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Gavekal Research
Will Denyer, Tan Kai Xian
Oct 22nd 2021
Webinar: What To Expect As The Fed Tapers
The Federal Reserve is planning to wind down its creation of artificial savings just as the US net national savings rate has ticked lower and the Treasury is preparing to rebuild its depleted cash balances. Will and KX set out what these all these shifts—as well as rising inflation, tightening labor markets and deteriorating housing affordability—mean for US stock and bond markets.
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Gavekal Research
Will Denyer
Oct 18th 2021
The Source Of Discoordination And Inflation
Today, the global economy lacks its usual order. Each month brings a new shortage that is disrupting supply chains and driving up prices. In short, the right goods are not being delivered at the right time and place. Will examines the drivers of spacial and temporal "discoordination" to determine how investors should allocate assets in this challenging environment.
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Gavekal Research
Will Denyer
Oct 18th 2021
The Troubling Signal In US Savings
In recent months, the US net national savings rate—the share of income unconsumed—has ticked lower. It may seem a small concern as the Federal Reserve prepares to taper, but if the rate of genuine savings continues to fall over coming quarters, it will be a danger signal both for asset markets and for US economic growth.
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Gavekal Research
Will Denyer
Oct 13th 2021
Video: Musical Chairs At The Fed
After the resignation of two regional Federal Reserve branch presidents over potential conflicts of interest, the knives are out in Washington for Jay Powell. In this video interview, Will assesses what personnel changes at the Fed may mean for the trajectory of US monetary policy and for the Fed’s role as US banking supervisor.
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Gavekal Research
Will Denyer
Oct 08th 2021
A Temporary Respite
Going into 4Q21, a worry for Will had been that asset prices faced the prospect of two tightening moves to US liquidity. Yet, with Congress now punting a debt-ceiling reckoning to December, this could, in turn, delay the Fed’s taper announcement to December, or even January. Thus, yesterday’s deal on Capitol Hill could allow temporary relief on the liquidity front.
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Gavekal Research
Will Denyer
Sep 23rd 2021
Liquidity And Shortages
It is possible the US equity market was simply confused on Wednesday, when it rallied after the Federal Open Markets Committee unfurled its communiqué. Or perhaps it was just oversold. Either way, the Federal Reserve revealed itself to be as hawkish as could have been expected. Asset purchases will be tapered “soon” and likely occur at a faster pace than last time around. Interest rates could be hiked next year and the Treasury will soon become...
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Gavekal Research
Will Denyer, Tan Kai Xian, Yanmei Xie
Sep 17th 2021
Webinar: Questions Arise As US Growth Slows
As renewed Covid outbreaks curtail activity and the labor market starts to normalize, the US economy is no longer generating big upside growth surprises. Will the Federal Reserve defer its retreat from super-easy monetary policy, and what will come of the Biden administration's fiscal strategy?
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Gavekal Research
Will Denyer
Sep 16th 2021
Video: Cryptos, NFTs And CyberPunks
As investors have flipped between euphoria and dejection over the future of crypto-currencies and related digital assets, prices have had a crazy ride. In this video Will outlines a framework for thinking about valuations. Even if digital art sold as NFTs sticks around, the basic economics of their use case means they probably won't be great stores of value.
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Gavekal Research
Will Denyer
Sep 07th 2021
Bottlenecks And Corporate Bond Yields
It seems that not all parts of the US economy are created equal. As the Delta variant outbreak causes US Covid cases to soar, the service sector is taking a hit. In contrast, the less-exposed manufacturing sector saw job growth in August. The question for investors is how these somewhat conflicting forces impact different asset classes.
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Gavekal Research
Will Denyer
Aug 30th 2021
Investing Through The Taper
After all the build-up hype, investors seem to have taken Jerome Powell saying that the Federal Reserve may soon be buying less assets in their stride. They have no doubt taken solace from the Fed chair’s promise that tapering does not mean imminent interest rate hikes, or quantitative tightening. So is the great 2021 “taper whimper” done and dusted? Perhaps not, for while the Fed’s expectation management has been slick, in the months ahead...
