Antipodean Capital Macro Strategy Daily Nov 21 - Markets are still saying that growth risks to Fwd EPS are dominating subtle Fed messaging shifts on rates. Prices need to fall further for buyers. USD rebound capping EM stocks. Reduce Kospi

Today’s themes: The subtle shift in Fed views due to US activity/PMI and inflation cycle peaks, and slowing growth concerns impacting tech, housing & small caps, is still not enough to help stocks. Last night’s key development was a key reversal day up for the USD (yet again), which pressured commodities, EM stocks and implies that FX carry shorts are the main game again. 10yr bond yields are stuck and not responding. Why is that?

Macro: US: A subtle messaging shift at the Fed due to data/PMI and inflation cycle peaks, falling stocks, and concerns that slowing growth will impact tech, housing and small cap stocks is still not enough to help stocks, which need to see more. (Theme: The LT data cycle in the US is peaking, along with the ST and MT cycles. Activity/PMI and inflation cycles look like they are rolling over. If they are, then the Fed already has rates, with a Dec hike pencilled in, neutral or slightly tight compared to long run and current Core inflation estimates. We thought it would be at the -18/-20% S&P zone that they would respond to falling stocks too, but are they moving earlier than we thought? Possibly, but still stocks are saying “we need more, and now”. Markets will need hikes to stop completely, or cuts, to stop falling. That’s what they said again last night anyway).

Summary: US stock markets fell heavily, and look set to test (S&P, DJIA, R2K) or continue to decline below late October lows (in the case of the NDX). Our sense is that October lows should be breached and a test of further February low supports looks likely. The USD rose due to safe haven demand, but risk off cross rates weakened with commodity FX falling. US 10yr yields are strangely unmoved. Oil collapsed 7%.

New trades: Long Kospi at 2088 cut extra 2 units from 2092 at 2082 (-0.5%).
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. Sell $JPY at 112.80 risk 114.20 tgt 110. S Sold NZDEUR at .5970 risk .6030 target .56.
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. Long US 2-10 curve flatteners at 26bps/35bps risk 40bps target 10bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Short Homebuilders 755, add at 800 risk 850 target 650. Short R2K at 1550 risk 1575 target 1450. Long Dec VIX at 17.6%. Short ASX200 at 5840 risk 5945 target 5600. Long Kospi at 2088 cut extra 2 units from 2092 at 2082 (-0.5%).
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver at 14.08 risk 13.85 target 14.80+