Macro

• 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.

• A key medium-term driver of share price is earnings estimate trajectory – in particular, “earnings inflections” – i.e. the trajectory of earnings estimates changing directions. 
• Different Asian markets have had different estimate trajectories. But most suffered estimate cuts since August/September 2024, coinciding with the US Dollar appreciation and the spike in US yields.
• We argue that investors need to watch out for Taiwan, Indonesia, Malaysia and India for earnings estimate increases. India’s could decline in the near term and commence an uptrend later. 

• EM sovereign debt has seen significant changes since the pandemic, but no wave of defaults has occurred
• China’s debt numbers are higher than Europe’s for the first time, impacting the global market
• Sovereign debt restructuring remains a complex and idiosyncratic process, with challenges ahead for debt dynamics and growth in the EM market

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

• Looking at the current polls, there’s no clear path to a functioning coalition in Germany.
• The three potential options are: CDU/CSU pairing with SPD – a move toward stability but lacking excitement; CDU teaming up with the Greens – a less likely scenario given weak polling and major ideological clashes; and finally, the Merz dream coalition of CDU/CSU and FDP, which remains far from reaching the crucial 50% mark.
• With all three options falling short, creativity (or desperation) might be the only way forward.

• The Drill: Could nuclear be the next Trump bet?
• This week’s The Drill examines commodities in the aftermath of Trump’s election, where calm has begun to return as risks were initially overestimated.
• Nuclear energy is likely an underappreciated theme in the new Trump administration, while tariff threats appear overblown.

• Upwards revisions to Euro area labour costs and a jump in negotiated wage settlements extend cost growth inconsistent with a sustainable return to the 2% inflation target.
• The ECB hopes this will subside swiftly in 2025, with productivity growth and squeezed profit margins helping contain inflation. But these hopes seem set to be disappointed.
• Persistent wage pressures should prevent a 50bp rate cut in December and limit further cuts. Less dovish fundamentals feed bullish Euro seasonality, magnified by positioning.

• The investment side in Malaysia over the post COVID years has really taken off.
• In Thailand, private investment contracted (-1.4%), reflecting political and economic challenges driving offshore investments.
• Bangkok has seen little progress in mobility since the mid-1990s.

• Our Geopolitical team is wrapping up an analysis on the escalating Ukraine-Russia conflict.
• In the meantime, here’s a piece we believe markets might not yet be fully tuned into:With Donald Trump and Elon Musk seemingly forming a close alliance, their influence on trade and economic policies has become a hot topic.
• Notably, Vivek Ramaswamy and Musk have thrown their support behind Javier Milei’s economic strategy in Argentina, which includes radical measures such as aggressive spending cuts and a commitment to reducing trade barriers.

• One of the biggest trends impacting the fund flow in Korea this year has been the huge capital inflow into overseas equity ETFs. 
• The net asset value of the listed ETFs in Korea investing in overseas stocks surpassed the ETFs investing in domestic stocks for the first time in 17 years.
• The ETFs that invest in overseas stocks were 35.8 trillion won on 12 November 2024, up 111% from 12 January 2024.

• The tentative green shoots in consumer and business demand seen in the latest data are likely due to one-off factors.  A sustained recovery is still some distance away. 
• The fundamental underpinnings of domestic demand remain shaky, given continued weakness in the labour and property markets and external uncertainties. 
• Moreover, with the trade war likely to be escalated by the next US administration, the Chinese economy may suffer material damage from a more hostile external environment. 

• US natural gas prices rose 5.77% for the week ending 15/Nov, buoyed by forecasts of cooler weather, rising US LNG exports, and declining production.
• Henry Hub Put/Call volume ratio sharply rose to 1.08 from 0.65 (08/Nov) the previous week as put volumes rose by 53.5% WoW, while call volumes fell by 7.0%. 
• Call OI increased for December, January, February, and March expirations, while put OI was substantial for November, April, May, June, and July contracts.

