E.g., 15-12-2019
E.g., 15-12-2019
We have found 12120 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Greater Good Versus Individual Liberty

    Yesterday Hong Kong's streets were again the stage for violent clashes between protesters and police. At the heart of the conflict is a showdown between the shared identity in Hong Kong shaped by the common law system inherited by the British and the common narrative in China emphasizing the "greater good" over individual liberties.

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

    Gavekal Research

    Strategy Monthly: An Asian Repricing

    Asian inflation has decoupled from other emerging market regions and may be settling at a new permanently lower level. At the same time, lower Asian inflation also reflects weak capital spending and slower economic growth due to the global trade downturn. The best way to play this new low-inflation, low-growth era is with regional bonds.

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

    Gavekal Research

    The Upside For Europe

    The euro is trading at its weakest against the US dollar since May 2017. Whether it falls further from here or finds support around current levels to establish a base for a rebound will depend mainly on whether Europe’s economic performance continues to deteriorate, or whether upside surprises are likely in the months ahead.

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

    Gavekal Research

    US-China Impressionism

    It is sometimes said that getting a clear view of Chinese policy is impossible; the best you can hope for is an “impressionist” picture of what broadly is going on. Increasingly it looks as if this impressionism is catching. As if understanding China wasn’t hard enough, lately figuring out US policy towards Beijing has become a lot more complicated.

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

    Gavekal Research

    Quantifying Trade War Risk

    Investors seem to have grown somewhat blasé about the US-China trade war lately. Over 12 months after the outbreak of hostilities, the S&P 500 is up 2.2% year-on-year. Part of the reason for this nonchalance appears to be a belief that US growth and domestic profits are invulnerable to any escalation of the conflict. This belief may be mistaken.

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

    Gavekal Research

    Reasons To Truly Love Malaysia

    In a bid to lessen currency depreciation pressure, three years ago Malaysia effectively closed down offshore trading in the ringgit. It won the battle but has been losing the war. Its asset markets remain unloved and Malaysia has a higher cost of capital than most regional rivals. Yet the time may be right to look again at Malaysia, at least from a fixed income stance.

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

    Gavekal Dragonomics

    Macro Update: The Return Of Selective Easing

    After a rocky few months of trade troubles, disappointing data and hawkish policy, China has shifted back to a more decisive focus on growth-supporting measures. This move should help support markets and the economy through end-2019. But as Andrew explains in this chartbook, the boost from this cautious “selective easing” is still limited.

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

    Gavekal Research

    Legal Is Not The Same As Legitimate

    Democracy is in trouble. Everywhere the cause is the same: a massive conflict between legitimacy and legality. For the last 100 years or more, the split between left and right left anchored the legitimacy of any democratic government. Unfortunately, over the last couple of decades or so, the left has betrayed the people, while the right has betrayed the nation.

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

    Gavekal Research

    Video: Where Next Hong Kong?

    Hong Kong’s leader Carrie Lam today begins a process of civic engagement aimed at bridging the divide between an unpopular government and a diffuse movement that has engaged in 17 weeks of violent protest. Simon discusses whether economic goodies can buy off dissent and assesses the chances of a compromise political settlement.

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

    Gavekal Research

    What If The Fed Has Finished Cutting

    What happens to the US equity market if the Federal Reserve has already finished cutting interest rates? Last Friday, Will made the case for a rebound in US growth, but withheld judgement whether it would be driven by real growth or inflation. The prospect raises the very real possibility that the Fed may decide rates have been cut enough.

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

    Gavekal Dragonomics

    This Old House

    China’s government has launched a new program to renovate older residential compounds, which some are touting as a massive new investment stimulus. As Rosealea explains in this piece, such hopes are misplaced. But the new spending will help cushion the impact of the cutbacks of the subsidies delivered through the slum redevelopment program.

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

    Gavekal Research

    India’s Laffer Curve Gamble

    India’s decision to cut its corporate tax rate from 30% to 22% has spurred a 7% surge in equities as investors bet on new capital spending reigniting a stalled growth cycle. The problem is that even if this fiscal easing spurs more business investment, the consumer side of India’s economy remains stuck in a low gear due to knottier problems.

