Contrarian Updates on 23 Apr 2025

Global Markets

 

US Yield Curve & Fed Rate Monitor

 

Crypto Market Tracker 

 

 

Key Macro & Technicals

 

 

Market Commentary 

·       FX majors been mixed last few weeks with NZD/$ gaining +4.8% alongside general USD weakness. Even less movement across Asia FX particularly $/INR and $/CNH. However did noticed the $/CNH has quietly probed the breakout point of a potential ascending triangle formation. USD Index has also broken out from double top and downside momentum is gathering steam.

 

·         On 21/04, the USD fell on fears on a possible shake-up in the Federal Reserve, casting doubt over the future independence of the central bank. White House economic advisor Kevin Hassett has suggested that Trump and his team are studying if they could fire Fed Chair Jerome Powell. The statement came after Trump revived a threat to oust Powell from the role, accusing him of not moving fast enough to bring down interest rates.

 

  

·         On 11/04, USD Index slumped on escalation on US-Sino Trade War despite the temporary relief rally due to the 90-day tariff pause didn’t last long as it didn’t include China. Instead Trump ratcheted up duties on Chinese imports to an effective 145%, further escalating tensions between the world’s two largest economies. China then retaliated with a new 125% tariffs on US imports up from 84%. Longer-dated US treasuires also selling off, putting 10Y yields on course for their biggest weekly jump since 2001. DB analysts commented “we are witnessing a simultaneous collapse in the price of all US assets including equities and USD versus alternative reserve FX and bond market. The market has lost faith in US asset so instead of closing the asset-liability mismatch by hoarding dollar liquidity it is actively selling down US assets themselves”.

 

·         On 13/04, JPM Bruce Kasman quipped that “the post-Liberation Day back-pedalling has led some to breathe a sign of relief but not for us. A 10% universal tax is still a very large shock and huge 145% tax on China is prohibitive. You cannot stop trade between the world’s two largest economies and not expect damage everywhere. We maintain our call for a 60% likelihood of a US/global recession”.

 

·         On 21/04, Capital Economics analyst have said “indirect damage” has been done to the USD by the tariffs, generating extreme uncertainty about the broader economic outlook and undermining confidence in the US institutions and asset markets. The levies also sparked dislocations in the US treasury market as the bonds actually sold off sharply rather than acting as safe haven during last month S&P selloff. In their view, its is no longer hyperbole to say that the USD’s reserve status and broader dominant role is at least in question, even if the inertia and network efforts that kept it on top for decades are not going away anytime soon”.

 

·         In 2024, China earned a record $3.5T from exports, 16% of which went to Southeast Asia its biggest market. Beijing in turn, has paid for railways in Vietnam, dams in Cambodia and ports in Malaysia as part of its 1B1R initiative that seeks to bolster ties abroad. Malaysia’s Trade Minister Tengku Zafrul Aziz told BBC ahead of XJP’s visit that “We can’t choose and will never choose between China and US. If the issue is about something we feel is against our interest, then we will protect ourselves”. This reaction pours cold water on the White House intention to use upcoming negotiation with small nations to pressure them into limiting their dealings with Beijing. The development is particularly acute as instead of granting concessions to Trump 2.0 this time, China is digging in and XJP went on a personal visit to Vietnam, Malaysia and Cambodia citing that Beijing is SEA’s better friend than the truculent US administration.

 

·         On 14/04, ING analyst noted ECB’’s stance has likely shifted since its March meeting, according to as new US tariffs on European goods, coupled with a rising EUR and falling energy prices have raised concerns over growth and disinflation in the medium term

 

·         On 14/04, Barclays economists said that Trump’s administration’s 90-day pause on reciprocal tariffs is unlikely to mark a distinct shift in the broader trade policy towards countries outside China. The pause, announced after a surge in Treasury yields and sharp equity losses, exempts China and preserves the base 10% tariff on other countries. At the same time, tariffs on China were raised from 64% to nearly 150%, lifting the overall US trade-weighted average tariff to 30%. For the rest of the world, the effective rate has declined to around 12%, down from 17% before the suspension.

 

·         On 17/04, Kyiv and Washington signed a memorandum of understanding to develop mineral resources in Ukraine to pay back US support since 2022. This paves the way for an economic partnership deal and setting up an investment fund for the reconstruction of Ukraine. However this updated deal does not involve any security guarantees.

 

·         During Trump’s 1^st term as president, the US and Japan signed a bilateral trade deal in 2019 that cut tariffs on US farm goods, Japanese machine tools and other products whilst staving off threat of higher US car duties. Although the agreement did no cover automobile trade, then PM Shinzo Abe said he had received assurances from Trump that US would not impose “Section 232” national security tariffs on Japanese car imports. “Between President Trump and I, myself, this has been firmly confirmed that no further, additional tariffs will be imposed” Abe told a news conference after signing the deal. Japan however was no exempted from Trump’s latest 25% tariff slapped on all automotive imports in the US. Hence, Japan now has “grave concern over the consistency with regards to the latest US automotive tariffs and 2019 bilateral trade deal”. $/JPY has hit a 7M low at 140.65 on 21/04 on market speculation that Japan could face US pressure to prop up the JPY to help Washington reduce the huge US trade deficit.