• WTI futures dropped 4.77% for the week ending 15/Nov, pressured by a bleak demand outlook, a rising dollar, and weak economic data from China.
• WTI options Put/Call volume ratio rose to 1.00 from 0.66 (08/Nov) last week, as call volume dropped by 57.3% WoW and put volume fell by 35.4%.  
• WTI OI PCR climbed to 0.86 from 0.77 (08/Nov) last week. Call OI fell by 37.9% WoW, while put OI fell by 29.9%.

• A surprising airfare rebound extended CPI inflation’s energised rise to 2.3%. Its higher weighting in core and services measures compounded the upside surprise there.
• Underlying inflation also strengthened on other measures, like the median, and looks inconsistent with a sustainable return to the inflation target.
• We still expect inflation to trend above the target in 2025 on excessive unit labour cost pressures. The BoE can remain gradual in its easing cycle, skipping a cut in December.

• Rubber Meet spots Risk Center, EUDR, industry academy as priorities
• RAOT delegation holds talks with APROMAC top brass
• Ivory Coast cup lump exports ban to stay, says APROMAC official

• Airspace / China is making sure its low-altitude economy is ready for takeoff China is looking to the skies for future growth as it nurtures its nascent low-altitude economy with efforts to launch pilot programs for new aviation services.
• The National Development and Reform Commission (NDRC), the country’s top economic planner, is to create a Low-Altitude Economy Department to oversee the sector as it takes off, according to Chen Zhijie, director of the State Key Laboratory of Air Traffic Management System and Technology.
• At the same time, the central government is drawing up detailed industry guidelines to establish a regulatory framework for the sector, Chen said at a Monday forum.

• The 2025 budget sends the right signals to the market by reinstating financial discipline.
• However, given the macroeconomic assumptions, the global economic environment, and the limited flexibility in spending, there is little room for deviations.
• The federal government presented the 2025 Economic Package, in which the broadest measure of debt (Public Sector Financial Requirements, RFSP) is planned to decrease from 5.9% of GDP this year to 3.9% in 2025. 

• For the first half of November, we forecast headline inflation at 0.40% bw, below the historical average due to the early discount season of “El Buen Fin”.
• This would bring inflation to 4.59% YoY.
• Our estimate of 0.40% bw is below the historical average of 0.54% bw for this period.

• On 19 November, the Financial Services Commission (FSC) announced major rule changes on corporate mergers and acquisitions have been approved by the Korean government.
• Revised rules have three specific goals: Improve rules on calculating and determining merger prices when M&As take place between nonaffiliated business entities, strengthen disclosure duties, and improve external evaluation system.
• If the Korean government is really serious about making positive rule changes, they need to apply these new laws not just for NON-AFFILIATED companies but more importantly for AFFIILATED companies.

• We went long Taiwan equities end-2023 in expectation of regional outperformance. The TAIEX is up 31% CYTD. It has further to run. Ignore geopolitics, stay overweight equities and the NT$.
• The economic and corporate earnings outlooks are positive. The Taiwanese business cycle is in a broad-based upswing.  Corporate fundamentals are healthy. The investment and credit cycles are strengthening. 
• Meanwhile China dependence is declining.  Exporters are diversifying away, and manufacturers are sensibly hedging against geopolitical risks and the Chinese economy by investing beyond.

• SGX Iron Ore Futures dropped to USD 96.71/ton, down USD 5.49/ton, hitting a low of USD 96.30/ton amid pressure from declining housing prices and industrial output in China.
• Chinese portside inventories increased by 120k tons WoW to 148.51m tons last week, while average daily port discharge volumes rose by 131k tons WoW to 3.18m tons.
• Despite weak economic data from China, SGX Iron Ore Futures may rebound in November-December as pre-Lunar New Year restocking boosts steel demand.

• October’s final Euro area inflation print confirmed its surprisingly steep rise to 2% y-o-y. Strength was not only broad across countries but components with median rates rising.
• Underlying inflation pressures were broadly above expectations and target-consistent levels. Upwardly revised labour cost growth won’t help sustain 2% HICP inflation.
• Confirmed price and wage inflation strength adds to hawkish GDP and unemployment news, curbing the case for 50bp to remain less likely than the dovish market hopes.