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

    Gavekal Research

    Black Zero Or Green New Deal?

    Investors and environmentalists alike got their hopes dashed on Friday. Their best-case scenario would have seen Berlin invoke a climatic emergency to override fiscal orthodoxy and roll out a stimulative program of green investment. In the event, the measures announced not only fell short of the green lobby’s expectations—they were budget-neutral.

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

    Gavekal Research

    Stay Neutral Between Equities And Cash

    As August’s panic has receded, bond yields have risen from their lows. Even so, with the 10-year US treasury yield at 1.77%, the only way bonds can deliver significant upside from here is if the US economy slides into a disinflationary recession. That may yet happen. But it is by no means the most probable course for the US economy.

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

    Gavekal Research

    Video: What Next In The Tech War

    Washington views China as a strategic competitor, and the White House has promised a “whole of government” effort to constrain China’s development of key advanced technologies. Dan examines the three ways in which the US is making life difficult for Chinese tech companies, and explores other weapons the US could deploy should the tech war escalate.

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

    Gavekal Dragonomics

    Waiting For Rate Cuts

    Markets are now primed for China’s central bank to lower the policy rate in the new loan-pricing system it unveiled in August. In this piece, Andrew explains how these rate cuts will work, why they are different from the rate cuts of the past, and why these moves will not mean any change in the central bank’s current strategy of “selective easing.”

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

    Gavekal Research

    US Liquidity Is Not The Worry

    Despite this week’s violent US money market judders, the Federal Reserve looks to have a clear plan for managing monetary policy and liquidity conditions. There are many reasons to worry about risk asset pricing, but a shock from the bowels of the US financial system is not among them. In contrast, there are four reasons to stay upbeat about the US liquidity situation.

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

    Gavekal Research

    The Industrial Disease (II)

    Last week, Charles examined the decline of the US industrial sector, introducing his “industrial Wicksellian spread” as an indicator of environmental conditions for industry. Now he looks at the probable causes of industrial deterioration, explains why neither monetary nor fiscal policy can help, and uses his toolkit to draw some important conclusions for portfolio investors.

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

    Gavekal Research

    The EM Oil Shock That Won't Be

    Three “master” prices tend to dictate price levels in most asset markets—US interest rates, the US dollar and energy prices. A synchronized fall in these three prices usually bodes well for emerging market assets, while a rise bodes ill. Since it is rare for all three master prices to move together, the challenge for investors is to figure out which way the cross currents are flowing. If one master price is making a big move, its effect can...

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

    Gavekal Research

    The Cost Of Cleaner Shipping

    Right now, investors concerned about energy prices are focused on the attacks on Saudi Arabia’s processing facilities. But a possible conflict in the Gulf will not be the only emergent factor likely to affect oil prices over the coming months. New rules for cleaner shipping fuels, known as “IMO 2020,” also have the potential to roil global petroleum markets.

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

    Gavekal Dragonomics

    After The Summer Of Discontent

    The poor economic indicators for August make it obvious why China’s government got ahead of the data release and signal renewed support for growth in early September. That means more incremental policy measures are coming, which will help sentiment. And the drag on growth from the auto sector should also reverse toward the end of 2019.

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

    Gavekal Research

    Reexamining The US Recession Indicator

    I may opine across many topics when writing these missives, but all said and done, I am a rules-based investor. In late 2016 my US recession indicator told me that the US economy was likely to face a recession, yet no such thing happened. As a result, I started to look for an explanation, and only now do I feel that a clear answer is coming into view.

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

    Gavekal Research

    Q&A On The Saudi Oil Attacks

    One thing that stands out about the reaction to the weekend’s strikes on Saudi Arabian oil facilities is how muted much of the market response has been. Nevertheless, investors are concerned about what lies ahead. In this report, Louis attempts to answer some of the most prominent questions asked over the last 48 hours.

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

    Gavekal Research

    A Saudi Tipping Point?

    Following this weekend's attacks on Saudi Arabian oil installations, the important question has to be whether this proves to be the moment at which investors realize that market expectations have become too far removed from reality. In short, will the attacks shatter the consensus that neither energy prices nor inflation can ever rise meaningfully again?

