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Buy On Yom Kippur?

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Buy On Yom Kippur?

Louis-Vincent Gave
27 Sep 2023
An old saying advises investors to “sell the equity market on Rosh Hashanah, and buy it back at Yom Kippur.” However, this year any investor minded to trade according to the Jewish calendar would have been better off selling US treasuries as 10-year yields jumped from 4.29% to 4.52%. So, with the Jewish holidays now behind us, should we trust market lore and dive back into risk assets?
India Macro Update: Limited Upside Ahead

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India Macro Update: Limited Upside Ahead

Udith Sikand, Tom Miller
26 Sep 2023
India’s economic growth drivers are broadening amid a pick-up in domestic demand. But with limited scope for policy support and mounting external headwinds, the balance of risks is tilted to the downside, at least in the near term.

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Memories, Memories

Charles Gave
26 Sep 2023
Real yields on the 10-year bund fell as markets began to price in German reunification, dropping to reach 4% at the end of 1989, and the sky seemed the limit for Germany’s asset markets. In May 1990, the German stock market made a relative peak against the US and French markets—a peak it has never surpassed. Charles examines the historical lessons and considers the implications for today's developed economies.

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The Message In The Shanghai Gold Premium

Louis-Vincent Gave
25 Sep 2023
The last few weeks have seen an odd divergence in gold markets. In Shanghai the price of gold touched the renminbi equivalent of US$2,048 per troy ounce. Meanwhile, in New York the gold price has moved relatively little, trading sideways around US$1,925/oz. Louis ponders the signals and implications of this highly unusual price gap.

The global view

Memories, Memories
Real yields on the 10-year bund fell as markets began to price in German reunification, dropping to reach 4% at the end of 1989, and the sky seemed the limit for Germany’s asset markets. In May 1990, the German stock market made a relative peak against the US and French markets—a peak it has never surpassed. Charles examines the historical lessons and considers the implications for today's developed economies.
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London Conference — September 2023
Our research panels tackle the macro outlook in core OECD economies, the chance of a strong Chinese recovery and the pathway of emerging economies that seem to be disengaging from the traditional US dollar-centered monetary system. We end by asking what these macro trends mean for investment strategy and asset allocation.
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A Better Tool Required: Cross-Country Equity Valuations
To gauge relative equity valuations between international markets, investors typically compare P/E ratios. But simple P/Es fail to account for different states of market development, different sectoral compositions, different risk-free rates and the ever-present risk of currency volatility. To iron out these discrepancies, KX proposes a new cross-market valuation methodology.
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A World Awash In 'Safe' Assets
As Europe’s data continue to point to tougher times, much the same can be said about the United States. There are many explanations for this odd divergence between growth and bond yields. Louis suggests a shift in global trade and its funding as a reason for today’s pain in OECD bond markets.
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Test Your Knowledge
Why have pork prices in China jumped more than 20% since July?
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Chart of the Week

Week 39, 2023
The renminbi’s recent weakness against the US dollar is mostly due to the dollar’s strength. The renminbi has actually appreciated against the CFETS index, the nominal effective exchange rate measure that serves as the central bank’s policy anchor. That’s because the PBoC has been aggressively intervening to prop up the currency against the dollar.
Open Chart

Ukraine Fallout

Behind The Commodity Price Rally
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Mixed Messages In The German Labor Market
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Video: China-Russia After Wagner
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The Fog Of War And Commodity Prices
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China Risks Sliding Into A Proxy War
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The Ultimate Head Fake
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Webinar: Is A New Cycle Playing Out?

Anatole Kaletsky, Arthur Kroeber, Louis-Vincent Gave
7 Jul 2023
The global investment environment remains blighted by sustained inflationary pressure, tapped-out Western governments and a weakening Chinese economy. But tech stocks are again surging, this time on AI-fueled expectations. Anatole, Arthur and Louis pick through these dynamics to explain how these apparently conflicting trends may play out.

India chartbook

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India Macro Update: Limited Upside Ahead

Udith Sikand, Tom Miller
26 Sep 2023
India’s economic growth drivers are broadening amid a pick-up in domestic demand. But with limited scope for policy support and mounting external headwinds, the balance of risks is tilted to the downside, at least in the near term.

