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Gavekal-IS
The Swiss Franc Is Gold On Prozac
Didier Darcet
28 Sep 2023
Gold has long acted as an alternative reserve of value in times of fiat currency debasement. Didier argues that Swiss franc deposits have a track record over recent decades of fulfilling the same function, but with much lower volatility.
Gavekal-IS
Level 2.0 Portfolio For September
Didier Darcet
7 Sep 2023
The Portfolio 2.0 approach run by the GK-IS team tracks the world’s four major liquid asset classes: equities, government bonds, fiat currencies and gold. This month’s finding is that economic activity remains strong, while inflation is not yet under control. In other words, the global economy remains in an “inflationary boom”.
More Research
The Bond Market Is Sick
Global bond market returns can be broken down into the returns on cash in different currencies and returns due to time risk. Examining the returns of major bond markets on this basis, Didier comes to a disturbing conclusion.
An Adverse Combination
The last month has seen a simultaneous rise in bond yields and a fall in the S&P 500 index. This combination is not unusual, but it rarely augurs well for portfolio managers. In this piece, Didier asks whether the stars are aligning for a concerning shift in the macro investing environment.
Oil Is Money
In late 2020, Didier proposed that the essence of money could be expressed in terms of (i) gold, (ii) consumer goods and (iii) energy. In a capitalist system, he says that money-as-energy is the dominant relationship. In this piece, he explains a return-enhancing cash management strategy based on this insight.
Growth At Risk?
The most important macro factor driving the creation of economic wealth and equity returns is growth, pure and simple, contends Didier. Since early 2023, Gavekal-IS models showed the world economy’s combined growth rate being stronger than the consensus view because primary energy prices had moderated. So, with oil prices now heading upward once more, is the game up for growth?
When India Awakes…
Napoleon Bonaparte famously remarked “let China sleep, for when she wakes, she will shake the world.” Didier recently completed a research trip to India and wonders if the same sentiment now applies to the awakening subcontinent behemoth. In this piece, he explains how India’s culture will impact its material development.
US Disinflationary Boom
Following the latest US CPI print, Didier notes that June’s deceleration in the rate of consumer inflation points to a regime shift in the Four Quadrants framework from inflationary boom to disinflationary boom. This is very positive for equity markets.