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Macro and Cross Asset Strategy

Weekly Top Ten Macro and Cross Asset Strategy – Jun 16, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Ban on Short Selling Stocks in Korea Extended Until March 2025

By Douglas Kim, Douglas Research Advisory

  • On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025. 
  • For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025. 
  • However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025. 

2. Steno Signals #103: A blood-bath in metals in July!?

By Andreas Steno, Steno Research

  • Happy Sunday from a windy Copenhagen!We’ve been yammering about the copper buildup on Chinese exchanges for months.
  • Was it a strategic decision to hoard copper reserves?
  • Were the Chinese waiting to offload this copper until the CNY devalued, or a result of the physical demand in the Chinese economy nosedived off a cliff?

3. EM Watch: Is China making a fool out of Western metals speculants?

By Andreas Steno, Steno Research

  • Hot on the heels of watching Powell’s press conference, which pushed back slightly against renewed rate-cut optimism, it’s clear that the Fed is playing a cautious game.
  • Despite the soft inflation data this morning, they significantly changed the dot plot.
  • They likely believe the CPI report was noisy due to a sudden deflation in transportation.

4. Malaysia Economics: Is “Digital Tiger” Malaysia About to Roar Again?

By Manu Bhaskaran, Centennial Asia Advisors

  • After a period of economic and political turbulence, Malaysia is now re-entering the spotlight, performing admirably in attracting technology-focused investments.
  • The success in luring semiconductor and data centre investments is not down to pure luck; policymakers have worked hard to ensure that the country friendly to global tech business.
  • If momentum on business investments and policy reform can be maintained, the country may be on the verge of a virtuous cycle that helps it escape the middle-income trap.

5. The Week at A Glance: Everything you need to know ahead of the FOMC and CPI

By Andreas Steno, Steno Research

  • Welcome to our concise weekly overview of key events, expectations, and positioning strategies.
  • This week, we focus on the Federal Reserve meeting, US inflation data, and the crucial Bank of Japan meeting.
  • As usual, the most crucial forward-looking inflation evidence is found in the NFIB report released ahead of the CPI report.

6. US CPI Review – Admittedly a soft report, but NOT the new normal

By Andreas Steno, Steno Research

  • The CPI report today was admittedly softer than our initial hawkish forecasts, with headline coming in unchanged at 0.0% MoM vs 0.1% expected while core came in to the soft side of 0.2% MoM vs 0.3% expected.
  • Our anticipation of rising goods-flation didn’t play out fully, and while shelter re-accelerated as we forecasted, core services disinflated heavily in May due to auto insurance costs declining.
  • The main culprit behind the dovish CPI report was the sudden drop in Motor Vehicle Insurance (chart 2.b), which has so far been printing at trend MoM levels around 1-1.5%, lifting headline inflation by 0.03-0.05% consecutively.

7. Portfolio Watch: Good news = no cuts = bad news (for metals)

By Andreas Steno, Steno Research

  • The latest job report just dropped, and it’s music to our ears—solidifying our thesis once again.
  • A few highlights:Construction Hiring: Markedly up again.
  • This is a strong cycle signal, indicating robust economic activity.

8. “Wham, Bam, Thank You Ma’am” – Commodities Get Slammed

By Rikki Malik

  • “Strong” non-farm payrolls number a catalyst for another hit to commodities
  • Oil positioning is now very supportive for prices with non-commercial buying levels close to  five-year lows.
  • Copper may have more short-term downside with speculative interest still high

9. Macro Regime Indicator: Up, Up, Up still!

By Andreas Steno, Steno Research

  • In May we concluded that: “In May, our models hint of an “Up,Up,Up” environment in inflation, growth and liquidity, which is a decently positive indicator for risk assets, but also for broader reflationary trades returning through the month and into June.” The above conclusion has held true to a large extent and we went against the prevailing consensus driven by the “slowdonistas” when needed during the latter parts of April.
  • For June/July, we see an increasing liquidity trend from right about now, while the growth- and inflation cycle cyclically heats up still, while some lagged effects pull in the opposite direction.
  • From a market perspective, the overwhelming conclusion is that we will continue in an up, up, up macro regime referring to the liquidity cycle, growth cycle and cyclical price/inflation cycle.

10. Quant Signals: USDMXN

By Andreas Steno, Steno Research

  • The case for a stronger MXNMXN sold off massively following the Mexican election last week but we still view the MXN as a clear-cut ‘trade balance’ play.
  • As long as the trade ties between China and the US increasingly necessitate a ‘value-add middleman,’ Mexico remains in an advantageous position, regardless of whether the president is Sheinbaum or Obrador.
  • Our PCA model reveals that USDMXN is trading very rich compared to macro factors.

Weekly Top Ten Macro and Cross Asset Strategy – Jun 9, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Positioning Watch – Turmoil in Markets Is Returning

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch.
  • The divergence between market-cap weighted and and non market-cap weighted indices is slowly normalizing, but the impact that NVIDIA (and some of the other big tech firms) has on both broad equity returns is notable with the 5 largest companies in the S&P 500 accounting for roughly 30% of the index by now.
  • This does not only have implications for the distribution of returns between bigger indices (Nasdaq vs Dow Jones for instance), but also on indices option volatility, with the VIX ex NVIDIA hitting lows of around 9 in May (2017/2018 lows).

2. EM Watch: The China bet and the copper story are both old hat by now

By Andreas Steno, Steno Research

  • Welcome to our weekly EM editorial where we travel across the liquid EM markets in the context of recent developments in USD markets.
  • ISM Services jumped back to 53.8—time to put that recession chatter to bed for a few months again?
  • Bloomberg’s latest alarmist piece on “business employment dynamics” showing a net job loss in Q3 of last year is probably the worst analysis I have read in a while.

3. Steno Signals #102 – Bad inflation news everywhere

By Andreas Steno, Steno Research

  • Happy Sunday and welcome to our weekly flagship editorial.
  • The inflation progress has stalled, and it is not just a US phenomenon.
  • It is spread to Europe and with freight rates rapidly on the rise, we are likely no longer getting any help from goods inflation in coming quarters.

