, supply challenges, and Zambia’s evolving mining ecosystem.

• 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 today, we’re bringing them directly to you.
• While the macro landscape can be complex, we believe it doesn’t have to be intimidating.

• Trump’s energy policy focused on increasing domestic production and exerting pressure on oil exports to bring down prices
• Forecast for 2025 and 2026 predicts global commodities market growth and potential oil price fluctuations
• OPEC members plan to increase capacity in 2025, leading to a large surplus in the oil market and potentially lower prices in 2026

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

• Latex export revenue posts 18% growth YoY during Jan-Sept
• Tire industry can consume 200,000 tons of latex a year at present
• Govt placing a lot of attention on research, downstream foray

• Hope you had a great weekend! Here’s this week’s sneak peek into my thoughts on liquidity trends and how they influence my approach to risk-taking.
• Watching the alt-season unfold from an incredibly wet and windy Copenhagen this weekend has been quite bizarre.
• The weather outside certainly doesn’t bring out my animal spirits, but there’s a certain smell of 2021 in the air in financial markets—especially if central banks decide to print more into this scenario.

• The US oil and gas rig count fell by 1 to 583 for the week ending on 22/Nov, reporting a second consecutive weekly fall.
• For the week ending 15/Nov, US oil production fell to 13.2m bpd from 13.4m bpd. Output was at a record high of 13.5m bpd between 11/Oct through 01/Nov.
• US energy producers added two rigs in Texas and one each in Wyoming and Oklahoma. They cut three rigs in Louisiana and one each in California and Colorado.

• Overweight, Japanese equities and private equity. Underweight JGBs and hedge against yen weakness
• Japanese business cycle indicators remain broadly positive, underpinning continued economic recovery and corporate earnings growth.
• Mortgage are rising, a positive for construction & consumption. However, spending is moderating despite strong nominal wage growth. Consumption rather than exports is the biggest uncertainty to the outlook.

• SGX IO Futures closed USD 3.83/ton higher for the week ending on 22/Nov. It traded in a range of USD 6.90/ton, which was smaller than the prior week.
• Chinese portside inventories increased by 350k tons WoW to 148.86 MT as of 22/Nov. Steel mill inventories rose 13.8% to 15.6 MT in mid-November compared to early November.
• Iron ore prices remain well supported in the near term despite high stockpiles at Chinese ports due to strong consumption and robust steel production ahead of the Lunar New Year.

• Disappointing September/October China lending data with TSF down 9%/24% YoY to 3.7/1.4 trillion RMB Vs. (analysts expectations of 4/1.5 trillion RMB) has led to skepticism about China’s recovery story.
• Copper prices have dropped below 9000 USD/ton and stayed there despite the fall of exchange inventories. 
• We like the LT copper story and see long-term benefits for stocks like Southern Copper (SCCO US), Ivanhoe Mines (IVN CN), and Teck Resources (TECK US). 

• Donald Trump’s approach to fulfilling his commitment to end the Russia/Ukraine war is crucial.
• This approach could directly affect the escalating tensions on the Korean peninsula.
• It could also impact the situation in the Taiwan Strait.

• The past week saw insights on Aspirasi Hidup Indonesia (ACES IJ), Ginebra San Miguel (GSMI PM), DigiPlus Interactive (PLUS PM), Keppel DC REIT and Bangkok Dusit Medical Services (BDMS TB).
• There was also a macro insight on Indonesia’s economy post the recent rate decision and an insight from Daniel Tabbush on Singapore banks as credit growth starts to recover. 
• 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.

• While US equities have already discounted better times under a second Trump administration, the dollar is continuing to appreciate based on better growth expectations, particularly versus the UK and Eurozone.
• After years of excessive regulatory requirements on banks, rumours are abound that the new Trump administration will revoke Basel 3 capital requirements to boost lending to the real economy.
• The Trump administration will face legislative barriers via filibusters. Financial markets will not give the second Trump administration an indefinite carte blanche with respect to any profligate fiscal policy conduct.

• The S&P 500 arrested its decline at its 20 dma and exhibited a bullish reversal and this reversal was confirmed by bullish internals.
• Our base case calls for a rally into year-end. The coming week is the start of the seasonally bullish period to year-end.
• One key risk is option sentiment, is showing signs of froth, though other sentiment indicators remain in neutral territory.

• Looking to 2025, market returns are likely to be more uncertain than in the past. The degree of dispersion in the range of forecasts is wider than usual.
• There will be winners and losers. Deregulation should benefit the energy, AI-related technology, and financials. 
• Losers include bonds, and construction stocks because of their sensitivity to both rising rates and heightened labour costs from deportation.

• The Republican sweep, both in Congress and the White House, seems to have sparked a risk-on attitude across financial markets of late
• But Republican presidencies have coincided more regularly with periods of post-war economic downturns
• And the disparate US equity market performance enveloping presidential cycles is a nagging puzzle   

• Iron ore prices were rangebound and maintained at over 100 USD/ton. In the last four years, they have been in a 95-130 USD/ton range. 
• China TSF (Total Social Financing) disappointed the street with 1.4 trillion RMB (-24% YoY), compared to the street estimates of >1.5 trillion RMB.
• We believe that more significant lending numbers would catalyze the iron ore price, but till then, iron prices will remain stagnant at the 100 USD/ton level. 

• Steep dip of 30.6% in NR exports month-on-month in Sept
• Ivory Coast’s infusion touches an abysmal share of 14.9%
• Rubber glove exports to be worth a record RM13.7 billion in 2024

• Hello everyone, and welcome back to our weekly positioning watch.
• Main Takeaways: The energy bet is starting to look compelling. Oil positioning is fairly bearish, and it seems hedge funds are starting to play the oil trade from the short side after months of avoiding energy altogether.
• The risk asset trade is still on, but positioning is stretched. The Santa rally suggests higher equity prices, but year-end position squaring could disrupt the long equities play.

• Autos / In Depth: How BMW, Audi and Mercedes ended up also-rans in China
• Retail /: Nongfu Spring founder attacks livestream sales model and low-price platforms
• Energy Insider /: Russian gas to power Shanghai by year-end, Beijing reins in solar industry

• For the week ending 15/Nov, US crude inventories rose by 0.5m barrels, exceeding expectations of a 0.4m barrel increase. Gasoline stocks exceeded estimates, while distillates declined less than expected.
• US natural gas inventories fell by 3 Bcf for the week ending 15/Nov, contrasting analyst expectations of a 2 Bcf buildup. Inventories are 6.4% above the 5-year seasonal average.
• TD Cowen raised its PT on Exxon, while Morgan Stanely lowered its PT on Halliburton. Aramco and Sinopec began the construction of a refining and petrochemical complex in China.

• The Euro has weakened over the past week due to markets focusing on hawkish price and wage inflation, with more emphasis on activity growth rates and PMIs than on unemployment and underlying inflationary pressures.
• The Flash HICP for November may not rise as expected due to base effects such as German package holidays, which is considered a temporary blip.
• Despite most data warning against a 50bp cut, the RBNZ is likely to make this cut again, positioning it as an outlier.