Macro and Cross Asset Strategy

1. UK CPI Trips Into The Fall

By Phil Rush, Heteronomics

• UK inflation’s march higher ended early as expectations tripped over a drop in airfares to slow slightly in September, ahead of slightly falling back through the Fall seasonal.
• Weakness elsewhere cut the annualised median rate below 2% for the first time since March. That is likely to be a small soft spot relative to the worrying cumulative upside.
• Our forecasts remain close to or below the consensus until June, after other forecasts rose in last month’s survey. We still see wages stoking an excessive underlying trend.

2. Credit Cockroaches Incubating

By Phil Rush, Heteronomics

• Write-downs at two regional banks follow the cockroaches of First Brands and Tricolor bankruptcies, and should not be dismissed as isolated idiosyncratic events.
• Overly accommodative monetary conditions are stimulating markets to incubate cockroach eggs that may spawn as private credit malinvestment in the next recession.
• It is too early for these eggs to hatch, aided by the warm support of further Fed rate cuts. So, risk assets will probably keep on rising in the void of economic data releases.

3. EMERGING THEMES: China’s Next 5 Year Plan

By David Mudd

• China will roll out its 2026 – 2030 five-year plan this month, which outline the economic and social roadmap until the end of the decade.  
• Historically the five-year plans have been a roadmap for investors to look for tailwinds for economic sector performance.  We believe the high-tech industries will remain the main focus for investment.
• Exporters of high-end equipment and machinery will continue to benefit with the consumption sector being a focus for international investors.

4. A Sharp Increase in Short Selling Balance in the Korean Stock Market Past Seven Months

By Douglas Kim, Douglas Research Advisory

• The net short selling balance in KOSPI reached 12.6 trillion won as of 20 October. This is the largest amount ever.
• The top 5 companies in KOSPI with highest short selling balance/market cap ratio include Kakaopay, L&F, Hanmi Semiconductor, Cosmax, and LG H&H. 
• Net short position In KOSDAQ as a percentage of total KOSDAQ market cap more than doubled from 0.5% as of 31 March to 1.1% as of 21 October 2025.

5. A Fragile Bull

By Cam Hui, Pennock Idea Hub

• The narrow U.S. market leadership presents fragility challenges for investors. 
• The economy is becoming increasingly dependent on the top 20% of consumers, and the market is dependent on Magnificent Seven and AI stocks to lead the market.
• While there are no signs that these trends are about to break, the market is overextended in the short run and can correct at any time.

6. The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 20)

By David Mudd

• The materials sector continues its outperformance in Hong Kong, however the recent sharp pullback showed a weakening in strength and momentum.
• Mainland investors continued to buy Hong Kong listed stocks heavily during the market pullback earlier this month.
• Zhejiang Sanhua Intelligent Controls (2050 HK) quashed market rumors about a large robotic order from Tesla (TSLA US); however, it continues discussions on cooperation opportunities.

7. Technically Speaking Breakouts & Breakdowns – HONG KONG (October 18)

By David Mudd

• Hong Kong has pulled back this month as the U.S. trade war intensifies, however it remains in a Secular Bull Market.
• Materials and Healthcare sectors continue to outperform YTD, with Technology coming in a distant 3rd place.
• Hengan International Group (1044 HK)  had multiple breakouts relative to MSCI Asian indexes and on an absolute basis.  Analysts’ recommendations are split as the shares trade at their target price.

8. The Art of the Trade War: THE END OF THE BEGINNING

By David Mudd

• The meeting next week between Presidents Trump and Xi will mark the beginning of  a resolution to trade and other issues between the two countries.
• The most difficult tech and rare earth elements issues will probably not be resolved.  Increased tariff rates will be delayed again.
• TikTok and Taiwan are key issues and will set the tone for the U.S.-China relationship during President Trump’s remaining term.  

9. EM Active Funds: What’s Driving Performance in 2025?

By Steven Holden, Copley Fund Research

• Active EM funds average +26.0% YTD, their strongest year since 2017, though still underperforming the benchmark by -1.8%. Fewer than 40% have outpaced the iShares MSCI EM ETF.
• Style and regional positioning drove dispersion. Value managers and South Korea exposure supported gains, while Aggressive Growth styles and India-heavy allocations weighed on returns. High Active Share strategies also trailed.
• Active EM outperformance remains consistent long-term. Active funds have beaten the benchmark in 14 of the past 22 years, with the ETF often ranking near the peer group median.