 

 

·         Within equities space, the larger movers have been MSCI Asia +5.8% with STI, SENSEX, Nifty and Russia Index rallying 6.6 – 8.4%. On a deeper dive, STI filled the gap at 3800 overnight after the 1000 points fall in SPX earlier this month whilst SENSEX continues to breakout from congestion channel. Russia Index at 2946 appears to be targeting the gap as well. Also, whilst US equity indices have been stabilising noticed there SPX has broken of falling wedge last week which makes retracing to 5492 and 5647 which represent 50% and 61.8% Fibo levels a real possibility. Those would be decent levels to exit/ trim US equity position susing the rally momentum this trading cycle given Trump flip-flopping. Also, SPX rally been broad-based this time based on AD line.

 

·         Unsurprisingly VIX has fallen 22.3% but interestingly smart beta dividend and momentum volatility has actually increased 11.2% and 10.6% respectively. No major moves within fixed income but there has been unexpected development in that UST not been acting as a safe haven lately. This time though REITs are not the uptrend with risk-in momentum with MAPL and CDLT both +7.5% and 6.3% respectively.

 

·         On 22/03, the Big Short Investor Danny Moses commented that the market have not yet factored in the impact of mass cut in spending. He told Fortune the DOGE cut’s have jeopardized private contractors, small businesses and the labour market. Trump has fired more than 24k federal workers many of whom expect difficulty finding private sector jobs due to their specificity of their expertise. An additional 75k employees took deferred resignation opportunity which allowed them to receive pay and benefits through September. DOGE’s mass cuts already has begun to jeopardize major contracts with Accenture telling investors that its Federal Services business, representing 8% global revenue lost US government contracts. One of the reason markets have not factored in impact of firings is the lag in government date. Whilst the Bureau of Labor Statistics reporting about 10k fewer federal government jobs in Feb, the survey period for the report very likely ended before many of the firings were carried out. Should a substantive number of federal works fail to find new jobs, spending will likely slow, a not-insignificant hit to the US economy made up of nearly 70% consumer spending.

 

 

 

·         On 13/04, Bridgewater Associates Ray Dalio warned today US is teetering on the edge of recession, citing economic disruptions caused by Trump’s tariff campaign and broader global instability. He also said “I think that right now we are at a decision-making point and very close to a recession and that the tariffs are like throwing rocks into the production system”. The uncertainty he noted is weighing heavily on investment decisions and could damage long-term productivity. Beyond tariffs, Dalio also flagged deeper concerns about the confluence of risks facing the global economy. He cited a ballooning US debt, widening budget deficit and growing geopolitical instability as ingredients for a potential economic shock. Finally, he said “we’re having profound changes in the world order and if you take tariffs, if you take debt, if you take the rising power challenging existing power … how that’s handled could product something that is much worse than a recession”.

 

·         On 14/04, Citi has downgraded US equities to neutral from overweight, reflecting the current uncertainty in the macroeconomic outlook, elevated valuations, and mounting earnings downgrade pressures. Whilst some tariff-related risk have been priced out following Trump’s 90-day pause on trade restrictions, Citi believes the US remains vulnerable to further economic drag. Citi’s proprietary Earnings Revision Index recently hit “recessionary” levels of -40%, underlining the risk of further downgrades. The bank new top-down forecast for global earnings growth is 4%, well below the 10% expected by bottom-up consensus. Citi upgraded Japan to overweight, pointing to more attractive valuations and reduced risk of US trade conflict. Japanese equities are trading at the 15^th percentile valuation multiple over the last 25Y and have already priced in bearish EPS scenarios. The UK equities also upgraded to Overweight as well citing “cheap valuations, while its defensive nature could help if volatility persists”. For EM equities, they have downgraded to underweight from neutral, driven by China’s heavy exposure to current tariffs and risk that elevated trade barriers could persist despite recent sign of progress.

 

 

·         On 14/04, European equities were boosted as Trump exempted smartphones, computers and other electronic devices and components from his reciprocal tariffs. This followed the US president imposing 145% tariffs on products from China earlier this month, a move that threatened to take a toll on tech giants like Apple. Trump pushed back on reports that certain electronics has been exempted from his sweeping tariff plan saying products like smartphone and laptops still subject to existing 20% fentanyl-related tariffs

 

 

·         On 21/04, China has imposed sanctions on US congress members, government officials as well as head of NGO for “egregious behaviour on HK-related matters”. The sanctions come in response to the US sanctioning 6 Chinese and HK official last month, which Chinese foreign ministry Guo Jiakun “strongly condemns”. China’s Ministry of Commerce also issued stern warnings to countries against striking trade agreement with the US which could undermine its interests following report that the Trump administration intends to offer tariff relive in return for curbs on trade with Beijing. Interesting that Trump started being even-handed when he came to power in Feb targeting countries based on their trade surpluses but now he shows US true colors with his anti-China policies.