4. The Week at A Glance: The comeback of the (growth and inflation) cycle

By Andreas Steno, Steno Research

  • Welcome to our short and sweet weekly overview of key events, our expectations and how we position for them.
  • On ISM Manufacturing (Monday). Our forecast at Steno Research is 50.2 for the ISM Manufacturing Index, slightly above the consensus of 49.9.
  • April’s activity was notably weak due to several factors: tax seasonality which withdrew liquidity, a hawkish build-up of expectations ahead of the early May FOMC press conference, and weak international impulses.

5. Is that It? Commodity Bull Market Over?

By Rikki Malik

  • Recent signs of economic weakness in the US is a believable narrative for the current weakness
  • OPEC +  announcement on increasing production adds to the noise
  • Weakness spreads from the energy sector to other commodity sectors

6. Market Trends and Strategy: Hong Kong Bull Market Broadens

By David Mudd

  • High dividend yield  names continue to outperform the broader market.  Energy and Materials sectors are best performers over the last year.
  • Mainland buying has continued to buoy the Hong Kong market even through the pullback in May.
  • Short selling is declining and market breadth is increasing supporting rotational buying between sectors.

7. ETFs Are Reaching Way Beyond Passive Investing

By Srinidhi Raghavendra, Mint Finance

  • ETFs are synonymous with passive investing. It passive investing and beyond. ETFs have been stealing breakfast, lunch and dinner away from mutual funds.
  • Active ETFs have jumped from obscurity to ubiquity. >70% of new ETF launches in the US over the last seven years have been active ETFs.
  • Active ETFs in the cheapest quintile command AUM of USD 325 billion while those in the most expensive quintile hold merely USD 35 billion.

8. May Themes and Thematic Portfolio Review

By Rikki Malik

  • A monthly review of how the markets and our themes are currently performing
  • Analysing what went wrong and what went right in stocks and sectors
  • Highlighting positions added or removed from the thematic investment portfolio

9. Impact of China’s Economic Deceleration on EM Economies

By Alex Ng, Fortress Hill Advisors

  • China’s economic growth is expected to decelerate from the previous high-growth period in the 2000s and early 2010s. This will have an impact on other EMs. 
  • We track the impact from the angles of China’s commodity imports, supply-chain position, and foreign investment.
  • Commodity producer countries can be more heavily impacted. The impact on Asia will be mixed, suffering from regional trade, but some supply chains could be diverted away from China.

10. India Politics: Setback for Modi Heralds Era of Uncertain Coalition Politics

By Manu Bhaskaran, Centennial Asia Advisors

  • The ruling BJP suffered major losses in the recent elections. It fell short of an overall majority and will have to rely on regional partners to form the next government. 
  • Consolidation of the anti-BJP vote under the aegis of the INDIA coalition delivered dividends, but voters also were not enthused by Modi’s economic and social campaign rhetoric. 
  • Expect short-term uncertainty as the major blocs attempt to cobble together parliamentary majorities. But more political checks and balances would be good for India. 

Weekly Top Ten Macro and Cross Asset Strategy – Jun 2, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Positioning Watch – AI (NVIDIA) is overshadowing everything else

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch.
  • Equities have been dragged higher over the past week after NVIDIA published yet another earnings surprise, and markets were funnily enough buying into other Tech equities on the back of NVIDIAs earnings – strengthening the argument as to why AI / NVIDIA has proven to be a major driver in the equity space.
  • Every single time NVIDIA or other GPU companies’ earnings surprise positively, we are witnessing a subsequent boom in the amount of AI related news, which are rapidly increasing at the moment.

2. Korea Exchange Launches the Disclosure of Corporate Value Up Program on KIND System

By Douglas Kim, Douglas Research Advisory

  • The Korea Exchange introduced the Corporate Value Up program on the KIND website. This is a voluntary system aimed at boosting the corporate value of listed Korean companies.
  • Five key investment indicators for the 2,400+ listed Korean companies include PBR, PER, ROE, dividend payout, and dividend yield. The detailed data these indicators can be easily downloaded on excel. 
  • Corporate Value Up program is a marathon, not a sprint. In this race, the runners (Korean companies) also need some water (such as improvements to dividend/corporate income tax policy).

3. Ifo Watch – Is Germany rebounding against all odds?

By Andreas Steno, Steno Research

  • The nationwide figure was released today at 14.00 CET, and despite headline CPI surprising a tad dovish compared to consensus of 0.2% MoM, we had the right lean on overall price pressures with rates markets clearly viewing the report as hawkish news with the longer end of the yield curve selling off.
  • In general regional figures showed a slight dovish surprise in headline terms, which is de facto the mandate of the ECB, but core prices and key components of the HICP basket were not a pleasant surprise for policymakers, which will likely weigh on the rhetoric from ECB in their June meeting.
  • Notably we saw a slight hawkish surprise in the HICP figure compared to CPI, as the categories recreation and culture and restaurants and hotels weigh relatively more in HICP compared to CPI, while food prices weigh less.

4. How to Spot A Market Top

By Cam Hui, Pennock Idea Hub

  • We are not overly concerned about the capitulation of a prominent Wall Street bear on an intermediate-term basis.
  • Stock prices are advancing on stable interest rates and continued economic and earnings growth.
  • However, the stock market is showing some signs of bullishness exhaustion and it’s vulnerable to a short-term pullback.

5. Steno Signals #101 – Introducing the Washington DC Crypto Put!

By Andreas Steno, Steno Research

  • It’s been a break-through week for Crypto bros in many ways.
  • First, the SEC made a massive u-turn and approved the spot ETH ETF and then Donald Trump fully endorsed the crypto space in his speech at the Libertarian Party forum over the weekend.
  • Crypto has broken through to K-street and on top of the obvious positive side-effects, a BTC or an ETH is now becoming a politicized asset.

