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Gavekal Research
Louis Gave
Nov 16th 2015
France Under Attack
In the worst days of the Northern Ireland troubles, British policymakers spoke of a “tolerable level of violence”. It was taken for granted that senseless and murderous acts would be committed, but what mattered was ensuring that these did not “get out of hand”.
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Gavekal Research
Anatole Kaletsky
Nov 16th 2015
Brexit: A Blunder To Rank With The Boston Tea Party
Ask any divorced couple whether their relationship would have been different had they never married. Actually, don’t bother asking, since the answer is obvious. Strangely, most conservative politicians do not seem to understand this—and neither do 48% of British voters. That is the number, according to recent opinion polls, who want a divorce from the European Union.
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Gavekal Research
Louis Gave
Nov 13th 2015
A Happy Apologist
At Gavekal the conversation with clients never stops and from time to time we like to offer up a taste of debates that strike us as interesting. Louis got into just such a discussion earlier this week with one of our smarter, free-market embracing US clients. The topic of discussion was China and why Louis is such an apologist for the Chinese Communist Party when he clearly has little time for governments meddling with markets elsewhere?
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Gavekal Research
Nick Andrews
Nov 12th 2015
Drifting In The Mid-Atlantic
On the one hand the United Kingdom looks to have similar dynamics to recovering European economies, where growth is picking up nicely even though deflationary pressure still looms—Britain’s headline CPI rate stands at -0.1% and real rates have swung positive from a low of -4.7%. Such a cautious view explains why the Bank of England offered a report last week whose dovishness surprised some. Yet, on the other hand mid-Atlantic Britain in many...
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Gavekal Research
Charles Gave
Nov 11th 2015
The Catastrophe Of Negative Rates
Yesterday both Reserve Bank of India governor Raghuram Rajan and Bundesbank president Jens Weidmann broke ranks, daring to suggest that ultra-low interest rates may not be such a good thing after all. If rates were held too low for too long, warned Rajan, the risk of financial instability would be greatly heightened, a concern Weidmann shares. Unfortunately, that’s not the half of it.
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Gavekal Dragonomics
Raffaello Pantucci
Nov 10th 2015
China And Russia: Locked In Reluctant Embrace
China’s economic activity is gradually reducing Russian influence in Central Asia. Despite that, shared authoritarian values keep the two countries closely aligned on many issues.
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Gavekal Dragonomics
Raffaello Pantucci, Jing HUANG, Aaron L. Friedberg
Nov 10th 2015
CEQ: China Reshapes Asia
In the last two years China has made a bold push to expand its influence in Asia, using both the carrot of well-funded infrastructure diplomacy and the stick of forceful assertion of territorial claims in the South and East China Seas. What explains this newly assertive foreign policy, and what are its effects likely to be? This special issue of the China Economic Quarterly tries to answer these questions.
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Gavekal Research
Nick Andrews
Nov 06th 2015
Clearer Political Skies In Spain
For the last three years Spain has been the poster child for the eurozone’s recovery. In its country report published yesterday, the European Commission described Spain’s growth as “robust, underpinned by sustained job creation, improved financing conditions, high confidence and low oil prices”. Yet not everything in the Spanish garden is rosy. The manufacturing PMI suggests the recovery is facing severe challenges, having slowed from a cyclical...
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Gavekal Research
Cedric Gemehl, Nick Andrews
Nov 05th 2015
Good Enough In Turkey
Investors have welcomed last weekend’s victory of the Justice and Development Party (AKP) founded by President Recep Tayyip Erdoğan in Turkey’s elections, with the lira and equities both rallying strongly. After June’s inconclusive poll failed to produce a workable government, the concern was that a country with huge economic, security and strategic challenges would become ungovernable. In this context, the election result was the best that...
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Gavekal Research
Cedric Gemehl, Nick Andrews
Nov 05th 2015
Good Enough In Turkey
Investors have welcomed last weekend’s victory of the Justice and Development Party (AKP) founded by President Recep Tayyip Erdoğan in Turkey’s elections, with the lira and equities both rallying strongly. After June’s inconclusive poll failed to produce a workable government, the concern was that a country with huge economic, security and strategic challenges would become ungovernable. In this context, the election result was the best that...