 

·         On 14/04, Taiwan first phase of tariff talks with US went smoothly and the government hopes to take this challenge as an opportunity to promote a new Taiwan-plus-the-United States layout for trade according to President Lai Ching-te. Major semiconductor producer Taiwan has been due to be hit with a  32% tariff by Trump until he puts all tariffs ex-Chinna on hold for talks to take place. TSMC the world largest contract chipmaker, announced last month an extra $100B investment in the US. Lai said Taiwan has already been signing trade and IP agreement with countries such as Britain and Canada and also want to join the CPTPP.

 

·         On 14/04, Italian billionaire Gianlugi Aponte’s family-run business is emerging as the lead investor of a group seeking to buy 43 ports from conglomerate CK Hutchison. The Aponte family Terminal Investment Limited which manages a diverse portfolio of container terminal according to its website, will the be sole owner of all the ports once the deal is completed except for two in Panama that will be controlled by Blackrock Inc. The port facilities at the strategic waterway account for about 4% of the total value of the deal. Li Ka-shing is expected to make more than $19B. CK Hutchison faced a barrage of criticism from China on its decision to sell most of its $22.8B port business to Blackrock. The deal has become highly politicised as the conglomerate is thrust into the crosshairs of an escalating China-US trade war.

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·         Nowadays, Chinese companies are racing to build factories around the world and forge new global supply chains, driven by a desire to circumvent tariffs and secure access to market. This has shifted the narrative from Chine being a destination of FDI to becoming the major source of investment. Generally speaking, China’s outbound investment boom is accretive as it is helping industrialize poor countries like Indonesia and Morocco and diversify and technologically upgrade the economies of middle-income countries like Brazil, Turkey, Mexico and Thailand.

 

 

·         In India’s case however, China is trying to isolate the world’s biggest and more important developing country from its new economic world order given US-led globalisation retreat. Beijing is encouraging Chinese companies to build plants in “friendly countries” whilst discouraging them from investing in others as a kind of industrial diplomacy. In particular, Beijing appears to be limiting Apple’s manufacturing partner Foxconn from bringing Chinese equipment and Chinese works to India and some of their Chinese workers in India were even told to return to China. This informal Chinese ban extends to other electronic firms and Beijing has told Chinese automakers specifically not to invest in India. They also been reportedly blocking export of Chinese solar equipment and tunnel boring machines made in China by Germany’s Herrenknecht for export to India have apparently been held up by Chinese customs. Whilst India has been more than unfriendly to China this trend is more strategic as China rather not build up the manufacturing capabilities of its biggest potential rival.    

 

·         In Europe, China’s Ministry of Commerce has told Chinese automakes like BYD, SAIC and Geely to pause investments in EU countries that voted in favour of tariffs on Chinese EV and increase investments in EU countries that voted against them. Hungary stands out as the largest recipient of Chinese FDI in Europe by far, including a massive $7B, 100GWh CATL battery plant and new BYD plant slated to start production this year. After Spain abstained from voting on Chinese EV tariff, CATL signed as $4.3B deal with Stellantis to build a battery plant in Spain

 

·         Brazil by far the largest recipient of Chinese FDI in Latin America is another country where warm relations have been reward with new Chinese factories. Brazil’s President Lula has sought to partner with Chinea to reindustrialize Brazil’s economy with BYD and Great Wall Motor both building EV factories after taking over former auto plants from Ford and Mercedez. Brazil’s rising tariffs on all imported EVs have helped spur Chinese EV makers to localize production without antagonizing Beijing unlike EU which is specifically targeting EV imports from China

 

·         In contrast, the Philippines is a country where Chinese firms have been wary of investing in part due to South China Sea tensions. For year, the Philippines has received only a fraction of the levels of Chiense FDI that its Southeast Asian peers like Thailand and Indonesia have received. The situation worsened after President Ferdinand Marcos Jr took a more confrontational stance with China in 2022. Since then, many Chinese infrastructure projects stopped and investment from Chinese SOE dried up.

 

·         Commodities wise we see risk-on too with SPSCI +3.2% and XAU/$ and XAG/$ both moving higher by 7% and 7.8% last few weeks. Whilst crude oil only moved +2.8% we have seen NG futures dropping 19.2% in the same time period. However, did notice a potential falling wedge forming on crude oil futures. Crypto currencies also been very resilient lately and SOL/$ +29.5% outpacing BTC/$.

 

·         On 13/03, Abu-Dhabi backed MGX made a $2B crypto investment in Binanace deepening ties between the world’s largest crypto exchange and the UAE. The exchange has been growing its links with the UAE under CZ’s successor Richard Teng, who was previously head of Abu Dhabi Financial Services Authority.