6. Portfolio Watch – Adjusting equity and commodity risks as the reflation story stalls

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly portfolio watch, where we shed light on the most important factors driving our Macro and Crypto portfolio over the past week.
  • Macro Portfolio – Reflation bets have lost momentumWe have been banging the drum on a combination of slightly higher prices and a continuation of the rebound in manufacturing on a more global scale, placing bets in broad commodities and cyclical equities like Materials.
  • The recent rally in BCOM has however been put to a halt over the past week, and it looks like we are in for a smaller correction in industrial metals, where clustering risks have turned more profound in copper and silver especially, as right about everyone has placed longs in the copper July contract.

7. FSC Head Remarks Short Selling Could Resume in 1Q 2025 and Launch of Financial Investment Income Tax

By Douglas Kim, Douglas Research Advisory

  • On 27 May, Lee Bok-Hyun (Head of FSC) remarked that short selling of stocks in Korea could resume sometime in 1Q -4Q 2025. 
  • The centralized  system to detect short selling of stocks in Korea on a live basis could be completed as early as 1Q 2025.
  • The financial investment income tax is likely to be LAUNCHED in January 2025, which could negatively impact the local stock market. 

8. China’s Housing Market: Heading Closer Towards an Eventual Bottom

By Said Desaque, DeSaque Macro Research

  • Beijing has announced a range of measures to stabilise China’s housing market, including dealing with unsold inventory through government purchases and boosting demand via lower mortgage downpayments.
  • A return to the 2016-2020 boom in housing activity is unlikely, while an extended L-shaped period of healing appears to be a plausible baseline scenario.
  • Improvement in homebuyers’ confidence will be crucial in achieving a market bottom, particularly lower concerns about the financial health of developers and non-delivery risks for new homes.   

9. Litigation Funding as an Asset Class

By Albert Maass, Edelscourt

  • Litigation funding offers third-party financing for lawsuits in exchange for a share of the settlement or judgment.
  • It has emerged as an attractive asset class due to high returns and diversification benefits.
  • The market is driven by institutional involvement, technological advancements, and the rise of ESG litigation.

10. Energy Cable: A new supply side crisis brewing in Nat Gas space?

By Andreas Steno, Steno Research

  • The natural gas trade has started to move in recent weeks as the supply side looks constrained again.
  • While the current situation doesn’t exactly mirror 2021, there are some similarities when we look more closely.
  • Firstly, given the new supply outlook post-energy crisis, we believe there are no fundamental reasons for TTF natural gas to trade in its pre-crisis range.

Weekly Top Ten Macro and Cross Asset Strategy – May 26, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Portfolio Watch: Are you paying attention to China?

By Andreas Steno, Steno Research

  • The Chinese equity trends have really been eye-catching over the past weeks and despite US efforts to flare-up the trade war via new tariffs, the trend has just continued.
  • The new Chinese efforts to prop up the sentiment in the Real Estate space have so far been successful and it seems like an attempt that is a LOT more serious and sizy than what we have seen so far.
  • We are no longer talking about trial balloons or minor twists.

2. EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy?

By Andreas Steno, Steno Research

  • Copper markets have been on a tear in recent months and our assessment is that the positive sentiment started when Chinese copper stock data points started supporting the notion that China was “hoarding” Copper concentrate ahead of 1) a devaluation, 2) an overhaul of the electrical grid or 3) a power grab on supply chains for EVs, Solar Panels, Data centers and the likes.
  • On top of this, we have seen how US officials have highlighted the option of creating a strategic reserve of Copper Cathode in the US, potentially in response to the stockpiling of refined copper seen in China (chart 1).
  • Why is the Chinese copper stock not receding here? That is the question macro-managers and geopolitical pundits are asking themselves daily!

3. Positioning Watch – The real world strikes back

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch.
  • Markets have been enjoying the easier financial conditions imposed by a weaker than anticipated inflation print, although yields have found their way back to pre-CPI levels.
  • The big ongoing theme in markets seems to be the renewed pressures in commodities, as real world demand for crucial metals like copper and nickel has spurred significant flows into broad commodities.

4. Steno Signals #100 – China’s MAJOR power grab on Copper supply chains

By Andreas Steno, Steno Research

  • Let me start by dwelling on the fact that Macro generalists such as myself and Thorsten Slok of Apollo suddenly spend countless hours watching Copper trends.
  • It is probably a red flag in itself, but it just seems like these developments are so INCREDIBLY important for global macro- and geopolitics these months.
  • We have been all over the Chinese copper story in recent months and also traded it with good luck, but we have admittedly been wrong in our call for a weaker CNY (so far).

5. Don’t Let the Bull Throw You Off!

By Rikki Malik

  • There is a chance for a correction in the HK markets as latecomers to the party get nervous
  • All the signs are pointing to a continuation of this bull market as government support measures continue to roll out.
  • Don’t get bucked off that bull by a short-term correction!

6. Technically Speaking: Hong Kong Strategy in the Secular Bull Market

By David Mudd

  • First major technical resistance for HSI and HSCEI has been met with force and a consolidation/correction begins
  • Market breadth expands over last month presenting investment opportunities beyond tech and mega-cap
  • Short and long term sentiment indicators going positive as most analysts continue to look in rear view mirror

7. Active GEM Funds: Top-Down Country Positioning Latest

By Steven Holden, Copley Fund Research

  • EMEA Momentum: EMEA is experiencing positive momentum across multiple countries, with record investments in the MENA region, strong momentum in Greece, Turkey reversing long-term declines, and Poland nearing new ownership highs.
  • Asian Stall: Significant underweight in India suggests caution among investors, China weights remain depressed, Indonesia maintains a strong consensus overweight.  Select ASEAN nations show signs of potential comeback.
  • LATAM Overweights: Investor sentiment in LATAM remains bullish, with Brazil and Mexico seeing most funds positioned overweight. Argentina hits new highs in fund ownership driven by strong conviction in MercadoLibre.

