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. The Market Cycle Puzzle
- Gold has staged a convincing relative breakout. In the last cycle, the turn was accompanied by similar turns in value/growth, size and U.S./international leadership. This time, leadership rotation hasn’t happened.
- We attribute this to the “debasement trade” will carry on and hard assets will continue to dominate in the next multi-year market cycle.
- This time is different. Investors shouldn’t depend on a rotation from growth to value, large cap to small cap, and U.S. to non-U.S. equities in the near future.
2. Outlook 2026: Fiscal Expansion + Monetary Divergence + Robust AI + Ebbing USD = Resilient Asia
- Concerns about trade tensions, geopolitics and high debt persist. But DMs’ fiscal expansion, continued Fed rate cuts, ongoing AI boom and healthy balance sheets should keep Asia resilient in 2026.
- With record low inflation, Asian rates and COE should stay low. We expect USD moderation, boosting Asian flows. Key themes: Defense expenditure, select base metal super-cycle, continued focus on dividends.
- 2026 targets: MXASJ 985, SHCOMP 4400, Hang Seng 29000, KOSPI 5000, TWSE 30000, Sensex 91000, Strait Times 4730. Overweight HK/China, Korea and India – the latter on stock picking considerations.
3. The Diversification Debate: German Stagnation Undermines the Case for Europe, but Gold Wins in 2025
- The arrival of the second Trump administration has triggered a wave of commentary justifying lower exposure to US financial markets. Dislike of US trade policy is the main driving force.
- The case for greater exposure to Europe is undermined by significant economic stagnation and deindustrialisation in Germany, thereby raising questions about the future economic and financial stability in the region.
- Gold is the big winner in 2025 due to portfolio diversification, driven by geopolitical tensions and US dollar weakness. The consensus global economic outlook for 2026 suggests range-bound gold prices.
4. TAC Index Weekly Air Cargo Bulletin 22 December 2025
- Global air freight rates edged a little lower last week according to the latest data from TAC Index, the leading price reporting agency on air freight markets.
- The global Baltic Air Freight Index (BAI00) calculated by TAC was off -3.3% in the week to December 22, leaving it at -0.6% year-on-year – still very close to where it was at this stage of 2024 when there had been a pronounced peak season high, reflecting continuing strength of demand as well as constraints on air freight capacity in the market.
- Rates out of China were lower again week-on-week both to Europe and the US, while BAI Spot rates out of Hong Kong were also falling back day by day over the week as the height of the peak season surge subsided.
5. US: Economic Policy Goes on the Naughty List in 2025
- The U.S. market will experience increased turbulence in 2026 as the Federal Reserve continues to ease monetary policy and inflationary pressures intensify. Speculative market sectors are already under pressure.
- There is a disconnect between the Administration’s claims about lowering prices and consumers’ concerns about affordability. The disconnect is driven by inaccurate BLS inflation numbers that are greatly understated.
- The FOMC shows a historic split in the course of Fed actions through 2026, which will continue to unsettle markets regardless of who the next Fed Chairman is.
6. CX Daily: ByteDance Riles Smartphone Ecosystem With AI Pitch
- In Depth: ByteDance Riles Smartphone Ecosystem With AI Pitch
- Hong Kong Plans New Virtual Asset Licenses
- PBOC Vows to Optimize Policy Timing While Keeping Loose Stance
- Beijing Boosts Foreign Investment Playbook With High-Tech and Services Push
7. CX Daily: Memory Shortage Creates Space for China’s Lesser-Known Chipmakers
- In Depth: Memory Shortage Creates Space for China’s Lesser-Known Chipmakers
- Exclusive: Citic Bank President in Line for Top Role at China’s No. 5 Lender
- Exclusive: China’s Zheshang Bank Nominates Former Regulator as President
8. CX Daily: China Unveils More Nuanced Economic Plan for 2026
- In Depth: China Unveils More Nuanced Economic Plan for 2026
- At the conclusion of the Central Economic Work Conference in December, China’s ruling Communist Party unveiled a blueprint for 2026 that signals deep-seated structural problems, from industrial overcapacity to persistent deflationary pressures.
- By adding “promoting quality and efficiency” to its long-standing mantra of “seeking progress while maintaining stability,” Beijing is reinforcing a move away from its old playbook of debt-fueled investment to a more nuanced approach as it prepares to kick off its 15th Five-Year Plan.
9. Egypt (December 22nd 2025)
- CBE likely to keep rates on hold this week.
- Israel finally signed the gas deal with Egypt.
- Pound stable, high demand for local treasury bills.
