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Gavekal Research
Anatole Kaletsky
May 09th 2018
Hardly A Game Changer For Oil
While nobody could have been surprised by the full-scale commercial warfare launched against Iran by President Trump yesterday, his announcement raised more questions than answers. The most important question is whether this action will make the world safer or further destabilize Middle Eastern and global geopolitics. The second question is whether the US enforcement of sanctions will really be as tough as Trump’s belligerent rhetoric and the...
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Gavekal Research
Anatole Kaletsky
May 08th 2018
What—Me Worry?
What should most worry investors about the state of the US economy today? The answer is: “Total absence of worry”. That was my clear conclusion after a week in Los Angeles hobnobbing with the thousands of CEOs, financiers, technologists and politicians at the Milken Global Conference. An intoxicating cocktail of tax cuts, deregulation and record profits has transformed the post-crisis normalization of business confidence into uncritical euphoria.
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Gavekal Research
Anatole Kaletsky
Apr 09th 2018
The New Source Of Market Risk
Believe it or not, there was good news, as well as bad, from the US markets last Friday. The bad news was obviously Donald Trump’s threat to escalate the trade war with China and the equally aggressive response from Beijing. The good news was the fall in March’s US payrolls growth to just 103,000 from February’s upwardly-revised 326,000. This slowdown has eliminated, at least until after the summer, the risk of an unexpected Federal Reserve...
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Gavekal Research
Anatole Kaletsky
Apr 05th 2018
Reasons To Buy The Dip
After spending many years as Gavekal’s equity permabull, I joined Charles and Louis last December in warning of the risks to what was then a roaring, and accelerating, bull market. But my way of thinking about these risks was rooted in a different analytical framework, and so I have come to a different conclusion about how investors should respond to this latest sell-off (for Louis’ take, see Following Yesterday’s Pullback). With the lows of mid...
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Gavekal Research
Louis Gave, Anatole Kaletsky, Joyce Poon
Apr 03rd 2018
Strategy Monthly: Navigating In Choppy Waters
With its latest sell-off, the S&P 500 capped two months of volatility by moving officially into correction territory: down -10% from its January high, and below its 200-day moving average for the first time in two years. Is this the end of the long US equity bull market? In this edition of our Strategy Monthly, we offer three perspectives on how investors should position themselves in these more volatile times.
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Gavekal Research
Anatole Kaletsky
Mar 27th 2018
Why Aren’t Bond Investors Panicking?
Once again, the volatility that rocked global financial markets in recent days was at least as interesting for what it didn’t tell us as what it did. Amid growing protectionism, rising rates and fiscal irresponsibility in the US government, the biggest and most important financial market of all—the US treasury market—isn’t bothered.
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Gavekal Research
Charles Gave, Tom Miller, Cedric Gemehl, Anatole Kaletsky
Mar 23rd 2018
London Seminar — March 2018
In our seminar in London this week Charles pondered the investment consequences of the US moving back into an inflationary period. Tom discussed Chinese politics in light of Xi Jinping’s elevation. Cedric presented on how investors can best benefit from the diversity of the European economy. Anatole explained why the long-running global bull market is likely to continue, but also where the risks are buried.
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Gavekal Research
Cedric Gemehl, Anatole Kaletsky
Mar 06th 2018
Change And Stasis In Italy
In Italy’s general election on Sunday, the anti-establishment Five Star Movement emerged as the largest single party in each chamber of parliament, and the populist Lega eclipsed Silvio Berlusconi’s Forze Italia to dominate the right of Italian politics. Following these changes, it is hard to see how any plausible combination of parties can secure a stable majority in both houses of parliament. As Cedric and Anatole explain, the most likely...
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Gavekal Research
Anatole Kaletsky, Cedric Gemehl
Mar 05th 2018
Time To Stop Worrying About EU Political Risk
Is it time for investors to finally forget about “political risk” in the eurozone? Judging by the weekend’s events in Germany and Italy the answer is an emphatic “Yes”. The big event was the overwhelming vote by Germany’s Social Democratic Party to participate in a “grand coalition” with the center-right. This means that Angela Merkel will be reappointed for a fourth term as chancellor. Thus Germany will have a stable government with no serious...
