Gavekal Research

Udith Sikand, Tom Miller

Aug 22nd 2019

India’s economy is weak across the board, weighed down by lackluster investment, anemic consumption and soft external demand. Deep reforms are needed to unlock the country’s economic potential. In this quarterly report, Udith and Tom offer a check-in on India’s growth outlook, explain why equities may be de-rated further and worry about the bond rally fizzling out.

Gavekal Research

Charles Gave

Aug 21st 2019

I am certainly no technical analyst, but I do have a good memory. The story of major financial crises can be told with reference to the US dollar’s movements against the euro (and its antecedents). It now looks to have reached a significant juncture, especially with Italy moving toward another period of political instability.

Gavekal Research

Louis Gave

Aug 20th 2019

In almost three weeks since the beginning of August, gold is up 5.9% while investors in 10-year US treasuries have gained 4.2%. This is unusual. As Charles has highlighted, the two “anti-fragile” assets of choice seldom skyrocket simultaneously, so markets have been in full-blown panic mode. But what were markets panicking about, and what could boost confidence once again?

Gavekal Research

Anatole Kaletsky

Aug 19th 2019

Anatole has previously argued that the correlation between inverted yield curves and recessions has very little predictive significance. In this piece he updates that view to argue that inverted yield curves have no predictive significance whatsoever. For this reason, he thinks that equity investors have gotten their reaction to recent developments about right, while bond investors are all in a muddle.

Gavekal Research

Simon Pritchard

Aug 16th 2019

Extreme nervousness in global markets can be attributed to a synchronous weakening of growth that has been reinforced by soft data out of Germany and China. This is also a juncture when commentators seem to have concluded that pent up stresses in the global trading and security system have reached a tipping point. On top of these secular worries is the terror that China is about to have a “Tiananmen moment” by violently crushing the two month...

Gavekal Dragonomics

Thomas Gatley

Aug 14th 2019

After a end-of-quarter bounce in June, China’s economy resumed its gradual downward course in July, with industrial production, fixed investment, housing starts, retail sales and credit growth all slowing. The bright spots were exports, which registered a surprising pickup despite the trade war, and housing sales, which reversed three months of declines with a modest gain.

Gavekal Research

Louis Gave

Aug 14th 2019

The latest round of data releases appears to confirm fears that the world is facing another synchronous global downturn. If so, it will be different from other slowdowns, in that it will not have been caused by rising interest rates or higher energy prices. What’s more, it will be setting in when there is little prospect of a globally coordinated response, when monetary policy appears to have lost traction, and when asset prices are looking...

Gavekal Dragonomics

Dan Wang

Aug 13th 2019

The outcome of US-China trade talks is uncertain, but one thing is clear. Chinese companies, their customers and suppliers, faced increased risks of US American sanctions. Hardliners in the US national security establishment are pressing ahead with an “all-of-government” strategy to constrain China’s technological and financial clout. This will continue regardless of the outcome of trade talks.

Gavekal Research

Vincent Tsui

Aug 12th 2019

It has often been said that when the US sneezes the rest of the world catches a cold. In Asia, a similar link exists between the behemoth China and other regional economies. Hence when Beijing unexpectedly let the renminbi weaken through CNY7.00 to the US dollar last Monday regional currencies fell by 1.6% in the following five days. They could fall more, however there is unlikely to be a broader contagion to regional asset markets. Asia’s solid...