E.g., 03-12-2020
E.g., 03-12-2020
We have found 12700 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Asia: Look For Real Growth To Boost Earnings In Asia

    A strong US dollar has rarely been a tailwind for emerging market equities. Set against the backdrop of anemic global demand and the concomitant fall in commodity prices—a severe weight on export revenues for many EMs—the outlook for EM corporate earnings is not exactly benign. However, Discrimination Pays In The Emerging Markets. The rapidly changing global environment is likely to throw up a new set of winners and losers in the EM universe.

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

    Gavekal Research

    Greeks Gaming Themselves Out

    Yanis Varoufakis, the new Greek finance minister, is a professor of economics who specializes in game theory, but when it comes to negotiating strategy he has more to learn than to teach. Varoufakis’ idea of a winning strategy is to hold a gun to his own head and then demand a ransom for not pulling the trigger. Not surprisingly, this bluff has been called, first by the German government and now by the European Central Bank. As a result the...

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

    Gavekal Research

    Panic or Process?

    In the past few months, we have seen surprise interest rate cuts from India, Australia, Russia, Turkey, China, Switzerland, Denmark... the list goes on. So what lies behind all these surprise cuts? Panic, or process? The arguments for panic are obvious, and include:

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

    Gavekal Research

    Growth & Markets Monthly (February 2015)

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

    Gavekal Dragonomics

    Peak Coal Is Nigh

    Here’s some good news for China’s smoggy skies: the nation’s consumption of coal fell outright in 2014, for the first time since 1998. This decline—the result of a severe downturn in the most energy-intensive industries—has upended some long-held assumptions about China’s future trajectory of energy use. Last year’s unexpected combination of 7.4% GDP growth and just 2.2% growth in energy consumption means it is now very likely that China is...

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

    Gavekal Research

    Greek Risk Is Not About Debt

    European markets staged a vigorous relief rally yesterday after Greek finance minister Yanis Varoufakis dropped his calls for a write-off of Greece’s public debt, proposing instead a package that would include the exchange of European Financial Stability Facility loans for growth-linked bonds. Yet contrary to what the Greek and German governments pretend and to what we read in the press, Greece’s public debt is not the real issue either for...

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

    Gavekal Research

    Why RMB Stability Vs The US$ Matters

    In China’s onshore market the renminbi is trading within a whisker of the weak side of its permitted trading band against the US dollar. Meanwhile in the offshore market the renminbi hit a two year low last Friday. Against the backdrop of a strong US dollar—in trade-weighted terms the US currency rose 9% over the three months to the end of January—these moves have prompted a number of clients to ask whether Beijing is about to steer a...

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

    Gavekal Research

    US Housing Gets Interesting Again

    You’d think the US housing market should be humming along nicely. Economic growth is decent even as worries of deflation in overseas markets help push long-dated bond yields to record lows, so cutting the cost of home finance. The collapse in oil prices has given households money to spend and pushed consumer confidence readings for January to a post-crisis high. Last week’s GDP report for 4Q14 showed personal consumption growing at an impressive...

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

    Gavekal Research

    Ignore The US GDP ‘Surprise’

    How worried should we be about the weakening of the US economy towards the end of last year? The answer, despite Friday’s sharp fall in equities and the record low set by the 30-year treasury bond yield, is not at all. Whatever the reasons might have been for last week’s market gyrations, they could not have been connected with the economic slowdown ‘revealed’ by Friday’s fourth quarter GDP figures, since this slowdown was almost certainly an...

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

    Gavekal Research

    Sweden: The Planets Are Aligning

    Asset allocation is—or at least should be—a process. Investors try to identify the favorable and unfavorable factors driving an asset’s performance, and monitor developments to identify where they stand in the investment cycle.

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

    Gavekal Dragonomics

    Profits Under Pressure

    China looks like it should be a winner from falling commodity prices, as it is a large importer of raw materials. Unfortunately, the truth is almost exactly the opposite: lower commodity prices mean that its own energy, mining and metals firms are suffering. Add in the construction slump, and 2015 is shaping up to be a horrible year for industry.

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

    Gavekal Research

    Turning Cautious on US Equities

    Given their remarkable performance over the last four years, can US equities really continue to outperform global peers? Recent developments give cause for concern as market technicals look weak and earnings announcements for bellwether stocks have come in lackluster. Earlier this week Louis asked some basic questions about US equity market leadership (see Does It Still Make Sense To Overweight US Equities?). We share his concern not because we...

