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12 Oct, 4 tweets, 2 min read
The Bank of Korea held rates & note that it will watch CPI for November but rather confident that consumption is stronger as mobility normalizes (SK moves to endemic) & inflation pressures limited, as in no stagflation.

Meanwhile, coal off the chart & oil edging to 84! Image
Flooding in coal mining region in China has caused coal prices to rise (note both China & India rely on coal for electricity: >70% of total source but India said it got ample reserves).

Across Asia, this energy supply shocks hits economies differently! Image
Remember that most of Asia loses from commodity supply shocks, except Australia, Indonesia and Malaysia.

China, Japan, India and South Korea are net importers of commodity.

$ flows from importers to exporters in commodity supply shocks. USD/JPY 113.3!!! Meanwhile, IDR strong! Image
Want to see something cool? Chart below shows net trade of commodities - fuels in orange.

Losers: JPY, INR, KRW
Winners: AUD, IDR, MYR

Okay, wanna see FX performance??? Mirror image!!!

Macro is fun right? FX market is very driven by energy + Fed right now! ImageImage

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More from @Trinhnomics

Trinh Profile picture
4 Oct
Good morning from Poland 🇵🇱☀️ ! Shall we speak a bit about Asian economics, namely Asia & oil today?
Before we talk about Asia & oil, let's go through data we didn't (Friday was a holiday in Hong Kong & I was flying & don't forget that mainland China is off this week). Remember that China manufacturing PMI (state) was bad on power outages + demand.

But EM ex Asia doing better.
Notably, India is doing better, another month of expansion - we'll speak about why that will put some pressure on the current account. Indonesia great! Again, IDR is my favorite EM Asia FX at the moment for reasons u know - got better mobility + amazing trade + high yield. Good!!
Read 21 tweets
Trinh Profile picture
29 Sep
China isn't the only one in Asia that is heavily dependent on coal for electricity (about 70%), India is too.

And guess what? Prices have risen. And so India too will need to make difficult choices as reserves run low.
India coal stockpiles at power plants are the lowest in four years & so it has to choose whether to import expensive coal or have blackouts.

What is happening in China is not a China story but regional & global.

Winter is coming. 🥶🇮🇳🇨🇳
And as my Indian followers pointed out: India (and like much of Southeast Asia), winter is actually good for electricity demand, as in it would go down because cooler temperatures require less cooling & not much heating.

The same cannot be said for China.
Read 10 tweets
Trinh Profile picture
29 Sep
GPIF said it wont buy yuan denominated sovereign.
A big deal of course because people care about what the largest pension in the world buys. It has 1.75trn asset under management and gains in one quarter was USD45bn so what GPIF buys/don't buy matters.
Note that GPIF hasn't invested in China sovereigns but the fact that the largest sovereign fund (who invests in sovereigns) isn't including yuan denominated sovereign means fear that China'd hoover liquidity is less so, positive for emerging Asia excluding China sovereigns.
Read 4 tweets
Trinh Profile picture
28 Sep
Got gas? Got coal? Got oil? Got renewables?

What do we learn from the energy supply shock? We learn that the world is still energized and driven by fossil fuel.

In emerging markets, coal is still the main source of electricity (not just China but also India).

And guess what?
Yes, and yes, and yes: THE WINNER IS INDONESIA.

It exports it to China & China is paying higher prices for energy (natural gas, coal, etc).

Best performing currency this month: Indonesian rupiah. Your loss, its gain!

It exports natural gas + palm oil too, both more expensive!
And of course you knew that because I wrote that ASEAN supply shock story a couple months back & that it said: Indonesia is the biggest commodity exporter in Asia, yes, absolute & relative share of exports.

So what? Manufacturers cry over higher costs but Indonesia gains. Right?
Read 9 tweets
Trinh Profile picture
21 Sep
Good morning. I know, I know, many of u have asked me to opine on Evergrande contagion etc. But let's first start with this: Happy Mid Autumn Festival! 🏮 Meaning, eating a lot of moon cakes. That means mainland China is off so if u're waiting for partial bailout, gotta wait🤗
Let's see what has happened & priced. This is month to date (September) that has plenty of news from crackdowns (education, entertainment, property, casinos, tech) to slowdown (retail sales on Delta) & of course the latest is how Evergrande is going down, orderly or disorderly.👈🏻
You can see that at first it was rather contained to just Evergranded and then to high yield and then spreading a bit. But what are markets saying:
* No contagion to systemic (meaning banking sector) as in no Lehman Brothers
* But uncertainty on bailout/scale of it + sector & eco
Read 8 tweets
Trinh Profile picture
13 Sep
Good morning! All about inflation again! Dejavu! Okay, why? Well, look at US PPI, off the chart in August at 8.3%YoY on supply-side issues, from raw materials, to intermediates (chips!!!), to logistics, to labor costs.

So what? Well, what's next for CPI & le Fed regarding QE??? Image
Eyes are on US CPI tomorrow - it is expected to rise on a month-on-month basis but decelerate on a YoY to 5.3%YoY.

While CPI may have peaked, don't expect it to fall down to le Fed 2% target anytime soon.

A lot of news about the Fed over the weekend. Mesters wants to taper! Image
If u think I'm being tough on the Fed & apparent disregard for its "data-dependency" and keep saying "temporary" and "transitory" while CPI heads north & GDP higher & asset inflation eroding average Americans' purchasing power, check this:

THEY PROFIT.

reuters.com/business/finan…
Read 4 tweets

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