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Gavekal Research
Anatole Kaletsky
Feb 22nd 2018
After The Yellen And Bernanke Puts, The Pavlov Put
Last Monday, I pointed to three reasons why the recent turmoil in global equities would probably prove nothing worse than a counter-trend “buy on dips” correction, rather than the start of a serious bear market. That's not to say that worries about inflation and overheating are unfounded. But investors are still quite relaxed about both growth and inflation, as evidenced by historically modest bond yields.
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Gavekal Research
Anatole Kaletsky
Feb 12th 2018
CSI Wall Street
Bear market massacre or harmless buy-the-dip correction? Financial investigators have spent the weekend sifting through, dismantling and reassembling dozens of clues to determine the true nature of the shocking crime committed on Wall Street last week, as stock prices suddenly went down instead of up. But amid the righteous indignation inspired by this offence against morality and natural law, possibly the most important forensic evidence has...
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Gavekal Research
Anatole Kaletsky, Louis Gave, Arthur Kroeber
Jan 17th 2018
Audio & Transcript — Gavekal Research Call January 2018
In Gavekal’s monthly research call yesterday, Louis Gave reviewed evidence that the investment environment is experiencing a once-in-a-generation shift from a deflationary environment to one that is broadly inflationary. Anatole Kaletsky argued that this metamorphosis will likely be an orderly affair. Arthur Kroeber updated his view on China’s likely impact on global commodity markets.
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Gavekal Research
Anatole Kaletsky
Jan 16th 2018
The Five Big Bond Market Questions
With 10-year US treasury yields near the point of breaking out above their 2017 high of 2.6%, financial commentators around the world have suddenly become obsessed with a single question: Have bonds finally entered a bear market, after the multi-decade bull trend that started back in October 1981, when the 10-year yield peaked at 15.8%?
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Gavekal Research
Anatole Kaletsky
Jan 02nd 2018
The Big Questions For 2018
Many of the important questions confronting investors at the beginning of 2018 are the same as they were 12 months ago. And in most cases I would suggest the same answers. This may seem boring or stubborn, but it is quite reasonable in the middle of a long term economic expansion and structural bull market.
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Gavekal Research
Anatole Kaletsky
Dec 15th 2017
No Full English Brexit In The EU’s Roach Motel
Full English Brexit is off the menu. When Theresa May rushed into the Café Berlaymont at 6:00am last Friday, all that was left on the menu was an over-priced double espresso with a side of Irish bacon. When she returned to Brussels yesterday, after losing a crucial parliamentary vote on her Brexit policy, the only new item on the menu was a large slice of humble pie.
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Gavekal Research
Anatole Kaletsky
Dec 14th 2017
Audio & Transcript — Gavekal Research December Call
In Gavekal Research’s monthly conference call yesterday Anatole Kaletsky outlined five reasons why investors can be optimistic that the current bull market will continue for years to come. His bullishness is moderated by three broad risks.
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Gavekal Research
Anatole Kaletsky
Dec 04th 2017
Strategy Monthly: The Long Cycle Continues
As equity markets everywhere continue to trade higher, money managers are getting increasingly nervous about how long the rally can last. In December’s Strategy Monthly, Anatole argues that we are still only half-way through a secular bull market that can last through the end of the decade. With further US rate hikes on the cards, barring any nasty surprises non-US markets are likely to outperform going forward. The only fly in the ointment is...
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Gavekal Research
Anatole Kaletsky
Nov 30th 2017
Goldilocks And The Ten Grizzly Bears
Over the last fortnight, Anatole has written lengthy pieces on why he remains structurally bullish and how investors should play this trend. Today, he takes a realistic look at factors that could disrupt his generally upbeat assessment of the global economy and markets. This piece is a journey into Anatole’s darker side.
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Gavekal Research
Anatole Kaletsky
Nov 28th 2017
A Regime Change For Oil?
Every US or global recession in the past 50 years has been preceded by a doubling or more of oil prices, but not every doubling of oil prices has been followed by recession. While even US$70/bbl probably does not pose a serious risk to the world economy, any rise above US$70 could spark a combination of inflationary pressure and reduced demand that proves lethal to global financial conditions and growth.
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Gavekal Research
Anatole Kaletsky
Nov 23rd 2017
Fake Brexit? Or No Brexit?
The British economy since the Brexit referendum is often likened to the suicide jumper who leaps off a 20-storey building, shouting “so far, so good” as he falls past the 10th floor. This comparison is unfair to suicides. The real message about economic performance from the government’s annual budget statement yesterday was “so far, so bad”. While a minority of economists and investors—plus a large majority of Conservative politicians—share...
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