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

    Gavekal Research

    Asia’s Encouraging Currency Stability

    Three months ago to the day, the US Federal Reserve ended its outright purchases of treasuries. Three months before that, the ECB instituted negative interest rates. And whether by coincidence or causation, most commodity prices chose the past six months to unravel. The combination of these events has led to some sharp exchange rate moves. Over the past three months, commodity currencies have been taken to the woodshed: the Russian ruble is down...

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

    Gavekal Research

    Does It Still Make Sense To Overweight US Equities?

    Investment decisions are typically driven by the costs of five factors: land, labor, capital, energy and government. One of the key theses of Too Different for Comfort, the book I wrote a couple of years ago (available for free download here), was that in the years following the Asian Crisis of the late 1990s, Asia boasted one massive comparative advantage: a much cheaper cost of labor than anyone else. So for ten years, any new factory,...

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

    Gavekal Research

    Five Corners (28 January): In Central Banks We Trust

    Overview: When central banks led a war on inflation in the late 1970s and 80s they kept on fighting long after the enemy was beaten into submission. They are likely to take the same approach of using overwhelming force in today’s fight against deflation, says Anatole. United States: The Swiss may have given forward guidance a bad name, but the Fed should be taken at its word, argues Will Denyer. Unlike Anatole, he thinks that interest rate...

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

    Gavekal Research

    QE: Competitive Devaluation, Or Stealth Bank Recapitalization?

    The battle for morale is half the war. So it is likely to prove in the eurozone, where the impact of quantitative easing will hinge on how investors perceive the European Central Bank’s policy. If they regard it primarily as a competitive devaluation, which would be deeply deflationary for the world economy, then it will make good sense to remain long eurozone bonds and short the euro. On the other hand, if markets decide QE amounts to a...

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

    Gavekal Research

    The Case For A Real Chinese Bull Market

    This report makes the case for a secular improvement in returns from Chinese equities. It does so by a political economy analysis of long-run equity market performance in the three East Asian developmental success stories most akin to China: Japan, South Korea and Taiwan. The basic argument is that when a high-growth economy shifts from policies of “financial repression” to a more liberalized financial system, a sustained period of improved...

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

    Gavekal Research

    Chinese Equities: A Guide For The Perplexed

    The 60% rally in China’s main onshore stock market was clearly one of the big stories of 2014. Whether this bull market can continue is obviously one of the big questions for 2015. As attentive readers will have noticed, we at Gavekal have formed a wide range of views on this subject. This note is an effort to summarize and, we hope, clarify our various opinions.

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

    Gavekal Research

    The Greek Endgame

    With most votes counted it looks as if the euro system has helped give birth to the continent’s very own Hugo Chavez, with the third largest party in Greece’s parliament being neo-Nazis. Nice work! With Spain going to the polls later this year and Italy never far from its next political imbroglio, Greece offers a glimpse of what Europe’s political future could look like. The question is whether the irresistible rise of Alexis Tsipras and his...

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

    Gavekal Research

    Beware The Correction Of False Prices

    I want to start this paper by reiterating a few of my strongly held convictions about the role of central bankers:

    14
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    5C Overview: Easier For Longer

    Following Mario Draghi’s dramatic quantitative easing announcement last week all the main central banks are singing from the same hymn-sheet. The obvious point is that this musical offering is more of a fugue than a unison chorus: Each central bank repeats the Federal Reserve’s original themes of ZIRP and QE in its own time and key, creating a complex pattern of overlapping harmonies and the occasional dissonance. As in a fugue, however, a...

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

    Gavekal Research

    5C United States: What If The Fed Really Did Hike This Year?

    Since making its first rate cut in September 2007, the Federal Reserve has delivered seven years of the most intense monetary easing that modern economies have experienced. Now, the world must grapple with the exit strategy. To be sure, that moment of reckoning could be delayed by factors that include lower oil prices, a higher dollar and renewed risk of a Grexit. But, unlike a certain central bank from a country noted for its chocolate and...

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

    Gavekal Research

    5C China: The PBOC Loves To Be Feared

    With consumer inflation modest, producer prices falling, and many other central banks in easing mode, the People’s Bank of China looks set to cut interest rates further this year following last November’s reduction (see Five Macro Questions For 2015). At the same time the central bank also seems intent on maintaining the pace of financial reform after last year’s moves to widen the renminbi’s permitted trading band and liberalize deposit rates...