    7
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Draghi's Fiscal Gift

    As he pushed interest rates still further into negative territory and announced the resumption of quantitative easing on Thursday, outgoing European Central Bank chief Mario Draghi made clear that he was passing on the baton of policy stimulus—not so much to his successor, but rather to Europe’s finance ministries.

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

    Gavekal Research

    The Industrial Disease (I)

    Something ails the industrial sector. Since the 2008 crisis, the growth of US industrial production has failed to keep pace with the growth of the overall US economy. In this paper, Charles examines the industrial sector’s malaise using tools derived from the theories of 19th century Swedish economist Knut Wicksell. His conclusions are disturbing.

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

    Gavekal Research

    Video: Washington, Iran And The Price Of Oil

    This week’s sacking of John Bolton as White House national security advisor triggered a fall in the price of oil as traders concluded the notorious war hawk’s departure paved the way for a relaxation of US sanctions on Iranian oil exports. That may be unlikely; US officials insist their policy of “maximum” pressure on Iran remains in force.

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

    Gavekal Research

    US Banks To Shine Again

    Ahead of next week’s Federal Reserve meeting, US bank stocks look set to break out of their 21-month underperformance trend. Investors are betting on a 25bp rate cut, with at least one more to come before December. They are also cheering the rise in long rates globally over the last week or so, which has acted to steepen yield curves. Given that US consumers will benefit from even cheaper money and should brush off whatever the trade war throws...

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

    Gavekal Dragonomics

    Putting The Squeeze On Tech

    The Trump administration has shown the world that it is willing and able to inflict severe pain on China’s top technology firms. But can the US really squeeze China hard enough to cut it off from global R&D, or stop all advances by Chinese companies? In this piece, Dan argues that the US can slow China’s technological progress—but not stop it.

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

    Gavekal Research

    The Three Waves Of Capitalism

    Three great forces drive capitalism and markets: the Schumpeterian, the Ricardian, and the Malthusian. Usually only one dominates at any one time. The flood of capital into tech indicates investors believe that Schumpeterian creative destruction will continue to drive returns over the coming years. But Louis argues that a new wave may be about to take over.

    15
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Up Against The Limit With The ECB

    German savers face “custody fees” when depositing big sums at the bank, or get clipped 50bp when buying a euro-denominated money market fund. Such outcomes explain why a growing number of economists oppose calls for the European Central Bank to cut rates further and restart quantitative easing when it meets tomorrow.

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

    Gavekal Research

    Asia's Great Moderation

    Emerging market government bonds yield more than rich-world equivalents because investors worry about getting their money back. This higher return on capital can cause a feedback loop of rising foreign debt and diminished financial sovereignty. Yet, with Asia having seemingly crushed inflation, a “great moderation” may reverse that dynamic and usher in a potential re-rating of risk assets.

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

    Gavekal Dragonomics

    The Next Stage Of The Pork Crisis

    The African swine fever crisis in China is reaching a new stage as prices for pigs and pork spiral upward at an unprecedented pace. The government is responding with a combination of subsidies for pork farms, as well as rationing and price caps. But this is a short-term strategy that will not contain the ASF epidemic and could even worsen it.

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

    Gavekal Research

    The Danger Of A Dumbbell Portfolio

    Both bond and equity markets are signaling investors' belief that monetary policy will not only stay easy for as far as the eye can see, but actually get easier in the coming weeks and months. But what if they end up getting wrong-footed in their expectations of another wave of interest rate cuts, quantitative easing and other uber-dovish monetary policy measures?

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

    Gavekal Research

    The Meaning Of The Iran-China Deal

    Reports that China has signed a long term agreement to buy large quantities of Iranian oil in defiance of US sanctions will weigh on global crude prices and further complicate US-China talks, reducing the chances of a deal before the 2020 US election. In effect, the world is now facing a four-way tug of war over the oil price.

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

    Gavekal Research

    Beijing's Conflicted Easing

    As prospects for a quick resolution of the US-China trade conflict fade, and the data continue to soften, expectations for Chinese growth are getting marked down. As if on cue, the government has sent signals of more decisive policy support for growth. While encouraging, this does not presage a shift in China's macro policy of "selective" easing.

