Most Recent
Gavekal Research
How China Is Winning The Lithium Race
Yanmei Xie
18 May 2022
South America’s “lithium triangle” contains more than half the world’s known reserves of this precious, silver-white metal. US and Australian companies dominate existing mines, but Chinese firms are the boldest investors in new projects, backed by strong political and financial support from Beijing.
Gavekal Research
The Cost Of Credibility
Will Denyer
18 May 2022
The US Federal Reserve is finally gaining some traction in its efforts to restore its credibility as an inflation manager, and the market is starting to take the Fed seriously: real yields on US treasuries have returned to positive territory and inflation expectations have begun to moderate.
Gavekal Dragonomics
Foreign Capital Pulls Back
Wei He, Thomas Gatley
18 May 2022
Foreign investors sold down a record US$23.9bn of onshore Chinese stocks and bonds in the first quarter. Wei and Thomas argue that while the outlook is different for bonds and equities, overall portfolio capital inflows will be meaningfully smaller this year than in past.
Gavekal Research
Paris Seminar, May 2022 (In French)
Cedric Gemehl, Didier Darcet, Louis-Vincent Gave, Charles Gave
18 May 2022
Gavekal CEO Louis Gave, along with Europe analyst Cedric Gemehl and Gavekal Intelligence Software's quantitative research principal Didier Darcet, discussed the global investment outlook, provided an update on European markets and outlined the latest research on portfolio construction.
Gavekal Dragonomics
Lockdowns Hammer The Economy
Dragonomics Team
Legislating Financial Stability
Wei He, Xiaoxi Zhang
Huawei’s Survival Strategy
Tilly Zhang
The Property Policy Reversal
Rosealea Yao, Xiaoxi Zhang
The Reopening Continues, For Most
Ernan Cui
Multinationals Turn Cautious
Dan Wang
Macro Update: Growth Interrupted
Dragonomics Team
Reopening In Slow Motion
Ernan Cui
The Delayed Housing Recovery
Rosealea Yao
Lockdowns Take A Bite
Dragonomics Team
More Research
Playing The Asian Snake
Charles Gave
The Microsoft-ification Of Warfare
Louis-Vincent Gave
Are US Equities Cheap Enough?
Tan Kai Xian
Towards A UK Inflationary Bust
Nick Andrews
Round Up The Usual Suspects
Louis-Vincent Gave
Webinar: Global Investment Roundtable, May 2022
Charles Gave, Anatole Kaletsky
Australia’s Stubbie Half Full
Udith Sikand
The End Of The Unipolar Era
Louis-Vincent Gave
The Fallout From Food
Vincent Tsui, Udith Sikand
America’s Economic Plan For The Indo-Pacific
Tom Miller
Gavekal Research
What Will Stop An Unfolding Bear Market
Louis-Vincent Gave
6 May 2022
Today, it feels like everything from US and eurozone government bonds to major-market growth stocks and currencies like the euro and Japanese yen are in bear markets. This raises the question: when will this bear market end?
The global view
Paris Seminar, May 2022 (In French)
Gavekal CEO Louis Gave, along with Europe analyst Cedric Gemehl and Gavekal Intelligence Software's quantitative research principal Didier Darcet, discussed the global investment outlook, provided an update on European markets and outlined the latest research on portfolio construction.
Webinar: Global Investment Roundtable, May 2022
As inflation rises and central banks move to tighten monetary policy, global markets have become progressively more skittish. Charles Gave and Anatole Kaletsky address the state of the global economy and offer their best advice on structuring portfolios.
The End Of The Unipolar Era
Investors are dealing with the effects of a war on two fronts: Russia’s invasion of Ukraine, and the West’s financial offensive against Russia. On both fronts, resistance to the assault has proved stronger than expected. Louis examines the resilience of the defense on each front and draws some salient conclusions for investors.
The Fallout From Food
Even before Russia upended global food supply chains by invading Ukraine, low income economies were stressed by a hit to growth and rising funding costs. Now, vulnerable economies are scrambling to secure food supplies and avert balance-of-payments crises and debt defaults.