 

·         On 20/04, RBC analysts noted that commodities markets are now at the heart of an intensifying global trader war and even if tariffs were rolled back in full, damage from broken trade relationship and heightened uncertainty would linger. The brokerage uses the industry cost curve as a benchmark to measure potential downside, with historical data suggesting that commodities tend to hover around the 90^th percentile of the cost curve. Any move below that typically prompts production cuts and at current sport levels, iron ore would have to another 18% to hit its cost support $80/t. Copper need to declines 24% and aluminium 12% to trigger the same.

 

·         On 16/04, crypto analyst Michael van de Poppe forecasting that BTC could reach a new ATH in the next 3M. His assumption is based on the correlation between BTC price and M2 supply and he also expect this to happen with $/CNY heading lower, fall in gold price and rise in altcoin prices. Bitcoin has also hit 25% milestone on road to the next halving.    

 

 

·         On 13/04, GS hikes end-2025 gold price target to $3700, which it’s third such hike this year. The bank had in March hiked its 2025 gold price target to $3300 and warned in an extreme risk case, gold could reach as high as $4500.

 

·         On 16/04, Asian government are now looking to buy more US oil and gas as they scramble to lower their trade surplus with Washington to ease their trade burdens. Many of them run large trade surpluses with the US and are major energy importers. India plans to end taxes on US ethane and LPG imports but analysts are saying there is limited scope for India to increase US ethane imports due to lack of shops, storage tanks and crackers that process the liquid gas. Trump also wants Japan, South Korea and Taiwan to join the $44B natural gas export project in Alaska. The project aims at transporting gas south from Alaska’s remote north a 1300-km pipeline to be shipped LNG to these countries bypassing Panama Canal. Japan’s Mitsubishi Corp may consider investing and Taiwan’s CPC Corp signed an agreement with Alaska Gasline Development Corp to buy LNG and invest in the project, a move Taiwan’s President Lai Ching-te said would ensure the island’s energy security.

 

·         On 17/04, Petrobras will reduce the price of diesel sold to distributors by an average of BRL 0.12 after Trump’s tariffs

 

·         On 17/04, KSA Defence Minister Prince Khalid bin Salman arrived in Tehran for weekend talks between Iran and US over Iran’s nuclear programme. Iran and KSA agreed to a 2023 deal brokered by China to re-establish relations after years of hostility which threatened the stability and security in the Gulf and helped fuel conflicts from Yemen to Syria. “Ties between the Saudi and Iranian armed forces have been improving since the Beijing agreement” according to Iran’s armed forces chief of staff Mohammad Bagheri. Iranian Supreme Leader Ali Kamenei also sent his foreign minister to Mosow with a letter to Putin to brief the Kremlin about nuclear negotiations with the US which has threatened to bomb the Islamic Republic. Turmp has repeatedly threatened Iran with bombing to extend tariffs to third countries that buy Iranian oil if Tehran doesn’t come to an agreement with Washington over its disputed nuclear programme. Russia, a longstanding ally of Tehran playing a role in Iran’s nuclear negotiations with the West as a veto-wielding UN Security Council member and signatory to an earlier nuclear deal Trump abandoned during his 1^st term in 2018. Putin has kept on good terms with Khamenei as both Russia and Iran are cast as enemies by the West but Moscow is not keen to trigger a nuclear arms race in the Middle East.

 

 

 

Special Update on 10 Apr 2025

Global Markets

 

 

 

 

 

Key Technicals

 

 

 

Market Commentary 

·         On 09/04, Trump has granted 90 day moratorium on tariffs for all countries except China at 104% causing S&P 500 to surge +486 points to hit nearly 5000 level

·         Whilst Trade War 1.0 did see similar moves on 02/18 with double rally making a new high 2940 on 10/18, this turned out to be a a trap as the S&P then plunged 20%

·         History might repeat itself if Trump rolls back the China tariffs but that is not certain. Given that the latest bull market has been +3Y since Ukraine War 2022 the smart move to use the rally to exit US equities

·         Typically such Fibo retracements have been between 38.2% - 78.6% so targeting 50 – 61.8% would make sense as an exit level

·         Can then build up dry powder for the eventual bear market where you can pick your preferred securities at bargain prices

 

  

 

 

Contrarian Updates on 04 Apr 2025

Global Markets

 

 

 

 

US Yield Curve

 

 

Fed Rate Monitor

 

Crypto Spot Market Cap

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Fear and Greed Index Chart

 

Altcoin Season Index

CoinMarketCap 100 Index

Crypto ETF Net Flows

 

 

 

Key Technicals

 

 

Market Commentary 

·        FX markets have been more exciting lately with AUD/$ and AUD/JPY dropping 4.1% and 6.5% respectively whilst $/CHF moved down by 4.1%. Interestingly, EUR/$ actually rallied +4.8% despite being a risk-on currency pair and at odds with  how equity markets have been behaving last +1M. Broadly speaking, still USD weakness though with USD index falling 3.4% since last month. Took a deeper dive and AUD/JPY still trading upwards having been congestion channel 58 – 123 since 1988 despite recent downturn due to Trump induced volatility

 

 

·        On 14/03, Stifel economists quipped “rather than double down with additional rate reductions… the Committee is presumably better suited to maintain its ‘wait-and-see’ approach”. Whilst the market is expecting three rate cuts, the Fed will likely maintain optionality, preferring to strike a balanced tone and not give too much away in terms of policy direction. However, the summary of projections, which will accompany the rate decision, is likely to force the Fed into divulging fresh clues on further rate cuts.

