E.g., 11-12-2018
E.g., 11-12-2018
We have found 158 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Don’t Sweat About The Yield Curve

    At least as interesting as the 1.1% rise in US equities on Monday, following the weekend’s news of a three-month US-China tariff truce, was the day’s decline in long-dated US treasury yields and the concomitant flattening of the US yield curve. But was this bond market action good news or bad for investors?

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Christmas Comes Early

    The most cherished gifts often come in small packets, and investors duly cheered just two small words yesterday by the Federal Reserve chairman. In a speech, Jerome Powell said policy rates were “just below” the neutral level. That was a big change from a month earlier when he said they were “a long way from” the not-too-hot-not-too-cold level. This suggests that the pace of interest rate hikes may lessen, while on the same day data was released...

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

    Gavekal Research

    GE Is More Fish Than Fowl

    There is suddenly a flood of commentary speculating that General Electric is a canary in the proverbial coal mine for the US corporate credit market. With investors focused on the troubled conglomerate’s underfunded pension scheme and ailing power business, GE has seen its credit rating downgraded and become a focal point for broader fears that US corporates have taken on too much debt and bought back too much equity. Without taking a view on GE...

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Gridlock is Good

    The Democrats have wrested back control of the US House of Representatives, while Republicans have expanded their Senate majority. Hence, the US’s bicameral legislature is set for two years of gridlock. This was the most benign result possible from this midterm election. While largely expected, confirmation is probably positive for risk assets.

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

    Gavekal Research

    US Macro And The Market

    Coming after another bruising week in the market, which saw the S&P 500 flirting with correction territory, down -9% from its late-September high, Friday’s third quarter US GDP report is heartening. Although 3Q’s quarter-on-quarter annualized growth rate of 3.5% was slower than the 4.2% rate recorded in 2Q, it was still strong relative to the expected 3.3% and compared with the US economy’s structural growth rate. While US growth will...

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

    Gavekal Research

    Buy The Dip

    “Things are fine now, but they are going to get worse.” This is what I hear from commentators on US growth, from corporate managers talking about profit margins, and from Chinese exporters discussing the impact of the trade war. The same could be said of US financial conditions—they are fine now, but as interest rates rise they will deteriorate.

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Time To Rebalance Into Equities

    The S&P 500 is down almost -7% in six days, the biggest drawdown since the -10% decline in the first quarter. It is now below its 200-day moving average, for the first time since April 2nd. Will it bounce back, or is a US equity bear market now upon us? I would bet on the former, but not too aggressively.

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

    Gavekal Research

    Still Not Interested In US Bonds

    Wednesday saw the second biggest sell-off in US bonds since November 10, 2016, immediately after the US presidential election. The 10-year treasury yield jumped 11bp to 3.16%, its highest since 2011. However, investors should be wary of treating this as a buying opportunity, for a number of reasons.

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

    Gavekal Research

    The State Of The US Consumer

    Despite cyclical headwinds and the threat of a welfare-sapping trade war, the US consumer has stayed fairly upbeat. The worry has been that rising tariffs change that situation and hit growth. Hence, news of a trade deal between the US and Mexico is to be welcomed (Justin Trudeau may feel differently). Still, at the end of the day the effect will still be to push up costs that someone must cover. For this reason, as the economic cycle matures...

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

    Gavekal Research

    Sound, Fury, Fear And Markets

    Regardless of political affiliation, there seems to be a consensus that yesterday was a bad day for the Trump administration. It is almost impossible to predict the chain of events that will unfold in the coming days and weeks, but the political fallout from Paul Manafort’s fraud conviction and Michael Cohen’s guilty plea will be unabashedly ugly. Whether this latest twist in the drama gripping Washington has broader ramifications for markets is...

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

    Gavekal Research

    The Meaning Of A Flat Yield Curve

    Every US recession since the mid-1950s has been preceded by a flat or inverted yield curve. The fact that the curve is now fairly pancake-like in form and the Federal Reserve is ratcheting up interest rates has investors on edge. On balance, I conclude that the time is right to get out of US banks, but not to be rushing the exits of the US equity market.

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

    Gavekal Research

    Good News Really Is Good News

    The US economic engine is humming, and corporate earnings continue to beat expectations. Data released on Friday showed real GDP grew at an annualized 4.1% in the second quarter. And with just over half the S&P 500’s constituents having reported for 2Q, 83% have exceeded earnings expectations. Yet investors are unimpressed. The US stock market has so far failed to regain its January pre-VIX-spike high, and despite Friday’s strong GDP print,...

    2
  • 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

    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

    Is The Fed Really Going To Cause A Crisis?

    Is a crisis in US dollar bond markets really inevitable if the Federal Reserve continues on its current tightening trajectory? Some think so, including Reserve Bank of India governor Urjit Patel, who this month expressed his fears in an op-ed in the Financial Times.

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Revolution In Switzerland?

    This weekend the people of Switzerland vote in a referendum that could upend their country’s monetary system in ways never seen before. If the “Vollgeld” initiative is approved, it will be a major event in world economic history. And even if rejected, the growing groundswell in favor of similar proposals elsewhere in the world means it is worth paying attention to.

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

    Gavekal Research

    Still Bond Bears

    Matching its 2013 peak, the world’s most-watched interest rate—the US 10-year treasury yield—yesterday touched 3%. Concerns are now high that it will soon move higher, perhaps much higher. For perspective, the US 10-year hit 3.75% in 2011, 4% in 2010 and 5% in 2007. In this cycle, we think yields will break above 3% and then march upwards. In short, we remain bond bears and continue to recommend keeping duration short. Today, we want to...

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

    Gavekal Research

    Policy And Productivity In The USA

    If President Trump is to accomplish his stated goal of renewing American economic greatness then an absolute requirement is for productivity growth to be pushed above its current miserable level of 1%. To an extent, the economic cycle is helping him, as a tightening jobs market is pushing up wages and creating incentives for firms to add labor-saving capital investments. I would also point to three structural developments, which, although not...

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

    Gavekal Research

    The Message From Credit Markets

    Over the last three weeks US high yield credit spreads have collapsed by 100bp—a tightening that far exceeds the 10bp narrowing in investment grade spreads over the same period. Coming after a marked widening in the Libor-OIS and Ted spreads over February and March, this fall in credit spreads is clearly encouraging. It supports our contention that the widening of Libor spreads was an idiosyncratic anomaly, and nothing investors should be overly...

    0
Show me: results