Test Your Knowledge
At the height of last year’s logistics trouble, the ports of Los Angeles and Long Beach announced an escalating US$100 fee for each container sitting at terminals more than nine days. How much have shippers had to pay up since then?
Post Your Answer
Chart of the Week
Week 20, 2022
The Misery Index adds up the year-on-year inflation rate and the unemployment rate to measure the degree of economic stress for regular folks. Today, the rapid acceleration of inflation has sent the index to its highest level since at least the global financial crisis, reflecting the rising cost of living across the western world. What's more, spikes in the misery index usually coincide with recessions.
US economy & markets
The Cost Of Credibility
The US Federal Reserve is finally gaining some traction in its efforts to restore its credibility as an inflation manager, and the market is starting to take the Fed seriously: real yields on US treasuries have returned to positive territory and inflation expectations have begun to moderate.
Are US Equities Cheap Enough?
With US equities -17% off their January high, treasuries moving back toward fair value and some signs that US inflation is moderating, how strong is the valuation case for US equities?
The Fed’s Soft Landing Play
Investors are focused on whether the Federal Reserve can lower US inflation without causing a recession. Jay Powell thinks he has wiggle room, as US firms’ need for labor greatly exceeds its supply. The logic may be good, but the Fed has a poor record of achieving such soft landings.
How Long Before The Fed Breaks Something?
The Federal Reserve is tightening with haste to rein in high inflation and inflation expectations of its own making. The question for investors is how much it can tighten before rupturing the asset price bubble it helped blow up and breaking the economy that it has hitherto supported.
Ukraine Fallout
The Microsoft-ification Of Warfare
The End Of The Unipolar Era
World Enters New Liquidity Crisis
Gas! Gas! Gas!
Why India Has Russia’s Back
CYA As A Guiding Principle (2022)
Gavekal Research
Webinar: Global Investment Roundtable, May 2022
Charles Gave, Anatole Kaletsky
13 May 2022
As inflation rises and central banks move to tighten monetary policy, global markets have become progressively more skittish. Charles Gave and Anatole Kaletsky address the state of the global economy and offer their best advice on structuring portfolios.
India chartbook
Gavekal Research
India Macro Update: The Energy Shock
Udith Sikand, Tom Miller
30 Mar 2022
India remains on course to outpace other major economies in 2022 but its momentum is waning. As a big energy importer, the country will be hit hard by surging oil and commodity prices, and geopolitical tensions will force it to make difficult choices that could affect its long-term economic prospects. What will this mean for Indian assets?
China chartbook
Gavekal Dragonomics
Macro Update: Growth Interrupted
Dragonomics Team
27 Apr 2022
As 2022 opened, China’s economy showed signs of stabilizing as the government shifted to a more supportive policy stance. That trajectory has now been abruptly interrupted by the lockdown of Shanghai and many other major cities to stamp out Covid-19. In our latest quarterly chartbook, the Dragonomics team outlines how this shock will affect the economy, policy and markets.
Europe's economy
Towards A UK Inflationary Bust
Britain’s economic rebound from the coronavirus is over. The UK is hardly unique in experiencing a deceleration in activity, but a number of peculiarities in the structure of the British economy mean the UK’s growth and inflation outlook is bleak even relative to other major developed economies.
The Euro Can’t Hold Its BEER
A key question for this week is whether the euro exchange rate breaks below its long-term support level of US$1.05. With investors focused on the growing threat of a eurozone recession and the shrinking chances of monetary policy normalization, it is hard to see what may spark a euro rally.
Gas! Gas! Gas!
A week ago, talk in Europe centered around how soon Germany would bow to what many observers thought inevitable and agree to an immediate boycott on all imports of natural gas from Russia. This week, the conversation has reversed 180°.
Tightening And Recession
In Europe, the increase in nominal bond yields over the last eight months as the market prices in future interest rate increases is already leading to a tightening of monetary conditions. In other words, the tightening currently in view may well bring inflation back under control, but at the cost of a eurozone recession.
