E.g., 18-11-2019
E.g., 18-11-2019
We have found 1938 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Oil And Contagion

    So much for the gentle year-end that looked to be in store after the swift recovery from October’s sell-off. Investors now face an acute dilemma as oil demand estimates get scaled back and the energy complex howls: does the effective tax cut delivered to oil consumers outweigh the effects of capital destruction and rising bad debt that must result from a 40% fall in prices? US equity investors have mostly cheered the onset of $2 a gallon...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Draghi’s Job Just Got A Lot Harder

    The specter of debt default is once again haunting the eurozone. Failure by the Greek government to get its candidate elected president in a December 17 parliamentary vote will lead to a general election in January; an election that the radical left wing opposition party Syriza, which is currently ahead in the opinion polls, stands a real chance of winning. The prospect triggered a sharp sell-off in Greek government bonds yesterday, with the...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (10 December): Contrarian Ideas For 2015

    Overview: Anatole Kaletsky looks at the struggle between the Middle-East sheiks and US oil producers and concludes that oil is about to finally conform to standard economic theory. One unintended consequence may be the effective liquidation of western oil majors. United States: Will Denyer considers the dramatic scaling back of the US shale oil sector but argues that US capital spending should do just fine next year. Europe: Francois Chauchat...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    New York Seminar December 2014 - Charles, Francois, Tom & Will

    We held our winter seminar in New York on December 5 with Charles, Francois, Tom and Will offering their views of the global economic pulse and recent market developments.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: To Resist Or Succumb To Russia’s Value Call?

    With a stagnant economy, collapsing oil prices, painful EU sanctions and a grinding war in Ukraine to finance, the case for investing in Russian equities, to say the least, looks poor. Add to these huge challenges recurring rumors of capital controls, and you have a potent cocktail that is likely to scare away even the most adventurous, and battle scarred investors.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Sweden Goes Italian

    Sweden, normally a model of collegiate common sense, is gripped by political chaos. The Social Democrats, once Sweden’s natural party of government, snuck back into power after a general election eight weeks ago allowed them to cobble together a coalition. The government has moved to jack up taxes and unwind the previous administration’s private school reforms and adoption of for-profit healthcare. The rival right wing alliance is grumpy, but...

    9
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Burning Questions For 2015

    With two reports a day, and often more, readers sometimes complain that keeping tabs on the thoughts of the various Gavekal analysts can be a challenge. So as the year draws to a close, it may be helpful if we recap the main questions confronting investors and the themes we strongly believe in, region by region.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Crunch Time, Really, For The ECB

    There is an odd dissonance to the spin that has led up to tomorrow’s European Central Bank’s meeting. On the one hand, ECB officials are doing their best to paint the move towards full-blown quantitative easing as manifest destiny. Indeed, the economic conditions seem to merit such action given awful PMIs released this week for France, Germany and Italy, which together account for two thirds of eurozone GDP. Yet there is a parallel track of ECB...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Growth & Markets Monthly (December 2014)

    This month saw our main growth indicator drop into negative territory for the first time in more than a year. The key drags were the commodity-related components and the underperformance of growth-sensitive stock markets such as South Korea and Sweden. The chief concern for markets is whether lower oil prices and the new monetary activism of the Bank of Japan and promises of action from the European Central bank can help reignite market momentum...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Great Policy Convergence

    Yesterday’s announcement that the European Central Bank is preparing to buy government bonds from the first quarter of next year is an event of historic importance. As the logical follow-up to Mario Draghi’s commitment to expand the ECB’s balance sheet by €1trn, yesterday’s statement by ECB vice-president Vitor Constâncio confirms beyond reasonable doubt that Europe is ready, at last, to implement full-blown quantitative easing, over-riding the...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (26 November): Capital Spending In 2015

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Italy Inches Towards Reform

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Global Central Banks Are Driving Appetite For US Cyclicals

    The rebound in US equities since their mid-October trough has been impressive. After giving up almost all its year to date gains in just four weeks, the S&P 500 snapped back even more quickly, ending October at a new record high. Since then, it has extended its advance to notch up a YTD gain of 12%. Yet, until just a few days ago, the relative performance of sectors within the index indicated a degree of caution on the part of investors....

