Contrarian Updates on 26 May 2024

 

·         MSCI World 3462, SPX 5304, DJI 39069, Shanghai Comp 3089, Hang Seng 18609, Nikkei 38616, EuroStoxx 5036, MSCI Asia 1378, UKX FTSE 8317, CAC 8094, Nifty 22957, Sensex 75410

·         2Y UST 4.95%, 10Y UST 4.45%, 2Y CGB 1.8%,  10Y CGB 2.33%,  LQD 106.98, EMB 88.59, HYG 76.82

·         SPGSCI 581.69, XAU $2339, XAG $30.6, Oil $82, Nat Gas $2.75,   

·         DXY 104.6, ASIADOLR 90.65, EUR 1.0848, JPY 156.74, GBP 1.2843, AUD 0.6636, AUD/¥ 104.01

·         BTC $69032, ETH $3879, XRP $0.5314, SOL $165.81, BNB $603.39, USDC $1.0005

·         VIX 11.9, EUR 3M Vol 5.3%, JPY 8.7%, GBP 3M Vol 6.1%, XAU 3M Vol 13.6%

 

·         Key market driver remains to be inflation and interest rates with Fed and other central banks threading the needle to keep a bare semblance of credibility. Every market cycle has been the same if you actually study their forecast versus outcomes. Asian equities have turned around with some bellwether funds showing good profits. Shanghai Composite forming a potential double bottom so might have bottomed out after the last 2Y down-cyle. Also, US yield curve is downward sloping which reinforces the view that rate cuts are still in play. China yield curve however remains upward sloping but drifted downwards from 1Y ago. The Fibo extension 1.618 suggest that the next SPX target would be 5640 level. This is further confirmed by The Street targeting 5640 – 5750 levels after raising price targets and historical trend that the SPX experienced +10% increase over the first 100 days of the year. ECB Chief quipped that the ECB is ready to cut interest rate next month but the policy must continue to be restrictive this year as wage growth will not normalise until 2026

 

·         Hedge funds have slightly reduced holdings in the “Magnificent 7” Following 3 consecutive quarters of significant increases. In contrast, active real money investors have maintained or increased their OW positions in certain tech stocks, opting to ride them out for more gains. BABA prices $4.5B convertible senior notes which was significantly oversubscribed to fund their stock buyback program, which is a really bullish signal for the beaten down stock. 3333 more than doubled on 27/05 as trade resumed after China Evergrande said liquidators had agreed on behalf of key shareholders to sell a stake in the EV maker. However, noticed the deal between China Evergrande Group, Evergrande Health Industry and Acelin Global was non-binding so it remains to see how it will play out.

 

·         ETH saw an extended rally on the back of progress towards a spot-exchange traded fund. Seems key levels for BTC is $68,300 and $69,800 across The Street. CBO Andrew Howard, Jan3 sent a critique against Ethereum founded Vitalik Buterin for dumping almost $100M ETH in the market 6 years ago, when the market was at an all-time high. Trump pledges to free Silk Road Creator Ross Ulbricht is he re-elected as he has served 11 year of two life terms + 40 years for creating the darknet marketplace. He added, “I am very positive and open minded to cryptocurrency companies and all things related to this new and burgeoning industry. Our country must be the leader in the field. There is no second place”

 

·         We have US jobless claims/ GDP / Core PCE, Eurozone CPI and China Manufacturing PMI due this week. CRM, HPQ and ADSK earnings are due as well.