Antipodean Capital Macro Strategy Daily Nov 29 - Fed’s Powell gives equities a boost. But markets are wrong to expect a swift change in Fed forecasts or dots. A Dec hike is still very likely. Disappointment is a risk. Exit US flatteners, bu

Today’s themes: Stocks got a further kick along last night from a seemingly less hawkish Fed Chair. Our sense is that further gains are likely to test Nov highs. The interplay between this positive Fed message, seasonals, trade talk outcome uncertainties, slowing activity/inflation data, and declining Fwd EPS estimates due to tech, energy and basic materials share EPS downgrade cycles is intriguing. How it pans out will be difficult to determine, given so many complex factors, and the number of them, at play. But our bias is for this rally to extend but then slowing activity/inflation data and Fwd EPS downgrade cycles to impair share price gains and cap the rally. Time will tell if this is correct.

Macro: So many complex factors at work. Yet this is exactly the sort of dynamic at play as the cycle nears its end point. Bullish factors, of which there remain a few, and which were added to by the fed Chair last night, remain intact. Bearish factors of which activity & inflation data slowing are the most worrisome in our eyes, continue to mount. It is this interplay between bullish and bearish factors that is intriguing. At some point the balance will tip either way, and stocks will either extend back to new highs, extending the cycle yet again, even if in a non long lasting way, or stocks will falter and break recent lows, thus confirming at best a deeper 15-20% corrective phase, or at worst a slide into a major bear market. Our sense is that coming weeks will tell which way the trend moves, whether bullish or bearish. Best to stay nimble, short term, and tactical until the trend re-asserts.

Summary: US stock continued their post Thanks giving gains, with markets thinking last night’s Fed Chair speech implies less rate hikes for ‘19/’20 & potentially for the upcoming Dec meeting. Key day reversals lower in the USD resulted and look set to extend. Commodities, HY & EM growth assets rebounded, while 10yr yields fell and the 2-10 curve steepened. Our expectation remains for further stock rises to Nov highs.

New trades: Short Copper at 2.71 stopped at 2.8 (-3.3%). Buy EUR$ at 1.1360 risk 1.1260 target 1.18. Exit US curve flatteners from 26bps at 25bps.
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.
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+.