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

    Gavekal Research

    Video: Italian Politics Favors Bonds

    Yesterday Italy’s new government took office, the 66th since 1946. Meanwhile, Italian bond yields have reached record lows. Nick attributes this to two factors. First the global bond rally. Second, the shifting winds of Italian politics away from the Euroskeptics to the Europhiles, which bodes well for Italian-European budget negotiations.

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

    Gavekal Research

    India's Frenetic Inertia

    They say the first step to solving a problem is recognizing that you have one. With its recent moves to shore up sagging growth, Narendra Modi’s new government has finally acknowledged that India’s economy is in trouble. But unless it quickly finds a coherent reform strategy, Modi’s second term could fizzle out into economic failure.

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

    Gavekal Research

    Audio & Transcript — Gavekal Research Call September 2019

    In yesterday’s conference call, Anatole Kaletsky, Will Denyer and Louis-Vincent Gave outlined reasons for recent dramatic moves in bond markets and made arguments for what comes next. Anatole also addressed Brexit developments and Louis discussed the situation in Hong Kong.

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

    Gavekal Dragonomics

    Taiwan’s Manufacturers Rethink Reliance On China

    Could Taiwan be a winner in the US-China trade war? As Dan reports in this piece, US tariffs have succeeded in getting major contract manufacturers of electronics to shift jobs out of China, some of which are going to Taiwan. But this trend is not enough to end Taiwan’s dependence on Chinese growth, or its vulnerability to Chinese competition.

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

    Gavekal Research

    Italian Politics And The Bond Market

    On Tuesday, members of Italy’s left wing populist 5-Star Movement lent their support to the formation of a new coalition government with the Democratic Party. The new government, to be led by Giuseppe Conte, technocrat prime minister in the previous coalition, still has to secure a confidence vote in Parliament. But that should go through in the next couple of weeks. If it does, right wing populist Matteo Salvini—Italy’s most prominent...

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

    Gavekal Research

    Tariffs Won't Trouble US Consumers

    As US growth has slowed this year, consumer spending has been the economy’s bright spot. Personal consumption expenditure was the principal contributor to growth in the second quarter and July. However, fears are growing that the US consumer will come under increasing pressure in the coming months as the latest round of tariffs go into effect.

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

    Gavekal Research

    Strategy Monthly: The Message From Bonds

    Record low bond yields point to a deflationary catastrophe in the making. Yet growth data in the world’s two biggest economies remain decent. Could investors be reacting to a rupture in the international order? Gavekal analysts are not persuaded by such arguments and offer four alternative explanations for the “bond bubble”.

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

    Gavekal Research

    ‘Do Or Die’ Boris Is Bullish For Sterling

    Considering the political chaos that will descend this week on the UK, it may seem surprising that the pound has bounced back to its trade-weighted level just before Boris Johnson became prime minister. Or maybe it is not too surprising—if a “No Deal Brexit” is the only possible scenario that would justify a further weakening of sterling and other UK assets.

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

    Gavekal Research

    Video: Looking Through The Bond Bubble

    As yields fall to record lows, bond markets seem priced for some sort of global economic calamity. With Europe in dire straits and the US-China trade war remaining live, there is certainly cause for worry. But when things look like they can’t get any worse, Will reckons, they often don’t. As the US growth outlook appears steady, equities and cash are the better bet.

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

    Gavekal Research

    The Case Against Recession

    Earlier in August, Charles announced that he was reluctantly joining the US recession camp. His reasoning was based largely on his observation that the long run average growth rate of US corporate profits had fallen to a level that in recent decades has always indicated an economic downturn. I am more optimistic than Charles.

    7
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Importance Of Oil

    The world’s fixed income markets are priced for a severe bout of demand destruction and deflation. Yet, outside Europe at least, growth in the world’s major economies continues to tick over. However, could a sudden oil price rise spark an uptick in inflation pressure that triggers an abrupt repricing in which bond yields spike sharply higher?