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: Reasons To Believe In A Capex Cycle Trough - François Chauchat

    Brussels will today reveal financing details of a much touted plan to boost capital spending in the European Union by €315bn, or about 2% of GDP. The intention is commendable since the core eurozone part of the community has seen investment as a share of GDP shrink to a historically low 11% (ex-dwellings). But although the program should be helpful, on its own it is unlikely to be a game changer. Simply put, there are three potential sources...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Where Next For Eurozone Equities?

    Eurozone equity markets have swung through a classic behavioral finance cycle this year. Optimism in the first quarter turned into complacency in 2Q, concern in 3Q, and capitulation in October (see The Liquidation of Euro-optimism). Since then, starting in the middle of last month, European markets have rebounded nicely, getting their latest fillip from Mario Draghi’s speech last Friday, in which the European Central Bank president pledged that...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Balanced Portfolio Alternative

    In recent weeks Charles has argued forcefully that the specter of deflation looms large. He sees capitalism returning to its “19th century roots” of deflationary booms and busts. He points to the wide dispersion of weak prices and in yesterday’s Daily added a twist by highlighting weak silver prices as a reliable predictor of price declines (see The Signal In Silver). If you accept this view, the next question becomes whether price signals point...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Here Comes The Melt-Up

    Back in mid-October as stock markets around the world plunged faster than at any time since 2011, many investors and economists feared a meltdown. But with the US economy steadily expanding, monetary and fiscal policy becoming more stimulative in other parts of the world and the autumn season for financial crises now over, a melt-up seems more likely than a melt-down.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A US vs UK Asset Allocation Model

    Over the long term, there is no reason why the UK stock market should offer a higher—or lower—return than the US market in dollar terms if the two countries operate in an open system and are similarly (badly) managed. Equally, there is no reason for the US bond market to outperform or underperform the UK bond market since—in an open system—the risk-free rates must be the same. If one market has outperformed the other for a considerable period...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Bank Shares And Deflation Risks

    Over the years, I have learnt the hard way to pay a good deal of attention to the behavior of bank shares. Simply put, when interest rates and bank shares fall in tandem the market is offering a clear signal that very bad news is on the way.

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (12 November): The Commodity Fallout

    Overview: Louis Gave Considers the poor performance of gold mining stocks and wonders if energy companies are set to go the same way.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Beware The British Roller Coaster

    Mark Carney’s quarterly press conference at the Bank of England tomorrow could be the catalyst which reminds investors of the warning that we have issued several times over the past few months: Britain is no longer a haven of political and economic stability amid the turbulence in Europe—and this loss of safe-haven status is not yet remotely discounted in British asset prices, especially the sterling-dollar exchange rate and prime property in...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Never Let A Good Crisis Go To Waste

    In most countries, new leaders typically benefit from a six month honeymoon before insiders start griping to the Fourth Estate about how dysfunctional their administration really is (usually out of resentment that someone else got a coveted job). That’s not the case in the European Union. Even before he’s measured his windows for curtains, European Commission president Jean-Claude Juncker is having to cancel media events (as he did on Sunday in...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: Ruble’s Fall Is Both Threat And Shock Absorber

    The ruble’s recent devaluation has exceeded falls seen in previous periods of weakening oil prices as Western sanctions have created a shortage of foreign exchange. At the same time, fears that Russia will impose capital controls has triggered outflows. Russia’s central bank has denied rumors that it is pulling up the drawbridge on its capital account and says it is sticking with a planned move towards an inflation targeting regime that will...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Draghi Succeeds In Buying Time

    Mario Draghi did a reasonably good job of wresting back the monetary policy initiative yesterday, after several weeks in which the European Central Bank president had appeared on the back foot and under pressure. Hesitant communications about the ECB’s balance sheet target, and a series of Reuters ‘leaks’ suggesting the central bank’s governing council was irreconcilably divided and therefore largely impotent had threatened severely to undermine...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Gridlock Itself Is Not The Problem

    The votes are in and the result is yet more gridlock in Washington. For the US there is nothing unusual in this situation. Presidents have been opposed by both houses of Congress in 32 out of the 70 years since WWII, and opposed by one house in another 14 years (see here). However, political paralysis is becoming the norm in many democracies, especially in Europe. An important question is therefore how different countries and regions can cope...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Take Profits On Hungarian Bonds

    Hungary has been Europe’s stand-out economic performer this year, outgrowing both its Central and Eastern European counterparts and its larger Western neighbors. While much of the continent has faltered, Hungary has surprised on the upside, with growth hitting 3.8% YoY in the second quarter; its highest reading since 2006. Meanwhile, unemployment has fallen back to 2007 levels, inflation is at a record low, and the country’s external accounts...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Deflation: Boom Or Bust?