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

    Gavekal Research

    5C Europe: How Milton Friedman Helped Save The Euro

    Since the euro’s inception economists have considered the attempt to conduct central banking in a fiscally decentralized currency zone as challenging at best, and at worst doomed to fail. Hence, Milton Friedman said the eurozone would not survive its first recession.

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

    Gavekal Research

    5C Asia: Will The BoJ Follow Suit?

    Governor Haruhiko Kuroda’s comments at the World Economic Forum in Davos last week set off speculation that the Bank of Japan may soon expand its program of quantitative easing. Our base case is that the BoJ is unlikely to oblige QE enthusiasts in the next 6-12 months as Japan is currently in a ‘honeymoon’ period where lower inflation is likely tolerable.

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

    Gavekal Research

    Towards Eurozone Reflation (Part II)

    The European Central Bank has finally crossed its Rubicon. Yesterday ECB president Mario Draghi unveiled plans to buy at least €1.1trn of public, private and supranational debt securities over the next 20 months. And if necessary, the ECB could extend and accelerate this quantitative easing program, expanding its balance sheet by as much as €3trn, or 30% of the eurozone’s gross domestic product, to hit its inflation target.

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

    Gavekal Research

    Australia, The Next Shoe To Drop

    Central bankers are ditching managerial gradualism in their monetary policy communication and are getting serious. Switzerland, Denmark, India and now Canada have all made surprise interest rate moves in recent days—okay, the European Central Bank continues to drip-feed its every thought to friendly journalists, but the sheer scale of the adjustment taking place in relative global prices means that policymakers must respond swiftly to events....

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

    Gavekal Research

    The Essential Emerging Market

    These are challenging times for emerging markets and investors could be forgiven for writing them off as being more trouble than they are worth in terms of risk-adjusted returns. The macro environment is harsh given the continued cratering of commodity prices and a potential reversal of US dollar flows on the back of a likely Federal Reserve tightening. Still, we think this would be a terribly short sighted formulation as the coming year is...

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

    Gavekal Dragonomics

    The Inevitable Rise Of Fiscal Deficits

    China is now pushing forward the biggest reforms to its fiscal system in 20 years.. These important changes will however have one major and rather counter-intuitive consequence: the official government budget deficit will have to get much larger. In China’s case, a wider budget deficit will be evidence of progress not regress.

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

    Gavekal Research

    Positioning Prior To The ECB Decision

    With the European Central Bank set to make its big announcement on quantitative easing tomorrow, the market is already pricing in a game changer. This makes portfolio positioning today a difficult task. Lofty expectations have increased the odds of disappointment, and yet investors can be excused for not wanting to position themselves for a fight with the ECB—after all, it could actually decide to fire up its printing presses in earnest. We have...

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

    Gavekal Research

    In China, Bad News Is Just Bad

    It never rains but it pours. China’s official statisticians announced today that the economy’s annual growth slowed to 7.4% in 2014, the slowest rate in 24 years. Their news came hard on the heels of yesterday’s -7.7% slump in the domestic A-share market, triggered by a tightening in the regulations governing margin trading. That intervention came out of the blue, although the regulators are clearly concerned by the growth of illicit margin...

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

    Gavekal Research

    Towards An OECD Recession In 2015

    One of the OECD’s jobs is to determine when a recession has hit the overall grouping of developed nations. The chart below shows OECD recessions shaded grey, while US recessions, as decided by the National Bureau of Economic Research, are in pink. The OECD seems to record a recession during periods when the industrial production index for the grouping falls over a 12 month period (one exception was 1995 when a mysterious recession apparently...

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

    Gavekal Research

    Who Will Profit From Eurozone QE?

    Finally, the European Central Bank is expected to launch its first program of full-blown quantitative easing, buying sovereign bonds outright with freshly-printed euros. The announcement could come as soon as this Thursday’s policy meeting. But there are big questions still unanswered over how exactly to conduct QE in a currency union made up of supposedly independent countries and autonomous governments.

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

    Gavekal Research

    Swexit!

    So Switzerland’s central bankers have decided that pegging their currency to the European lira administered by ‘Derivative Draghi’—as one of our friends in Hong Kong calls the European Central Bank president—was not such a great idea after all.

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

    Gavekal Research

    The SNB Loses Its Nerve

    Central banks have been at pains to use “forward guidance” as a tool to demonstrate transparency and with it make their policies credible. So investors got quite a shock yesterday when the Swiss National Bank abandoned a near 40 month commitment to peg the EUR/CHF exchange rate at 1.20. In its place the SNB escalated a policy of negative interest rates in an effort to deter hot money inflows; the 3-month Libor target was cut by -50bp to -0.75...