8. Quant Signals: PCA model and Backtesting Features

By Andreas Steno, Steno Research

  • Steno Research PCA model Using a Principal Component Analysis (PCA) model to analyze assets across financial markets provides a powerful framework for investment decisions.
  • By mapping out the macro anatomy of a given asset, PCA identifies key trends and underlying patterns that influence price fluctuations and market dynamics.
  • In this process, we have defined what we see as the most important global macro factors, ensuring that our analysis is comprehensive and targeted.

9. Portfolio Watch: Trading the next of the rolling melt-ups

By Andreas Steno, Steno Research

  • Welcome to our weekly Portfolio Watch.
  • We have had a decent week as our short bet on Utilities has started to deliver, while a continued long bet in technology (and ETH) has been the game in town in the risk asset space.
  • The liquidity trajectory is slightly murky over the next 2-3 weeks before a major reversal from mid-June and onwards as the net issuance pace of T-bills will be ramped up again into July tapping liquidity from the ON RRP along the way.

10. Energy Cable: Commodities, Freight Rates and Goods Imports Are Rising…

By Ulrik Simmelholt, Steno Research

  • A soft CPI report was just what Commodities needed to take the next leg higher
  • Inflation expectations fat tailed. Commodities on the move, but we still need oil. China to export inflation to Europe?
  • Despite last week’s dovish inflation print, we are not sure that it is disinflation that we need to be worried about, both in the short- and long term.
  • Let’s discuss three reasons for that.

Weekly Top Ten Macro and Cross Asset Strategy – May 19, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Steno Signals #99 – Freddie Mac gearing up to unleash trillions for consumption?

By Andreas Steno, Steno Research

  • Last week we learned that the so-called “excess savings pool” from the pandemic had vanished into thin air in the US, or rather that personal savings have been running sub-trend long enough to bring savings back to a normalized state.
  • This does not mean that US households have run out of savings, it merely means that savings rates are running below trend, which is not out of the ordinary during late-cycle economies.
  • We have recreated the study on German numbers and found much less “alarming” trends in German households, which goes to show that the methodology developed by the San Fran Fed ought to be taken with a pinch, if not even a truckload, of salt.

2. China Watch: No one has noticed that China is exporting INFLATION again..

By Andreas Steno, Steno Research

  • Welcome to our weekly EM editorial where we shed light on the most important developments in the EM space in the context of the impulses from the USD markets.
  • Things are heating up in the global macro space as we are standing at crossroads.
  • Is the macro momentum finally rolling over globally (including in the US) or are we amidst a potential rebound from China that wreaks havoc with the current increasingly dovish Western consensus?

3. Great Game – Why Putin fired Shoigu and Why Biden is going tough on China

By Mikkel Rosenvold, Steno Research

  • Welcome to this week’s geopolitical update, the Great Game.
  • This week we’re covering Putin’s surprise sacking of Defense Minister Shoigu as well as the ongoing global EV war.
  • Russian President Putin has replaced his Defense Minister Sergei Shoigu with former economic advisor and Deputy Prime Minister Andrei Beluosov.

4. Positioning Watch – How are Macro Hedge Funds positioned?

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly Positioning Watch – insights into how market participants are positioned.
  • Markets are waiting patiently for the US CPI report today before placing their bets it seems, with little to no action seen yesterday and in European opening hours yesterday.
  • As elaborated upon in our “Week At a Glance” on Monday, we see hawkish surprises to both headline and core inflation , which will not be good news for markets, who have seemingly returned to their hopes of rate cut(s) this year.

5. US CPI Review – Everything is soft in April

By Andreas Steno, Steno Research

  • Main Takeaways: Core inflation is still way too hot, but this report speaks well to the crowd hoping for rate cuts.
  • Food and Shelter are the two dovish surprises… Both are re-accelerating in live data which will likely come into effect laterApril was super soft in real-time activity data and there isn’t much to suggest that it will continue in May, where data is on the rise again… But for now, this feeds the FCI loop in a positive sense, which will allow risk assets to ride the dovish CPI wave for now.
  • US Headline CPI rose 0.31% on the month, whilst core inflation increased by 0.29%, with consensus at 0.4% and 0.3%.

6. Quant Signals: Central Bank Sentiment Indicators

By Andreas Steno, Steno Research

  • Our updated state-of-the-art Central Bank Sentiment indicators are flagging important changes in communication dynamics since the beginning of the year.
  • We recently upgraded our sentiment measurement to a more fine-tuned and nuanced NLP model that effectively captures the meaning of Central Banker rhetoric and here share key findings.
  • We regularly track and update our measure of positivity/negativity of Bank language contained in statements, outlooks and speeches on a scale of -1 to +1 in our DataHub for premium subscribers.

7. Five Reasons to Be Bullish

By Cam Hui, Pennock Idea Hub

  • A review of technical and sentiment conditions shows that stock prices are setting up for a sustained advance.
  • The combination of strong momentum, good breadth and skeptical sentiment points to higher stock prices.
  • Key risks are evidence of a disturbing relative strength by defensive sectors and an upcoming CPI report that could upend the bullish narrative.

8. China Takes It up Another Notch-Property Proposals Change the Game

By Rikki Malik

  • China is following the Fed’s playbook of keeping market momentum going with good news and actions
  • The HK dividend scheme is a prime example of that
  • The latest proposal for unsold properties will remove a major barrier to a bottom in the property market.

9. NFIB Watch: 5 KEY charts from the best survey on the US economy

By Andreas Steno, Steno Research

  • Our favorite survey out of the US economy was published earlier and it was a pretty decent report overall as the sentiment among SMEs improved, but there are a few trends worth noting in the details, so why don’t we briefly walk you through them here.
  • For the first time in a long while, we see a clear net/net decrease in expectations for future price hikes.
  • This is conciliatory news for Jay Powell and his ilk for H2-2024 (but not before then..)

