Global Macro Strategist
Summary: Morning APAC Global Macro & Cross-Asset Snapshot
(Note that these are solely the views & opinions of KVP, they do not constitute any trade or investment recommendations of any kind.)
To see this wk’s Macro Monday click here
APAC Global Macro Morning Brief
So the US gets fully back in today, post Monday’s Veterans day. Overnight sessions was dominated by risk-off sentiment, which was likely a combination of profit taking from last wk, US/CH trade jitters & escalations on the streets of HK
With all that said, US equity futures bounced from the lows, c. -0.50% at one point before finishing -0.10% for the sessions – neither here nor there
Early days this Tues Asia Morning but we are a touch lower at -0.10% on US equity futures, and up to -0.35% on ASX futures, however the Nikkei & Hang Seng are looking up at +0.26% & +0.70% - the latter, likely a technical bounce after pulling back -2.6% yesterday
And just for context, people were being sent home from work across businesses in HK for their safety – so going c. + 5months of protests, the level of conflict is increasing. Its tough to see things changing for the better anytime soon
At the end of the day, this is a structural social imbalance problem, a massive concentration of wealth in the hands of the few – which is by itself is not necessarily bad – yet at the expense of where the many, have little to no options available to them from a housing, working & living perspective – which is obviously unacceptable for a long-term functioning society
The extradition bill, was just the proverbial straw on the camel’s back on what has been brewing for years
And the fascinating (& sad… yet perhaps long-term good) thing is we are seeing this across the globe, Trump, Brexit, Argentina, Chile, Europe… not trying to say all these places are the same, nor justifying violence by any means... yet its this breaking down of the "social contract" – where its quite clear that whilst there was a lot of growth & low fruit in the system, policy makers & officials could coast along, yet it’s a very different world we live in today
The countries & societies that will thrive, will be those that will be proactive on these structural challenges
As very successful & wealthy individual once told me, what’s the point of being rich if you need an armoured car to take you from one heavily guarded location to another heavily guarded location - you may as well live in a jail
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New overnight that Nigel Farage will focus on labor instead of Tories (& not contest seats in the election for the Brexit Party), puts some fuel in cable's rockets, as we jumped +0.63% to 1.2855. To be honest these are likely crosses that see a lot more sterling strength.
Have a brilliant day & watch out for FOMC’s Clarida today 18:30 SGT (05:30 ET) as he may give some hints on Powell’s testimony on the economy later this wk
Namaste
-KVP
Today:
Other:
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
