Antipodean Capital Macro Strategy Daily Dec 3 - Delay of higher tariffs is ST positive for stocks, but hurdles remain. Beware excessive optimism. CB’s are giving less and higher cost credit. HY spreads are widening as they would 6-9mths bef

Macro: Trump-Xi have agreed to delay hikes in tariffs until Feb pending a) a range of talks on issues such as IP protection and cyber attacks and b) widespread purchases of US goods by China. Time will tell if China comes to the party, so the proof will be in the pudding. Also, trade is part of a wider ranging new US approach to China designed to confront and turn back China’s growing power. This lends itself to further conflict, and a potential non resolution of current matters.

Macro: The reality of the global landscape is that, regardless of trade resolutions or not, central banks are reducing their balance sheet size, and are increasing the cost of credit. With long lead times, this lowers global growth and inflation (eventually), widens credit spreads, and reduces investment returns in growth assets. It’s worth recalling this when getting overconfident on trade resolution issues.

Summary: US stocks made further gains Friday. US yields fell. The G20 meeting has produced an agreement not to escalate US-China tariffs, but messaging from both is subtly different and the proof will be in the pudding. Trade is one part of a broader US effort to realign what it sees as a power imbalance that has been unchecked for 15yrs. The USD is weak so far in Asia, and stock futures should be up when they open.

New trades: None
FX: Short EURSTG at .9010 risk .9150 target .84. Long AUDNZD 1.0750 tgt 1.12 risk 1.05. Long GBP 1.2770 risk 1.27 target 1.33.Sold $JPY at 112.80 risk 114.20 tgt 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s sell NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Short Homebuilders Long Kospi at 2.72x risk 2.62x target 2.92x. Long S&P, short Homebuilders at 3.49x, risk 3.35x target 3.8x.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+.