In today’s briefing:
- Positioning Watch – All About the Soft Landing Narrative
- Inflationary Expectations and Service Sector Inflation: Crucial to Fed Interest Rate Reductions
- The Week That Was in ASEAN@Smartkarma – Alfamart’s Expansion, Erajaya, and Anwar’s Malaysia
- Ifo Nugget: Should We Believe the Numbers?
Positioning Watch – All About the Soft Landing Narrative
- Hello everyone, and welcome back to our weekly positioning watch, where we as always try to dig down into the latest positioning data and give you an overview of what’s moving narrative currently.
- Sentiment and positioning are still skewed towards hopes of a soft landing, with bets being placed on lower yields, a weaker dollar, booming equities and almost non-existent credit spreads – ironically a prime condition for an upcoming recession (which is still our base case for H1 2024).
- General media and story counts are also all about the soft landing vs recession, with the mentionings of “recession” back at pre-COVID levels, while soft landing counts are on the rise, although pulling a bit back from recent highs.
Inflationary Expectations and Service Sector Inflation: Crucial to Fed Interest Rate Reductions
- Lower inflationary expectations will raise the ante on the Fed to reduce nominal interest rates to avoid an unintended policy tightening via a rise in inflation-adjusted measures.
- There are significant differences in the formulation of inflationary expectations between the corporate sector and financial markets. Survey-based measures of inflationary amongst households remain higher than the Fed’s 2% target.
- The ability of the Fed to aggressively lower the federal funds rate will depend on the FOMC’s assessment of the neutral policy rate and future service sector inflation trends.
The Week That Was in ASEAN@Smartkarma – Alfamart’s Expansion, Erajaya, and Anwar’s Malaysia
- The past week saw insights on Sumber Alfaria Trijaya (AMRT IJ), Erajaya Swasembada (ERAA IJ), and Bumrungrad Hospital (BH TB), Sido Muncul (SIDO IJ), AND Uchi Technologies (UCHI MK)
- There was also a macro insight on Malaysia plus insights on Singapore Airlines (SIA SP), XL Axiata (EXCL IJ), Malindo Feedmill (MAIN IJ), and Lippo Karawaci (LPKR IJ).
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.
Ifo Nugget: Should We Believe the Numbers?
- Before we get going we have to stretch that this month’s number comes with a yuuuge caveat, namely that of the German Constitutional Court’s decision from 1 and a half weeks ago.
- The court decided to block the funds intended by the German government to subsidize electricity prices for both households and companies and since the decision was taken on the 15th of this month we strongly suspect that some submissions were sent before the ruling.
- That would of course mean that the companies would have had a lot more bullish outlooks before the 15th.
💡 Before it’s here, it’s on Smartkarma
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