10. Long 10Y, Short 2Y on Yield Curve Normalisation

By Pranay Yadav, Mint Finance

  • Fed’s decision to taper its balance sheet runoff has provided support to long-term treasuries, particularly 10-year notes, signaling a potential rise in demand and a move towards yield curve normalization.
  • Recent treasury auction results reflect a divergence in demand across maturities; long-term 10-year treasuries show weaker performance compared to strong showings in shorter 3-year and 5-year maturities.
  • Data-Dependent Fed is likely to be influenced by improving economic indicators, supporting a normalization of the yield curve. During normalization, the 10Y-2Y spread is the superior instrument for exposure. 

Weekly Top Ten Macro and Cross Asset Strategy – May 12, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. Big Fines on Foreign Investment Banks for Naked Short Selling in Korea – Implications

By Douglas Kim, Douglas Research Advisory

  • The FSS mentioned it has uncovered 211 billion won of naked short sales by Credit Suisse and 8 other global banks of Korea-listed stocks between 2021 and 2023. 
  • The current ban on short selling stocks could be extended to at least 1H 2025. 
  • The Korean government’s imposing these large fines on the foreign brokers is sending a message to the foreign brokers to not engage in naked short selling.

2. Portfolio Watch – Time for liquidity bets

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly portfolio watch.
  • A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn.
  • The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run.

3. Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away

By Douglas Kim, Douglas Research Advisory

  • In this insight, we discuss the use of Smartkarma Smartscore system to screen stocks in KOSPI 100.
  • For top 50 companies (in KOSPI 100) in Smartscore rankings, their share prices were up on average 7% YTD. Bottom 50 companies had average share price decline of 7.8% YTD. 
  • In using the Smartkarma Smartscore system, it may be appropriate to describe it in terms of “WHERE THERE IS SMOKE, STAY AWAY.” 

4. USD inflation preview: NO, inflation is not going away folks..

By Andreas Steno, Steno Research

  • The monthly inflation reports have proven to be the catalysts for the repricing of USD rates in recent months and we fear another 1-2 sigma event next week.
  • Our calibrated nowcasts have settled on the hottest inflation forecast in town, which will likely prove to be a shocker now that USD duration bets are back in fashion.
  • Our nowcasts hint at 0.45% MoM headline inflation and 0.38% MoM core inflation, which is well above consensus at 0.3% MoM for both (see full details in chart 7)The uniformity in the early consensus numbers is striking with right about every analyst on earth expecting a 0.3% MoM print, which has oddly turned into the mechanical monthly forecast every single month.

5. Steno Signals #98 – The recession panic is back right as liquidity is returning!

By Andreas Steno, Steno Research

  • Happy Sunday from a wet Copenhagen!Let me just admit to it upfront.
  • Last week didn’t play out according to my macro thesis.
  • The US cycle suddenly showed signs of weakness in surveys, which alleviated some of the pressures in USD rates and in USD versus Asian FX.

6. Macro Regime Indicator May – UP UP UP!

By Andreas Steno, Steno Research

  • Welcome to our monthly flagship asset allocation analysis – the “Macro Regime Indicator”.
  • Coming into April, we wrote that “The macro environment is turning worse on both inflation -and liquidity metrics, while the growth variable remains positive (measured by the cyclical manufacturing momentum).
  • This leaves us in a classic “QT” environment with less obvious “gung ho” risk taking through April compared to the full-on risk positive environment we have seen over the past 4-5 months as continuously flagged and traded via our allocation tools.”Without the growth parameter being a home-run in our models, we mostly got the April correction right and also capitalized decently well on the liquidity withdrawal and the hot inflation report.

7. New Release: Fund Positioning Chart Pack

By Steven Holden, Copley Fund Research

  • Q1 Performance Analysis for active Global EM funds.  Country/Sector/Stock Positioning relative to benchmark for Global funds
  • Spotlight on Indonesia activity among Asia Ex-Japan investors.  Sector Dispersion in USA funds
  • Extreme Stock Positioning in UK Small/Midcap funds. Ownership Trends in the Financials sector among MSCI China funds.

8. Energy Cable: Saudis are pushing hard for a new oil bull market

By Andreas Steno, Steno Research

  • Freight rates are rising again and it will likely impact USD inflation in Q2 already.
  • The Saudis are trying to bring back the oil bulls via keeping the market tight. ‘
  • Our models are close to entering a long oil bet again..

9. The Week That Was in ASEAN@Smartkarma – Astra International, Bukalapak, and Bank Negara Indonesia

By Angus Mackintosh, CrossASEAN Research


10. Tectonic Macro Shifts

By Alfonso Peccatiello (Alf), The Macro Compass

  • ”Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.”

  • With this sentence, the Fed announced the tapering of their QT program last week.

  • The Federal Reserve has been running QT (Quantitative Tightening) since mid-2022: this process is aimed at unwinding the multi-trillion Fed bond holdings accumulated during previous QE episodes


Weekly Top Ten Macro and Cross Asset Strategy – May 5, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it

By Andreas Steno, Steno Research

  • I spent last week in Asia and even though I admittedly like to see my research as edgy and contrarian, I quickly realized that most PMs in the region agreed on my take on the imminent risk of a devaluation of the CNY.
  • USD/CNH call options are popular/consensus in the Asian Macro PM space, but interestingly there is no consensus around the contagion from a devaluation of the USDCNY.
  • The discussions I had pointed in all directions, meaning that a CNY devaluation holds the potential to turn into a macro earthquake, despite it already being a consensus position.

2. April Themes and Thematic Portfolio Review

By Rikki Malik

  • A monthly review of how the markets and our themes are currently performing
  • Analysing what went wrong and what went right in stocks and sectors
  • Highlighting positions added or removed from the thematic investment portfolio

3. Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement

By Douglas Kim, Douglas Research Advisory

  • Some of the Corporate Value Up program’s initial guidelines proposed by the Financial Services Commission (FSC) were announced today.
  • Overall, the initial guidelines were disappointing mainly because they lacked concrete figures with regards to tax incentives for companies that make significant improvements to their corporate governance.
  • More concrete measures announced today included recommendations for overlapping parent company listing (split listing) and disclosure recommendations for the majority shareholder’s profit transfer to an unlisted private company (tunneling).

