JPM JPM International Ma

• Oil slightly lower as US and Iran are back talking with "good chance" of an agreement. Our view on the outcome is unchanged, but this is not the market’s PC1.

• APAC dominated again by a heavily negative tech tape (KOSPI2 -10%, Kioxia -18%). The Desk feels like this is one big stop-out (see Chart below on Crowding & Butterly Effect) on a combination of US factor moves, ASML and China DUV (Sandeep’s thoughts are here), NVDA circular financing red flag (CDS move was biggest on record) and China DRAM all coming ahead of one of the busiest week of the year. Funnily enough, China SPEs (JPCHSPEQ) down too this am. • We still maintain factor hedges even if it feels increasingly likely that we are late stage in this process: AI earnings/fundamentals are solid + Semis drawdown extended + equity funding costs normalized + seasonal degrossing already in line with previous years. Having said that, crowding risk has not fully cleared on our books - global Semis L/S positioning is still at the 98th %ile – and another leg lower from here could come with a more pronounced pickup in index correlation.

• Our thesis for a global macro regime shift has been reinforced by DM flash PMIs showing building growth momentum. This has supported the broadening trade which includes EU Equities. Imo, the most interesting thing is that Europeans are back to buy Europe (Chart below) after a hiatus.

• JPM is sceptical, but I wouldn’t liquidate Miran’s return to Monetarism as neo flat-earthism. The 2020-2021 dramatic burst in money growth presaged the structural change in inflation that followed across advanced economies (Charts below). That said, central banks should focus on the projected cyclical lift that should tighten labor markets as this could keep overall DM core inflation running above comfortable levels. My view is that hawkish holds are in the cards this week.