APAC Global Macro Morning Brief – Happy Macro Tue 26 Nov 2019: Risk-On Equities Kicks Off Thanksgiving Week APAC Global Macro Morning Brief – Happy Macro Tue 26 Nov 2019: Risk-On Equities Kicks Off Thanksgiving Week APAC Global Macro Morning Brief – Happy Macro Tue 26 Nov 2019: Risk-On Equities Kicks Off Thanksgiving Week

APAC Global Macro Morning Brief – Happy Macro Tue 26 Nov 2019: Risk-On Equities Kicks Off Thanksgiving Week

Macro 1 minute to read
Strats-Kay-88x88
Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


(Note that these are solely the views & opinions, they do not constitute any trade or investment advice of any kind.)

 

To see this wk’s Macro Monday click here

APAC Global Macro Morning Brief

 

Happy Macro Tue 26 Nov 2019: Risk-On Equities Kicks Off Thanksgiving Week

 

So the week of US Thanksgiving kicks off with green across global equity indexes with the bulls potentially setting the bell-curve for the wk

Last wk marked the first wk down in the S&P at a modest -0.33%, after a string of 6 up wks, with the smallest up wk being +0.54% - that’s asymmetry for you


Lots of controversy of whether the US Congress HK bill is good, bad or noise in the face of developments in the city

For now, the price action seems to suggest that its been seen as positive – yet note this also coincided with district council elections that saw record turnout which was likely the key driver

The HK lined of Alibaba will be listed today under the ticker 9988 HK (it will be available to trade both as a stock & CFD through Saxo) and will add c. +$11bn to Alibaba’s cash chest. This will put its cash at c. $43bn, just $6bn shy of the number one cash hog, Apple’s $49bn

So you have to wonder if we should speculate on a potential buyback of Alibaba stock at some point – a la Microsoft & a la Apple when they got cash heavy & growth slowed -, as well as which line would be targeted. Politically it should obviously be HK > US line…


Meanwhile the M&A equity fever continues – we previously heard of LVMH making a run for Tiffany for over 15 yards, now we TD Ameritrade being bought by Charles Schwab for a deal almost valued at twice that. The latter’s’ industry is seeing a lot of pricing pressure & the need to reinvent its business


In regards to the trade deal, no view is the view from KVP – when markets are up, the interpretation is that things are going well & when they are down, then the talks are breaking down

At the end of the day, any ‘Phase One’ deal (which some people are now even calling a skinny phase one, talk about dilution of dilution) is more than likely to be temporary & likely to fall out in 1Q/2Q 20 at best. Still respect the price action for the tactical side of the portfolio

I think years from now, we’ll look back at this trade spat as a lot of noise – whereby folks should have been focusing on the very accommodative monetary policy on the tail end of a late expansion

The more interesting view to KVP, is a potential tactical trades around a deal-break, yet looking for structural buys on any pullback to add to a long core bias  

-

Overnight econ data was light, yet worth noting the slight beat on German IFO survey at 95.0a 94.9e 94.7p

So whilst we are in the 11month of contraction on German Mfg. PMIs – at least suggested by the flash mfg PMI last wk 43.8a 42.9e 42.1p – it worth noting we are in month two of consecutive higher highs. So still in contraction territory at sub 50, yet not as much

Worth noting the Bundesbank is not picking up, what the flash German PMIs are putting down – as they slashed German growth downwards to +0.6% (+1.6%) for 2019, and +1.2% (+1.6%) for 2020. They continue to expect inflation to clock +1.4% for 2019

Meanwhile as flagged in yesterday’s Macro Monday, there were big beats across both flash PMIs for the US – which could indicate that the ISMs are going to be well supported when they come out next wk after the Thanksgiving weekend

Before that of course, we should have official China PMI data due over the coming weekend

-

Cross-Asset Snapshot:

O/N saw risk-on with equities green across the board

S&P closed +0.75% at 3133, with Nasdaq-100 +1.21% to 8372. Dax +0.63% 13247. HSI fin. Mon +1.50% 26993

DXY unchg, yet Cable +0.52% to 1.2900  - Again, looking out 3-5-10yrs from now, the most likely view from KVP would be that this was a historic time to be long sterling & sterling assets

As always trade & portfolio construction is much more important than investment themes/ideas

The second best performer vs. the USD was the kiwi, +0.12% 0.6418

Gold & Silver were lower at -0.46% 1455 & -0.78% 16.89

Oil joined the equities up party with +0.33% 63.60. NatGas bucked trend closing down -5.4% to c. 2.52


-

 

It’s a phenomenal day & its only going to get better

Namaste

-KVP


Today:

  • NZ: Big beats in 3Q retail sales this early am at 1.6%a 0.5%e 0.2%p (Biggest gain since back-end of 2018 & likely also linked to the Rugby 2020, imagine if they had won!)
    • Worth noting early doors weds morning we get both the RBNZ Financial Stability report, TB & Governor Orr speaking 06:00 SGT/HKT (17:00 ET)
  • AU: RBA’s Lowe speaking @ 17:05 SGT/HKT (06:05 ET)
  • UK: Highstreet Lending
  • US: Powell due to speak @ 08:00 SGT/HKT (19:00 ET), TB, Wholesale Inventories, Richmond Mfg. Index, New Homes Sales, CB Consumer Confidence, FOMC’s Brainard 02:00 SGT/HKT (13:00 ET)
  • CA: Corporate profits

 

Other:

Some Pieces From the Rest of the SaxoStrats Squad

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.