4. Portfolio Watch: No respite for Asian FX.. How to deal with it?

By Andreas Steno, Steno Research

  • Welcome to our weekly Portfolio Watch! We have had a strong week in our portfolio with a USD-reflationary lean, but we are starting to contemplate how to deal with contagion from a continued rise in USD versus Asian FX pairs, especially if the increasing latent risk of a major devaluation of the CNY comes into fruition.
  • There is currently no respite for the Asian FX pairs as all major forward looking models point to a reacceleration of US inflation trends from the current plateau around 3.5% YoY.
  • We will look at the devaluation risks in detail tomorrow in our weekly “Steno Signals”, but will pinpoint value pockets in markets already today in our Portfolio Watch.

5. NPS Changes Its Core Asset Allocation Method – First Time in 18 Years

By Douglas Kim, Douglas Research Advisory

  • NPS announced today that it will change its core asset allocation method, which aims to increase its purchase of risky assets including stocks and alternative assets. 
  • Under the new system, the proportion of risky assets will increase to 65% of the NPS’ entire fund assets and the remaining 35% will be allocated to the safe assets.
  • There is an increasing probability that a portion of the 24.6 trillion won (2.3% of AUM) could get allocated to risky assets including domestic equities. 

6. Positioning Watch – Prepare for further action in JPY pairs

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning/sentiment overview!Equity sentiment has soured a bit since we last spoke, with broad US traded ETF fund flows sent back into solid negative territory after a stunning start to the year.
  • While most of it is due to the tax-season in April, the hawkish repricing of global central banks has also played its part in normalizing the über-bullish sentiment in US equities, with markets now also biting their nails as an ECB June cut is no longer a certainty.
  • Chart 1: Rolling monthly US ETF fund flowsAfter a couple of weeks of outflows from XLE, the reflation bet is back on track with around 500 mn.

7. China Ups the Ante with Relaxation of Property Curbs

By Rikki Malik

  • Property restrictions removed in major cities, continuing the gradual process from the last 6-8 months
  • A BIG signal to the market and the public with the relaxation of curbs in Beijing 
  • China’s factory output continues expansion and travel data positive for consumption

8. The Week At A Glance: ISMs, NFP, FOMC & QRA to put even more pressure on USD rates?

By Andreas Steno, Steno Research

  • The QRA announcement will be released in a few hours (on Monday) while the issuance details will be released on Wednesday.
  • We generally don’t see any reasons to fear the Q2 issuance as a strong tax-season has been confirmed with the TGA standing at 941bn dollars, which is almost 200bn above the target range.
  • The TGA also printed above the target range going into Q2, making it unlikely that the US Treasury turns the heat on in the issuance pace. We see a small downgrade of the Q2 number (202bn) as the most likely.


9. Energy Cable: The recipe for another summer of exploding energy prices (in Europe)

By Andreas Steno, Steno Research

  • Energy markets in Europe still fragile. A hot summer and manufacturing rebound could set prices going.
  • Manufacturing cycle is improving everywhere but in Germany. Cost-push inflation showing up in drilling now
  • This week we want to talk about the ingredients needed for another summer of exploding electricity and gas prices.

10. Great Game – Could Biden Have Even More to Fear from Trump’s Trial?

By Mikkel Rosenvold, Steno Research

  • Welcome to this week’s Great Game where we will catch up on events in the Middle East and also cover the Trump trial that’s currently taking all the attention in the US Election race.
  • Situation:Israel responded very lightly to the massive Iranian attack on April 13th and we haven’t heard any more from that conflict over the past week.
  • As we predicted, Israel’s response was “next to nothing” and clearly acknowledged the de-escalatory nature of Iran’s strike. I know some took offense to that analysis, but it is genuinely our assessment and I think events since has reinforced that view.

Weekly Top Ten Macro and Cross Asset Strategy – Apr 28, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Steno Signals #96 – A major devaluation of the CNY could be imminent

By Andreas Steno, Steno Research

  • China is preparing something BIG. That seems more and more obvious to me by the week now. The question is what that BIG thing is.
  • China reported a strong 5.2% YoY Q1 despite troubles on the ground, local financial institutions are hoarding bonds because of a weak credit demand growth picture and the Chinese authorities seem to be stockpiling like crazy.
  • We have seen plenty of tin-foil theories speculating in the reasons behind those Chinese actions, but maybe China is just preparing a major one-off devaluation of the CNY?

2. Hong Kong: The Glass Is Half Full, Time to BUY Beta

By David Mudd

  • HSI has now closed above its 3 year downtrend and is poised to advance to its next resistance level
  • International brokers finally turning more bullish on the market as the US, Europe and Japan markets turn down
  • High beta sectors are set to outperform as global investors reallocate to the cheapest AND 2nd largest tech sector in the world

3. Back Testing the End of Mandatory Lock-Up Periods Monthly Data in Korea

By Douglas Kim, Douglas Research Advisory

  • In this analysis, we provide a back testing analysis of the end of mandatory lock-up periods monthly data in Korea in the past six months.
  • All in all, this end of mandatory lock-up period monthly data continues to provide some alpha generating results.
  • In the past six months, they have tended to work better in periods when KOSPI declines rather than in periods when KOSPI rises. 

4. Will the Ban on Short Selling Stocks in Korea Extended Beyond End of June 2024?

By Douglas Kim, Douglas Research Advisory

  • On 6 November 2023, the Korean government announced that it will temporarily ban short selling stocks until end of June 2024. 
  • On 25 April 2024, the FSS unveiled for the first time its plan to build a computer system to prevent naked short selling called NSDS (Naked Short Selling Detection System).
  • There is a high probability that the the temporary ban on short selling which currently lasts until end of June 2024, could be extended further to 2Q 2025.