10. HEW: Heavy Hitters Pulling Punches

By Phil Rush, Heteronomics

• Sentiment stabilised this week as credit issues are realised to be more of a long-term problem than an imminent issue. Indonesia and Korea hawkishly held their policy rates.
• Inflation undershot final expectations in the UK and US, yet constitutes less excess rather than outright weakness, and merely aligns with slightly earlier forecasts.
• Next week’s release calendar has some heavy hitters, but pulling their punches. The Fed cut and ECB hold are widely expected, as is a marginal slowing in EA inflation.

1. UK: Mixed Messages On Labour Market

By Phil Rush, Heteronomics

• Most narratives can find some support in the latest labour market report, preserving uncertainty that should keep the BoE on hold at least until some clarity emerges.
• Unemployment has increased (LFS) or stabilised (payrolls), while pay is shockingly resurgent (inc-bonuses), slowing as expected (ex-bonus) or stagnating (private pay).
• Weakness isn’t as clear as the consensus and press sometimes make out, but concerns aren’t invalidated. We still expect resilience to preserve excess inflation hawkishly.

2. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 17 October 2025

By Dr. Jim Walker, Aletheia Capital

• China: Monetary & Trade Indicators Strengthen: September data show broad-based monetary growth
• Korea: Early Signs of Trade Softness: The first 10 days of October show exports down 15% YoY, imports down 22.8%.
• India: Inflation Trends Favor Rate Cuts: Wholesale prices up just 0.1% YoY in September — a stark contrast to >10% in 2022 and flat in 2023.

3. UK: Unseasonably Resilient In Q3

By Phil Rush, Heteronomics

• Slight growth in August sustains an above trend level of activity and is tracking to a 0.2% q-o-q pace for Q3, matching our forecast and the consensus, but disappointing the BoE.
• The ongoing slowdown in service sector activity repeats residual seasonality that would leave a trough in two months, but there is slightly more resilience this year.
• Policymakers shouldn’t react to statistical noise, and are unlikely to amid ongoing excesses in underlying inflation that a stabilising labour market wouldn’t break.

4. The Art of the Trade War: PAIN THRESHOLD FOR THE TACO TRADE!!

By David Mudd

• Tensions between China and the U.S. have increased. Last week’s tit-for-tat exchanges culminated with President Trump threatening China with higher tariff rates and a cancellation of his meeting with Xi.
• Trump’s Friday post on social media immediately caused U.S. markets to swoon with the S&P breaking support levels.  In a TACO trade moment, Trump reversed his harsh rhetoric on Sunday.
• Anyone can speculate on what the next few weeks will look like for markets, but we believe the market may start pricing in more long-term risk.

5. HEW: Cockroaches Startle Pricing

By Phil Rush, Heteronomics

• Losses on bad and fraudulent US loans raise the risk that more cockroaches will emerge, nourished by monetary policy stimulating asset prices outside of recessionary regimes.
• Market rates fell on this, while macro data didn’t offer direction as UK Q3 GDP kept tracking 0.2%, EA inflation was confirmed, and UK labour market data were mixed.
• Next week’s UK inflation data should reveal a rise, with the CPI reaching 4%. Delayed US CPI data will provide a rare signal more relevant to the Fed’s likely decision to cut.

6. EA: Inflation Rises Briefly In The Fall

By Phil Rush, Heteronomics

• Inflation’s rise to a high 2.3% in September was confirmed in the final print, although some payback remains likely in October. We doubt it goes fully back to the target then.
• Underlying inflation metrics were broadly stable again at about 2.5%, with little progress in most statistical measures for over a year.
• There is little cause for alarm at this stage, so the ECB can keep waiting in a good place, but we still see a greater risk of hikes than cuts in 2026.

7. The Return of Tariff Man

By Cam Hui, Pennock Idea Hub

• We’ve been warning forweeks that the U.S. equity market advance was extended and it could pull back at any time.
• President Trump’s threat to impose high tariffs on China seems to be the bearish trigger.
• Our base case calls for a 5-10% pullback, and we regard any correction as a welcome pause and opportunity to add to equity positions at lower prices.

8. The AI Bubble Debate

By Cam Hui, Pennock Idea Hub

• Are we in an AI bubble? Probably, but much depends on what stage we are in the bubble.
• On one hand, headline M&A deals like the one concluded with AMD is supportive of further gains.
• On the other hand, the recent Oracle earnings report casts doubt about the profitability of AI cloud computing sustaining elevated valuations.

