Antipodean Capital Macro Strategy Daily Feb 19 - The next phase of the growth slowing phase is which policy makers, when and how, respond. The ECB look like doing so. Expect more from the Chinese too.

Today’s themes: Today we build on yesterday’s 4 daily themes – slowing data & EPS cycles, policy maker responses, whether US data closes the gap to EU and US curve flattening via the Fed collar – with three related themes. The first is that we are again seeing the first signs of policy responses from the ECB to weaker EU data (which is about time, because many EU nations are in or near recession!). The implications of these responses are key, because they will dictate EU asset trajectories, and we have argued that in a slowing growth world we should “follow the first easers”. The second new wild card thrown into the mix is US Trade Sec Ross’s report that EU auto exports to the US are a risk to national security, which provides Trump the opportunity to place tariffs on EU autos. This risks exacerbating EU data weakness and signifies another whole new threat to global trade and growth, this time amongst allies (who needs enemies when you have Trump as an ally). Thirdly, we write today on Chinese policy stimulus measures and this week’s 5 yr high new lending data. Again, do these policy responses imply that Chinese assets relatively may outperform?

Summary: Markets in the US were closed for Presidents Day holiday, so not much to shake the tree in terms of new US data or newsflow. However some meaningful reactions to recent EU macro data weakness from ECB Chief Economist Praet indicate that policy responses from the ECB may soon be coming, with implications for EUR, EU stocks and EU yields. Chinese car sales were -18% yoy. More policy measures will come there too.

New trades: Sold AUD again at .7140 risk .72. Sold NZD at .6850 risk .6895. Sold AUDJPY at 78.85 risk 79.25. Sold NZDJPY at 75.75 risk 76.25.
FX: Short AUD .7170 risk .72 target sub .70.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s sold 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. Bought March VIX 17.42%.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Bought Gold at 1314 risk 1304 target 1350. Bought Silver at 15.76 risk 15.60 target 16.30. Bought Copper at 2.80 risk 2.76 target 2.90.