5. Great Game: Despite New Aid, Ukraine will lose within 12 months. Plan Accordingly!

By Mikkel Rosenvold, Steno Research

  • With all eyes on the Middle East for the past weeks and months, we haven’t focused as much on the ongoing war in Ukraine.
  • In the big picture, not much has changes on the frontline despite continued heavy losses and a Russian election.
  • But now I think it’s time for investors to re-adjust their assessment of the war and consider contingencies for the path ahead.

6. HSCEI Outperformance Is Asia’s Best Kept Secret

By David Mudd

  • China Enterprise Index (HSCEI) is now the top performing index in Asia on a USD basis
  • HSCEI also trades at the lowest P/E multiple in the Asia
  • High probability of divergence as US and Europe markets turn down

7. Shipping Watch: No news is bad news (for inflation)

By Andreas Steno, Steno Research

  • Headlines in the beginning of 2024 were dominated by shipping and logistic troubles but over the last months that has almost died completely down.
  • With “no news” we continue to see spill-overs to goods inflation in coming months.
  • In general freight rates have been falling since Jan high but still remain some 50% above 2023 levels

8. Active GEM Funds:  Extremes in Positioning & Momentum

By Steven Holden, Copley Fund Research

  • This report identifies stocks at the extremes of their positioning or momentum ranges within our active Global EM fund universe.
  • We have pinpointed eight stocks either at their historical positioning extremes or undergoing significant changes in fund ownership, providing detailed ownership profiles for each.
  • HDFC Bank loses steam after merger, Nu Holdings surges to new highs, POSCO plunges to new fund ownership lows.

9. The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..

By Andreas Steno, Steno Research

  • Welcome to our weekly “the week at a glance” publication where we dissect the most important central bank meetings and key figure releases in a short and sweet format.
  • This week we focus on PCE prices, European PMIs and the Bank of Japan.
  • Event 1: European PMIs (Tues): A lukewarm, but positive, surprise.

10. Bollinger Bonds

By Mark Tinker, Market Thinker

  • In our April monthly, we highlighted the combination of fading impulse for momentum stocks (principally tech) and the need for tax related selling in the trading/retail space coming against a background of a correction in the short term bull phase within the longer term bond bear market.
  • Since the beginning of March, US 10 year yields have gone from 4% to around 4.6%, unwinding the Fed Pivot language that emerged to ‘explain’ the earlier rally.

  • In our view that was an unlikely ex-post narrative, as is the one emerging now that the Fed will not cut at all.


Weekly Top Ten Macro and Cross Asset Strategy – Apr 21, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Steno Signals #95 – Is the Next Move a Hike?

By Andreas Steno, Steno Research

  • Before getting to the financial word, I just briefly want to reiterate that we find a de-escalation most likely between Iran and Israel after the events unfolding over the weekend.
  • Our head of geopolitics, Mikkel Rosenvold, released his take earlier.
  • Quote of the week: Iran’s Chief of Staff: “Our attack is over, and we do not wish to continue it, but we will respond forcefully if Israel targets our interests.

2. The week at a glance: Soft CPI in UK and a BIG positive surprise from China?

By Ulrik Simmelholt, Steno Research

  • Happy Monday and welcome to our short and sweet coverage of the data calendar for the week ahead.
  • We try to map the events with market moving potential and exploit weaknesses or skews in the economic consensus around them.
  • This week we see strong upside to US retail sales, Chinese GDP, while soft downside to the UK CPI figures.

3. Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..

By Andreas Steno, Steno Research

  • Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
  • Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
  • We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.

4. The Rally in Gold: Clear as Day

By Jeroen Blokland, True Insights

  • The massive rally in the price of gold coincided with Fed Governor Waller’s speech, in which he stated that he believes the Federal Reserve should buy more T-bills.
  • Many market pundits argue that changing narratives explain historical gold rallies.
  • But digging a bit deeper reveals that, especially since the Great Financial Crisis, the narrative behind gold’s strong performance has been the same and getting stronger.

5. Chinese Data Continues to Improve Incrementally

By Rikki Malik

  • Qingming holiday sending surpasses  2019 levels on an absolute and per capita basis
  • A further relaxation of housing measures spurs increased mortgage demand
  • Two steps forward, one step back -typical signs of a bottoming-out economy.

6. The Liquidity ‘Air Pocket’: A Short Update After US Tax Filing-Week

By Michael J. Howell, CrossBorder Capital

  • Global Liquidity has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand
  • Three factors are dragging Global Liquidity — the US Fed, the PBoC and the rising MOVE Index
  • Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end

7. Here Comes the Sentiment Flush

By Cam Hui, Pennock Idea Hub

  • The S&P 500 violated an uptrend that began in November. The violation resolved with the index is testing initial support nearby at the 50 dma at about 5110. 
  • Our analysis of market internals concludes that the decline is nearly done. Sentiment is not sufficiently panicked to be contrarian bullish. Technical conditions are oversold but can become more oversold.
  • We interpret these conditions as a stock market that’s undergoing final flush before an intermediate-term bottom is formed. We believe any pullback should be temporary and shallow in nature.

8. Hedging Risk Amidst the Escalating Israel-Iran Conflict

By Albert Maass, Edelscourt

  • Tensions between Israel and Iran have escalated, potentially leading to a broader conflict involving major global powers, which could significantly impact global financial markets.
  • Immediate market reactions could include a drop in global stock markets, a surge in oil prices, and increased demand for safe-haven assets like gold and the US dollar.
  • Multi-Asset portfolio managers need to employ strategies such as reducing risky asset exposure, increasing investments in defensive sectors, and diversifying geographically to mitigate the conflict’s impact on investments.

9. Iran’s attack – Large in Size, Harmless in Effect. What’s next?

By Mikkel Rosenvold, Steno Research

  • Welcome to the weekly Great Game, which is obviously dedicated to the situation in the Middle East.
  • We covered Saturday’s attack on Israel in our Debrief, so in this post, I’ll try and look a bit ahead and give our take on what may lie ahead – both in the Israel/Iran conflict, but perhaps even more importantly in the Red Sea deadlock.
  • Understanding Iran’s strikeSituation:On Saturday evening, Iran attacked Israel in response to the April 1st bombing of the Iranian embassy in Damascus.