• Mining / Cover Story: China digs in to boost mining in Democratic Republic of Congo
• Stabbings /: Eight killed in stabbing at vocational college in East China
• Futures /: Futures firm linked to fugitive tycoon seized by securities regulator

• For H1FY25, the fiscal deficit was only 29.4% of the FY25 target, with strong income-tax, GST and customs revenue. The 12mma of the fiscal deficit narrowed to 4.6% of GDP.  
• Corporate tax revenue grew just 2.3%YoY in H1FY25, reflecting slower profits growth. Stronger government spending likely in H2FY25, but fiscal deficit will still be well below 4.9% of GDP. 
• CAD likely to be 1.3% of GDP in H1FY25. Lower oil prices, stronger G&S exports should allow a small CA surplus in H2FY25, shrinking FY25 CAD to 0.2% of GDP.

• European natural gas market facing uncertainty due to potential end of Russian gas flows through Ukraine
• North American LNG supply delays causing imbalance in global market
• Price relationship between summer 2025 and winter 2526 dependent on weather, supply sources, and storage refill mandates

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

• Donald Trump is committed to reducing energy prices by 50% within a year.
• However, uncontrollable factors may hinder this goal.
• As such, he may only achieve a modest success, if any.

• Welcome back to Macro Regime Watch, where we dive into our nowcasting models to analyze Growth, Inflation, and Liquidity trends.
• Over recent months, we’ve dedicated substantial time to upgrading our models and refining the data we use.
• But the core question remains: how do we interpret the complexities of the macro environment, and how can these insights inform financial market strategies?

• Happy Sunday, everyone! If you can’t show it in a meme, then it’s not true.
• That’s my modus operandi in the research business, and I stumbled upon this tremendous meme of the business cycle and how JPoww and his ilk respond to it.
• This has been the Fed’s operating model for a while: exaggerating the business cycle in both directions.

• Happy Friday and welcome to our weekly Portfolio Watch.
• Many have been puzzled by the weakness in US markets towards the end of the week, with explanations largely pointing to an exhaustion of the Trump trade.
• This trade had been roaring across USD, USD bond yields, USD equities, and Crypto.

• Market fluctuations in CNY and Euro currencies, potential impact of PBOC reaction function and ECB policies
• Possibility of increased pessimism in Europe not fully priced in, with potential for further downside in Euro
• Recommendations for underweight positions on Euro compared to USD, Swiss Franc, and Japanese Yen, with potential for continued market movement

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

• The Ministry of Finance has decided to end the 13% export tax rebate on copper effective December 1st, 2024. Copper semi-producers rely on this rebate to remain profitable. 
• Copper semi-producers might rush to sell their inventory by 1st December when changes take effect, which may affect prices and distort differentials on the SHFE-LME. 
• As long-term bulls, we like Southern Copper (SCCO US); under 100 USD/share, it is worth exploring. We also believe a long LME short SHFE trade in the short-term could work.  

• The past week saw insights on Grab Holdings (GRAB US), Sea Ltd (SE US), Avarga Ltd (AVARGA SP), The Keepers Holdings (KEEPR PM), and Jollibee Foods (JFC PM). 
• There were also insights on Shakey’s Pizza (PIZZA PM) and Bumrungrad Hospital Pub Co (BH TB) plus commentary in the AI push from Indosat and GoTo Gojek Tokopedia (GOTO IJ).
• 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.

• OPEC cut its 2024 demand growth forecast by 5.7%, marking the fourth consecutive monthly downgrade, while the EIA and IEA raised their forecasts by 7.6% and 7%, respectively.
• Although the EIA and IEA raised 2024 demand projections, they lowered 2025 estimates. They anticipate an oversupplied oil market in 2025, with supply growth expected to outpace demand.
• The EIA raised Q4 2024 oil price forecasts on geopolitical tensions and inventory withdrawals but cut post-Q2 2025 estimates due to expectations of rising inventories from higher output.