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

    Gavekal Research

    QE And The Drift To Euro-Stagnation

    It’s official, or at least very nearly. Sovereign debt purchases in the secondary market by the European Central Bank are legal under European law. This was the opinion of the European Court of Justice yesterday when giving a preliminary ruling on the ECB’s program of Open Monetary Transactions which was proposed in 2012 although never actually used. The ruling removes a key obstacle to the ECB adopting quantitative easing although the court...

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

    Gavekal Research

    Five Corners (14 January): The Oil Impact

    Overview: Anatole looks back into history and sees no good reason why cheaper oil should not be a huge boost to the global economy.

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

    Gavekal Research

    5C Overview: The Oil Plunge Really Is Good News - by Anatole Kaletsky

    If there is one number that has even more impact on the global economy and financial markets than the Fed funds rate, it is the price of oil. Every global recession since 1970 has been preceded by a doubling of the oil price (January to March 1974, March to October 1979, July to October 1990, June 1999 to March 2000, January 2007 to July 2008). And when oil prices have fallen by more than 50%, the plunge has generally been followed by rapidly...

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

    Gavekal Research

    5C United States: The Economic Ripple Of Cheaper Oil

    Some worry that while US consumers are today benefitting from lower fuel costs, this will be trumped by mass layoffs as the shale energy boom goes bust. We don’t buy it. The shale boom is certainly going to bust, but the size of the US energy sector should not be over-estimated and nor should the positive effects that tend to follow oil price declines be underestimated.

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

    Gavekal Research

    5C Europe: A J-Curve For Corporate Profits

    There are three main ways that the oil price counter-shock should deliver higher real economic growth in the eurozone economy (see The Triple Merit Of Lower Energy Prices).

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

    Gavekal Research

    5C Asia: Oil's Bane Is Asia's Boon

    The oil price plunge is likely to create dislocations in the global economy for years to come, especially if consensus predictions of ‘lower for longer’ play out. Asia, as a net oil importer, almost certainly stands to gain, although the path to prosperity will vary depending on where a particular economy is in the economic cycle. Japan and India offer prime examples of this divergence.

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

    Gavekal Research

    Where's The Arbitrage In China Shares?

    The rally in China’s domestic equity market over the last two months has been spectacular; the run-up in Hong Kong’s offshore market less so. While the Shanghai composite index has shot up 33% since late November, the MSCI China index—composed of mainland businesses listed in Hong Kong—has climbed a relatively feeble 5%. As a result, onshore and offshore valuations have diverged markedly, defying expectations that November’s launch of a channel...

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

    Gavekal Research

    5C China: A Mixed Bag Of Blessings

    Most researchers have rightly argued that China will on balance benefit from US$50 a barrel oil since it is a large net-importer of the stuff. The standard story runs that the trade surplus should swell and consumers can use their effective tax cut to buy other items. We have addressed the regional impact of cheaper oil, but on the whole the negative consequences have gotten less attention (see The Losers From Lower Energy Prices). This is a...

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

    Gavekal Research

    Europe’s Quantitative Teasing

    On Wednesday the eurozone is likely to inch a step closer to quantitative easing when the European Court of Justice hands down its preliminary ruling on the legality of the European Central Bank’s program of Outright Monetary Transactions proposed in 2012. While the ECJ is expected to find that the OMT lies within the ECB’s competence (to use Euro-jargon), any qualifications it makes will go a long way to determine the shape of a eurozone QE...

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

    Gavekal Research

    Setting Aside Emotion And Seeking Reason

    Une nation est une âme, un principe spirituel. Deux choses qui, à vrai dire, n’en font qu’une, constituent cette âme, ce principe spirituel. L’une est dans le passé, l’autre dans le présent. L’une est la possession en commun d’un riche legs de souvenirs ; l’autre est le consentement actuel, le désir de vivre ensemble, la volonté de continuer à faire valoir l’héritage qu’on a reçu indivis. Ernest Renan, Conférence à la Sorbonne, March 1883

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

    Gavekal Research

    Still Aiming For The Top

    China has long criticized the dominant role of the US, arguing instead for a “multipolar” world. But a recent and surprisingly dovish speech by Vice Premier Wang Yang has stirred up a debate about whether Beijing’s foreign policy is becoming more accommodative. So is China really willing to accept a US-led international order? Don’t believe it for a moment.