9. US Equities: Maintaining Elevated Leadership Valuations Will Require Upside Surprises

By Said Desaque, DeSaque Macro Research

• Hype surrounding the benefits of artificial intelligence (AI) has increased in 2025, despite a slowing economy. While new economy sectors have contributed to growth,  not all is AI-related.
• There are valid comparisons between the current environment and the late 1990s surrounding hype about the beneficial impact of technological innovation on corporate performance. S&P500 leadership is priced to perfection.
• Current US equity leadership valuations are exposed to threats over the next 9 months, including stress in credit markets due to high bond issuance by companies in AI-related activity.

10. Asia Cross Asset Podcast: Japan – The New LDP Leader: Implications for policy and markets

By At Any Rate, At Any Rate

• Ayako Takashi advocates for responsible expansionary fiscal policy, focusing on income distribution rather than aggressive fiscal expansion.
• Takashi’s comments on the relationship between the government and the Bank of Japan do not necessarily indicate clear intervention, but may put pressure on the central bank.
• The BOJ may need to deliver rate hikes every six months to combat elevated inflation, with market expectations of a terminal rate around 1%. Timing of rate hikes may be tricky, especially with fluctuating exchange rates.

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

1. HONG KONG ALPHA PORTFOLIO: (September 2025)

By David Mudd

• Hong Kong Alpha portfolio gained 8.45% in September and 60.89% and 62.80% YTD and since launch one year ago.  The portfolio has outperformed Hong Kong indexes by more than 40%.
• The portfolio has a Sharpe ratio of 3.23 YTD and has generated more than 40% of its returns from stock-picking (alpha).  Its beta is low at only 1.17.
• At the end of September, we increased exposure to AI and robotics and sold positions in the consumer and finance sectors.

2. UK: Lending Looks Stimulated

By Phil Rush, Heteronomics

• Lending activity is sustaining beyond the levels prevailing before the stamp duty tax hike distortion. Only housing transaction volumes are down, but by less than before.
• New loan rates have fallen by 23bp since then, for a 110bp cumulative fall. New rates are close to the outstanding stock. Many borrowers are refinancing for similar deals.
• Past tightening has broadly passed through, but the strength in broad money growth signals that monetary conditions are settling at a slightly stimulative setting.

3. EA: Core Excess Revealed In Sep-25

By Phil Rush, Heteronomics

• Inflation’s break above target to 2.23%, within 1bp of our forecast, came as past energy price falls dropped out to reveal the more resilient underlying pressures.
• Small upside surprises in large countries, like Germany and Italy, were balanced in number and contribution by larger surprises in small ones, like Greece and Estonia.
• We expect less negative payback in October and January, preventing our profile from languishing below the target through 2026, like the consensus view does.

4. UK: Government Leads Imbalances

By Phil Rush, Heteronomics

• Household saving and inflation have eroded their debt burden while corporates remain prudent. A lack of imbalances to correct starves the UK of fuel for a recession fire.
• Persistent fiscal and current account deficits highlight where the UK’s primary risk lies. If the market regime focuses on fiscal issues, the corrective pressures could be fierce.
• We don’t expect that correction to occur, but the Chancellor should tread carefully, while doves need not worry about a recession arising from healthier other UK sectors.

5. Australian Equities: Where are we now, and what’s next?

By MAGELLAN – IN THE KNOW, Magellan Asset Management

• Australian economy remains sluggish, but some positives include recovery in small caps and resilience of Australian consumers
• Market volatility and narrow leadership driving unhappiness among active investors
• Resilience of Aussie consumer and strong retail results stood out in recent reporting season, with small caps and US housing exposure also notable themes

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

6. HEW: Watching What Didn’t Happen

By Phil Rush, Heteronomics

• The US government shutdown removes the potential for official statistics to damp dovish concern, raising the likelihood of October’s cut, especially with other weak data.
• EA unemployment’s rise reflected rounding rather than substance. UK national accounts revealed healthy balance sheets, aside from the government, and bullish lending stats.
• Next week’s calendar stays thin with US releases suspended and Europe’s cycle focusing on the following week. The RBNZ, BoT, BSP and Peru announce rates next week.