• The US oil and gas rig count fell by 1 to 584 for the week ending on 15/Nov, after remaining steady for three weeks in a row.
• For the week ending 08/Nov, US oil production inched down to 13.4m bpd after remaining at 13.5m bpd for four consecutive weeks.
• US energy producers added two rigs in New Mexico and one in Pennsylvania while cutting two rigs in Texas and one each in Oklahoma and Utah.

• Gold prices have staged multi-year breakouts in multiple currencies, indicating a long-term bullish outlook.
• In addition, gold is on the verge of staging relative breakouts against global equity markets that point to multi-year outperformance ahead.
• The U.S. macro outlook calls for a re-acceleration of inflation, which is also positive for gold.

• Declining political approval ratings were sending a clear message to the Democrats that all was not well during the current post-pandemic economic recovery, notably tight household finances for many.  
• Markets are discounting only 50 basis points of Fed easing in 2025, raising the spectre of criticism about political bias against the incoming Trump administration’s fiscal policy agenda. 
• Chairman Powell will argue that policy is data-dependent. The magnitude of recent easing cannot be justified by incoming information over this period, thereby exposing the Fed to potential flak.

• U.S. equities have surged in the wake of Trump’s electoral victory while stock markets in the rest of the world have been flat to down.
• While the combination of narrowing global leadership and elevated U.S. valuation are concerns, we remain cautious but not bearish on the U.S. and global equity markets.
• Fundamental and macro momentum are strong, and there are no signs of reversal in funding costs.

• Consortium appeals to farmers not to sell below INR 200/kg
• Supply to market expected to fall by 30% in coming days
• Compound rubber imports go up by 47.5% YoY until Sept

• Trump and Powell have had an acrimonious relationship since Trump’s first term and that continues today.
• Trump’s fiscal policies will create crosscurrents for the US economy and run counter to Powell’s objectives as chairman of the Fed.
• Although tariffs can be implemented quickly, they must run concurrently with other policies to restrain their inflationary effects on the US economy.  Other policies will take longer to implement.

• In our inaugural report on Asian Equities, we argue that this asset class is likely to outperform in the medium term, though the near term could be choppy.
• “Republican sweep” in the US could drive near term US equity outperformance. Higher US bond yields and stronger US Dollar could continue to drive foreign outflows in Asia as well. 
• In the long term, far cheaper Asian valuations, favorable growth and demographics and eventual USD moderation driven by gradual Fed rate cuts enthuse us about Asia. Interesting opportunities galore here.

• The US dollar and rates continued to rise over the past week, causing an increase in UK yields despite poor unemployment and GDP data. The possibility of a December Fed cut remains due to US inflation data.
• Bank Indonesia’s decision was the main event in a quiet week for monetary policy decisions.
• UK inflation saw a significant increase due to changes in regulated energy prices. Other awaited data includes flash PMIs and final HICP.

• A review of recent events/data impacting our investment themes or outlook
• In the markets we follow, China, Gold and the JPY most impacted
• Which ones should we fade and where has the trend changed?

• Inflation and monetary policy remain pivotal themes globally.
• Asian markets, despite recent sell-offs, offer medium- to long-term growth prospects.
• Cryptocurrency and fiscal policies warrant closer scrutiny amidst macroeconomic uncertainties.

• China faces more clashes if Trump chooses hawk Rubio as Secretary of State, experts say Rubio, if confirmed, would bring his “bias against China”
• Reporter’s Notebook: Peru unveils Chancay Port at APEC Summit … with a little help from China
• BNP Paribas cuts China investment banking jobs

• For the week ending 08/Nov, US crude inventories rose by 2.1m barrels, surpassing expectations of a 0.4m barrel increase. Meanwhile, gasoline and distillate stocks unexpectedly declined.
• US natural gas inventories rose 42 Bcf for the week ending 08/Nov, exceeding analyst expectations of a 34 Bcf buildup. Inventories are 6.1% above the 5-year seasonal average.
• Occidental beat revenue and EPS estimates by 0.7% and 34.8%, respectively led by higher hydrocarbon output. Analysts upgraded their 12-month PTs on Occidental, Chevron, Exxon, and Halliburton.

