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Gavekal-IS
The Industry Of Industries
Didier Darcet
30 Jan 2025
Investors generally don’t give a disproportionate amount of thought to the machine tools sector. But as Didier points out, if anything disrupts the supply of machine tools, the whole manufacturing sector could be in jeopardy. Given the structural shifts in the global machine tools market over recent decades, this could soon become a “live” issue, especially for the US.
Gavekal-IS
Good Start, Good Finish
Didier Darcet
22 Jan 2025
Some 43% of Formula One Grand Prix winners begin from pole position. Why? Because in high-stakes competitions, a strong start often paves the way for victory. And what is true in racing seems to apply in stock markets. Didier notes that getting a good start to the investing year tends to augur a strong overall 12-month stretch.
More research
Oil As A Currency
A core argument for Charles is that economic activity can simply be thought of as energy transformed. By extension, primary energy production is the foundational activity in any modern economy. In an era of currency debasement, he extends this argument to portfolio theory and looks at economic values where oil is the base currency.
How To Deal With Hybrid Assets
For years, Gavekal-IS’s portfolio construction research has focused on “pure” assets like equities, government bonds and gold. But what about “hybrid” assets? What happens when we shift from gold to silver, from government bonds to high-yield bonds, or from fixed-rate bonds to inflation-linked bonds? In this report, Didier explores the dynamics.
If You Must Hold Bonds
Interest rates cannot play nice with both gold and long-dated government bonds at the same time—it is a one-or-the-other deal. Some investors reluctantly find themselves tied to bonds, whether for asset-liability management reasons, or regulatory requirements. Are they doomed? Not necessarily, explains Didier in this report.
Inside Musk’s Mind
Elon Musk has been charged with making the US government efficient. Many observers dismiss this goal as unattainable. However, Didier argues that by applying an evolution of the Pareto principle, which dictates that 80% of results come from 20% of causes, Musk might just achieve the impossible.
Schumpeter Was Right
From the birth of stars and planets to the rise of life itself, a drive for greater efficiency has shaped the universe, says Didier. But the same force that builds also destroys. In this piece, he relates the effort to create a universal law of nature to investing—and to the idea of markets reaching a critical tipping point.
The Retreat Of The American Empire
Donald Trump’s sweeping electoral victory signals that the US may be at a turning point, contends Didier Darcet. The financial effects that flow from his decision to pick nation over empire will have far-reaching consequences.