Antipodean Capital Macro Strategy Daily Nov 30 - Record Chinese Coal stocks imply 15-20% coal, iron ore price falls, & mining Fwd EPS downgrades. The FOMC will likely hike in Dec, but shave a hike off ‘19/’20. Their macro forecasts look “of

Macro: Mining share EPS downgrade cycle: Most major commodity markets are now -20/-35% from their highs. Base metals are already so, Oil joined them in Q4, and coal and iron ore are set to continue to decline. This will hurt diversified miners as the USD has fallen at the same time in Q4, meaning that in local ccy terms, a double whammy has kicked in. Big miners EPS estimates should now be heavily changed for ’19, as most forecasters also have higher not lower commodity price estimates in their forecasts.

Macro: The Fed: Come Dec 18-19 FOMC, the Fed will likely slightly lower core PCE estimates, and retain their GDP & unemployment forecast. This is not enough to avoid a Dec hike in our view. However it is in the outer years that forecasts may change, on inflation mainly, although this change will not be enough to alter dot points by more than 1 hike for ‘19/’20. More evidence of GDP & inflation data weakness are required for Fed forecasts to alter, and thus for wholescale dot point changes. This is a story for H1/H2 ‘19 we sense.

Summary: US stock consolidated their post Thanks giving gains, but failed to extend the gains seen via Wednesday’s less hawkish message from Fed Chair Powell. This weekend’s trade talks at the G20 meeting now are the focus for stocks. The USD and US yields were largely unmoved last night, with weaker housing data offset by strong personal consumption data. Oil may be making a price low.

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+.