China chartbook

Gavekal Dragonomics

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The Financial Risk Report 2023

Xiaoxi Zhang
19 Sep 2023
China’s property-market correction and the resulting sluggish economic growth have intensified stresses on two of the biggest financial weak points: local-government financing vehicles and property developers. This chartbook assesses the financial risks emanating from those two groups of borrowers, and examines the likely impact in store for commercial banks, bond markets and other creditors.

Gavekal Dragonomics

How Small A Yard, How High A Fence?

Yanmei Xie
A new Biden administration catchphrase calls for a “small yard, high fence”: export and investment controls on China will be limited to a small number of critical technologies, but they will be very hard. Yanmei argues that advanced computing technologies will be locked inside that yard, while most other technologies are likely to sit outside it.

Emerging markets

Video: India's Rising Star
There are increasing signs that the Indian government’s focus on investment spending, is starting to “crowd-in” private investment and spur consumption. Moreover, inflation is cooling, paving the way for monetary policy to be eased. In this interview, Udith assesses India’s prospects and explains what this improving macro-outlook means for India’s already highly performing asset markets.
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Three Questions About Frontier Debt
One of the many tasks on US Treasury Secretary Janet Yellen’s plate during her long Beijing weekend is to nudge China to give more debt relief to the poor countries which it lavishly financed over the past decade. China did make a big step in late June by finally signing a deal to help Zambia. But the gap between Western and Chinese ideas of how best to restructure debts is still wide.
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An EM Decoupling Of Sorts
Rapid tightening of monetary policy in advanced economies has historically caused financial stress in emerging economies, forcing a tightening of their monetary policy. Hence, it may be surprising that investors are penciling in interest rate cuts across emerging markets, even as Western central banks plan more hikes. Udith examines the change in this formerly dependent relationship.
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Webinar: Turkey And Thailand—Two Elections At A Hard Time For EMs
Turkey and Thailand go to the polls on May 14. Both countries have seen their share of authoritarian policymaking and populist democratic politics. In yesterday’s webinar, Udith Sikand and Vincent Tsui assessed each economy’s prospects and sought to draw some common lessons.
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Latest video

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Video: The Real State Of China's Economy

Christopher Beddor
22 Sep 2023
After August’s panic about a possible economic implosion in China has died down, Christopher Beddor offers a sober assessment of the current outlook. Growth momentum appears to be stabilizing, and the authorities are easing real estate market policy. However, the financial weakness of developers continues to put strains on less visible parts of the financial sector.

Oil & commodities

The Next Phase Of The Ukraine War?
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Video: The Man In Demand
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An Altercation Of Economists
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Strategy Monthly: The China Blowback
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Destabilizing Malaysia
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Oil's Opacity Problem
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China tech

Video: China's Inward Turn
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The End Of The Echo Boom?
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Coping With Semiconductor Containment
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Video: AI—Boom Or Bust?
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Internet Platforms Back In Favor
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The Foundation For An AI Boom
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From the archives: oldies but goodies

Deficit Deniers Of The World Unite
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Deficit Deniers Of The World Unite

Anatole Kaletsky
In our politically correct age the pressure to bow down before certain popularly accepted and apparently proven “truths” can be overwhelming. In the aftermath of the US elections, two such nostrums are unnecessarily vexing investors—the urgency of deficit reduction and fear of higher taxes. I believe that both of these obsessions will soon be forgotten.
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Are We Entering into Revolutionary Times?
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Are We Entering into Revolutionary Times?

Louis-Vincent Gave
The role of a society’s elite is to rise to the challenges of the times, and find solutions fitting to those times, even if this involves a radical break with the past. But the modus operandi for most leaders is to try and maintain the status quo. But if the problems are large enough, this does not work, and the same challenges reappear until either a solution is found, the elite is replaced by a new elite, or the country, system or civilization disappears.
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The High Cost Of Free Money
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The High Cost Of Free Money

Charles Gave
Perhaps the most famous economic law is the one that there is no such thing as a free lunch. By keeping US short rates at abnormally low levels beyond the financial crisis and as growth bounces back beyond the dreams of the wildest optimists, the Fed increasingly seems to be trying to ‘feed the US economy for nothing’. This is worrying, for extended periods of cheap money typically come back with a hefty price tag.
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