    It has been my contention for a while that capitalism is returning to its 19th century deflationary roots. Indeed, the evidence for this assertion has become overwhelming. The consumer price indices of 13 OECD countries have negative YoY readings. Another eight are below 1%. In the case of “goods inflation,” all European economies are flashing negative. And if the likes of Italy or Spain thought that salvation lay with an “internal devaluation...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    ECB Credibility On The Line

    The latest reading of the German IFO survey may have surprised on the downside, but the balance of recent hard and soft data suggests the eurozone has experienced nothing worse than a summer “soft patch”. A triple-dip recession is unlikely and it is more likely that European growth will re-accelerate on the back of a strengthening US economy, a weaker euro, lower oil prices and improved fiscal and credit supply conditions. All this should...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Growth & Markets Monthly (November 2014)

    In this edition of our monthly report we note that economic activity continues to register weaker momentum while deflationary pressures remain stubbornly present. On the primary liquidity side, the Fed has ended its quantitative easing program, while the Bank of Japan has committed to a more aggressive policy, which may yet inspire the European Central Bank into similar action. Private sector credit multiplication, or the velocity of money, has...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The True Meaning Of The September October Sell-Off

    The World MSCI stands marginally higher than its position on August 1st. So someone who went on holiday for three months might conclude that not much has happened. Yet, in doing so, our Frenchman (for who else takes three month holidays?) would have overlooked an important question that is highly relevant to the here and now. Specifically, why did markets unravel so aggressively in a six week period from early September to mid-October? To this...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    London Seminar October 2014 - Anatole, Francois, Tom, Will & Charles

    We held our autumn seminar in London on October 28 with Anatole, Francois, Tom, Will and Charles offering their take on the state of the world economy and the outlook for financial markets.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (October 29): The Fiscal Imperative

    Overview: Anatole Kaletsky explains why monetary policy has become an effective irrelevance and fiscal policy is really the only game in town.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    At The Limits Of Policy

    If Europe was looking for a quick fix it is clear that relief is unlikely to come from fiscal policy. Any hope that promises of “structural reform” would allow the strictures of the Fiscal Compact to be loosened have been dashed. For sure the French and Italian budget deals with Brussels look to include plenty of fudge, which makes them less contractionary than the headline suggests. However, much is now riding on monetary policy. In this regard...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: We Are (Again) All Keynesians, Some Of Us Just Don’t Know It

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    After The ECB's Stress Tests

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: Almost The End Of Fiscal Drag

    As was to be expected, the game of chicken over 2015 budgets between the European Commission and France and Italy has ended with a face saving fudge. In exchange for cosmetic measures aimed at reducing ex-ante fiscal deficits by 0.2/0.3% of GDP, both countries will be able to cut taxes next year on the back of measured spending cuts and attempts to make labor regulation more flexible.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe: Hope Springs Eternal

    On Sunday the European Central Bank will announce the results of its Comprehensive Assessment: intended to be an exhaustive—and conclusive—examination to establish once and for all the health of Europe’s banking sector. Although previous stress tests lacked credibility, hopes are high that the ECB’s latest exercise will assuage lingering fears that hand grenades still lurk undetected on the balance sheets of eurozone banks. By restoring...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Travels Along The New Silk Road: The Economics Of Power

    China’s economic expansion overseas is one of the defining geopolitical shifts of our time. Chinese firms have already invested in excess of US$500bn abroad, and the annual flow of overseas investment is set to overtake the flow of foreign direct investment this year (see More Deals, More Players). The push into Africa has captured most attention, but China’s economic tentacles are spreading across developing Asia, too—not least in Central Asia...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Buying The Dip? Choose Asia

    Markets remain jittery, but the last week has at least seen a break in the downward momentum. Hence it may be worth taking stock of relative performance by the big regions. Looking across the MSCI benchmarks, the All Country World index is down –4.7% since its peak in early September, while the US, Eurozone, Emerging Markets (ex-Asia) and Emerging Asia declined respectively by –3.9%, -5.2%, -8.4% and –5.4%.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Debate: Fade Or Embrace The ECB?