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

    Gavekal Research

    Managing Equities In A Strong Dollar World

    In December, we examined the rules a fixed income manager should follow when the US dollar is going through a period of structural appreciation. We emphasized that these are different from the guidelines he or she should follow when the US dollar is structurally falling. Equity managers too should change their approach when the US dollar is in a structural up-trend, but the sets of rules they should follow are vastly more complicated than...

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

    Gavekal Research

    Discrimination Pays In The Emerging Markets

    Viewed as a single asset class, the emerging markets had a tough time of it in 2014. A world characterized by weak global demand, soft commodity prices and a stronger US currency left US dollar-reliant emerging economies exposed and vulnerable. Today, as we roll into 2015, emerging markets are still facing the same headwinds. The US will struggle to support global growth single-handedly and the oil price is unlikely to stage a meaningful...

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

    Gavekal Research

    The Macro Dividend From Oil

    Now that the markets have dealt with their post-New Year hangover and the buy-on-dips normal service has been resumed, it seems a good time to step back and consider some of the themes that could dominate markets in the months ahead. Here are some suggestions for this year’s main macro stories, with some financial implications at the end.

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

    Gavekal Research

    Stay Long The Renminbi

    With the Federal Reserve expected to raise interest rates, Europe seemingly about to embrace quantitative easing, and Japan’s economy still in the doldrums, the US dollar’s rise looks unstoppable. But for investors seeking a longer term store of value, the Chinese renminbi is a surer bet.

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

    Gavekal Research

    Stick With US Treasuries

    US treasuries have maintained their stellar performance in the first three trading sessions of 2015 with yields of both the 10-year and 30-year declining more than 20bp. A year ago I advised strongly for investors to buy long-dated treasuries. But last month I suggested a tilt toward shorter duration portfolios due to the changed macro environment and more challenging valuations (see Managing Bonds In A Strong Dollar World). In light of recent...

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

    Gavekal Dragonomics

    Five Macro Questions For 2015

    For our first China research piece in the new year, we offer a guide to the economic outlook in the form of short answers to some big questions: Will the pace of economic reform accelerate? Will monetary policy keep getting looser? Will the property market recover convincingly? Can corporate profits hold up? Is consumer spending in trouble?

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

    Gavekal Research

    Growth & Markets Monthly (January 2015)

    In this year’s first Growth and Markets monthly, we observe continued deterioration of our main growth indicators. That said, part of this slowing is related to weaker commodity prices, themselves more a result of oversupply than a general lack of demand. On that note, it was interesting to see that our diffusion index of OECD leading indicators (less geared towards commodities) is climbing higher. When it comes to risk, we note that our...

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

    Gavekal Research

    From Greed To Fear

    For the last two and a half years since June 2012, the best strategy for global equity investors has been to buy on dips. The strategy worked because of a very high level of market resilience combined with a (sometimes excessively) optimistic environment. As a result, over the last couple of years markets have tended to recover very quickly from shallow corrections.

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

    Gavekal Research

    Oil And US Contagion Risks

    Oil prices are 50% lower than last summer and it is not clear that the rout is over. Such a dramatic price adjustment in what is arguably the most essential commodity to modern life will inevitably shape the economic and investment landscape in 2015. In the case of the world’s largest oil consumer, our view has been that lower oil prices reinforce the case for a sustained US recovery. Our proviso to this fairly cheery prognosis is that the...

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

    Gavekal Research

    The Long Shadow Of The Commodity Bust

    The commodity boom of the past decade had all the hallmarks of a typical bubble: massive retail participation (through ETFs, mutual funds etc…), large pension fund involvement, a widespread belief that ‘this time, things were different’ and that a ‘commodity super-cycle’ was unfolding. But like all bubbles, this one too has come to an end. There were plenty of potential triggers in the shape of (i) the Federal Reserve’s decision to stop printing...

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

    Gavekal Research

    Europe's Corporate Jurassic Park

    Corporate Europe has now suffered through two years of an unwonted profit drought. Since early 2013 the eurozone’s gross domestic product has swung from a -1% year-on-year contraction to between 0.75% and 1% growth. The historical relationship between GDP growth and earnings per share implies that EPS growth should have picked up in tandem with the—admittedly modest—pick-up in economic growth. Yet the aggregate level of eurozone EPS is roughly...

