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Gavekal Research
Charles Gave
Jul 03rd 2020
An Upgrade For The Jeep Portfolio
In the Covid-19 crisis, Charles’s “Jeep” portfolio, introduced at the end of 2017 and expounded on in mid-2019, has amply demonstrated its worth, outperforming a pure equity portfolio, but with much lower volatility. In this paper, Charles reviews the Jeep portfolio once again, upgrading its components to navigate a post-Covid world.
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Gavekal Research
Anatole Kaletsky
Jul 03rd 2020
Time To Run With The Herd?
When a herd of cattle is being hunted by a pack of wolves, the worst thing any cow or bull can do is show individualism and originality by running off in a different direction from the rest of the herd. In financial markets, “the trend is your friend” expresses the same evolutionary logic. Are markets now displaying non-rational herd behavior?
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Gavekal Dragonomics
Yanmei Xie, Dan Wang
Jul 03rd 2020
Japan And Korea Split On China's Rise
Japan and South Korea have responded differently to China’s attempts to peel them away from the US. Japan continues to align closely with its ally, while South Korea is more ready to accept that China as the regional power. In this report, Yanmei and Dan explore the logic behind these decisions and what they mean for the regional power balance.
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Gavekal Research
Arthur Kroeber
Jul 02nd 2020
The Rising US Covid Risk
In the coming weeks, the headlines about Covid-19 in the US are all but certain to get much worse as case numbers rocket in many southern and western states. Higher case numbers will be accompanied by more hospitalizations, stories of overloaded hospital systems and (probably) rising death tolls.
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Gavekal Research
Nick Andrews, Cedric Gemehl
Jul 02nd 2020
Strategy Monthly: A New European Dawn
European nations have managed to lay the ground for a putative fiscal union. In a change of tack, Germany has changed tack by embracing demand management policies. Its new approach should drive a more balanced and domestically-focused recovery that may lift the eurozone-wide return on invested capital. Nick and Cedric argue that this changed dynamic is likely to attract foreign capital and lift the euro against the US dollar.
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Gavekal Research
Charles Gave
Jul 01st 2020
Competing Reserves Of Value
In order to function properly, any economic system must have one or more trusted reserves of value, so that participants can factor time into their calculations. In recent decades the world has offered investors three principal reserves of value:
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Gavekal Research
Vincent Tsui
Jul 01st 2020
Video: Singapore Beyond July's Election
Although a new opposition political party is making Singapore’s current election season somewhat more interesting than past campaigns, the outcome is not in doubt: the ruling People’s Action Party will be confirmed in power for another five-year term. In this short video interview, Vincent looks beyond the July 10 poll to survey the economic and market outlook for the island republic.
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Gavekal Dragonomics
Thomas Gatley
Jul 01st 2020
The Uneven Rebound In Consumption
The recovery of consumption in China is coming, but it will be an uneven one. In this piece, Thomas explains how the combination of recent negative surprises on public-health restrictions with positive surprises on jobs and income will shape the trajectories of different consumption categories, from food to autos to electronics.
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Gavekal Research
Udith Sikand
Jun 30th 2020
A Rare Growth Story
Economic good news stories are almost as rare as hens’ teeth these days—almost, but not quite. On Tuesday Vietnam’s General Statistics Office released its advanced 2Q20 GDP estimate showing 0.36% YoY growth, meaning Vietnam is likely to be one of the very few countries in the world to register any growth at all during the second quarter.
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Gavekal Research
Arthur Kroeber, Will Denyer, Louis Gave, Andrew Batson
Jun 30th 2020
Webinar: Global Investment Roundtable, June 2020
Yesterday Louis Gave, Will Denyer and Andrew Batson joined Arthur Kroeber at the Global Investment Roundtable. They discussed the economic growth and market situation in the US, the state of the Chinese recovery, and what a post-Covid-19 world might look like.
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Gavekal Research
Will Denyer, Tan Kai Xian
Jun 29th 2020
From Bullish To Neutral
There has been a lot of talk about how the rally in US markets has been driven entirely by irrational sentiment. We disagree, and have since late March argued that the rebound in risk assets was rational. Our assessment rested on four financial and economic pillars. Today a reexamination of these pillars suggests a moderation of our bullish stance.
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Gavekal Dragonomics
Dan Wang
Jun 29th 2020
The US Takes Action Against Military Fusion
New regulations from the US Department of Commerce which go into effect on Monday could deny US-origin technologies to a broad swath of Chinese companies. In this Quick Take, Dan explores which firms are most at risk of falling afoul of these regulations and how their supply chains might be affected.
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Gavekal Research
Louis Gave
Jun 29th 2020
Towards More Of The Same?
Investors looking at the impressive rally in global equities since mid-March have been forced to come to one of three conclusions: (i) the Covid-19-induced halt to our economies will soon fade away like a bad dream, (ii) equity investors are crazy, or (iii) a growing number of investors think the cash they hold is bound to become worthless.
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Gavekal Research
Will Denyer
Jun 26th 2020
What's US$1.6trn More Or Less?
As three months ago, the prime case for holding US risk assets is the liquidity support provided by policymakers. But while liquidity conditions remain extraordinarily easy, and will continue to do so as long as inflation expectations remain depressed, in one respect at least the potential of surplus liquidity to push asset markets higher may have been exaggerated.
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Gavekal Dragonomics
Simon Cartledge
Jun 25th 2020
The Future Of Hong Kong
Whither Hong Kong? After a year of political turmoil, uncertainty about the city’s prospects is the highest it has been in decades. This 20-page DeepChina report examines Hong Kong’s historical trajectory, and concludes the city is in long-run decline—even though it will continue to be an important financial gateway between China and the world.
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Gavekal Research
Charles Gave
Jun 25th 2020
Please May I Have €10bn Too?
Indulge me for a moment in a flight of fancy. Last week, the European Central Bank lent out €1.31trn to eurozone banks at a negative interest rate of -1%. Now, I am not a bank, but it is diverting to imagine that I might qualify for a small crumb of this funding, say a modest €10bn—because I know exactly what I would do with the money.
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Gavekal Research
Arthur Kroeber
Jun 24th 2020
US Regional Outbreaks Hit A Key Threshold
The southern United States is in the grip of a major wave of the Covid-19 pandemic. Until now, Arthur has taken the view that rising case numbers alone would not be enough to convince state governments to slow down or roll back economic reopening plans. However, the risks to this core scenario are mounting.
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Gavekal Research
Yanmei Xie
Jun 24th 2020
The US Approaches A Cliff Edge
As the US starts to resume normal economic activity, a concern is that fiscal support is ended too early and the recovery is snuffed out. While European economies have extended many of their job protection schemes, the US faces a cliff edge at the end of July. If incomes suddenly crater, the worry is that spending plunges and the recovery takes on the feared W-shape.
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Gavekal Research
Charles Gave, Louis Gave, Cedric Gemehl, Didier Darcet
Jun 24th 2020
Webinar: Global Update (French), June 2020
In yesterday's webinar for our Francophone audience, Charles and Louis Gave, Cedric Gemehl and Didier Darcet updated viewers on their views of asset markets and government responses to the economic calamity caused by Covid-19.
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Gavekal Research
Vincent Tsui
Jun 24th 2020
Video: Behind The Resilience Of Hong Kong's Markets
Hong Kong has been beset by a string of bad news, from mass street protests, through Covid-19, to national security legislation of unknown scope and severity imposed by the mainland. Yet you wouldn’t guess it from looking at the city’s property market—the world’s priciest—or its stock market where several mainland tech companies are lining up to do their initial public offerings. Vincent explains the disconnect.
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