Gavekal Dragonomics
Securing The Western Frontier
Tom Miller
China looks like a winner from the US withdrawal from Afghanistan, now free to tighten its grip on Central Asia. In this DeepChina report, Tom explains the complex reality of the latest round of the "great game." China is getting closer to Russia, skeptical of Afghanistan and Pakistan, and consolidating its economic hold on Turkmenistan.
Emerging markets
The Fallout From Food
Even before Russia upended global food supply chains by invading Ukraine, low income economies were stressed by a hit to growth and rising funding costs. Now, vulnerable economies are scrambling to secure food supplies and avert balance-of-payments crises and debt defaults.
The Bad News Bus Arrives For EMs
In emerging markets, crises are like London buses: you can wait years for one to come along, then three turn up at once. This applies to recent events in Sri Lanka, Pakistan and Peru, where long-festering problems since before Covid have tipped abruptly into crisis.
Webinar: The Impact Of Ukraine On Energy And Emerging Markets
Tom Holland warned that a further fall in the supply of Russian piped natural gas could lead to energy rationing for European industry. Vincent Tsui and Udith Sikand surveyed the emerging market landscape to determine the winners and losers from higher energy prices, a stronger US dollar and tighter policy from the US Federal Reserve. Tom Miller reviewed Russia-China relations.
The China-Russia Axis
If anyone still had doubts, Xi Jinping and Vladimir Putin swatted them aside on Friday: China and Russia are political allies. While a formal military alliance is off the table, it is no longer possible to dismiss their relationship as an “axis of convenience.” This relationship is likely to be especially important in the energy domain.
Latest video
Gavekal Research
Video: The Quirinale Question
Nick Andrews
14 Jan 2022
The possibility that Italian prime minister Mario Draghi could be installed as the country’s largely ceremonial president when parliament chooses a new head of state next month has raised fears of a new period of political instability. In this video interview, Nick Andrews assesses the implications for Draghi’s ongoing structural reform program, and for Italian asset prices.
Gavekal Research
Strategy Monthly: The Bond Market Rout
Research Team
3 May 2022
As 10-year US treasury yields break above 3% for the first time since 2018, the full impact of pandemic-induced stimulus and supply disruption is becoming clear. Almost all western economies face sharply rising inflation and growth-sapping interest rate rises to dial it back.
Equities
Paris Seminar, May 2022 (In French)
Are US Equities Cheap Enough?
Round Up The Usual Suspects
Webinar: Global Investment Roundtable, May 2022
What Will Stop An Unfolding Bear Market
How Long Before The Fed Breaks Something?
Oil & commodities
How China Is Winning The Lithium Race
The Fallout From Food
World Enters New Liquidity Crisis
The Clash Of Empires Intensifies
Why India Has Russia’s Back
The Bad News Bus Arrives For EMs
China tech
Multinationals Turn Cautious
London Seminar — March 2022
Better Manufacturing Through Science
Dependence And Restraint
Congress Pushes Decoupling
Guiding The Gig Economy
Covid-19
The US Profits Problem
Despite rising inflation and the negative impact of higher interest rates on earnings multiples, the bull case for US equities rests on corporate profits continuing to power ahead. The problem is that even if the US economy ducks trouble, top line revenue growth is set to moderate, while rising costs will squeeze margins.
Macro Update: Growth Interrupted
As 2022 opened, China’s economy showed signs of stabilizing as the government shifted to a more supportive policy stance. That trajectory has now been abruptly interrupted by the lockdown of Shanghai and many other major cities to stamp out Covid-19. In our latest quarterly chartbook, the Dragonomics team outlines how this shock will affect the economy, policy and markets.
Reopening In Slow Motion
As Shanghai enters its fourth week of lockdown, Ernan's updated bottom-up analysis of China's top 100 cities by GDP shows that 57 have relatively tough restrictions in place, down from 66 a week ago. The country looks to be on a more gradual reopening trajectory that implies economic disruptions will persist beyond April.
Lockdowns Take A Bite
Economic data deteriorated across the board in March as lockdowns started to bite, despite better-than-expected overall Q1 GDP growth. The Gavekal Dragonomics team argues the near-term focus for policymakers is to bring Covid under control, rather than engage in more aggregate-level easing.
