E.g., 18-10-2018
E.g., 18-10-2018
We have found 203 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Equities In The Late Cycle (Revisited)

    The stock market volatility of the last week, triggered by fears over rising bond yields, emphasizes how participants now accept that the US economy is in the late phase of its cycle. KX argues this is not a reason to flee US equities, but it does demand a more discerning approach.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Rate Rises And The US Stock Market

    For the first time in the long post-2008 cycle, the US has a positive real interest rate. After Wednesday’s 25bp hike in US rates, at just short of 2.25%, the effective Fed funds rate will now exceed the Federal Reserve’s favored core PCE measure of inflation, which at the end of July stood at 2%. In theory, that could change later Thursday with the release of August PCE data. But with the dot plot suggesting another rate hike this year and...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Message From US Housing Construction

    Wednesday saw a soft US housing data release for August, pointing to a coming weakening in residential construction. With the Fed raising rates and 10-year treasury yields well above 3%, equity investors may sniff late-cycle decay. KX shares such concerns, but advises investors to hold their noses for a while longer.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Signaling From US Autos

    Even as the US economy fires up on tax cuts and government spending, interest rate-sensitive sectors show signs of rolling over. First it was housing, and now auto sales have slid to the lower end of their range after steadily softening this year. Over the next year, the question is less whether autos can boost growth, as how much they will detract from it. The fact that the Trump administration is still considering significant tariffs on...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Strategy Monthly: A Simple Guide To US Asset Allocation

    We synthesize four years of work on asset allocation and present a model portfolio built around analysis of the cost of and return on capital; the real rate of return on equities, bonds and cash; and the ideal duration of fixed-income holdings. Today we recommend that US portfolios hold 75% in equities, 25% in cash, and shun bonds.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Benign View Of US Inflation

    With US inflation now running above the Federal Reserve’s long term target rate, and the US labor market almost as tight as at any time since the turn of the century, the question for investors is not whether inflation will continue to push higher, but how fast it will rise. The distinction is important. Headline CPI inflation came in at a six-and-a-half-year high of 2.9% in July. And in June the overall and core PCE measures that the Fed...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    More Underperformance Ahead For US Bank Shares

    It’s been a tough few months for investors in US bank shares. Since late February banks have underperformed the broader S&P 500 index, in large part on fears that the flattening trend in the US yield curve will compress bank net interest margins and depress earnings. Yet viewed on a longer time horizon, things look different. From the fourth quarter of 2015 until the first quarter of this year (the latest data point), bank net interest...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Weighing The Forces Driving The US$

    Where is the US dollar going next? After weakening markedly against other developed economy currencies at the beginning of the year, the US dollar staged a vigorous rebound in April and May. Since then, the DXY US dollar index has essentially tracked sideways. Of course, trying to forecast the US dollar’s moves is frequently a thankless task. Nevertheless, it is important to examine both the bullish and bearish forces at work and to weigh their...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    When To Buy US Equities?

    Last month, Will and KX asked When To Buy US Bonds? This month, they turn their attention to US equities and devise a portfolio asset allocation model that advocates overweighting stocks against bonds when returns on invested capital and earnings yields exceed corporate funding costs. Back-testing gives an impressive historical outperformance at a reduced volatility relative to the S&P 500. But just as important is what the model has to say...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Yield Curve As A Recession Signal

    Every time since the 1960s that the US yield has inverted, a recession has followed within 18 months to two years. So it is no surprise that the recent flattening of the curve, which has seen the 10-2-year treasury yield spread fall to just 25bp, is attracting attention. Many observers say the flattening reflects market expectations of weaker aggregate demand ahead. Some argue that the flattening of the curve itself may cause a recession, by...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Still Caught In The Cycle

    The June US labor market report released on Friday appears to bear out Federal Reserve chairman Jay Powell’s view, set out in a speech last month, that “there is a lot to like about low unemployment”. Although the headline payrolls number grew by an unexpectedly strong 213,000 month-on-month, the unemployment rate actually ticked higher from 3.8% to 4%, as greater numbers entered, or reentered, the labor market.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Better Fed Model

    The “Fed model” which values US equities relative to bonds is now more than 20 years old. In that time, it has become widely used and has attracted equally widespread criticism. In this paper Will and KX revise the original to iron out some of its flaws, and come up with an improved model which offers greatly superior risk-adjusted returns.

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Trade War And The US Cycle

    How will the US administration’s trade disputes affect the US economic cycle? In the worst case scenario, if Donald Trump follows through on all his threats the disruption to global supply chains could be great enough to push the world economy into recession. At this point, the greatest impact flows from the high degree of uncertainty about future actions.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The New Model Duration Rule

    Choosing the right level of duration for a bond portfolio is devilishly tough. It is doubly so when the global interest rate environment is shifting. For this reason KX is introducing a new top-down based duration management tool which encouragingly offers superior signaling and can be used across multiple developed economy bond markets.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    When To Buy US Bonds?

    Since the early 1980s, buying and holding US long bonds has been a solid investment strategy. This macro environment was supported by a favorable demographic tailwind that ensured a bountiful supply of global savings. That situation is now changing, and as interest rates rise investors should not assume that yields will retrace as they did after the 2013 “taper tantrum”. In this piece Will and KX put their Wicksellian framework to work and...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Hurdles For US Profits

    Corporate America shot the lights out in the first quarter as tax cuts helped S&P 500 earnings soar by 23%, while macro data released this week showed profits rising an aggregate 14% year-on-year, versus 4.8% in 2017. This week also saw good news for banks, as regulatory shackles were loosened. Yet investors who think US firms are headed back to the races must convince themselves that a series of late-cycle hurdles can be overcome.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Does The Dollar's Run-Up Have Legs?

    Being a US dollar bear has been a humbling experience over the last few weeks. The year started well enough for bears, with the DXY dollar index declining -4.2% over the first seven weeks. But since mid-April, the US currency has staged a rebound vigorous enough to leave the DXY up 1.95% year-to-date. This rally confronts investors with a baleful prospect: any further sustained appreciation of the US dollar will have a detrimental effect on...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Playing A Flatter US Yield Curve

    The US yield curve could invert towards the end of this year or early in 2019, the head of the St. Louis Federal Reserve said on Monday. For investors it’s a troubling thought. Over the last 50 years, whenever the US yield curve has inverted, a recession has typically followed within a year or two. Yet although the current flattening of the curve is set to continue, the process will be gradual, which means inversion and an ensuing recession...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Fade The US Dollar Rally

    If a week is a long time in politics, then three months is an eternity in the foreign exchange market. Three months ago, sentiment towards the US dollar reached a nadir after US Treasury secretary Steven Mnuchin expressed his desire for “a weaker US dollar”. Over the following weeks, the US currency duly weakened. But since mid-April the dollar has staged a rally, with the DXY index gaining 3.5% as the market has noted the increase in US long...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The American Growth Dynamic

    It is clear from data released on Friday that the US economy remains set on an expansionary and inflationary trajectory. Growth in 1Q18 came in at a stronger-than-expected 2.3%, while the US employment cost index rose 2.8% YoY to a high for this cycle. Even as consumer spending comes off the boil, US firms, in what looks like a classic late-cycle pattern, are responding to bottlenecks by investing more in their capital stock. We continue to see...

    0
Show me: results