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Gavekal Research
Anatole Kaletsky, Simon Pritchard
Nov 15th 2018
The Winding Road To Vassalage
No one much likes Theresa May’s compromise deal that would leave Britain as a rule-taking, semi-detached appendage to the European Union. That, however, is the most likely outcome after the UK cabinet yesterday approved an exit deal that sets up a November 25 summit, where EU leaders will be asked for their assent. Shortly afterwards, the UK parliament will have its say, and despite challenging math in the House of Commons a “national interest”...
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Gavekal Research
Anatole Kaletsky
Nov 13th 2018
This Really May Be The Start Of A Year-End Rally
Although this week started with a violent sell-off, Anatole argues that the stars are aligned for a year-end equity rally, especially in emerging markets. This is because EMs have sold off not on US interest rate worries but a combination of rising oil prices and heightened political risk. Those headwinds now seem to be abating and beaten up markets could surprise before year-end.
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Gavekal Research
Anatole Kaletsky, Charles Gave
Nov 09th 2018
London Seminar — October 2018
At Gavekal’s seminar in London last month Charles Gave and Anatole Kaletsky presented on whether the world is breaking up into three different monetary zones, and whether this is a correction to, or an end to, the long-running global bull market. Micahel Clendenin of Gavekal RedTech explained how they conduct research on the Chinese technology and internet sector.
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Gavekal Research
Anatole Kaletsky
Nov 02nd 2018
It's Finally Safe To Buy Sterling
The pound rose 2% yesterday after a statement from the British government that a Brexit deal could be expected by late this month. That has since been rowed back. Nevertheless, the UK is moving into an endgame where the most plausible outcomes are either a "soft Brexit", or a new referendum which results in the UK remaining in the EU. Both would be good news for sterling.
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Gavekal Research
Anatole Kaletsky, Will Denyer
Nov 01st 2018
Strategy Monthly: Yes, We're Still In A Bull Market
Anatole and Will believe that continued exposure to US equities makes sense, since underlying corporate profitability remains strong. So long as one avoids the most rate-sensitive sectors, US portfolios should be 70-75% in stocks, with the rest mainly in cash. Moreover, they argue that the period of EM underperformance is now done, and emerging markets are poised for a significant rally.
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Gavekal Research
Anatole Kaletsky
Oct 22nd 2018
How The Brexit Stalemate Breaks
As the Brexit negotiations enter their endgame, a stalemate has become the most likely outcome. Theresa May’s Conservative Party is now in open rebellion against her leadership, with Britain’s weekend press reporting that her government is just 72 hours from collapse. And a “No Deal” Brexit “car crash” is now described as a 50-50 probability by many politicians and commentators in both Britain and Europe. Yet the pound has maintained its value...
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Gavekal Research
Louis Gave, Anatole Kaletsky
Oct 11th 2018
Audio & Transcript — Gavekal Research Call October 2018
In this month’s Research Conference Call Louis-Vincent Gave examined the present bad tidings from markets and asked whether the global bull market faces a denouement. Anatole Kaletsky argued that this sell-off will likely prove to be a temporary setback for emerging markets and that the global bull market may have further to run. However, he warned that the outcome will depend heavily on where the oil price goes from here.
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Gavekal Research
Anatole Kaletsky
Sep 24th 2018
No Deal Could Mean No Brexit
After European Union leaders rejected Theresa May’s Chequers deal, the UK government is left with only two alternatives, argues Anatole. If Parliament in November is confronted with No Deal or No Brexit, the most likely outcome would be a new referendum and a vote to remain. The result will be a massive appreciation of sterling and a rally in many UK domestic assets.
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Gavekal Research
Anatole Kaletsky
Sep 12th 2018
Why The US Cannot Win A Trade War
The US has made a fundamental policy mistake in pursuing a trade war against China. A Keynesian macroeconomic analysis shows that the US will likely be worst affected by the conflict, while China should escape unscathed and several other emerging markets could be clear gainers. This sell-off may be an ideal opportunity to "buy the dip" in EMs
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Gavekal Research
Anatole Kaletsky
Aug 30th 2018
Tail Risks That Worry Me
Yesterday I made the case that emerging markets should be superior performers in a global bull market, which I characterized as the most hated in history. What that analysis left out was the relative prospects of the other big blocks in the global equity universe; namely, Europe and Japan. My core point yesterday was that trade wars do more harm to economies that close their markets than those countries which supply them, and on this score...