• During the period under consideration, i.e. September 12th, 2024, to October 14th, 2024, the EUR/USD pair posted both downward and upward swings.
• In the beginning, it faced a general increase, until September 26th where the pair faced a sharp decrease.
• After that, it fluctuated sideways in a slight but steady downward momentum, and by the end of the period the price traded at a lower level than September 12th. 

• Luxembourg’s economy is projected to show moderate growth in 2024-2026, with real GDP growth rates of 1.26%, 2.68%, and 2.49% respectively, rebounding from a 1.09% contraction in 2023, according to the IMF.
• However, Real GDP per Capita is expected to decrease from €100,065.85 in 2022 to €97,065.86 by 2026.
• Total investments are projected to stay steady at 16-17% of GDP, while Gross National Savings are expected to decline slightly from 25.40% in 2022 to 23.19% in 2026.

• Donald Trump’s victory in the presidential election could be a boon for TikTok, potentially offering the Chinese-owned short-video app a reprieve from the impending federal ban that would cost it one of its biggest markets.
• President Joe Biden signed a bill into law this April that gave a choice to ByteDance Ltd., the Chinese parent company of TikTok — sell the app by January next year or face a ban from the country’s app stores.
• The reason given for the bill was concern that Beijing could access U.S. users’ information and use TikTok to influence citizens — although TikTok denied both claims.

• Following another reasonably hot U.S. CPI report yesterday, it’s time to dust off the old sell-side charlatan chart comparing today’s inflation to the 1970s.
• Honestly, I find this comparison absurd in many ways, as the drivers of inflation are different now.
• Still, there is an interesting resemblance, which got me thinking…Inflation in the U.S. is trending around 3-3.5%, and the Fed has made no progress over the past 3-4 months toward the 2% target.

• We review our current coverage given recent headlines, including potential FX depreciation, trade moves and migration changes.
• Within Consumer, we see most of our covered companies as solidly positioned, as most of these companies have at least a third of their revenues originated in the U.S., with mostly minimal export-import relationship.
• In Cement, our covered companies are also well positioned, supported by their exposure to the U.S. market, with a significant portion of their EBITDA generated in this country.

• This was not about Left versus Right, it was about a generational shift, from the Boomers to Gen X.
• This will then also move the children of the Boomers – the Millennials – down in favour of the next generation, the Zoomers of Gen Z.
• The economy and the markets will now shift in line with their traits and behaviours.

• Premium brands focus on high-value large rims, leaving small-rim markets.
• Factory closures signal overcapacity as brands exit small-rim tire production.
• New players gain ground in small-rim segments in Europe and North America.

• Thailand likely to receive less rains in the coming one-month period  
• Indonesia, Vietnam, Cambodia likely to have above normal rains  
• WMO predicts 60% chances of La Nina developing

• Before we get to Trump, we need to quickly discuss OPEC and their recent cut in demand forecasts.
• This reduction hints at an unwillingness to increase production in the near future.
• Saudi Arabia is key here, as it holds the largest excess capacity, and a production hike from them could swing the market and send prices below $50 USD in the blink of an eye.

• US inflation’s unsurprising October print should reassure market expectations for a December rate cut after pricing became overextended by post-election exuberance.
• Although the seasonally adjusted rates annualised above the target again, unadjusted rates are trending at dovishly subdued levels, with no headline exceptions since April.
• These numbers are arguably old news but don’t discourage a December cut. The shocks from Trump policies won’t hit until 2025 and pre-empting them seems too presumptive.

• We’re at a critical juncture in sovereign bond markets, with liquidity running razor-thin and the game changing fast.
• German Bunds, traditionally rock-solid, are now trading through swaps and nearing zero on cross-currency swaps (ESTRON/SOFR) – a first in modern market history.
• The takeaway? Major central banks, especially the ECB, are pressing too hard on QT, and the markets are about to hit back hard if they don’t ease up soon.

• Discussion on US elections and Fed policy implications
• Impact of policy uncertainty on calendar spreads and wild card options
• Investor positioning and its influence on various bond contracts

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