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The Global Impact Of The Construction Malaise

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The Global Impact Of The Construction Malaise

Thomas Gatley
18 Aug 2022
China’s construction recession has already lasted a year, with little prospect of a meaningful rebound in coming months. Thomas argues an extended downturn for the industry would hit commodity exporters among emerging markets and capital-goods exporters among developed markets, a prospect that financial markets do not yet seem to be pricing in.
Gold As An Alternative Reserve Of Value

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Gold As An Alternative Reserve Of Value

Charles Gave
17 Aug 2022
In a Keynesian world in which "clever" central bankers have manipulated the interest rate below the natural rate, bonds will no longer act as a hedge for equities in a bear market. Charles shows that at such times, gold has worked well as an "alternative reserve of value".

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Infrastructure Isn’t Enough

Andrew Batson
17 Aug 2022
China's government is relying heavily on public-sector infrastructure investment to stabilize growth. But Andrew argues that infrastructure spending alone has never been enough to turn around the business cycle. Unless and until officials can stabilize the property market, growth could continue to grind lower.

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Inflation And Financial Markets

Charles Gave
17 Aug 2022
Charles contends that financial markets do not so much care about the level of US inflation, but rather whether it is accelerating or decelerating. To this end, he explores the inflationary dynamic in today’s markets to offer specific investment recommendations
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Chart of the Week

Week 32, 2022

Week 32, 2022

Germany’s unemployment rate has been on the rise for the last two months, going from 5% in May to 5.4% in July. This does not signal a recession just yet, but rather the integration of Ukrainian refugees into the labor market. That said, unemployment figures are also no longer declining for German citizens. We expect they will go up as the German economy falls into an economic recession.

Ukraine Fallout

Russia, Do Your Worst
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Who Is Copying Who? Part II
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The Microsoft-ification Of Warfare
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The End Of The Unipolar Era
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World Enters New Liquidity Crisis
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Gas! Gas! Gas!
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Webinar: Inflation, Recession, Liquidity Crisis — Navigating Troubled Economic Waters

Anatole Kaletsky, Charles Gave, Will Denyer
22 Jul 2022
In this webinar Anatole Kaletsky and Will Denyer discussed the outlook for the US economy and markets over the next 18 months. Additionally, Charles Gave gave an update on the evolving international US dollar liquidity crisis.

India chartbook

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India Macro Update: Unmet Potential

Udith Sikand, Tom Miller
13 Jun 2022
As high inflation crimps consumption and interest rate hikes retard capital spending, Indian growth for 2022/23 is set to register a disappointing 7-7.5%. A slew of fiscal measures aimed at cooling inflation will take some pressure off the Reserve Bank of India. But in a global environment of resurgent price pressures and the threat of more supply disruptions, India seems set to undershoot its growth potential, argue Udith and Tom in their quarterly assessment.

China chartbook

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Macro Update: Confidence Crumbles

Dragonomics Team
26 Jul 2022
China has mostly reopened from the latest wave of mass lockdowns, and manufacturing is back online. But household consumption is subpar and confidence is poor, while the property sector is undergoing its deepest downturn since 2008. In our latest quarterly chartbook, the Dragonomics team explains the changing outlook for the economy and markets.

Europe's economy

Europe’s Electric Power Problem
In Europe spot baseload prices for electricity in France and Germany are up more than 1,000% over the last two years to trade at €440/MWh, the equivalent of oil prices at US$700/bbl. And if futures markets are to be believed, this is only a taste of price rises to come.
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Trouble In Store
Amid all the lamentations, accusations and recriminations over Europe’s natural gas supply squeeze, it is easy to lose sight of a vital question: just how big is the energy shortage that Europe is facing this winter likely to be? This paper provides some pointers to the answer by examining three of the main variables at work: the gas supply, the amount of gas in storage and the demand for gas.
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Revenge Of The Euro-Tourists
Eurozone economic growth defied investors’ pessimism in the second quarter, rising 0.7% QoQ and comfortably exceeding consensus expectations of just 0.2%. However, a reality check suggests this was likely the last hurrah before the eurozone slides into a severe economic downturn.
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The ECB’s New Role As Political Lender
Ten years almost to the day after Mario Draghi as European Central Bank president pledged “to do whatever it takes to preserve the euro,” the fall of Draghi’s coalition government in Italy promises an early test of the ECB’s latest attempt to reconcile the fundamental contradiction at the heart of its twin mandate to target price stability and to ensure the euro’s survival.
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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.

Latest video

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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.

Oil & commodities

Who Gets Cheap Energy Tomorrow?
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The Signal And The Noise, Part II
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Webinar: What Next For Emerging Markets?
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Strategy Monthly: The Silver Lining In Emerging Markets
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Webinar: Investing In The Age Of Weaponization
The Inherent Tension In Malthusian Bull Markets
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China tech

Chip Investors Are Too Pessimistic
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Plenty Of Friction But No Flames Over Taiwan
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Multinationals Turn Cautious
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London Seminar — March 2022
Better Manufacturing Through Science
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Dependence And Restraint
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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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