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Gavekal Research
François-Xavier Chauchat
Nov 05th 2015
The Fight Against Europe’s Inflation Skeptics
In recent conversations with Europe-based clients we have been struck by a rising tide of “inflation skepticism”. While many investors back in 2009-2011 fretted that monetary activism must lead to spiraling inflation, many now believe the exact opposite. Their fear is that irrespective of central bank action, inflation is doomed to stay below target. In just a few years, inflation has stopped being commonly thought of as “always and everywhere a...
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Gavekal Research
Louis Gave, Will Denyer, Tan Kai Xian, Rosealea Yao
Nov 02nd 2015
The Gavekal Monthly: A Possible Return Of US Inflation
The Gavekal Monthly outlines our highest conviction ideas and summarizes the key economic, market and thematic views held by the firm’s partners and analysts. This report is an attempt to answer a question that we are often asked, but find it hard to answer: "What does Gavekal think?".
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Gavekal Research
Charles Gave
Oct 28th 2015
Middle-East Machinations
Russia and Turkey are increasingly at loggerheads as Moscow escalates its military engagement in Syria. Earlier this month Turkey’s President Recep Tayyip Erdogan threatened to find another gas supplier after Russian jets breached its air space, and in recent days Ankara initiated legal action against Gazprom over the price it is charged for piped gas.
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Gavekal Research
Oct 27th 2015
London Seminar Audio And Slides
We held our main fall seminar on October 27 in London, where Anatole Kaletsky, Francois-Xavier Chauchat, Neil Newman, Tom Miller and Louis-Vincent Gave presented their views on the global economy. Anatole discussed the implications of recent developments in financial markets; Francois examined Europe’s resilience to global headwinds; Neil outlined three major investment themes in Japan; Tom explored China’s regional foreign policy ambitions, and...
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Gavekal Research
Cedric Gemehl
Oct 26th 2015
Why The Ruble Rally May Be Over
Global investors are bulled up on Russian financial assets with the ruble having outperformed most emerging market currencies since the “junk rally” got going in early September. On a YTD basis Russian bonds have outpaced those from other big EMs. As a result, dedicated Russian funds last month saw a big inflow for the first time in a year. Certainly, the shift in sentiment has been spurred by the Federal Reserve delaying any interest rate move...
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Gavekal Research
François-Xavier Chauchat
Oct 23rd 2015
The Promise Of A More Forceful ECB
The signal could hardly have been clearer. Although the European Central Bank chose to hold its fire yesterday, bank president Mario Draghi made it plain that he will be prepared to wheel out even bigger weaponry at December’s meeting to overcome the deflationary forces pressing on the eurozone’s economy. If necessary, this could include extending the current quantitative easing program beyond next September, increasing the ECB’s monthly asset...
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Gavekal Research
Charles Gave
Oct 22nd 2015
The Myth Of Secular Stagnation
When the European Central Bank meets today, discussion will center on whether it should expand quantitative easing in an attempt to stave off deflation and support the eurozone’s painfully slow growth. In Japan too, talk is about whether the Bank of Japan needs to step up its stimulus efforts. And in the US, the Federal Reserve last month decided to delay calling an end to its own zero interest rate policy amid evidence that US growth is in...
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Gavekal Research
Oct 21st 2015
Excerpt From Anatole Kaletsky's Hong Kong Seminar Presentation
Excerpt From Anatole Kaletsky's Hong Kong Seminar Presentation
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Gavekal Research
Oct 21st 2015
Hong Kong Seminar
This is the full recording from Gavekal's October Hong Kong seminar featuring Joyce Poon, Andrew Batson and Anatole Kaletsky as well as a Q&A session.
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Gavekal Research
Nick Andrews
Oct 20th 2015
Will The ECB Opt For QE-Plus?
When the governing council of the European Central Bank convenes this Thursday in the Maltese capital Valetta, the assembled policymakers will be forced to contemplate a track record of quantitative easing that at best can be described as “mixed”. True, since the ECB announced its €60bn a month program of asset purchases in March this year, eurozone activity has staged a modest comeback, with growth expected to rise to 1.6% in the third quarter...
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