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
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
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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
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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
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It’s a phenomenal day & its only going to get better
Namaste
-KVP
Today:
Other:
Some Pieces From the Rest of the SaxoStrats Squad
2024: The wasted year
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As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