 

·        On 24/02, BofA sees structural strength in the US economy driven by “sustained pickup in labor productivity growth” and argues that the productivity cycle will be long lived due to increased business formation, reduced regulation and capital deepening. BofA also noted that capital stock in the US is “old, inefficient and in need of refurbishment”. After decades of dominance by tech spending, capital expenditures have broadened driven by fiscal support, the need for date centers, aging infrastructure and reshoring. Whilst AI has been discussed as potential game changer, BofA is cautious about its immediate impact on the macro. The bank also sees a link between productivity cycles and stronger equity market returns with higher rates, nominal growth, pickup in demand and above-average S&P 500 returns. The rise in hurdle rates could also limit the survival of zombie companies which tend to drag productivity. The bank believes productivity gains could push US GDP growth to 2 – 2.5% range above The Street.

 

·        On 09/03, Trump refused to rule out the possibility of a US recession due to his recent policies saying “there was a period of transition because what they are doing is very big”. Trump had earlier imposed 25% tariff on Mexico and Canada but later exempted them for 1M. He also increase tariffs on Chinese good which prompted retaliatory measures and has set to impose worldwide reciprocal tariffs on 02/04 which could further erode market sentiment.

 

·        On 12/03, Trump announced a significant increase in tariffs on steel and aluminium imports from Canada by raising them from 25% to 50%. Trump has also called for Canada to eliminate what he describes as “Anti-American Farmer Tariff” of 250% to 390% on various US dairy products. In his statement, Trump also threatened to declare a National Emergency on Electricity within the threatened area, which he believes will empower the US to address what he considers “abusive threat” from Canada. He also warned if Canada doesn’t not drop other significant tariffs, he will further increase duties on 02/04 on cars imported from Canada a move he says could “ permanently shut down the automobile manufacturing business in Canada”

 

·        On 01/03, Trump signed a memo ordering Commerce Secretary Howard Lutnick to initiate a national security investigation into US lumber imports under Section 232 of the Trade Expansion Act 1962. On 24/02, BofA analysts noted that proposed US tariffs on imported PC and components could cause significant price hikes, supply chain instability and long-term shifts in manufacturing. By passing on costs to buyers, PC prices could rise 10% in US or spreading smaller price increase globally. Businesses may delay upgrades and lower price PCs could see an impact from more price sensitive customers. Price increases will likely offset margin pressure but could be demand destructive and despite efforts by OEM manufacturers to shift production, China remains the dominant hub for PC assembly and components. This explains why Taiwanese companies Quanta, Wistron and Inventec still operate largely in China. Even if final assembly move to other countries, many critical parts will still come from China, impacting overall costs. To avoid tariffs, HP and Dell have expanded laptop production in Mexico and Thailand whilst Apple has moved some MacBook production to Vietnam. 

 

 

·        Noticed US manufacturing PMI been trending towards the upper end of the range 53 in Feb 2025 from lows 46 in Jul 2023, which support the inflationary argument. Despite all this Trump tariffs and DOGE fear, US PCE inflation indicator still keeps dropping. This clearly shows it is the animal spirits driving valuations not macro data right now.

 

·        On 24/02, Bank Indonesia conducted a bold intervention in the FX market after the rupiah fell to its lowest level against the USD since 03/20. Edi Susianto who heads monetary management told Reuters that the depreciation was due to Trump’s trade policies. Right now, $/IDR capped around 16000 levels otherwise would have breached $16800 and beyond.

 

·        On 21/02, BSP announced a cut in the RRR by 200 bps to 5% effective 28/03 which lowers the reserve requirement for universal and commercial banks. Additionally, the RRR for digital and thrift banks will be reduced by 150 bps and 100 bps respectively. This decision follows BSP’s unexpected move to maintain interest rates during a policy review that week. Since then, $/PHP has dropped from 57.80 to 57.20 which whilst meaningful not outside the congestion channel

 

 

·        Global equities have remained weak with MSCI World Index crashing 13.4% since 21/02 all due to fears of Trump’s tariffs inducing a US recession. Having said that, US GDP growth still at healthy 2.4% so it is clear that its animal spirits in the driver seat. More importantly, during Trump 1.0 the US economic did not actually contract but that was enough to send the S&P 500 down +30% for that trading cycle. Also, noticed there was a clear breakout of double top formation at 5780 on 03/03 with 1D DMI crossover. Seems last Fibo 6100 sell was indeed the market top this cycle and we can safely dismiss the 6700 Fibo target given recent sell-down. For those of you looking to clear more US equity positions, typically such massive selldowns accompanied by huge short covering. Assuming 5118 which is the Fibo 38.2% retracement levels is the end of the interim selling, we can target 50% pullback to around 5600 as a good exit level. Typically short covering in the S&P 500 around 38.2 – 78.6% retracement.