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

    Gavekal Research

    The Perils That Lurk After Lending Club’s Success

    The last fortnight has seen the first two initial public offerings in the US by peer-to-peer lenders whose radical business model threatens traditional financial services firms (see The Disruption That Could Change Banking). Shares in Lending Club, the world’s largest online P2P marketplace by new loan volumes, soared 50% on its December 11 trading debut, while on Wednesday those of On Deck, an online lender to small firms in the US, rose 30%.

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

    Gavekal Research

    Turkey’s Big Win From Oil

    The Turkish lira hit a new low against the US dollar this week, in part due to heightened political tension that followed the arrest of journalists who have been critical of the ruling AK Party. The episode acts as a reminder that Turkey remains vulnerable to changing perceptions of political risk and even small shifts in global risk appetite. Still, we remain generally enamored with a Turkish growth story that should get a major boost from a...

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

    Gavekal Research

    Janet Yellen’s Inner Wicksellian

    As readers may be aware I have written very little on central banks and their policies recently. At the beginning of the zero interest rate policy experiment—which so far has lasted longer than World War II—I tried to explain why I thought it was a terrible idea (see The High Cost Of Free Money). However, I rapidly came to realize that my role was not to tell central banks what they ought and ought not to do, but rather to try to help our...

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

    Gavekal Research

    Catching The Russian Knife

    Why does a country with US$416bn of foreign exchange reserves and a current account surplus bigger than China or Japan relative to the size of its economy, suffer a currency crisis? The obvious answer is that the country is called Russia and it has launched an undeclared war against the US and EU. On closer inspection, however, this year’s 50% devaluation of the ruble, which culminated with an apparent death-plunge on Wednesday morning after the...

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

    Gavekal Research

    Will US$50 Be Oil’s Floor, Or Its Ceiling?

    As I explained in yesterday’s Daily, the oil price is set to remain depressed at least through 2015, until the Saudis are satisfied that they have injured their geopolitical and economic competitors severely enough to regain pricing power. The big question now is whether a price of around US$50 a barrel—some 10-15% below present levels—forms the floor of oil’s trading range for the next few years, as it did between 2005 to 2014, or whether US$...

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

    Gavekal Dragonomics

    Macro Update: Easing Policy In The New Normal

    China’s government has moved to more decisively support growth by cutting interest rates. But at the same time the leadership is emphasizing that China also faces “new normal” of slower growth. How will the latest move to easier policy play out in this new context? We think lower rates will offer some support to the real economy, but that the upturn in the credit cycle will be modest by recent standards. In the latest installment of our China...

    0
  • Gavekal Research

    Oil: Lower For Longer

    How low can the oil price go? And how long can it stay down? These two questions are weighing on the mind of every investor in the world these days, to the exclusion of almost everything else. Nobody can respond to the first question with any confidence—although we take a stab below—but the second is actually pretty easy to answer.

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

    Gavekal Dragonomics

    Beijing Will Call The Shots In Resource Sector Battle Royal

    In October the world’s fourth largest mining company, Glencore, launched an audacious merger bid for the world’s second biggest miner, Rio Tinto. The approach was rebuffed, and United Kingdom takeover rules—both companies have London listings—forbid Glencore from making any further overtures for the following six months. Yet few in the mining business believe that is the end of the story. Glencore’s chief executive officer Ivan Glasenberg has...

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

    Gavekal Research

    Europe Not EMs At The Vortex

    In the summer of 1998, Russia’s financial crisis stemmed from the oil price plunge that followed the Asian financial crisis. Today the worry is that Russia’s fall is causing a cycle of contagion which could pull down even decently managed emerging economies. Unusually, this collapse is happening just as the world’s biggest asset allocators prepare to effectively shut up shop. It is rare to get a full blown crisis over year-end simply because...

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

    Gavekal Research

    Managing Bonds In A Strong Dollar World

    During my money management career I have come to realize that there are two basic investing environments. There are periods when the US dollar is structurally declining and there are times when it is structurally appreciating. Depending on which condition applies, then anyone running a global investment portfolio should use different decision rules. We are probably moving into a period of structural dollar appreciation, so it seems an opportune...

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

    Gavekal Dragonomics

    Deflation: Local Or Global?

    Another month, another fall in Chinese producer prices. Last week’s release of inflation data showed that consumer-price inflation is still low at 1.4%, and producer prices are still dropping, by 2.7%. The producer-price index (PPI) has now fallen every month since March 2012. This extended spell of falling prices is giving rise to worries that China’s deflationary pressures could spread beyond its borders, weighing down attempts by Europe,...