7. Gold Mania, Niobium Dreams, and Antimony Nightmares (Datt)

By Money of Mine, Money of Mine

• US monetary policy is accommodative and markets are buoyant, especially in commodities
• Investors need to be cautious about being overly bullish in current environment
• Similarities seen with 2006-2007 period, particularly in disruptions in copper supply and new technologies in metal recovery; investors should be wary of hype and potential risks involved

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

8. Get Ready to Buy the Dip, But Not Yet

By Cam Hui, Pennock Idea Hub

• We remain intermediate-term bullish on stocks, but the market is at risk of a correction.
• If last week’s weakness is the start of a pullback, short-term trading indicators point to further downside potential.
• Investors should be prepared to buy the dip, but not yet.

9. Indian Market: WANT TO BUY THE DIP, THINK AGAIN !!

By David Mudd

• India’s markets continue to underperform Asia since our insight last November recommending investors to “Fade the Market”.
• Foreign investors continue to exit the market this year with the largest net outflow since COVID.
• The Trump administration is pressuring India in trade negotiations with reciprocal tariffs (25%), additional tariffs for importing Russian oil (25%), pharma tariffs (100%), and new restrictions on H-1B visas.

10. EA: Rounding Jobs For Migrants

By Phil Rush, Heteronomics

• A surprise rise in EA unemployment reflects rounding rather than alarming weakness, with labour supply and demand still surging. Finland’s woes are more idiosyncratic.
• Supply has trended much faster post-pandemic, sustaining demand at its old trend without extreme capacity constraints. Migration has more than accounted for the rise.
• Ukrainians are dominating the flow and complicating the read through to disinflationary spare capacity. Wage growth is an even more critical signal when supply is uncertain.

1. Broadly Slower Services PMIs

By Phil Rush, Heteronomics

• PMIs broadly disappointed and declined relative to August, but absolute levels mostly remain robust or at least expansionary. We are not concerned by these noisy moves.
• Such broad slowing seems shocking relative to the past few months, but it is historically a regular occurrence. Five of the previous twelve were at least as broadly bad.
• The labour market remains tight in the euro area, softened in the UK, and steady in the US. Slower activity does not mean disinflationary slack. We stay relatively hawkish.

2. EM Fixed Income: (EM) Credit where credit’s due

By At Any Rate, At Any Rate

• Despite a mixed Fed meeting, EM markets continue to rally in FX and rates
• EM local markets still in a good place with upside potential in growth and improving flow picture
• Sovereign credit markets have had a strong performance year to date, with investors feeling optimistic but also acknowledging the need to be humble in assessing macro risks and valuations.

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

3. HEW: Resilience Reminders Roil Doves

By Phil Rush, Heteronomics

• Bullish GDP revisions and jobless claims provided further reminders that the economy is much more resilient than market pricing has dovishly assumed, causing a hawkish shift.
• Nonetheless, the Riksbank surprised with a 25bp rate cut, but projected that as the terminal rate before hikes start reversing the stimulative setting in 2026.
• Next week’s US payrolls data dominates the calendar, given the potential to break market conviction in an October Fed cut. EA inflation should rise back above the target.

4. Asian Equity: Relative Valuations Have Mostly Converged; Korea the Only Large Rerating Candidate

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Most large Asian markets’ forward PE multiples are significantly higher than their long-term averages. But their valuations relative to Asia-ex-Japan are mostly at the averages, only Korea’s is significantly lower.
• HK/China’s relative PE is slightly lower than average, Taiwan’s is slightly higher. ASEAN markets’ relative PE are sharply lower than their averages, but we think most lack rerating catalysts.
• We think Korea and Philippines deserve to get rerated. India’s relative PE, though at its long-term average, could decline slightly further, to reach its recent bottoms.

5. Will AI save the US Economy?

By Alastair Newton, Heteronomics

• European policymakers and investors see Donald Trump’s economic policies harming Republican prospects in the 2026 midterms and the 2028 general election.
• The Trump Administration is placing a good deal of faith in AI as a panacea. But the US may not have the skilled labour or the power-generating capacity to fuel an AI boom.
• Nor is it clear whether the current Administration is preparing for the related socio-economic disruption from which the MAGA faithful would be far from immune.

6. Resilience Is Reinstating

By Phil Rush, Heteronomics

• Falling US jobless claims and bullish GDP revisions are reinstating evidence of ongoing resilience. Underlying GDP only slowed by about 0.1pp in H1, or 15% of 2024’s average.
• Risk management rate cuts to balance the higher costs of being wrong on the downside raise the probability that easing proves premature and swiftly ends.
• The ECB already sees the transmission of its past cuts trending loan growth higher. It may reach pressures consistent with hikes next year, and it already clashes with easing.

