Global Macro Strategist
Summary: Global Macro & Cross-Asset snapshot from APAC to kick-off your day
Happy Tue!
Tue 3 Sep 2019
O/N & Levels:
Not too much on, given US (& CA) was out given the labor day wkd – still US EQ futures are down c. -70bp since Fri levels in early Asia Tue open. DXY is breaking out higher given its multi-year high close on Fri & the US trade weighted dollar index is at all time highs
A strong US is chocking global growth & causing particular issues for EM, the Fed, Trump & Commodities in general - the whispers on Saxo 4Q Outlook say that it will focus predominantly on the USD, so please stay tuned for that
EZ mfg. PMIs were in-line to better as a whole & more importantly China Caixin mfg. index has a massive beat 50.4a 49.8e - too early to call the turning of the ship, yet 2-3 months of this could signal a bounce in the making… Worth noting that we have had a number of head fakes in China this year
Sterling at two wk lows given Bojo moves & Parliament counter moves… he’s potentially threatening calling a general election… ignore the noise for now… from KVP’s view… worst thing that can happen is another useless extension… best thing is some form of clarity on the future... be that in hard Brexit or no hard Brexit… it’s the uncertainty that kills economic growth, animal spirits & investor appetite
Today:
US back in & on that front final mfg. PMIsis & ISM mfg will be key with 50.0 & 51.2 expected respectfully across the two
AU retail sales, current account & of course RBA – mkt expecting no move from former given previous back to back cuts to 1%. Worth bearing in mind RBNZ surprise -50bp, as well as this will be first RBA meeting post USDCNH shooting through the 7.00 handle. A weaker yuan basically acts as a tax on Australia's exports into China
Have an amazing Tue & epic wk ahead, profitable trading everyone
For those that missed the Macro Monday Call from earlier this wk covering the action packed wk ahead, you can access it here & catch the replay link here....
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