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

    Gavekal Dragonomics

    The Dimensions Of Decoupling

    Whatever happens next in the US-China trade conflict, it’s clear that ties between the two nations have undergone a fundamental reset. Some “decoupling” will definitely occur as a result, and indeed has already begun. In this chartbook, Andrew and Lance explore how US-China decoupling could play out in flows of goods, money, people and ideas.

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

    Gavekal Research

    Asia Ditches Fiscal Conservatism, Conservatively

    As the external environment darkens, Asian governments are turning on the fiscal spigots—cautiously. Moves announced in recent weeks do not radically move the dial, but they should support growth. For now, monetary policy will remain the main counter-cyclical tool for arresting a downturn in Asia, but recent moves reflect an end to an era of fiscal consolidation.

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

    Gavekal Research

    Beijing Toughs It Out

    After a month of further escalation in the US-China trade war, China’s strategy for the next stage of the dispute is becoming clear. Its leadership now looks committed to a strategy of toughing out trade tensions. This means the prospect of a US-China trade deal is receding, and therefore that global growth will face further headwinds.

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

    Gavekal Research

    Buffeted By Deglobalization, Shipping Lines Tack To Asia

    After a sluggish 2018, global shipping lines are again facing choppy seas thanks to Donald Trump's tariffs and slumping trans-Pacific trade. There is, however, a silver lining for carriers with a strong Asian presence; the US-China trade war is spurring a fragmentation of regional supply chains, and that seems set to boost intra-Asian trade.

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

    Gavekal Research

    The Yen Dilemma

    Since the beginning of the month, the yen has been one of the few major currencies to strengthen against the US dollar. At the same time, Japanese government bonds have not escaped the global bond rally. This presents the BoJ’s chiefs, who for the last three years have been pursuing a policy of “quantitative easing with yield curve control”, with a problem.

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

    Gavekal Research

    Weathering Trump’s Trade War

    It may be the dog days of summer, but investors got a truckload of news this weekend that points to a bad situation getting worse. Given President Donald Trump’s escalation of tariffs and threat to bar US firms from operating in China, the worry is that his hardline stance spurs a US recession. KX and Will think this is unlikely.

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

    Gavekal Research

    Europe’s Victimhood Culture

    The biggest threat to world economic growth today is not the US-China trade war, but German exceptionalism. Even as Germany has suffered the greatest growth downgrades of any major economy, its politicians have obstinately rejected any Keynesian fiscal expansion. Now calls are mounting for a policy U-turn, but Anatole isn’t holding his breath.

    11
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Making Biarritz Great Again

    Some readers may know that my family is the majority shareholder in Biarritz Olympique Pays Basque, one of France’s oldest rugby clubs. Through this connection, I have had a front-row seat to the organization of the upcoming G7 meeting to be held in Biarritz over the next three days. When the city was chosen, I naively thought this was good news.

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

    Gavekal Research

    Video: The Anatomy Of The August Panic

    As more and more government bonds around the world slide into negative yield, investors can draw one of two conclusions: either the world faces an economic meltdown, or there is a buying panic in safe assets. But although there is indeed a synchronous global slowdown in growth, Louis favors the latter explanation.

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

    Gavekal Research

    Germany’s Fiscal Firepower

    Uniquely among the world’s big economies, Germany runs a budget surplus, in accordance with the “debt brake” written into its constitution following the 2008-09 financial crisis. This means Berlin could, in theory, deploy considerable fiscal firepower even within the current rules, and a great deal more if it chose to bend or rewrite them.

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

    Gavekal Research

    India Macro Update: Hardly A Growth Agenda

    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.

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

    Gavekal Research

    German Banks And The Dollar

    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.

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

    Gavekal Dragonomics

    Consumer Spending Growth Grinds Lower

    With exports and domestic investment both weakening, China’s government hopes that consumer spending will support growth. The bad news is that all indicators of consumer spending are still softening. With a deteriorating job market weighing on household income Chinese consumer spending is set to weaken further over the coming quarters.

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

    Gavekal Research

    The End Of The Panic

    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?