7. Asian Equities: Foreign Flows Come Roaring Back in September; India, ASEAN Still Getting Sold

By Manishi Raychaudhuri, Emmer Capital Partners Limited

• Fed’s “risk management cut” and a dovish outlook of 2 more cuts in 2025 are driving foreign flows back to Asia. US$11.5bn inflows in September till date underscores the sentiment.
• Korea (US$4.94bn) and Taiwan (US$7.5bn) grabbed the Asian flows entirely, driven by the rejuvenated AI capex theme. India (-US$904m) continues to be sold, though the selling pace has diminished.
• FIIs bought Indonesia (US$672m) in August and sold almost identical amount in Thailand. Philippines, despite being cheap and having a few sectors with upward earnings inflection, continues to be sold.

8. US Tariff Policy: A.K.A. WHACK A MOLE!

By David Mudd

• The U.S. continues to play “Whack-A-Mole” using tariffs to threaten and/or negotiate on many economic and geopolitical issues.
• The Trump tariff policy, which may be declared illegal by the Supreme Court next month, has caused manufacturers to hold off on hiring and expansion plans.
• Although tariff revenue for the U.S. government is at an all-time high, the U.S. will still record its highest trade deficit in history this year.

9. SLBs in 2025: Where Step-Ups Create Event-Driven Alpha

By Evan Campbell, CFA, Leaf & Ledger Limited

• Set-Up and scale: 245 SLBs face 2025 KPI tests; applying a 19% 2024 miss rate implies ~50 step-ups of ~25 bps, worth ~20–60 bps PV. >$80bn notional, heaviest in Q4.
• Trade design, credit and equity: Pre-position where slippage exists and no pre-test calls; run structure pairs; trade post-print drift; for equities, SLB misses flag delivery shortfalls and funding-cost creep.
• Why the market is inefficient: ESG KPIs hide in footnotes and annexes, overlooked by analysts. Verification lags and slow vendor updates delay repricing, so step-up structures stay mis-weighted and mispriced.

10. Indonesia : Sri Mulyani’s Exit Compounds Fiscal Risks

By Priyanka Kishore, Asia Decoded

• The exit of Indonesia’s veteran Finance Minister, Sri Mulyani Indrawati, marks a turning point in the country’s fiscal regime.
• With her out of the picture, it is only a matter of time before the government revises the 3% deficit ceiling higher to accommodate Prabowo’s large spending plans.
• This is a slippery slope and an indiscriminate push for spending, without concomitant tax reforms, could put debt on an unsustainable path.

1. UK CPI Stickier For Longer

By Phil Rush, Heteronomics

• UK inflation data confirmed the substantial upwards drift in the consensus, worth 0.6pp since May and 1.1pp over the past year, while matching final forecasts for August.
• The consensus has shifted further than usual over the past month. It now aligns with our hawkish forecast until April, when hope again dominates in dragging inflation down.
• Although the MPC won’t be shocked by this outcome, the persistent excess in underlying inflation still seems set to keep it holding rates. We do not expect cuts to resume.

2. UK Jobs Find Their Floor

By Phil Rush, Heteronomics

• Stability in unemployment at 4.66%, while payrolls only marginally decline, suggests the labour market has found its floor before disinflationary pressures accumulate.
• A narrative-breaking improvement could occur next month. Tax rises structurally explain the scale of the previous shock, with weakness seemingly not going beyond that.
• Excess supply is needed to break wage growth to a target-consistent trend. Without that, the MPC should hold rates before potentially reversing by raising them in 2026.

3. Emerging Markets Outlook and Strategy for September 2025

By At Any Rate, At Any Rate

• Global growth has been better than expected, particularly in emerging markets, due to strong export performance and tech cycle strength
• China’s growth is expected to slip below 3% in the second half, with domestic demand slowing sharply
• Despite the growth resilience in EM, central banks are expected to continue their gradual cutting cycle due to weak domestic demand and disinflation trends

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

4. Generative AI in Investment Mgmt: Value Investor’s Perspective w/ Ehsan Ehsani | New Barbarians #035

By William Mann, HarmoniQ Insights

• Ehsan Ehsani, executive director at Crescendo Partners and adjunct professor at Columbia Business School, joins the discussion with Harmonic Insights and will be organizing the Generative AI and Investment Management Conference at Columbia.
• Futures markets are predicting a 25 basis point cut with more cuts in the future, while volatility and factor returns continue to be influenced by macro factors.
• Quantitative investors typically do not make significant changes to their portfolios based on short-term data, instead focusing on longer-term trends and statistically significant moves.