 

·        European indices also battered with STOXX 600, CAC 40 and Russia Index dropping 10.4%, 10.8% and 15.3% respectively with TAIEX falling 8% too. Interestingly, China and rest of ASEAN indices have been resilient so far, which makes sense given they haven’t really rallied last +2 yrs. Index style-wise the selling is indiscriminate from small cap, growth, value and dividend stocks all taking the hits around 16 – 20% downwards. And unsurprisingly, the VIX has rallied 148.8% reinforcing that fear and uncertainty has taken control of the markets.

 

·        On 11/03, Citigroup downgraded US equities to neutral and upgraded Chinese equities to overweight citing a pause in so-called US exceptionalism with regards to its economic growth lagging the rest of the world. The downward revision of US equities from overweight position which Citi held since Oct 2023 was triggered by cautionary signals from two of the bank’s models. In the credit sector Citi has removed its US high yield overweight, now underweight in US investment grade credit whilst also closing its underweight position in EU investment grade credit.

 

·        On 10/03, GS analysts project that S&P 500 dividends will grow by 6%p.a. despite recent market volatility with a payout ratio of 30% and dividend of $80 per share. They also cautioned that a 10% universal tariff by the US could lead to a 3% hit to regional Asian earnings and 4% decline in valuations in Taiwan, Korea and Japan most exposed. The bank maintains a positive stance on Chinese equities but flagged expectations of profit taking after 30% rally since mid-Jan 2025. Japan is reiterated to be overweight citing strong investment case despite the yen’s fluctuations. In contrast, it held its marketweight views on India, Korea and Taiwan with investors watching the impact of tariffs and macroeconomic shifts

 

·        On 01/04, Ed Yardeni now sees S&P 500 potentially ending 2025 at 6000 in his revised best-case scenario as he trims earning expectations amid stagflation risk tied to new US tariffs. The equity strategist has reduced the probability of his base-case Roaring 2020s scenario to 55% from 65% whilst raising the chance of a stagflationary outcome, which could include “a shallow recession later this year, following a buy-in-advance shopping spree during Apr and May”. 

 

·        On 14/03, Barclays analyst said despite improved technical that could support short-term rebounds, rallies likely to be sold until Trump or Fed pivot. Which hard economic data and credit resilience suggest no imminent recession, the banks says concerns over Trump’s administration policies and stagflation risk weighing on sentiment. US equities been hit hard with NASDAQ and tech stocks down double digits from their highs, BTC/$ and Magnificent 7 down 20% and 10y US Treasury yield down 50 bps.

 

·        After the White House clash between Trump and Zelenskiy, we saw Republicans lash out against Zelenskiy. South Carolina Senator Lindsey Graham called for Zelenskiy to change his tune or resign saying “What I saw in the Oval Office was disrespectful and I don’t know if we can ever do business with Zelenskiy again”. On 27/02, Republican Senator Jim Risch, chairman of the Senate Foreign Relations Committee did not say a minerals deal would garner more Republican support but saw it as instrumental in bringing the war to an end. “I think there will be a settlement but as in all settlement, each party needs to come away and be able to tell their constituents they won”.

 

·        Rare earths are a group of 17 elements including 15 silvery-white metals called lanthanides plus scandium and yttrium. They are used in a wide range of products including consumer electronics, EV, aircraft engines, medical equipment, oil refining and military applications such as missiles and radar systems. China accounts for about 60% of global mine production and 90% of processed and permanent magnet output. Beijing sets quotas on output, smelting and separation which are closely monitored barometers of global supply.

 

·        On 10/03, US Energy Secretary Chris Wright said soaring US power demand growth is a train wreck waiting to happen and requires big investment and regulatory changes to meet. He also added that the Trump administration intends to reverse what he called US electric vehicle mandates.

 

·        On 28/02, Canadian and Mexican officials have fanned out across Washington seeking to show Trump they were making progress in securing their US borders to curb fentanyl access. US Secretary Scott Bessent said Mexico had proposed matching US tariffs aimed at Chinese imports but didn’t specify which level. He then said it would be a nice gesture if the Canadians also did it so in way US could fortress North American from the flood of Chinese imports that’s coming out of the most unbalanced economy in modern times. China’s embassy in Washington said Trump unilateral hikes severely violate WTO rules and pressure, coercion and threat is not the right way to deal with China. Instead, mutual respect is a basic prerequisite said embassy spokesperson Liu Pengyu.