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

    Gavekal Dragonomics

    Starvation Rations For Private-Sector Borrowers

    After a brief respite earlier in the year, China’s private sector is once again facing a credit squeeze. The PBOC’s announcement over the weekend of a change in the calculation methodology for the loan prime rate is likely to lower the cost of corporate loans, but it does not make it any easier for private firms to get finance.

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

    Gavekal Research

    The Diminishing Market Impact Of Tariffs

    After the US imposed its first major round of tariffs on Chinese goods last September, the S&P 500 sold off by -20%. After the second round went into force, it fell -6.8%. And since President Trump announced a third round, it has sold off by -6.1%. It seems each successive escalation in the trade war is having a smaller impact on the US stock market.

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

    Gavekal Research

    When The World Goes To Hell

    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.

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

    Gavekal Research

    Troops On The Border

    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...

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

    Gavekal Research

    Panic Stations

    I always try to be a rules-driven investor. And when the US stock market is down -3% in a day, taking it to -6% from its peak in three weeks, when 10-year US treasury yields have halved in nine months to just 1.55%, and when gold is up 20% in three months, it is a good time to review those rules to see what they can tell me. The answer is: quite a lot.

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

    Gavekal Research

    Lessons From The Argentine Shock

    In US dollar terms, Argentina's equity benchmark on Monday fell -48% in a one-day move. The -24% drop in long-dated US dollar-denominated Argentine bonds, a -17% drop in the currency, or the -38% fall in the local equity index will cause pain for certain macro players and dedicated emerging market funds. It should also cause us to ponder a number of questions.

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

    Gavekal Dragonomics

    The Slowdown Continues

    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 a surprising pick up in exports, and housing sales, which reversed three months of declines with a modest gain.

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

    Gavekal Research

    The Surge In Anti-Fragile Assets

    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...

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

    Gavekal Research

    Joining The US Recession Camp

    To listen to current commentary, you would think that US capitalism faced a Marxist end-of-times reckoning. Hence, it is noteworthy that the share of sales going to profits is now falling, while that going to labor is rising. Yet the latest US GDP report is still alarming for what it tells us about the state of the economy.

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

    Gavekal Research

    Hong Kong Q&A (Part II)

    The success of Hong Kong’s protesters in shutting down the city’s airport on Monday, talk from Beijing of “terrorism”, and the apparent massing of mainland paramilitary forces across the border from Hong Kong have led to a deluge of questions from clients about what is likely to happen next, and the potential investment implications. In this paper, Louis attempts answers some of the most frequent questions.

    7
  • Please login, request a trial or contact our sales team for more information

    Gavekal Dragonomics

    The Rising Risks For Chinese Firms

    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.

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

    Gavekal Research

    Asian Currencies Remain A Shock Absorber

    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...

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

    Gavekal Research

    A Trade Equilibrium Of Sorts

    After a week of trade war scares, things have settled down into an equilibrium that is uneasy, but likely to last several weeks. The central question now is whether the new tariff on US$300bn of Chinese exports to the US will go into effect on September 1, or if Trump’s team will find some graceful way to back down from that threat.

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

    Gavekal Research

    What Germany Means For Europe

    Even before the US-China trade war escalated last week, Europe stood on shaky ground. We learnt yesterday that German industrial production for June fell -1.5%. Europe’s largest economy faces cyclical and structural challenges, and the question is whether it takes its neighbors down with it.

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

    Gavekal Research

    The Death Spiral Of Eurozone Banks

    For months Charles has told anyone who will listen that the real threat to global markets is the slow-motion implosion of the eurozone’s banking system. Each time the region's equity has hit a critical threshold an intervention has caused it to bounce off and delay the reckoning. The size of these rebounds has waned and this time there may be no respite.

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

    Gavekal Research

    The Renminbi, Manipulation And The Trade War

    Monday’s actions on the Chinese currency—Beijing’s decision to let the renminbi’s exchange rate weaken past CNY7.00 to the US dollar, and Washington’s decision to label China a currency manipulator—signal that the US and China are close to throwing in the towel on a trade deal. Trade war escalation should now be the base case.