    Client: You published your last quarterly on the various scenarios confronting Europe. And arguably, the recent downturn in global markets finds its source in the fact that European growth has lately come in a lot weaker than most investors expected. Throughout the year, Francois has argued for exposure to Europe’s ‘national victims.’ Do you think that this call still makes sense? We had Anatole pop by the office the other day, mostly to discuss...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Waiting For The Japanese Pay-Off

    Back in December 2012, as it became clear Japan was moving towards an all-out attack on deflation, I argued that if Tokyo’s shock and awe campaign drove the yen into undervalued territory, it would have a powerful deflationary impact on the rest of the world. My view at the time was that the devaluation of the Japanese currency would reintroduce a formidable competitor into the world’s economic system, and that it would take roughly 18 months...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Blood And Bazaars On The New Silk Road

    After more than three decades of passive foreign policy, China has a strong leader unafraid of articulating a vision of expansionism. Like Vladimir Putin, Xi Jinping wants to re-establish his country’s historical sphere of influence—but Xi’s vision is based on economic logic rather than political machismo. Across Asia, China is using its enormous domestic market, financial power and prowess in building infrastructure to suck its neighbors into...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Give Last Week Back To The Indians

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Fed To The Rescue?

    “Lord, grant me chastity and continence, but not yet.” That prayer from a young Saint Augustine sprung to mind when listening to St. Louis’ Fed president, James Bullard, suggest yesterday that the Federal Reserve may extend its quantitative easing program beyond the planned end date on October 29. Bullard thinks the Fed should “invoke that clause about it being data dependent” and keep buying $15bn worth of treasuries and mortgage bonds, at...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Torschlusspanik!

    The Germans, it is said, have a word for everything—and their word for what we saw in European and US markets on Wednesday and in Asia on Thursday morning is Torschlusspanik. Literally ‘gate-shut-panic’, this describes the nasty crush that develops when everyone rushes at once for an exit that is fast closing; inevitably someone gets injured.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (October 15): The Equity Rout

    Overview: François Chauchat asks whether a US recovery is enough to drive global equity markets or has the world changed.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Oil Markets On The Brink

    Welcome to the “new normal” of the global oil markets. Investors are waking up to the reality that supply-demand fundamentals have gotten out of whack and are now readjusting. The price of Brent has fallen from its June high of US$115/barrel to around US$88/bbl, its lowest level since late 2010. This report will contend that prices could fall further before settling into a lower range and remaining there for a significant period.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Behind The Equity Market Meltdown

    Why are stock markets around the world falling? The surest explanation is one that works whenever the markets move in a big way: there are more sellers than buyers after a long period without a meaningful correction (it is three years since the 20% decline that ended in October 2011). A more sophisticated account of the correction might point to the collapse of oil prices and its impact on natural resource shares. While falling oil prices are...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Normal Or Systemic Markets?

    In The Crucible Arthur Miller wrote “until an hour before the Devil fell, God thought him beautiful in Heaven”. Granted, equity markets have not exactly suffered Lucifer-like de-ratings lately. Nonetheless, the price action in stock markets around the world is looking less and less healthy by the day. Let me explain: when examining the performance of a given index over a very long period of time, one typically finds that, like most things in...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    If You Keep On Doing What You’ve Always Done...

    ...you'll keep on getting what you’ve always got. At least, that's what any sports coach worth his salt would tell a losing team in the half-time huddle. And perhaps this is the problem facing the big developed economies. Not enough of today's bien-pensants (Hollande, Merkel, Yellen, Bernanke...) or their advisers (Summers, Piketty, Krugman...) have spent time chasing a ball around a field. Let me explain.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Seek refuge In The US

    Markets have suffered a significant risk-off move in the last month. US equities have fallen as much as –3.8%; European stocks are down -6% in euro terms and –8% in US dollar terms, and government bonds have been bid up while credit spreads have widened. Readers are surely wondering what to do now: Buy the dip, or sell everything before this turns into a full-on bear market? Hold steady, or adjust portfolios? To answer these questions, we have...

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe: Apocalypse Postponed

    Be afraid, be very afraid, if you are an investor in Europe. An “atomic bomb” is going to blow up in “the confrontation between Paris and Brussels”, warns Le Figaro, perhaps the most influential French newspaper, reporting what looks like the inevitable rejection of the French government’s 2015 budget by the European Commission. The same story appeared in other European media outlets this week, with many even attaching a precise date to this...