 

 

·        On 21/02, US negotiators pressed Kyiv for Ukraine’s critical minerals by raising the possibility of cutting the country’s access to Elon Musk’s vital Starlink satellite internet system. Atlantic Council. Then on13/03, Putin said he supported Trump’s proposal for a 30-day ceasefire with Ukraine but would forge on until several crucial conditions are worked out. A few days after, Britain’s Keir Starmer said European nations and Western allies were boosting preparations to support Ukraine in the event that a peace deal was struck with Russia. This initiative being branded the “coalition of the willing” and will keep increasing pressure on Russia, keep the military aid flowing to Ukraine and keep tightening restrictions on Russia’s economy to bring Putin to the table. Both Britain and France said they could send peacekeepers to Ukraine in event of a ceasefire whilst Russia insist it will not accept Western forces on Ukrainian soil. Interestingly, when Trump asked this same Starmer on MSM if Britain could take Russia by herself, he didn’t look very confident.

 

·        On 28/02, EU leaders all came out in support of Ukraine Zelenskiy following Trumps’s heated exchange. Again given Trump was publically challenging UK Keir Starmer whether they could take Russia on their own, it shows that he knew this would happen in advance. Others have commented that they need to do so for the optics, how far their action will match later on is another matter entirely. Right now, the Coalition of the Willing has a combined GDP exceeding EUR 20B with total US support for Ukraine over the last 3Y standing at 0.3 – 0.6% GDP. As such, matching US contributions of EUR 114B is very feasible given that Trump pushing them to increase their defence spending to 5% GDP. In terms of market reaction, it was pretty muted on the S&P and MSCI World so perhaps investors are not anticipating further escalation beyond Ukraine just another proxy war like Iraq and Afghanistan.

 

 

·        On 15/03, the US expelled South Africa’s ambassador with Secretary of State Marco Rubio calling the envoy a “race-baiting politician who hates Donald Trump” Seems Elon Musk and Peter Theil’s connections to South Africa is influencing US foreign policy despite all their denials or obfuscations. 

 

·        On 11/03, Greenland’s pro-business opposition party Demokraatit party which favours a slow independence from Denmark a parliamentary election that was dominated by Trump’s pledge to take control of island. Demokraatit secured 29.9% of the votes up from 9.1% in 2021 ahead of the opposition Naleraq party which favour rapid independence at 24.5%. The vast island with a population of 57k has bene caught up in a geopolitical race for dominance in the Artic where melting ice caps are making its resources more accessible and opening new shipping routes. Both Russia and China have intensified military activity in the region.

 

·        On 28/02, Macron left Washington with “very little hope” stating that there were misunderstandings, design problems in the commercial approach proposed by the US administration. Central to their reasoning is that France’s taxes on consumption in particular VAT are a tariff which are factually false. Speaking alongside Macron, Portugal Luis Montenegro reiterated his call for dialogue with Washington but said Europe will have to respond to an increase in tariffs in a similar way.

 

·        On 24/02, Trump was sued by the Democrats over recent executive order it says violates federal election law by giving him too much power over the independent Federal Election Commission. The Election Commission was created in 1974 in the wake of the Watergate Scandal to oversee elections and enforce campaign finance laws. According to the complaint letting Trump micromanage the commission would undermine its purpose by allowing a single partisan political figure to rig campaign rules and resolve disputes against his opponents. The plaintiffs include the Democratic National Committee, Democratic Senatorial Campaign Committee and Democratic Congressional Campaign Committee. The lawsuit seeks a declaration that a federal law shielding the election commission from “presidential coercion and control” is constitutional and block Trump’s Feb 18^th order. It also comes as Democrats, outnumbered in Congress seeks an effective means to counteract far-reaching changes to Trump’s first 6 weeks of his 2^nd term including many steps to lessen government oversight and eliminate internal dissent. Several dozen lawsuits have challenged over actions taken by Trump such as control over the National Labor Relations Board and SEC.

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·        On 14/03, BofA analysts are anticipating +10% downside in European equities should global economic activity slow as anticipated. On 14/03, UBS analysts said that Germany’s fiscal landscape is on a verge of tectonic shift with Chancellor-in-waiting Friedich proposing major increase in infrastructure and defense spending. This will likely improve domestic and regional outlook and free up to EUR 500B for infrastructure investment and exempt defense spending over 1% GDP from Germany’s debt brake

 

 

·        Other major movers have the TAIEX 100, KLCI and Russia Index, which have all dropped 6.4%, 4.9% and 7.8% respectively. TAIEX broadly following SPX and MSCI World as all of them are trading at ATH. However, KLCI and Russia Index are clearly out of favor with global investors, and they haven’t breached their ATH since 2018 Trade War and 2022 Ukraine War. For the latter, perhaps normalization of relations between US and Russia might reverse this trend

 

·        On 25/02, GS noted that hedge funds’ willing to boost bets on Asian stocks rose to its highest level since 2016. Long positions exceeded short positions by 1.5-to-1 which China and HK accounting for nearly ½ the regional inflows from 14/02 to 20/02. Japan contributed 23% of the inflows followed by Taiwan and Australia. “Asia is now the most overweight region versus MSCI AC World weights at expense of hedge funds rotating out of North America” according to the bank.