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

    Gavekal Research

    The Scene Is Set For Abenomics Act II

    On Sunday, Prime Minister Shinzo Abe got what he wanted: a resounding victory in Japan’s snap general election; a general election he had painted as a referendum on his ‘Abenomics’ economic policy program. Abe’s Liberal Democratic Party and Komeito, its junior partner in the ruling coalition, won 325 of the 475 seats up for grabs in the House of Representatives, maintaining their two-thirds majority in the lower house of Japan’s parliament,...

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

    Gavekal Research

    Our Holiday Reading List

    For the third year we are publishing a year-end books round-up. The topics covered by the 17 books in our compendium include hardy Gavekal perennials such as economics, politics and the effect of technological transformation on modern life. In addition Charles considers ancient Rome’s decline due to its apparent embrace of socialism over liberalism. Louis kicks us off with a look at the roots of our most basic human urges.

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

    Gavekal Research

    The Sources Of US Purchasing Power

    5
  • 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

    China And North Asia’s Deflation Syndrome

    Northeast Asian economies are “fated” to experience a structural deflation as they mature due to the nature of their industrialization model. Such economic determinism means that China faces an imminent risk of structural deflation similar to that experienced by Taiwan 20 years ago. In this piece Joyce argues that the way Northeast Asian economies protect their financial systems helps them avoid acute financial crises, but ensures a date with...

    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

    China A-Shares: Beyond The Leverage

    It is no secret that China’s A-share market has risen as far and as fast as it has over the last few weeks because stock prices have been propelled by an explosion in margin trading and soaring interest in index futures. But although rising leverage can add enormously to the momentum of a stock market rally to create a runaway snowball effect, leverage by itself is not enough to set the ball rolling in the first place. At least some of the...

    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 China: No One Expects Chinese Inflation

    Not many prices are rising in China these days. Core consumer-price inflation has averaged less than 2% over the past two years. The producer price index has been falling for nearly three years. Prices of coal, iron ore and now oil, once bolstered by Chinese demand, are in retreat globally. Housing prices are in their longest correction since 2008.

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

    Gavekal Research

    Asset Allocation In The Era Of Cheap Oil

    I’ve read plenty of bullish statements recently saying that the decline in oil prices amounts to a massive tax cut; “a phenomenon that’s making everybody better off,” as US Federal Reserve vice chairman Stanley Fischer declared last week. But as Frédéric Bastiat wrote, in economics you have what you see and what you don’t see, or as Milton Friedman put it: “There is no such thing as a free lunch.”

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

    Gavekal Research

    A Dream Of Asian Empire

    After years of passive diplomacy, China is now making it clear that it wants to play a substantive role on the global stage. In foreign policy, Xi Jinping’s “Chinese dream” means restoring China’s historical dominance in Asia. China is serious about winning friends and helping its neighbors to benefit from its rise, but its own interests come first: it wants to generate new trade networks, open up transit routes for its exports, and develop its...

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

    Gavekal Research

    5C Overview: The Remaking Of Global Oil Markets

    Almost everyone can agree that plunging oil prices are good for the world economy and crippling for oil producers such as Russia and Venezuela, but what about the big oil companies? The shareholders of oil majors such as Exxon, Chevron, Shell, BP and Total could be surprising beneficiaries if prices fall far enough to persuade corporate raiders or LBO investors that these companies should stop spending money on exploration and instead be...

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

    Gavekal Research

    5C United States: US Capex Will Grow Despite Energy Sector Cuts

    The relentless decline of oil prices promises to be a key variable impacting economic activity in 2015. The positive implication for consumers is clear. The implication for capital spending growth is less obvious. Our view is that the outlook for overall US capital spending is bright, despite the likely collapse of oil-related capex. In fact, it may be brighter because of the collapse in oil prices.

    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

    5C Asia: When To Bet On A Reversal Of The Yen?

    “Abenomics” has become a confidence game in that the government must do whatever it takes to stop the public losing faith in the Bank of Japan’s ability to spur reflation—even if this means printing ever larger sums of money (see Gold For Japan’s Confidence Game). A breakdown in confidence is unthinkable as it will kill both risk appetite and consumer demand. So unless Shinzo Abe can pull a rabbit from the hat, Japan appears to be heading for...

