Macro and Cross Asset Strategy

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

By January 14, 2024 No Comments
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. 2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 3

By Rikki Malik

  • Risk-Reward now skewed towards reward in the Hong Kong market.
  • Barbell strategy with both high-beta and lower volatility dividend stocks.
  • Some initial ideas included to add or start a portfolio  incorporating HK stocks.

2. KOSPI Superperformance Stocks (2019-2023)

By Douglas Kim

  • In this insight, we analyze the top 10 performing stocks in KOSPI in each of the past five years (2019-2023) as well as for this entire period.
  • The top 10 performing stocks in KOSPI were up on average 310% in 2023, sharply outperforming KOSPI which was up 19%. 
  • There are some important takeaways from a review of the top 10 performing stocks in each of the five years in KOSPI, including market cap, sector rotation, and turnarounds.

3. EM by EM #37: The Taiwan election & the Trade war

By Emil Moller, Steno Research

  • A victory for Lai in the upcoming election has the potential to significantly elevate geopolitical risks.
  • Should Taipei fail to maintain a satisfactory relationship with Beijing threats of retaliation will fuel derisking going forwardThe Taiwan election could reignite another round of cold trade sanctions between the United States and China.
  • Given the current hawkishness of the Biden administration, it’s unlikely that this stance will be softened in the upcoming U.S. election.

4. Simple Math – Why Rates Must Fall!

By Jeroen Blokland, True Insights

  • The divergence among (bond) investors is rapidly increasing. One group expects yields to rise further, while the other expects yields to go down and remain low. I’m in the latter.
  • To maintain debt sustainability, real yields must remain below real GDP growth. But with declining potential GDP growth, this is not the case currently, and this includes the US.
  • In the Eurozone, the real yield – real GDP picture is distorted because the ECB must aim monetary policy at the weakest link, Italy. 

5. What’s next in the Red Sea and Taiwan?

By Mikkel Rosenvold, Steno Research

  • Welcome to the second Great Game of the year.
  • What an action-packed start to 2024 we’ve had in geopolitics, and the coming weeks are looking no less eventful.
  • This week, we take a look at the status in the Red Sea as well as Taiwan and give our prediction as to what the coming weeks will bring.

6. Vietnam: Resilient Economic Growth Driven by Friend-Shoring & Bamboo Diplomacy

By Suhas Reddy, Mint Finance

  • Vietnam’s GDP expanded by 5.05% in 2023, lower than the government’s official target of 6.5%
  • Chinese President Xi Jinping’s first visit to Vietnam in six years aims to strengthen ties between the two communist nations.
  • China and the US vying for cooperation with Vietnam in developing rare earth minerals essential for energy transition.

7. US Employment Data Confirms a Weakening Economy

By Rikki Malik

  • The December US Employment report shows a weaker outlook than the headline suggests.  
  • A loss of over 1.5 million full-time jobs in December.
  • Excluding government jobs, an exceptionally low number of new full-time jobs were created over the last year.

8. USD Liquidity Watch: Trading the end of QT

By Andreas Steno, Steno Research

  • Welcome to another edition of our USD Liquidity Watch series.
  • The investment bank consensus is now (finally) converging towards our long-held view that the US Treasury is effectively behind the liquidity steering wheels at the Fed.
  • Lorie Logan of the FOMC said on Friday that “… given the rapid decline of the ON RRP, I think it’s appropriate to consider the parameters that will guide a decision to slow the runoff of our assets.

9. Charting Beyond the Sanguine Stock Market

By Thomas Lam

  • The upcoming US elections and eventual Fed pivot may sway the stock market positively
  • But the different states of the US business cycle can prospectively instigate different equity market outcomes
  • Hence, it is important to monitor the roughly coincident or almost contemporaneous risk of a recession in the US for potential clues

10. Central Banks’ Policy Pivot Impact on Developed Markets

By Raghav Chandra Mathur, Criat

  • Throughout 2023, the global developed economy was at the forefront of tackling rising inflation that has been gathering steam since mid-2022.
  • The majority of developed G20 countries saw their central banks raise policy rates at record pace to tame rampant price increases.
  • Rapid tightening and the potential of an upcoming pivot has resultantly upended stability in growth prospects for the upcoming year.