Global Macro APAC Morning Brief

Macro 1 minute to read

Kay Van-Petersen

Global Macro Strategist

Summary:  Morning APAC Global Macro & Cross-Asset Snapshot


Happy Tue 24 Sep 2019 – APAC Global Macro Morning Brief


O/N, Levels & Thoughts:

So interesting comment overnight with Draghi saying, “Euro Exchange rate is not especially weak”. It’s not common to get either the ECB or Fed head, talking directly about the currency. He also suggested that the ECB should be open to MMT advocating that its closer to fiscal policy & should be overseen by governments.   

Again this call for more fiscal policy by central bank governors has been going on for years, bottom line is… monetary policy globally is getting progressively less bang for buck.

Whilst KVP, is not a proponent of spending as much as you want because it has zero effect on inflation, what would you rather see? Another $500bn or $1trn going to central bank balance sheets, that commercial & investment banks get to freely drink from (at tax payers expense & massive lost opportunity cost), or that $500bn to $1trn go into infrastructure projects that can generate jobs, growth & asset that enhances the country for decades?

Flash PMIs o/n were abysmal across the eurozone with both mfg & serv. Indicators missing across France, Germany & the block as a whole.

For Germany, mfg. came in at 41.4a 44.6e 43.5. Serv in at 52.5a 54.3e 54.8p.

For the EZ block as a whole mfg. was 45.6a 47.6e 47.0p & serv. Was 52.0a 53.1e 53.5p.

The German economy is seeing the first shrinkage of the private sector in over 6yrs. For the EZ as a whole… mfg. PMI is the worst in close to 7yrs. Net-net we don’t seem to have found a floor… monetary policy is not going to save or stabilize the EZ… it has to be fiscal policy… and for that it probably still has to get worse before it gets better.

The euro sold off on the data points and we are back to sub 1.1000, sitting around the 1.0990 lvls after a low of c. 1.0966. Bunds got a bid and are now tighter on yields back to c. -58bp

EQ were mixed across the Europe, yet EuroStoxx & FTSE100 bucked the trend to the upside. And it the US, the S&P was largely unchanged alongside the Nasdaq. The Russel2000 had an interesting +42bp outperformance. Early doors Asia yet, US equity futures are up c. +40bp to +50bp on the S&P & Nasdaq100.

There were additional comments by Fed officials linked to the money markets & repo spike last wk, yet nothing material. As a house view, we continue to think that what is happening is purely technical & not a signal similar to the GFC ripples in the money markets that was a signal of things to come.

Oct 7, according to US Treasury Secretary Mnuchin will be when China’s Vice Premier Liu He will be visiting the US. Mnuchin also flagged that US agri products are once again being bought by China.

Incredible India – So missed something big in this wk’s Macro Monday & that was the latest round of stimulus from the Indian government that came out on Fri last wk.

After a few neither here nor there move, this latest initiative with a $20bn tax cut is very much substantial in both scope, spirit & message it sends out – I will put out an overview on this later today or tmr.

Net-net it basically gives us earnings of +20% for 2yrs, and what other major economy in the current global economic backdrop can give you that same argument. Also according to MS, valuations relative to EM are back on the lower end of the range. They favour mid & small caps over large, value over growth, cyclicals over defensives specifically with consumer autos & industrials, they also like the large cap financials & believe that real estate names should also do well. Some India etfs that KVP would consider are INDA, INDY, EPI & SMIN

 

Today:

  • JP: Flash PMI 49.5e 49.3p
  • EZ: German IFO biz
  • UK: Public sector borrowing
  • US: House prices, CB Consumer confidence, Richmond Mfg. Index
  • Central Banks: Kuroda & Lowe due out on the tape… 13:30 & 17:55 SGT/HKT time
  • NZ: Early doors tmr (Wed Sep 25) we have TB figures due


Other:

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

International

Trade responsibly
All trading carries risk. 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.