10. Portfolio Watch: The USD Wrecking Ball Is Back

By Andreas Steno, Steno Research

  • The USD has been on a roll since the firm US inflation report earlier in the week and we are approaching the point where European trade balances will be impacted substantially by the rally in (energy) commodities.
  • Even European Nat Gas seems to be on the move and pairing that move with the broader rise in Oil and Copper leads to a likely “flip” in the Eurozone trade balance.
  • When the Euro-zone trade balance shifts from positive to negative, we typically see an impact on the trend of the EUR, which is probably the last thing the ECB needs right now.

Weekly Top Ten Macro and Cross Asset Strategy – Apr 14, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

Receive this weekly newsletter keeping 45k+ investors in the loop


1. EM Watch: China is preparing something BIG!

By Andreas Steno, Steno Research

  • The below chart of ours have made the rounds in recent days and weeks as China seems to be preparing for something big given the heavy restocking efforts in Copper space.
  • As the price trends are diverging in copper versus steel and iron ore, the strategic initiatives of China are becoming increasingly evident in price action across the commodity complex, but we are yet to fully understand and accept the ramifications for global rates.
  • We have read plenty of bad takes on why China is building up copper reserves and the most obvious reason seems to be neglected by many.

2. Technically Speaking: The Early Bird Gets the Worm, China Retail Buys Hong Kong

By David Mudd

  • Hong Kong market is at historically cheap valuations. So what’s new?
  • Capitulation bottom in late January/early February dramatically reduced shorts and now long positioning starts.
  • China retail buying is taking a cue from China’s government buying programs and SOE company directives.

3. Israel-Iran War Coming?

By Mikkel Rosenvold, Steno Research

  • Welcome to this week’s Great Game, where we cover current geopolitical events relevant to your portfolio!
  • Situation: Israel attacked the Iranian embassy in Damascus, Syria, killing several high ranking Republican Guard officers, and the whole region is now anticipating the Iranian response.
  • Meanwhile, Israel and Hamas are making little progress in their truce talks in Cairo while Israel has withdrawn from smaller areas in Southern Gaza amidst heavy diplomatic pressure from the US.

4. Positioning Watch – Reflation bets are back in

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning/sentiment overview.
  • The mood in equity markets is still good, with major indices stabilizing at levels far above all time highs despite taking some time to swallow hawkish comments from Fed officials.
  • Markets seemingly don’t care about the repricing of Fed rates until they hear it from Powell’s mouth or until they get a feeling of true pivot (on the pivot).

5. 5 Things We Watch – Rates Pricing, Liquidity turning, Labor Market, Commodities & China

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly ‘5 Things We Watch’, where we provide 5 of the things we keep an eye out for in global macro in a short and concise format.
  • This week we are watching out for the following 5 topics within global macro: Rates Pricing, Liquidity Turning, Labor Market, Commodities, China.
  • The market went into the year expecting 7 cuts in total from the Fed, which has now been narrowed down to less than two, all while equity markets have continued their drift higher as the economy is doing better than expected paired with benign liquidity conditions.

6. Yen Weakness Not Solely Due to Bank of Japan as Corporates Play a Critical Role

By Said Desaque, DeSaque Macro Research

  • The weak yen could be a legacy of aggressive quantitative easing (QE), whereby the BoJ became the largest holder of government bonds, forcing traditional buyers overseas.
  • Overseas cash hoarding by Japanese affiliates is being cited as another reason for yen weakness. Superior growth opportunities outside of Japan are a reason for the lack of cash repatriation. 
  • Japan’s exporters currently face formidable competition with China, making a strong yen an unattractive option during a period of higher cost pressures, notably for labour.

7. Indonesia Economics: Disinflation Setbacks Tie Central Bank’s Hands Tighter

By Manu Bhaskaran, Centennial Asia Advisors

  • The latest figures show headline inflation inch further away from the central bank’s target, showcasing the difficulties caused by volatile food inflation worldwide. 
  • In addition to sticky inflation, fiscal policy uncertainty also lurks in the background; the new government has many big-ticket manifesto pledges that need to be funded. 
  • Still-Strong growth, sticky inflation, and depreciationary risks to the rupiah will cause Bank Indonesia to delay rate cuts, possibly for the whole year. 

8. Energy Cable: Melt UP in commodities upcoming?

By Ulrik Simmelholt, Steno Research

  • Take aways: Booking profits in crude, staying long in broader metals. Crude predicting ISM to turn in 6-9 months time. Sluggish German IP ahead. Last week, we reached our profit level in crude oil, leading us to exit the trade successfully.
  • Our outlook remains bullish on commodities, spurred by what we perceive as a reflation head fake.
  • This optimism has prompted us to enter a long proxy-position in the Bloomberg Commodity Index (BCOM), as we observe the rally widening across the commodity complex (Chart 1).

9. Gold and Goldilocks

By Mark Tinker, Market Thinker

  • This week’s ‘CPI Print’ has caused something of a panic in the bond markets and has left the ‘Pivot’ Pundits struggling versus the ‘No Cuts’ crowd, some of whom are now doubling down and even talking about rate rises.
  • Traders in other markets are looking across with some degree of concern, long wary of the ability of the bond markets to trigger problems elsewhere.
  • So too are the politicians, keen for their particular narrative on the economy to win them votes, but concerned that they need the markets (and by extension the Fed) to support their cause.

10. Looking For Inflation In All The Wrong Places

By Cam Hui, Pennock Idea Hub

  • Conventional inflation hedge vehicles have exhibited subpar performance despite rising concerns over persistent inflation that will delay the Fed’s rate cuts.
  • That’s because 1970s-style “bad inflation” is not present and “good inflation”, which is a by-product of an economic recovery and stronger growth expectations, is becoming dominant narrative.
  • Market expectations are shifting from a soft-landing to a no-landing outcome, which should be bullish for cyclical stocks and neutral to bearish for bonds.