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

5. BoE Trims QT To Hold Policy Steady

By Phil Rush, Heteronomics

• The MPC unsurprisingly held rates while seeking an answer to its key question around inflation risks amid elevated expectations and a possible structural shift.
• It also trimmed QT by £30bn to £70bn, keeping active sales of long gilts steady in the next three quarterly auctions while skewing QT towards short and medium gilts.
• We still expect the MPC’s presumption of rate cuts resuming to fade out in early 2026 as hawkish pressures persist. Some offsetting fiscal space arises from QT being trimmed.

6. Japan Macro: Restarting Coverage

By Takuji Okubo, Japan Macro Advisors

• Bank of Japan likely to remain on hold till January 2026 with risk of further delay 
• Once BoJ resumes hiking cycle, it will likely follow twice a year pace till 1.5% 
• With the Fed cutting rates, the long end of the JGB curve is firmly anchored

7. HEW: Cautious Cuts Through The West

By Phil Rush, Heteronomics

• Economic data releases revealed more resilience in labour markets than feared, while inflation remained high. Yet Western central banks broadly cut rates, albeit cautiously.
• The BoE’s caution left only two dovish dissents to its on-hold decision, while it cut QT by £30bn to £70bn to reduce the likelihood of gilt market indigestion.
• Next week’s SNB and Riksbank decisions should join the BoE in holding steady, although they have already cut much further. Flash PMIs are the data focus in a thin calendar.

8. US: You Ain’t Seen Nothin’ yet on the Impact of the Trump Tariffs

By Prasenjit K. Basu, CrossASEAN Research

• China’s share of US imports will halve in 2025 from Mar’18 peak of 21.8%, and ASEAN’s share (led by Vietnam) will rise to 14%. India, Korea, Taiwan’s shares gain too. 
• There was a big surge in Asian exports to the US in Jun-Jul’25 to beat tariffs, but tariffs will alter patterns in 4Q2025, cutting export growth and reducing US disinflation. 
• The rebound in US steel production (+4.6%YoY in Jun-Jul’25) and ISM manufacturing new orders suggests select American industries (metals, automobiles, electronics) will gain but downstream users will suffer steadily more. 

9. Twilight of the AI Bull?

By Cam Hui, Pennock Idea Hub

• The leadership of AI-driven stocks is starting to stumble from bubbly valuation levels, which brings up the warning from Bob Farrell’s Rule #4.
• The debate is ongoing as to whether the AI bull is evolving from hyperscaler leadership to the next phase of companies that can better exploit the technology.
• The lack of cyclical market leadership is concerning from a technical perspective. We are therefore tactically cautious about the short-term outlook for U.S. equities.

10. Dialling down the Noise

By Mark Tinker, Market Thinker

• Traders, Quants and Passive Investors have steadily crowded out most earnings signals for long term investors.
• Quarterly reports won’t be missed, and ironically their ending may help restore the role of fundamental analysis.
• However, narrative trading will simply go elsewhere and developments in AI, options and meme stocks are already creating a new asset class we might call ‘Equity as Crypto’.

1. BoE QT: Pruning A Bad Policy

By Phil Rush, Heteronomics

• The BoE’s annual Quantitative Tightening announcement in September should see it prune the targeted size, we expect by £20bn to £80bn, concentrated in the long-end.
• Fewer maturities in the year ahead would otherwise put too much pressure on active sales into a market that lacks appetite, especially with LDI demand disappearing.
• Pruning the size and duration delays costs crystallising by several billion a year, which the Chancellor will welcome, yet QT’s poor design remains an expensive fiscal disaster.

2. Fed: Politics Vs Fundamentals

By Phil Rush, Heteronomics

• President Trump’s current preference for rate cuts is not unconditional. Higher-order logic suggests this would not override fundamental resilience or fairly prove “TACO”.
• Political pressure is state-dependent, with the messenger mattering more than the objective truth beneath any message. Trump’s Chair will have a stronger hand.
• Brazil suffered President Lula’s pressure, but he still supported his “Golden Boy’s” turn from dovish dissent to forceful rate hikes. Fed pricing ignores the potential for change.