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

    Gavekal Research

    The Long Term Impact Of Trump’s Latest Tariffs

    Aftershocks from Donald Trump’s August 1 tweets promising new tariffs on US imports from China continued to reverberate through Asian markets on Monday morning. Most notably, China’s yuan fell by some -1.3%, with the USD-CNY exchange rate breezing unimpeded by the Chinese authorities through the CNY7.00 to the US dollar mark for the first time since early 2008. Equity markets in the region were also hard hit, with Japan down -2% and Hong Kong...

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

    Gavekal Dragonomics

    The Risks To Steel Prices

    China’s government is once again going after pollution from the steel industry, raising the risk of more policy-induced spikes in steel prices. While forced shutdowns to ensure blue skies are on the way, Rosealea argues that the bigger risk to steel prices is on the downside, due to weakening construction activity and cautious housing policy.

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

    Gavekal Research

    The Renminbi Devaluation’s Fork In The Road

    Following the surprise renminbi devaluation of August 2015 policymakers in the world’s major financial powers acted to calm markets in what came to be known as the “Shanghai Agreement” of February 2016. Since then, currency markets have broadly been one big yawn, with little volatility and few opportunities for macro traders to make meaningful money. Is that situation now changing?

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

    Gavekal Research

    What Sterling’s Move Tells Us

    The sterling exchange rate is going down and the usual suspects say this is bad news. But the exchange rate is merely a price that helps allocate capital between the economy’s internal and external sectors, and so set the purchasing power of rentiers and entrepreneurs. Entrepreneurs do best when the currency is undervalued, while rentiers and consumers win out when it is overvalued.

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

    Gavekal Research

    Strategy Monthly: Focus On The Fed, Not On US Tariff Threats

    Trade war fears are once again front and center of investors' minds. But the reduced magnitude of pledged US tariffs indicates that Trump is anxious to avoid damaging the US economy and financial markets. This leaves the focus on the Fed, and how much it is likely to cut interest rates.

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

    Gavekal Research

    What The Early End Of QT Means

    As expected, the Federal Reserve cut short term interest rates by 25bp on Wednesday. Less expected the Fed also halted its program of quantitative tightening, effective immediately. The decision to end the program early cancels an expected additional US$70bn contraction in the supply of money. This represents a significant easing.

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

    Gavekal Research

    Video: Enter Boris

    In the last week or so, the pound has fallen sharply to a two-and-a-half-year low against the US dollar. That’s all down to the new British government, headed by Boris Johnson, and his "do or die" Brexit campaign. But when a deal is finally struck, Britain’s strong economic fundamentals mean it is well placed for a boost in growth, along with the pound.

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

    Gavekal Research

    Sterling’s Information Void

    Since Boris Johnson became prime minister, the UK government’s promise of a “do or die” Brexit has caused sterling to slump -2.9% against the US dollar to about US$1.21. While the chances of Britain actually leaving the EU without a deal remain small, this outcome will remain unclear for some time. That presents risks, but great opportunities for those dealing in sterling.

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

    Gavekal Dragonomics

    Read My Lips: No Housing Stimulus

    The world’s major economies are seemingly united on the need for a fresh round of stimulus—except for China. And hopes for a more aggressive approach were dashed by the latest Politburo meeting, which declared that China would not boost the housing market to revive growth. In this piece, Andrew explains what’s behind China’s policy stance.

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

    Gavekal Research

    Darwin Or Keynes?

    Keynes advised that at the outset of a recession, policymakers should drive down market interest rates in order to borrow from future demand. Today’s central bankers have adopted this approach as permanent policy. Unfortunately, permanent Keynesianism fatally interferes with the economic Darwinism of creative destruction that propels growth in a capitalist system—with dire consequences.

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

    Gavekal Research

    Shanghai Talks Now A Sideshow

    Trade talks between the US and China resume today after a three-month hiatus. This meeting may or may not pave the way for a deal in the next several months, but it no longer matters much. The global macro risk from the trade conflict has ebbed dramatically. What's important now is the dimensions of the decoupling between the world’s two biggest economies.

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

    Gavekal Research

    China’s Hong Kong Gambit

    Following more violent protests in Hong Kong, Beijing reiterated its support for the city’s embattled chief executive in a first-ever press briefing on Hong Kong’s affairs. While the conflict shows no signs of resolution, the example set by Paris shows that Hong Kong can be both a dependable financial center and a hotbed of political dissent.