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Gavekal Research
Will Denyer
Aug 23rd 2021
The End Of The Cash Dump
The US Treasury is running low on cash. Having massively ramped up its holdings of cash between April and July 2020 at the height of the Covid crisis, the Treasury has been running them down again since February 2021. Normally the Treasury aims to hold cash equal to one week of its outgoings, but it has fallen to less than half that amount.
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Gavekal Research
Will Denyer
Aug 17th 2021
The Taper Is Coming
In less than two weeks, Jay Powell will get up to make his speech at the annual Jackson Hole gathering of central bankers. Investors should position for a clear signal that in the coming months the US will begin to taper. It is possible, even likely, that the ever-cautious Federal Reserve chief may decide to delay a few weeks, perhaps until the conclusion of the Fed’s next policy meeting on September 22. But his signal is only a matter of time....
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Gavekal Research
Will Denyer
Aug 02nd 2021
Risks To The Rally
US equities have ground higher on strong demand, easy monetary policy, and unattractive bond yields. As long as this situation remains, investors should remain moderately overweight US equities. But they should also carefully monitor three key macro risks that could upend this fairly benign investing environment.
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Gavekal Research
Will Denyer, Nick Andrews, Wei He, Vincent Tsui
Jul 23rd 2021
Webinar: The State Of Global Growth
The reflation trade has ebbed in recent weeks as investors have gotten more comfortable with the trajectory of US monetary policy and concerns have risen over the Delta variant of Covid disrupting economic opening. At the same time, China continues to crack down on its high-growth internet sector. Our team assessed the market implications of these trends.
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Gavekal Research
Will Denyer
Jul 23rd 2021
Did The Equity Rotation And Bond Sell-Off End In May?
The arrival of Covid-19 vaccines in November sparked a selloff in bonds and significant outperformance of value stocks, at least until mid-May. Having advised a bias to value stocks and keeping duration short in bond portfolios since last November Will was wrong-footed by the market moves of the past two months. Will the new trend last?
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Gavekal Research
Yanmei Xie, Will Denyer
Jul 22nd 2021
Video: The Debt Ceiling Is Back
After a two-year suspension, the US debt ceiling will soon be reimposed at current levels. Official estimates suggest that the Treasury can delay defaulting on its debt for three to four months. That is shorter than the five months the Treasury was able to delay during a similar standoff over the debt ceiling in 2019. Ultimately, Congress should act and default will be avoided.
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Gavekal Research
Will Denyer
Jul 07th 2021
Demographics And Prices
Starting in the early 1980s, the world became increasingly flush with people in their prime working and saving years. That trend, however, has largely run its course and may now be going into reverse. As a result, investors should consider what economic trends have demographic drivers, making them vulnerable to a structural shift occurring.
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Gavekal Research
Will Denyer, Tan Kai Xian, Yanmei Xie
Jul 02nd 2021
Strategy Monthly: Dialing Down Expectations For US Growth
Growth in the US economy is set to go from great to good. The easy pickings of releasing pent-up demand and re-employing idle workers are almost used up. Growth should stay above trend, but by a smaller margin. Investors should prepare for growth to undershoot expectations that are now too high.
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Gavekal Research
Tan Kai Xian, Will Denyer
Jun 25th 2021
Peak US Growth
The US economy has been on a tear and it could be assumed that a bipartisan Congressional deal to spend US$1.2rn on roads, bridges and tunnels would spur even more growth. Yet, surprising as it may seem, we may have seen the top of the US growth cycle as activity goes from great to good in the second half of this year.
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Gavekal Research
Will Denyer, Tan Kai Xian, Yanmei Xie
Jun 18th 2021
Webinar: The Market Impact Of US Policymakers
In yesterday’s webinar, our team of US analysts considered what the Federal Reserve's tentative moves to normalize monetary policy means for growth and asset values. They also offered updates on US fiscal policy and anti-trust developments.
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