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. BoE Faces Renewed Margin Pressure
- CFOs suffered squeezed margins in 2025 that they intend to partly recover in 2026, reversing a source of disinflation into another reason for hawkish concern.
- Price and wage inflation expectations remain excessive while the November crash in employment sentiment reversed, dampening the dovish ammunition.
- The MPC’s three pivotal members need dovish news to bring forward another cut not implied until at least April. This outcome merely encourages the inactive course.
2. HEM: Jan-26 Views & Challenges
- Hawkish cuts led markets to price less easing, or even hikes, but there was little change in BoE views.
- The MPC is split in the face of wage growth persistently above target-consistent levels but is bias to ease in May.
- Rising unemployment rates may aid the appropriateness of previous cuts if the neutral rate is less elevated.
3. Outlook 2026: THE BIG IDEAS TO NAVIGATE MARKETS
- Macroeconomic trends affecting global markets will be driven by an increasing schism between US published inflation numbers and actual underlying inflation in its economy driving real rates lower.
- The Fed will justify interest rate decisions based on understated inflation estimates expanding bubbles in financial markets, weakening the dollar and pressuring long-term Treasuries.
- In 2026, the US stock market will underperform its global peers, gold and other precious metals will continue to shine and Hong Kong will attract more mainland buying.
4. HEW: Turning 2026 Resiliently
- A festive feast in resilient GDP data has extended into tracking estimates for Q4 in the US and UK, while the US unemployment rate has fallen from revision-tempered highs.
- Falling PMIs were less encouraging, but don’t break resilient signals nor persistently excessive inflation signals. Plans to recover profit margins add to the BoE’s challenge.
- Next week’s US inflation data provides the first clean monthly rate after November’s nonsensical gap-filling. UK GDP data for November is the other highlight for us.
5. HONG KONG ALPHA PORTFOLIO: (December 2025)
- The Hong Kong Alpha portfolio outperformed its benchmark and all Hong Kong indexes in 2025 with an overall gain of 48.41%. The portfolio achieved a Sharpe ratio of 1.86.
- Alpha generation represented 59% of the portfolio’s gains in 2025. Most of this came from the materials, healthcare, and energy sectors. HKALPHA had low exposure to the real estate sector.
- As the Hong Kong market ends its consolidation, we added tech exposure at the end of the year and reduced underperforming positions in mostly in the utility sector.
6. Oil in 2026
- Last year’s downward trend in the price of oil is set to continue into 2026, with most analysts expecting Brent crude to test USD55pb in the first half of the year.
- There is undue concern about geopolitical supply disruption buoying prices, whereas we believe the real focus should be on what Opec+ decides to do at the end of the quarter.
- My forecast for Brent crude on 31 December is therefore USD55pb, but with the risk to this price skewed to the downside.
7. Overview #45 – Sanctions, Metals, and Mergers
- A review of recent events and data impacting our investment themes and outlook
- Tensions ratchet up between China and Japan over Taiwan comments
- Signs of a turning point in the Chinese macro environment?
8. Major 2026 Investment Themes
- A review of 2025 performance for the major asset classes and sectors we follow
- An outline summary of our current 2026 investment ideas and themes
- We make some changes in the allocations between commodity sectors
9. EA: De-energised Back To Target
- EA inflation slowed back to target at the end of 2025, reversing November’s upside news to strengthen the ECB’s “good place” caricature.
- Falling energy prices are driving an unsustainable disinflation, while service price inflation is stuck above 3%. Small and balanced EA surprises skew lower in big states.
- Base effects remain set to drive a drop below the target and reversal by May. A slightly below target 2026 is not dovish when underlying pressures are stronger.
10. FSC Allows Korean Securities Trading Account Opening For IBKR and 3 Other Foreign Firms
- On 9 January, FSC announced that it will allow Korean securities account opening for IBKR and three other foreign firms including Emperor Securities, TFI, and BancTrust.
- FSC announced that overseas traders will be able to access the Korean won on a 24 hours real-time exchange rates basis from July 2026.
- KOSPI is up 82% in the past one year and the likelihood of Korea becoming Developed Market status is a key factor driving higher share prices of Korean stocks.