3. France: Déjà Vu?

By Alastair Newton, Heteronomics

• Despite the near certainty that the Bayrou government will fall on 8 September, investors are wary, rather than spooked, reckoning that they have seen all this before.
• They are likely correct to judge that compromises will then be found, allowing the 2026 budget to be passed by a new centrist government.
• However, this would again only be putting off the day when a real crisis point is reached.

4. HEW: Crystalising Policy Divergence

By Phil Rush, Heteronomics

• Spreads between ECB and Fed expectations widened again this week as the ECB held rates with a neutral bias while disappointing US labour market data drive dovish hopes.
• Underlying US services inflation was soft, and initial jobless claims spiked, albeit over Labor Day. We think US pricing has gone too far, and political pressure won’t dominate.
• Guidance with the Fed’s upcoming cut could start to correct that. The BoE will hold rates, after more hawkish macro news next week, and should trim its QT plan this year.

5. The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 11)

By David Mudd

• HSTECH index is showing increasing strength as Hong Kong continues it Secular Bull Market.  Continued strong market breadth indicates both rotational buying and new investors entering the market.
• Southbound buying from mainland investors remains strong after the “Liberation Day announcement.  Mainland investor volume is now 20% of total volume in the Hong Kong market.
• China Biotech and Drug sectors were hit as the U.S. administration indicated it may begin restricting import of Chinese-made drugs and to cut off the pipeline of Chinese-invented experimental drugs.

6. Technically Speaking Breakouts & Breakdowns – HONG KONG (September 10)

By David Mudd

• The Hong Kong secular bull market continues to broaden and has broken all long term resistance levels. The HSCEI has beaten Asian and global peers over the last 18 months.
• Growth and Momentum factors have been the best performers in the HSCI year to date. The Materials and Healthcare sectors continue to show increasing strength in their relative returns.
• Cloud Village (9899 HK) had a breakout pattern from a continuation triangle after reporting a deal to stream Korean drama series to Chinese market. The company’s profits grew in 1H25.

7. ECB: Balanced In The Good Place

By Phil Rush, Heteronomics

• Staying in the ECB’s “good place” encouraged a neutral bias around its unanimous decision for no change, while being appropriately open to tackling future shocks.
• Staff inflation forecasts still undershoot the target, with recent upside news seemingly postponing passthrough rather than trimming the extent into something like our view.
• President Lagarde sounded relaxed about France’s spread widening, and the ECB did not discuss the TPI. We still expect no ECB easing against this, or further rate cuts.

8. Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 12 September 2025

By Dr. Jim Walker, Aletheia Capital

• US producer prices softened in August, but structural factors keep inflation pressures elevated despite Fed rate cuts.

• Labour market revisions show weaker US job growth, raising doubts on monthly payroll data reliability.

• Japan’s GDP growth headline looks strong, but weak domestic demand and lower business spending reveal fragile fundamentals.

9. Seasonal Weakness Ahead?

By Cam Hui, Pennock Idea Hub

• We are seeing fundamental headwinds in the form of elevated valuations and earnings uncertainty from tariffs, which won’t be visible until Q3 earnings season.
• On the other hand, the technical outlook appears relatively benign.
• Our base case calls for some choppiness ahead. We are near-term cautious, but not bearish.

10. Waller’s Gambit

By Cam Hui, Pennock Idea Hub

• Fed Governor Chris Waller is a leading candidate to be the next Fed Chair, and the issue of Fed independence is paramount.
• Our evaluation of his economic case for rate cuts should be whether the decisions are based on sound data, theory and solid judgment.
• He has shown solid thinking on employment, but his justification for rate cuts based on the Fed’s inflation mandate is weaker and shows signs of wishful thinking.

1. EA: Defying Disinflationary Narratives

By Phil Rush, Heteronomics

• Dovish hopes for EA disinflation continue to be disappointed by resilient outcomes. The rise to 2.1% in August amid sticky core pressures is opposite to the dovish narrative.
• Euro appreciation’s disinflationary shock is being offset by domestic resilience, which was most surprising in Northern Europe. Our errors were relatively small and balanced.
• Ongoing upside surprises have defied recent consensus expectations of a drift down to 1.8%. The ECB faces broad upside news that should reassure it against cutting again.

