Red Sea tensions, but not only / UST's 'the' leading indicator, 10's back to 3.95% / Huge election year ahead

• Wishing you & yours a happy, healthy and prosperous new year, hope this daily helps achieve some of your goals

• Starting 2024, the big question for markets is whether the FED (with 3 cuts in 2024) or the market (with 6cuts priced in for the year) is right, bonds markets which have been 'the' leading driver in 2023, will remain the key in 2024!

• Red Sea tensions up a notch or two, Iran, Houthis and a lot of misinformation, tensions rising though, re-routing of ships in the Red Sea will impact the longer it goes on, with chain stress, rising freight prices and energy prices (risk inflation higher), ongoing developments in Taiwan, Russia/Ukraine, Venezuela/Guyana and Israel will remain in focus

• Israel-Gaza war live: IDF indicates war will stretch on throughout 2024

• UK's food price inflation decelerated to 6.7% in December – the lowest level since June 2022 and down from 7.7% in November

• Wage inflation in late 2023, effectively delayed (risk of) recession

• Why is the EU’s decision on accession so important—and what does it mean for Ukraine and Russia?

• A Year of Political Chicken

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Markets :

• Contrarians might want to have a look at Chinese stocks in 2024 #HSI, on expectations of big stimulus coming up and an eventual economic recovery, sell bonds and rebuy USD again

• Equity markets : most financial institutions now expect markets to go up in 2024, when the tightening cycle is over, remember those same experts and investment bank's predictions from same time last year ? 8 out of 10 institutions were predicting SPX500 between 3700/4200 by end of 2023...

• UST's are the key to all/most of it, reading invest house research and BofA FM survey in Dec, seems everyone is/got long bonds again ?

• USDollar weakened into year-end, as bonds and risk rallied, beware a reverse Jan reaction

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This is what is required for that contrarian #SHCOMP #KWEB view ' China needs fiscal firepower to spark equity revival (robeco.com)

"The New Era for Portfolio Managers" - Inside Paradeplatz

Tuesday briefing: Will the Red Sea crisis lead to a wider Middle East conflict? | World news | The Guardian

Israel's top court strikes down key legal reform (rte.ie)

Putin's military unleashes wave of rush hour air strikes on Kyiv as Ukrainians return to work in New Year | Evening Standard

Suspected Chinese Balloon Flies Directly Over Taiwan (newsweek.com)

Venezuela says troops will stay deployed until British military vessel leaves waters off Guyana (msn.com)

Ukrainian EU membership would be a strategic masterstroke (prospectmagazine.co.uk)

China December factory contraction deepens, more stimulus on the cards | Reuters

Japan quake toll hits 30 as rescuers race to find survivors - Nikkei Asia

What an awful start to their year

Swiss voters to decide on foie gras and fur imports - SWI swissinfo.ch

A Year of Political Chicken by Harold James - Project Syndicate (project-syndicate.org)

BYD produced more than 3 million cars in 2023, set to beat Tesla (cnbc.com)

China-India trade tensions may continue in 2024, but Beijing doesn’t want to rock the boat | South China Morning Post (scmp.com)

Have a great start to 2024, whishing you and yours a healthy, jolly and prosperous new year

team PVM