Macro and Cross Asset Strategy

Weekly Top Ten Macro and Cross Asset Strategy – Mar 3, 2024

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. Hong Kong Dollar Carry Trade and Its Influence on Hong Kong Market

By David Mudd

  • Hong Kong Dollar (HKD) Carry Trade (CT) is an good leading indicator of the directional trend of the Hong Kong Market
  • Recently the HKD CT has been trending to a less positive/flat position
  • Hong Kong Aggregate Balance will no longer provide cushion against HIBOR rising due to the HKD peg system

2. FSC Announces Corporate Value Up Reforms Details

By Douglas Kim

  • On 26 February, South Korea announced its long awaited Corporate Value Up reform plan details to improve shareholder returns of listed Korean companies. 
  • Due to the lofty expectations about these corporate reforms, there was some disappointment when the details actually came out. KOSPI declined by 0.8% today following these corporate reform details. 
  • Many investors are likely to take a “wait and see” attitude to see if real, material, positive changes will be announced in 2Q/3Q, before committing additional capital into Korean equities.

3. The Week Ahead – US Core PCE, Euro Area Flash Inflation and Japan CPI

By Nomura – The Week Ahead, Nomura – The Week Ahead

  • Global equities finished the week on a high note, with Nvidia’s strong earnings boosting markets, especially in Japan.
  • European yields rose due to strong PMIs, while the dollar weakened and the euro and pound strengthened.
  • In the US, core PCE inflation is expected to be strong, with potential temporary factors contributing to the high readings.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

4. Positioning Watch – Commodities Are Finally Moving

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning watch! We have been all about the possibility of a cyclical rebound with the US economy showing great signs at the moment, and China is also potentially looking to beat the fairly bearish expectations (and why barely anyone has been net long cyclicals in all asset spaces).
  • This leaves markets with a great divergence, as Europe is yet to show the same signs of momentum, and inflation expectations (between USD and EUR) are also starting to diverge, but positioning has not followed accordingly.
  • Let’s rerun our current trades to kick things off: Equities: Long Materials and Long Korea (as a China proxy).

5. NPS to Invest 11 Trillion Won in Low PBR/Value Stocks in Korea?

By Douglas Kim

  • NPS is in discussion to invest nearly 11 trillion won in low PBR/undervalued Korean stocks.
  • Korea Exchange is in discussion with NPS to create a new index tracking low PBR/undervalued stocks in Korea in efforts to boost government’s efforts to boost the local stock market
  • This index is tentatively named Korea Value-Up Index and institutional investors are expected to use it as one of the benchmark indices for equity investments.

6. Steno Signals #88: Anyone left willing to bet on rate cuts in H1?

By Andreas Steno, Steno Research

  • It seems like no one is willing to add bets on rate cuts in H1 after even the doves from the ECB and the Fed have been hard to convince of spring action lately.
  • G3 central bankers have been on parade with messages around the risks of easing prematurely after watching the cocktail of 1) higher freight rates, 2) sticky wages and 3) easing financial conditions, especially in the US.
  • We have seen front-end back paddling in rates space ever since New Years accordingly and the almost bizarre uniformity in views and positioning has been blown into pieces in a matter of weeks.

7. The Weekly Market Monitor – Please Give a Warm Welcome to BITCOIN

By Jeroen Blokland, True Insights

  • Bitcoin rose nearly 20% this week, and the impact of spot Bitcoin ETFs is huge, but with a twist.
  • This week’s US personal income data provides yet another chart showing that the recession is already behind us. But will the US consumer keep spending?
  • That new The Economist cover does not bode well for stocks, but the moving average does. Yet, sentiment remains in Frenzy.

8. How the Rise of ‘Pod Shops’ Is Reshaping the Way Markets Trade

By Odd Lots, Odd Lots

  • Recent market volatility with large moves in individual stocks
  • Multistrategy hedge funds may be impacting these market movements
  • Goose Hollow Capital founder Krishna Kumar discusses the workings of pod shops and their impact on stock trading

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

9. Money Watch: Trillions of USDs Are Waiting to Be Unleashed

By Andreas Steno, Steno Research

  • Money trends were abysmal for most parts of 2022 and the early parts of 2023, but we are starting to see interesting trends arising in the global money growth with clear geographical divergences.
  • Japan, China and the Euro zone have reported January M1, M2 and M3 developments and while trends remain benign in JPY and CNY, the money trends in EUR are re-worsening.
  • A gap seems to be opening between USD and EUR money trends, which rhymes well with our strong thesis of a growing inflation gap between the US and the Euro zone.

10. Macro Nugget: Trillions of USDs waiting to be unleashed

By Andreas Steno, Steno Research

  • If we look at M2 trends (narrow money + time deposit / MMFs and similar assets), the broad USD measure remains a staggering 18% above trend with M2 nominally trending almost 4 trillion USDs above a long-term trajectory.
  • The similar trend in EURs is much less extraordinary with M2 currently 7% above trend, which translates to a little more than 1 trillion EURs nominally.
  • There is still a large excess of USDs in the systemSo where are those excess USDs parked?