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: Why The 'Country Factor' Has Failed To Show

    Anyone who expected to see a clear ‘country factor’ driving the relative performance of eurozone national equity indexes this year will have been sorely disappointed. Spain and Italy are both among the continent’s best performers over the year so far, yet the economic paths they have followed have diverged sharply. Spain has surprised on the upside; Italy on the downside. Finland’s economy has had a terrible year, much worse than that of...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: Waiting For The Regional Rotation

    After years of doubt about the efficacy of US economic policies, the revival of confidence in America stands out as one of the key developments of 2014. This turnaround has been attested by the recovery of capital investment, by the resilience of the US economy to the Federal Reserve’s tapering process, and more recently by the strength of the US dollar.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe's Great Debate

    European equities have been the big losers of the last six months with the Eurostoxx falling –9.5% in US dollar terms versus a 1.2% rise in the MSCI World index. Within Gavekal there are predictably divergent voices on the eurozone’s outlook. At the heart of discussion is the question whether policy initiatives can break the cycle of decline. Louis contends that Europe is set on a Japanese path, where deflation ensures that a cheap market gets...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Power Of The US To Impress

    Rightly or wrongly, the US payrolls have for years been the biggest market-moving event in the monthly news cycle. The market action on Friday was a reminder of their totemic power. We have repeatedly noted the mesmerising effect of the monthly payrolls, not just on Wall Street but even more on markets outside the US (note the near-perfect coincidence between the peaks and troughs shown on the chart below).

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Growth & Markets Monthly (October 2014)

    This month produced another visible deterioration in our growth indicators. A large part of this downshift stems from Europe which remains the major economic region of particular concern. On the risk side, most of our indicators weakened slightly; interestingly our own proprietary velocity indicator was the lone positive outlier. On the asset allocation side, equities generally hover around fairly valued, while bonds look expensive. However,...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Liquidation Of Euro-Optimism

    Mario Draghi did not impress yesterday as he unveiled details of the European Central Bank’s private securities purchase program. Investors were already in a bad mood after the TLTRO on September 18 saw banks tap less credit than expected. In refusing to offer specifics on his target for the ECB’s balance sheet expansion, Draghi seemed to step away from his recent bolder language; this may have been a communication error.

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe's Losing Battle For Recovery

    The wobble in world markets continues, with stock indices across all time zones down steeply in recent sessions. Investors are not only realigning their exposure in anticipation of tighter liquidity conditions as the US Federal Reserve finally brings its asset purchases to a close later this month (see More Fools Than Money?). Ahead of today’s European Central Bank meeting they are also looking nervously at the magnitude of the task facing...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (1 October): The Energy Selloff

    Overview: Louis looks at the decline in oil prices and wonders whether the genesis can be found back in May when the leaders of China and Russia met for an historic summit.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: A Changed Energy Dynamic

    As we see it the big developments impacting the global economy over the summer would roughly run as follows:

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Rise In Volatility

    First it was the foreign exchange markets, then commodities, followed by fixed income markets. Now it’s the equity markets. Wherever we look, volatility has been creeping higher. To some extent, this is not surprising. At the end of the US Federal Reserve’s first round of quantitative easing, and at the end of QE2, the markets wobbled. So with QE3 now winding to a close (and with the ECB still behind the curve), a period of uncertainty and...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: The Triple Merit Of Lower Energy Prices - François-Xavier Chauchat

    At this stage, the jury is out on whether the decline in oil prices is cyclical or structural. Economic growth in big areas of the world economy such as Europe and China has slowed below expectations, which for now points to a cyclical answer. Europe’s economy has become increasingly dependent on oil imports so the relief from lower prices is acting as a very welcome automatic stabilizer. In 2013, net oil imports amounted to 3.5% of the...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Italy’s Intergenerational Struggle

    Recession has become a way of life in Italy with 11 of the last 12 quarters seeing negative economic growth. The gloom was reinforced yesterday with the release of industrial orders for July showing a 0.7% YoY contraction. The sad thing for the one-time precocious catch-up kid of Europe’s post-war miracle has been Italy’s complete embrace of its dribbling dotage. Far from raging against the fading of its economic youth, Italy’s power elites have...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The ECB's Damp Squib

    To the surprise of the market, the first round of the European Central Bank’s keenly anticipated Targeted Longer Term Refinancing Operations turned out to be a damp squib, generating only half the expected level of demand. In the event, banks borrowed just €83bn, well short of the €167bn Bloomberg consensus. Given that in the last three months European banks have repaid more than €80bn borrowed through the earlier 3-year LTROs, the net...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (17 September): World Bond Markets

