Antipodean Capital Macro Strategy Daily For Jan 2 2019 - A key first week of 2019 for US stocks as S&P tussles with 2600 resistance. The US is on the verge of a GDP downgrade cycle. Consumer Confidence has peaked, PMI’s are softening.

Macro: Growth Assets: Will the buying seen over the last 4 days peter out and be followed by a new low? Or will it extend with a new sense of optimism for 2019 that drives stocks back to the highs? Our own view favours the new low, mainly because we see a US GDP downgrade cycle as being bad news for stocks, growth and thus corporate Fwd EPS. Time will tell whether that view pans out as we expect, or not. While markets were on holidays, US housing data was again sluggish, the Conference Board Consumer Confidence Index fell 6pts from record highs, the Richmond Fed PMI fell into negative territory for the first time since early 2016, while the Chicago Fed PMI remained near recent highs. That mix of data is on balance growth negative not positive, but we should know by the end of this or next week whether markets embrace further pessimism or a new sense of optimism.

Summary: Over the holiday period stocks made pre Xmas lows, but then rebounded amidst considerable volatility from those lows, to the tune of 5-6%. Key is whether this is a corrective rally within the bear correction ahead of new lower lows, or whether a major low is in place or not. The USD continued to weaken. Precious metals continued to rise, but a weaker USD did not help Oil or Copper. US 10yr yields continued to fall.

New trades: None.
FX: Short $JPY at 112.80 risk 114.20 tgt 105. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Sold NZDJPY 78.30 risk 78.90 target 75. Long JPYKRW at 9.85 risk 9.76 target 10.30
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s short NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps. Bought US 10’s at 2.91% risk 3.1% target 2.6%. Sold HYG at 83.55 risk 85 target 80.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Stay short 1 unit Homebuilders at 751. Short US Banks Index at 93.25 risk 100 target 80. Stay short Dow Transports at 10375 risk 10800 target 9000.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+. Bought Gold at 1243 risk 1230 target 1300.