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Gavekal Research
Anatole Kaletsky
Aug 29th 2018
Misunderstanding Today’s EMs
Suppose that, like me, you think the global equity bull market has a few more years to run and hence the sell-off which culminated with Turkish debt being downgraded two weeks ago was a merely a correction. Where are the best opportunities to “buy the dip”? The answer depends on whether you also share my view about the underlying causes of this year’s market setbacks.
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Gavekal Research
Anatole Kaletsky
Aug 23rd 2018
The Most Hated Bull Market In History
Anatole reviews the state of the US bull market and concludes that it still has legs. He does, however, warn that portfolio strategies which worked well during the disinflationary era since the mid-1980s are unlikely to play well in this bull market’s later stage.
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Gavekal Research
Anatole Kaletsky
Aug 02nd 2018
The Bullish Logic Of Trump’s U-Turns
The news on Wednesday that Donald Trump’s administration is considering imposing tariffs of 25%—rather than 10%—on an additional US$200bn of Chinese goods might appear to be an aggressive escalation of its trade conflict with China. But there is a high probability the proposed tariffs will never be implemented. Trump has a track record of talking tough, only to back down before it comes to the crunch; a pattern of behavior that may help to...
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Gavekal Research
Anatole Kaletsky
Jul 27th 2018
The Arithmetic Of Brexit
If a country votes to make two plus two equal five, that “democratic decision” will eventually be overwritten by the rules of arithmetic. Anatole reckons this is what’s playing out in Britain, as Theresa May’s government struggles to get a parliamentary majority for any realistic Brexit plan. If the situation persists, the only alternative will be another referendum—only this time the choice would be between remain and a far less attractive, but...
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Gavekal Research
Anatole Kaletsky
Jul 09th 2018
Time To Buy Brexit Britain
“Will the Brexit agony never end?” Anatole asked in mid-June. It now seems that the agony may end much sooner than expected. Following last Friday’s decision by prime minister Theresa May to blur all her “red lines” in negotiations with the EU, and—paradoxically—the subsequent resignation of hard-Brexiteer cabinet minister David Davis, the time to start buying cheap British assets may have come.
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Gavekal Research
Anatole Kaletsky
Jun 14th 2018
The Terms Of Betrayal
Will the Brexit agony never end? Theresa May managed this week to remove troublesome amendments attached by the House of Lords to her legislation for taking Britain out of the European Union. But she was immediately in even deeper political trouble. These problems show just why I have been advising clients to avoid any big bets in sterling assets, whether long or short.
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Gavekal Research
Anatole Kaletsky
Jun 06th 2018
‘Peak Politics’: Another Chance To Buy The Dip?
In recent weeks, investors have been hit with multiple political shocks in the shape of Italian politics, American trade policy and global oil shenanigans. But even as President Donald Trump seems to escalate the American “trade war” and Italy’s new prime minister thumbs his nose at Brussels’ budget parsimony, Anatole asks if political risks have in fact peaked, offering a “buy the dip” opportunity.
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Gavekal Research
Anatole Kaletsky, Cedric Gemehl
May 31st 2018
Whether To Buy Italy (And The Euro)
On Wednesday, Louis argued that the Italian president’s rejection of a proposed coalition finance minister was “worse than a crime, a mistake”. Anatole and Cedric are not so sure. In this paper they examine the two conditions—one political, one financial—that will signal a major buying opportunity in Italy.
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Gavekal Research
Anatole Kaletsky
May 21st 2018
The Resurgence Of Political Risk
Political risk is now the main driving force of financial markets. In 2017 investors learned—or thought they had learned—that political upheavals just create noise, with no lasting effect on market trends that are set by economic fundamentals. But in 2018 this relationship has been reversed. Wherever we look today—at oil prices, global trade flows or conditions in Europe—politics seems to overwhelm economic fundamentals and set the market trends.
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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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