    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

    Normalization of Chinese oil demand

    China’s investment–heavy and energy-intensive model of economic growth over the last decade meant that the country accounted for about two thirds of global oil demand growth. A frenzy of building, manufacturing and freight movement resulted in an extra 450,000 barrels of oil, on average, being consumed each day. But as China’s economy eases into a lower growth trajectory and energy efficiency policies are adopted, oil demand growth could halve...

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

    Gavekal Dragonomics

    A Leverage-Driven Rally

    China’s domestic “A-share” market is on steroids. The Shanghai Composite index has now risen by 42% since the middle of the year, and has shot up by 18% just in the nine trading days since the People’s Bank of China cut benchmark interest rates. Sure, the rate cut provided a fillip to sentiment, yet even so the current rally looks highly unusual. Over the last three years, the A-share market has broadly mirrored China’s economic cycle, rising...

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

    Gavekal Research

    China's Leverage-Driven Rally

    China’s domestic ‘A-share’ market is on steroids. The Shanghai composite index has now risen by 38% since the middle of the year, and has shot up by 15% just in the eight trading days since the People’s Bank of China cut benchmark interest rates. Sure, the rate cut provided a fillip to sentiment, yet even so the current rally looks highly unusual. Over the last three years, the A-share market has broadly mirrored China’s economic cycle, rising...

    3
  • 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 Dragonomics

    CEQ: The Xi Jinping Scorecard

    How is Xi Jinping doing? A year after the landmark Third Plenum at which China's leader laid out his vision for reforming China, this issue of the CEQ takes a close look at the progress of the reform program. Our expert contributors assess the achievements and the shortfalls, the winners and the losers.

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

    Gavekal Research

    The Commodity Bust: Not The Obvious Winners & Losers

    The huge moves in oil over the last four trading sessions together with the ongoing cratering of prices across the commodity complex have added to deflationary pressures weighing on developed and developing economies alike. But the greatest pressures are inevitably being seen in emerging markets as they tend to be (i) the biggest commodity exporters, and (ii) are more likely to subsidize fuels (developed economies prefer to tax most fuels like...

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

    Gavekal Dragonomics

    The Dilemma Of Deposit Insurance

    After debating it for more than 20 years, China has begun the process of setting up a deposit-insurance system, which will give the government’s formal backing to most bank deposits. Deposit insurance is the conventional protection against financial crises in 112 countries: it shields households from the vagaries of financial markets, helps prevent bank runs and improves financial stability. But China’s different starting point means that it...

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

    Gavekal Research

    A Better Class Of Bubble

    We never tire of pointing out that, when it comes to bubbles, no two bubbles are ever the same. Firstly, bubbles can bid up asset values because of their perceived ‘scarcity’ (typically land and real estate, but also tulips, or gold…) or because of their productivity (canals, railroads, telecom lines, energy…). This distinction matters because, in the first case, an economy is left with no more land (or gold, or tulips…) than at the outset. In...

    13
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Quarterly Strategy Chartbook - Avoiding The Pitfalls Ahead

    Forces of creative destruction are building up in the world economy as never before. Several of Gavekal’s key indicators are signalling that we are moving into a mild deflationary boom, in which cheaper resources, lower technology costs—especially for robotics—and accelerating disintermediation—notably in the financial sector—all promise to act as game-changers over the coming years. Reliably picking winners in such disruptive times is difficult...

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

    Gavekal Dragonomics

    CEQ Q4 2014

    China’s growth decelerates again. After a short mid-year recovery, China’s GDP growth slowed again to 7.3% in the third quarter. Senior leaders’ comments about the “new normal” for economic growth show a further slowdown is expected. The trade balance is solid, thanks to decent demand from the US and Europe and falling commodity prices. But consumption and income growth are starting to weaken.

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

    Gavekal Dragonomics

    CEQ Q4 2014 - Irresistible Advance Of The Private Sector

    Markets over Mao: The Rise of Private Business in China, by Nicholas R. Lardy (Peterson Institute for International Economics, 2014)

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

    Gavekal Dragonomics

    CEQ Q4 2014 - Socialist Rule Of Law, Hong Kong Democracy Movement

    So What Exactly Is 'Socialist Rule Of Law With Chinese Characteristics'?

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

    Gavekal Dragonomics

    CEQ Q4 2014 - The Market Is Open - Should You Buy?

    Foreigners can now invest in domestic Chinese shares through their Hong Kong brokers. Unfortunately, there are precious few reasons to buy.

    0
Show me: results