    In our latest bi-weekly review of global economics, we take a searching look at the state of global bond markets. As the US Federal Reserve inches closer to a tightening bias, bond investors must climb a wall of fear. Recent weeks have seen yields rise globally. The issue is whether this represents a nervous short-term move or a bigger shift in the cycle. Gavekal Dragonomics analysts consider the picture from the major economic regions.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The End Of The UK’s Haven Status

    The outcome of Thursday’s Scottish referendum is officially “too close to call”, since the difference between ‘Yes’ and ‘No’ has been inside the margin of error of almost all the polls published since the sudden swing towards independence last weekend. But markets are priced for near certainty of the status quo winning, with sterling stronger than a month ago against the euro, yen, Swiss franc and every other major currency save the dollar—and...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: Weatherproofing Bond Portfolios

    For much of this year bond investors have been in ‘risk-on’ mode. When in April the European Central Bank first hinted it was preparing to embark on its own unconventional easing measures, investors concluded that with all the world’s major central banks now offering a put on growth, it was safe to head out in search of extra yield. Global bond markets duly rallied across the board, with volatility falling to near-record lows.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: Short Term Volatility, Medium Term Strength

    Expectation of higher US short-rates has, over the last few weeks, reversed a portion of the big gains achieved in European bond markets. Just as in May 2013 when the Federal Reserve pre-announced its “tapering”, the key question is whether European bonds can resist a shift toward higher US bond yields.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Putin's Tolerable Victory

    The ceasefire in Ukraine agreed last Friday has now lasted almost a week. So far there have been no serious signs of a break-down, despite some sporadic shelling and localised attacks of the sort that undermined previous attempts to stop the fighting. Nevertheless, most media analysts and political consultants argue that this ceasefire will not hold, either because Russian president Vladimir Putin is a deceitful and ruthless monster greedy for...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Russia's Stagflation Dilemma

    Given the escalation of East-West tensions in Europe it is hard to consider Russia’s prospects without obsessing about the impact of economic sanctions. However, the exogenous shock from Ukraine has hit an economy that was already reaching the limits of its chosen development model. In particular, Russia faces a stagflation problem which is pitting a sensible monetary policy against an increasingly cavalier fiscal approach.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Putin’s Tolerable Victory

    The ceasefire in Ukraine agreed last Friday has now lasted almost a week. So far there have been no serious signs of a break-down, despite some sporadic shelling and localised attacks of the sort that undermined previous attempts to stop the fighting. Nevertheless, most media analysts and political consultants argue that this ceasefire will not hold, either because Russian president Vladimir Putin is a deceitful and ruthless monster greedy for...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Quarterly Strategy Chart Book - Three Views of A Fragile Europe

    As we see it, the most significant investment development over the last two quarters has been a renewed bout of economic weakness in the eurozone. This is all the more worrying since the rest of the world economy looks to be set on a recovery path. As a result, European growth assets have performed miserably, while eurozone bond yields keep making new lows. As we consider the path ahead for Europe, we can see three distinct scenarios: (i) Slow...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    QE & Bull Markets

    A client recently asked a deceptively simple question: does quantitative easing always lead to a bull market in financial assets? There was, of course, a background context to the enquiry which was last week’s much anticipated deflation-slaying action by the European Central Bank.

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The UK Now Faces Years Of Volatility

    The probability that the United Kingdom will break apart now appears to be at least 50%. The weekend’s crop of opinion polls agree with each other, and support last Tuesday’s poll showing a powerful swing in favor of a ‘Yes’ vote in next week’s referendum on Scottish independence. Given that up until last Tuesday most investors and analysts (including me) saw no more than a 10%-20% probability of independence, what has happened in the past few...

    3
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Tipping Point

    The European Central Bank has reacted strongly to weaker than expected growth and inflation numbers, just as ECB president Mario Draghi repeatedly promised it would (see Believe in the ECB). The reflationary package delivered in June and substantially augmented and enhanced yesterday should finally convince most investors that the ECB is ready to do whatever it takes to reflate the economy, with or without Bundesbank approval. Fussier observers...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    From Grandmaster To Grand Farce

    At first glance, Vladimir Putin’s strongman status was confirmed by the release of a seven point peace plan yesterday that reputedly had him call for Ukrainian troops to withdraw from areas of their own country. This followed Putin’s demand over the weekend that Kiev begin independence talks for southeastern Ukraine. These are the new realities that NATO leaders must chew over during a summit that starts today and is being billed as the most...