2. Cutting After Pauses

By Phil Rush, Heteronomics

• The BoE and Fed rarely resume cutting cycles after a pause, yet the Fed seems set to break its hold with a cut just as the BoE and ECB enter their own pauses.
• 2002-03 is the best historical parallel for the Fed, which signals potential cuts should be shallow and are likely to be reversed. Politics is no match for the fundamental need.
• Persistently excessive UK pressures should prevent the BoE from cutting in November or beyond, with a quarterly pause historically unlikely to resolve in another rate cut.

3. HEW: Pauses On And Off

By Phil Rush, Heteronomics

• Another disappointing payroll release provides the fundamental cover needed for the Fed to end its pause with a rate cut on 17 September without being too political.
• The BoE is starting its own pause, and if it goes a quarter without cutting, historically, it’s not resumed the cycle. Its DMP survey confirmed inflation’s persistent problem.
• Another upside inflation surprise seems set to keep the ECB on hold amid record low unemployment. We also expect it to preserve its view that policy is in a good place.

4. Liz Truss on the ‘Doom Loop’ Engulfing the UK Economy

By Odd Lots, Odd Lots

• Legacy systems can’t handle usage-based billing, slowing down product launches
• Metronome allows for quick roll out of new pricing models in minutes
• Guest interview with Liz Truss discussing economic challenges and the need for policy shifts

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

5. BoE Survey Says Inflation Persists

By Phil Rush, Heteronomics

• CFOs are telling the BoE that they plan to keep raising prices by more than 3% in 2026. The BoE should take notice, as this survey’s previous warnings have proven accurate.
• Expected increases reflect the passthrough of further wage increases beyond a pace consistent with the target. They exceed even our already hawkish forecasts.
• The BoE is unlikely to realise the sharp drop in wage growth it expects by year’s end, without a shock to break the current regime, bolstering our call for no more rate cuts.

6. HEM: Politicised Policy Pricing

By Phil Rush, Heteronomics

• Persistent inflationary pressures pared dovish guidance and pricing for the BoE and ECB, but Fed pricing is stuck.
• Blocking a rare resumption of Fed easing looks unlikely, but history suggests cuts would be shallow and reversed.
• Peer pressure is weak during a policy mistake. The BoE faces domestic problems that prevent further easing.

7. HONG KONG ALPHA PORTFOLIO (August 2025)

By David Mudd

• Hong Kong Alpha portfolio gained 11.34% in October outperforming its benchmark and HK indexes.  The portfolio’s Sharpe ratio increased to 2.91 and the beta and correlation to its benchmark decreased.
• The Hong Kong Alpha portfolio is generating significant alpha (idiosyncratic) returns since launch, with 40% of returns represented by superior stock selection, with the remaining due to sector weighting.
• At the end of August, we bought Luk Fook Holdings Intl (590 HK) for the portfolio as retail demand for gold products in mainland China increases.

8. 182: Private Credit: Hype, Hazard, or the Next Big Thing in Long-Term Growth? With Huw Van Steeni…

By The Money Maze Podcast, The Money Maze Podcast

• Private assets, gold, and real estate are recommended for investment to recreate what our parents had financially
• Private credit is reshaping wealth portfolios, with a shift towards insurance companies funding the majority of assets in private credit
• The role of private credit has grown significantly post-financial crisis, with a focus on higher quality, lower risk assets and loans to hard assets such as infrastructure.

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

9. Everything is a bit Brown

By Mark Tinker, Market Thinker

• We often talk of people wanting things to be Black and White and being disconcerted when they realise that they are in fact always Grey, but we would extend that metaphor to the full colour spectrum.
• We want things to be clear and bright and in vivid colour, but in fact everything is, well, basically a bit brown, the colour you get when all the other paints are mixed together and thus, to us at least, it represents the current and pervading sense of muddle and confusion.
• Politically, we see Red socialists embracing Green issues as their central policy, while Greens are pursuing Red Marxism (the author James Delingpole wrote a great book about this called ‘Watermelons’ as in Green on the outside, Red on the inside. But we would just merge the two colours and get brown.)

10. We Know More Than We Can Say Precisely

By Thomas Lam

• The current and expected deterioration of the underlying fiscal trend is troubling
• But the empirical and theoretical relationships between fiscal variables and longer-term interest rates are complex
• My decomposition of longer-term rates and econometric estimates can potentially add to the available research on this