Morning Market Update: CPI Preview Japan Hybrid Trade USDTWD and AI Moat Check

This Goldman Sachs morning update previews a 0.33% US Core CPI print and suggests tactical trades in Japan (Nikkei/JPY dual binaries) and Taiwan (USDTWD puts). It also highlights a structural regime shift where AI disruption challenges industry moats, leading to potential disinflation.

Key Takeaways

• 1.Goldman expects a 0.33% increase in January core CPI, slightly above consensus, with a projected year-over-year rate of 2.52%.
• 2.The firm recommends a Japan 'Hybrid' trade, betting on a higher Nikkei and a stronger JPY following the LDP Supermajority.
• 3.A short USDTWD (put binary) trade is proposed as the TWD is viewed as structurally undervalued and potentially subject to a rush of hedging.

Table of Contents

• US ECONOMICS (WALKER/RINDELS) - CPI Preview
• Buy Japan -> NKY Higher/XXXJPY Lower Hybrids
• EM FX OPTIONS TRADING (NANWANI) - USDTWD Trade Idea
• EQUITIES ONE DELTA TRADING (PRIVOROTSKY) - Moat Check. Regime Change. Tech Employment

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