 

·        On 28/02, China’s major commodities exchange announced that they would be expanding the scope of tradable derivatives’ products for qualified foreign investors from 04/03. Qualified Foreign Institutional Investors (QFIIs) and RMB Qualified Foreign Institutional Investors can participate in a trading of a bulk of commodities futures and options contracts. The Shanghai Futures Exchange includes stainless steel, fuel oil, pulp and container freight futures contracts of silver and steel rebar option contracts. The Guangzhou Futures Exchange allows the participation of trading industrial silicon, lithium carbonate and polysilicon futures and options contracts. The Dalian Commodity Exchange is open for polypropylene, polyvinyl chloride and styrene futures and options contracts.

 

·        On 11/03, Zhengzhou Exchange raised the trading margin requirement for some rapeseed meal futures contract from 9% to 7% after Beijing’s 100% tariff on Canadian imports triggered a two-day rally that pushed prices to a 5M high. This 100% tariff has been applied to $1B worth of Canadian rapeseed oil, oil cakes and pea imports and another 25% duty on $1.6B worth of Canadian aquatic products and pork. According to Chinese customs data, China imported 2.02M tones of rapeseed meal from Canada in 2024, accounting for 73% of its total imports. Other major supplier include the UAE, Russia and Ukraine.

 

·        On 15/03, Volkswagon entered talks with digital cockpit system developer Ecarx to put the Chinese company’s technologies in cars it sells in developed markets such as Europe. The firm which is backed by Geely to manufacture smart cars in Brazil and Indiawith Ecarx’s Antora 1000 which offers services such as voice recognition and navigation maps. The plan underscores efforts by Western automakers to leverage Chinese prowess in smart-driving technologies to hold onto their global market share after sales declined sharply in China in recent years. Mercedes-Benz also doing the same with Chinese firm Hesai’s lidar sensors. Interestingly, Volkswagen has enjoyed limited success with its in-house software unit Cariad and plans to lay off almost 30% of staff by end-2025

 

·        Chinese companies are ramping up orders for Nvidia H20 AI chip due to booming demand for DeepSeek’s low-cost AI models. Tencent and Alibaba and Bytedance have “significantly increased orders of the H20 as well as smaller companies in health and education sectors. Previously, only deep-pocketed financial and telecom firms bought serves with AI computing systems. Trump is looking at imposing restrictions on the sale of H20 chip to China. “When DeepSeek launched, many misjudged that computer power demand might stagnate or decrease. In reality, more advanced AI models drive deeper integration into daily life, exponentially increasing inference-level compute need” said White Oak Capital Nori Chiou.

 

·        On 01/03, SCB raised its China 2025 GDP growth forecast to 4.8% from 4.5% given stronger than expected real activity performance for the first 2M and the March PMI survey.

 

·        Bond markets remains the same trend with US Treasury yields heading lower with 2s and 10s dropping 13.3% and 9.7% respectively. Updated the chart and found the 10Y UST yields forming potential head and shoulder with neckline around 3.6%. Perhaps Trump induced US recession fear might lead to Fed continuing to cut rates further which is what he wants anyway. JGB and SGB both tracking US Treasuries dropping 14.5 – 24% range with the only exception is CGB where their 2s and 10s have moved higher by 1.4% and 3.5%. Credit curve not been impacted much so far as LQD, HYG and EMB only down 2.5 – 3.5%.

 

·        REITs have been a mixed bag with MAPL, CAPD and PWLR both rising 8.3%, 8.3% and 11.8% whilst PREI and UOGR dropping 3.9 – 6.2% range. Gold has rallied 3.5% due to safe haven flows whilst XAG, natural gas and WTI crude all falling 9.2%, 9.4% and 11.7% respectively. And in crypto world, BTC/$ actually been pretty resilient as its only dropped 14$ whist ETH/$ and SOL/$ both fell 35.8% and 31.2% respectively.

 

 

·        On 01/04, UBS maintains a gold price target of $3200 per troy ounce and continues to favour fold in their gold and Asian investment strategies. The bank also recognizes that prices could reach their higher scenario of $3500 if tariff-related or geopolitical risks escalate to the extent of adversely affecting the US and global economies.

 

·        On 10/03, deVere CEO Nigel Green anticipate that US will not be the last nation to take the step to build up their Strategic Bitcoin Reserve. Other nations motivated to hedge against dollar dominance will likely do the same. Interestingly, BTC/$ actually experienced a dip upon Trump’s executive order to establish the Strategic Bitcoin Reserve which shows investors still sceptical of the move.

 

·        On 26/02, the FBI said North Korea was responsible for the theft of approximately $1.5B in virtual assets from ByBit. The agency refer to this attack as “TraderTraitor” and saying that the proceeds have been converted into BTC/$ across thousands of addressed on multiple blockchains and will eventually be fully converted into fiat currency.