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

    Gavekal Research

    The Downward Revision In US Profits

    Alongside last Friday’s second quarter US GDP release, the BEA issued revisions which wiped out almost all the increase in pre-tax corporate profits since the end of 2016, and much of the post-tax increase. The revisions can be attributed almost entirely to weak top-line growth and rising wage costs. The good news is that the revisions do not sound a recession warning.

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

    Gavekal Research

    Unpicking US 2Q GDP

    Second quarter US GDP growth came in at 2.1%, slightly better than expectations. In itself, this headline figure is not especially illuminating. But dig deeper into the various components of 2Q growth, and there are reasons for moderate optimism about the trajectory of the US economy through the second half of 2019.

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

    Gavekal Dragonomics

    From Trade War To Decoupling

    Trade talks between the US and China will resume this week after a three-month hiatus, but how much do they really matter? In this piece, Arthur argues that the macro risk from the US-China trade conflict has ebbed to almost zero. What’s important now is to understand the dimensions of the decoupling between the world’s two biggest economies.

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

    Gavekal Research

    The Most That ECB Easing Can Do

    Mario Draghi fired no new bazooka on Thursday. But the European Central Bank president did signal the deployment of a whole arsenal of monetary weaponry in September. Such a package will cement the transition of the ECB under Draghi into a more active and more actively political institution, with a much more counter-cyclical policy stance.

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

    Gavekal Research

    The Effectiveness Of EM Rate Cuts

    An easier Fed stance suggests that the US dollar is unlikely to trend significantly higher from its present levels. The prospect of limited US dollar upside frees Asian central banks from the necessity of defending their exchange rates, and gives them leeway to support growth by cutting interest rates. However, the impact of rate cuts on both growth and asset prices will vary among Asian EMs.

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

    Gavekal Dragonomics

    The Size Of State Subsidies

    The US government alleges that “China provides massive, market-distorting subsidies,” particularly to state firms. But just how big are China’s subsidies to state-owned enterprises, and what kind of economic distortions do they create? This in-depth report quantifies three major types of direct and indirect subsidies, and explores their effects.

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

    Gavekal Research

    The Choice Confronting Investors

    With US$13.5trn of bonds on negative yields, Germany’s sovereign curve in negative territory out to 20 years, and G7 yields lower than in the 2008 crisis, the euro crisis, or 2016, when the world expected China to collapse, there are two possibilities. Either the world is facing low growth and inflation forever, or the bond market is in the final phase of an almighty bubble.

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

    Gavekal Research

    Healthchecking Boris Johnson’s Britain

    On Wednesday, “colorful” former journalist, television comedian and London mayor Boris Johnson will achieve a long-held ambition when he moves into Number 10 Downing Street to replace the hapless Theresa May as the United Kingdom’s new prime minister. Judging from the headlines, Johnson is taking over an economy on the brink of a painful slowdown, if not already actually in recession.

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

    Gavekal Research

    The Future Of Big Tech

    Big Tech is in the US government’s cross-hairs. Google, Facebook, Amazon and Apple face probes into their behavior, and legislation is in the works to clip their wings. The question for investors is: How serious will the stand-off with the government get and will a prolonged downturn in tech spark a broader decline in the US equity market?

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

    Gavekal Research

    Fiscal Crisis Averted, At A Cost To Liquidity

    On Monday, the White House and Congressional leaders reached a tentative agreement to raise US government spending caps and suspend the debt ceiling for two years. Assuming the deal is passed by Congress in the next few days, a fiscal crisis will be averted this year. But before investors breathe a sigh of relief and bet on a rally, it should be noted that one near term effect of the agreement could be an acute liquidity drain as the Treasury...

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

    Gavekal Research

    STAR Is Born

    Trading on the world's newest stock market board got off to a predictably volatile start on Monday, when Shanghai's STAR market opened for business. But while that was entirely foreseeable, the reaction of regulators will be less predictable, and will send important signals on the long-term liberalization of China’s stock markets.

    4
Show me: results