    12
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Scottish Poll A 'Yes' Vote For Volatility

    Until this week almost nobody outside Scotland took very seriously the possibility that Europe’s most stable and durable nation, the only big country on earth not to have suffered invasion, revolution or civil war in the past 300 years, might soon be wiped off the map. It now seems quite conceivable, however, that the United Kingdom of Great Britain and Northern Ireland will cease to exist within two or three years of the referendum on Scottish...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe: A Republic Of Voices

    Another year, another eurozone crisis. Perhaps crisis is too strong a word, but the economic news from Europe over the summer has been consistently disappointing. In his speech at the Jackson Hole central bank conference a couple of weeks ago, European Central Bank chief Mario Draghi sounded the alarm, demanding that European governments adopt more active fiscal policies to push up aggregate demand and boost growth. His call stoked expectations...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (3 September): World Labor Markets

    In our latest bi-weekly review of global economics, we take a searching look at the forces affecting labor markets in the world’s major economies. How robust are the medium term prospects for wage growth? And how will the longer term forces of ageing populations and increasing automation affect the outlook for jobs? Overview: Arthur Kroeber examines how the wage-positive influence of developed world demographics will balance the job-negative...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Market Review: A Summer Series

    In late July and early August Anatole went up the mountain so to speak and penned a series of articles that aimed to explain where we were in the current market cycle, and more importantly where we are likely headed. With most major asset classes continuing to head higher we thought it worth republishing Anatole’s consolidated thinking in a single document. Please click on the pdf link above, or, alternatively, the articles can be read...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Growth & Markets Monthly (September 2014)

    This month we note a slight deterioration in our global growth indicators, which probably mirrors the significant economic deceleration seen in Europe. On the risk side, markets do not appear stressed, although there has been a slight widening in the US corporate spread (albeit from very low levels). On the question of inflation vs deflation our indicators offer a mixed picture: on the one hand our diffusion index of US CPI components keeps...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: The ECB Effectively Has A Dual Mandate

    It has been a recurrent demand of Keynesians that the European Central Bank switch to a US-style dual mandate that targets inflation and unemployment. But at a time when price deflation seriously threatens, such a distinction becomes merely one of semantics. If the eurozone really is to return to the official [2%] definition of price stability then unemployment will necessarily need to decline sharply (see the chart below).

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Eurozone Funk Deepens

    Europe’s political leaders may be talking about fresh sanctions on Moscow, but the continent’s remaining economic optimists are fast capitulating in the face of Russian aggression in Eastern Ukraine. Both the European Commission’s eurozone economic confidence survey and the INSEE French business confidence survey, released late last week, deteriorated in August, with the EC survey slumping to its gloomiest reading this year. This decline in...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: Demography vs Technology

    We have written a lot about two trends with big potential impacts on the balance of power between labor and capital. The first is demography, which since World War II has been a tailwind for growth, but is now turning into a headwind. Virtually every major economy faces a steep fall in its worker-to-retiree ratio, even the US which is often thought to be exempt from demographic destiny because of its relatively high birth rate and openness to...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Less Stressful Way To Short The Euro

    The euro has now been ‘oversold’ on an RSI basis for more than a month, and the downside momentum seems to be accelerating. That should be no surprise given the poor relative economic performance of the eurozone, the increasing likelihood that the European Central Bank will soon be forced to embrace quantitative easing, and the chances that France, Italy and Portugal will resort to more aggressive fiscal stimulus. What’s more, German bund...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Some LBJ Wisdom Applied To France

    Lyndon B Johnson once said: “Did you ever think that giving a speech on economics is a lot like pissing down your leg? It seems hot to you, but it never does to anyone else”. The same may be true of writing about French politics. Yesterday, the French government resigned and the CAC 40 jumped more than 2% while French bond yields made new lows. Clearly, the market was unfazed. Perhaps it was even cheering the departure of economy minister...

    2
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Stagnation, Default Or Devaluation

    Last week’s Jackson Hole meeting helped to highlight a simple reality: unlike other parts of the world, the eurozone remains mired in a deflationary bust six years after the 2008 financial crisis. The only official solutions to this bust seem to be a) to print more money and b) to expand government debt. Meanwhile, Europe’s already high (and rising) government debt levels and large budget deficits raise the question whether we should worry...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Europe’s Equity Outlook

    The ugly GDP numbers reported in the eurozone over recent weeks have shocked forecasters and unnerved policymakers. Growth averaged only 0.5% annualized in 1H14, which is about half the consensus estimate (including my own view). And given heightened geopolitical tensions it is clear that the growth outlook may be clouded for a while.

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The US Dollar Breaks Out

    Is there a more consensus trade then being bullish on the US dollar? With a) the US economy outperforming those of Europe and Japan, with b) the Federal Reserve looking to withdraw some of the extra-ordinary stimulus that it has deployed in the past five years, just as the need for the European Central Bank, and possibly the Bank of Japan, to become a lot more aggressive becomes ever starker, with c) the Pentagon limiting its defense spending...

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Five Corners (20 August): Velocity Of Money

    In the latest bi-weekly review of global economics and investment we focus on the velocity of money and the credit cycle in the major economic regions: Overview: Charles Gave notes with concern the downturn in the Gavekal Velocity Indicator. US: Will Denyer looks where the US is in the credit cycle and argues it looks more like 2004 than 2007. Europe: François Chauchat argues that contrary to popular belief Europe’s long credit crunch is...

    0
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Cantillon Effect (And The Inevitable Demise of Financials)

    Richard Cantillon, an Irishman who spent much of his life in France, only wrote one book (Essai sur la Nature du Commerce) that was published after his death in the early 18th century. It proved a groundbreaking text in the history of political economy and had a huge influence on the likes of Knut Wicksell, the Austrian school and the great Irving Fisher.

    5
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    A Spectacular Eur-Asian Divergence

    Financial markets are nothing if not a real time survey of real people playing with real money. Hence, no one can seriously doubt that markets contain a huge amount of highly pertinent information. The problem for the investor is how can this be profitably extracted?

    6
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    What Smart ETFs Really Mean

    Anatole recently made the case that the world’s equity markets will likely be driven by valuations in the near to medium future (see A Return to Valuation-Driven Markets). Such a shift would mark a stark contrast to the last five years, when markets moved almost exclusively on changes in investors’ perception of economic growth and from shifts in global liquidity (especially central bank policies).

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    France By The Numbers

    It is sometimes said that France has 60mn subjects and twice that number if subjects of discontent are counted. Unfortunately, the ranks of the miserable were likely swollen by yesterday’s bad French GDP numbers. The data reflects the growing unhappiness among businesses that was nearly captured last month by the head of France’s biggest private sector employer’s group. “No more investments are being made and there is no job growth. What I see...

    10
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    How To Play QE In Europe

    The string of dismal second quarter data that emerged from the eurozone’s core on Thursday has left investors facing a quandary. Clearly the woeful GDP prints from Germany—down -0.2% quarter-on-quarter—and France—which stagnated for the second quarter in a row—make it more likely that the European Central Bank will embark on full-blown quantitative easing in the coming months, and sooner rather than later. But while the probability of QE is...

    4
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Europe: The End Of The Credit Crunch

    While markets are already speculating on how much more the European Central Bank must do to address the risks of prolonged economic stagnation, there is at least one key area where its policy is bringing results. After years of banks recapitalizations, two years of collapsing funding costs, and ahead of the publication of the asset quality review at the end of October, the ECB’s strategy for restoring the conditions for credit growth seems to be...

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Hearing Echoes Of 1987

    In the first four articles in this series, I explained why I believe that a structural bull market in equities began in late 2012 and is likely to continue well into the next decade (see The Case For A Structural Bull Market). But bull markets do not just keep rising without interruption. Sooner or later, equity investors are certain to suffer some large and painful losses, even if I am absolutely right about the economic, monetary and...

    8
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    What Is The ECB Waiting For?

    Banking networks have typically been built on two elements: confidence, and capital. Historically, confidence was often based on the common background of the bankers—the Lombards in Italy and France, Jews in Spain. Otherwise it relied on an institution willing to take on transfer risks (for a fee) and large enough to reassure payers that it was ‘too big too fail’; for example, the great monastic orders of the Middle Ages.

    1
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The European Equity Blues

    The relative performance of European stocks has been disappointing lately. Even though the European Central Bank delivered its promised easing, triggering both a further decline in peripheral bond yields and a weakening of the euro, eurozone stock markets have underperformed the US by 6% since early June in local currency terms, and by 7.25% in US dollars. However, as Louis noted in yesterday’s Daily, there are two ways of looking at any sell-...

    1
Show me: results