E.g., 19-02-2020
E.g., 19-02-2020
We have found 509 results.
View by: Grid List
Sort by: Relevancy Date
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    Don’t Fret About Libor

    A disproportionate increase in Libor relative to other benchmark short term rates over recent months has got many observers flustered. In this concise paper, Will and KX dig down to the cause of the increase, and explain what it does and doesn’t mean for portfolio investors.

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

    Gavekal Research

    Focus On Corporate Yields, Not Policy Rates

    There were no big surprises at yesterday’s Federal Reserve meeting, but in offering a slightly more hawkish tone, policymakers have amped up market anxiety. I must admit to not being in this crowd, for the perhaps heretical observation that the future of this bull market may not be decided at the Fed.

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

    Gavekal Research

    Don’t Wade Into Treasuries

    Leading up to today’s Federal Reserve meeting, long-dated treasuries have slipped back into their trading range. There are two reasons to think this offers a good opportunity to “buy the dip”. First, global growth has eased off as shown by our diffusion index of OECD leading indicators, which tends to lead year-on-year changes in 10-year treasury yields by about four months. Second, investors overreacted to January’s spike in US wage growth data...

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

    Gavekal Research

    The Corporate Bond Play

    With high-yield and investment grade spreads having shrunk to historically low levels, US corporate bonds are hardly cheap. Yet the combination of favorable tax policy and fiscal incontinence recommends them to any US bond portfolio. As the US economy is likely in the dog days of this cycle, the tricky question is what duration investors should focus on.

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

    Gavekal Research

    Video: Fixing The Model

    Earlier this week Will issued a mea culpa report that explained why he was revising his Wicksellian asset allocation model and substantially changing his recommendations for the US market. In this video interview he explains the story behind this revision.

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

    Gavekal Research

    Turning 90% Bullish

    Over the last three years, Will has developed his own version of Charles's Wicksellian framework to analyze the US economic cycle. His approach has been to gauge the difference between the private sector’s return on invested capital and its cost. In this candid report, he explains why he is overhauling his model and how this has substantially changed his recommendations.

    12
  • Please login, request a trial or contact our sales team for more information

    Gavekal Research

    The Curiously Weak Dollar

    Since early February, global markets have had a volatile ride. The big exception has been the US dollar, which has stayed stoically range-bound. This is odd considering the Federal Reserve’s fairly hawkish outlook for monetary policy and the fact that imposing tariffs on metal imports should lessen the US trade deficit. Not to pat ourselves on the back, but the general Gavekal view on the US dollar has in recent times been fairly bearish (see...

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

    Gavekal Research

    Housing And The US Economy

    The last economic cycle in the US was marked by excesses in residential investment and a dearth of business investment, which proved negative for productivity growth. As the current cycle gets a pro-cyclical boost in its mature phase from last year’s tax reforms, that imbalance will be at least partially reversed.

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

    Gavekal Research

    The US Current Account, Trump’s Trade War And Equities

    US president Donald Trump’s announcement last week of tariffs on imports of steel and aluminum are just the first salvo of a trade war aimed at reducing the US$566bn annual US trade deficit. Yet even far more extensive tariffs than those announced on Thursday will do nothing to narrow the US trade gap. As KX argues in this report, more powerful economic forces are working to widen the US trade and current account deficits over the coming...

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

    Gavekal Research

    Deficits And Bondholders

    Economics 101 says that when there is more of something, then other things being equal its price should go down. That is worrying for US bond investors as US lawmakers last week passed a budget deal that may raise deficits by US$320bn over the next 10 years (any new infrastructure spending will be extra). Interestingly, and perhaps not entirely coincidentally, just as debt-fueled big-government becomes the new normal in Washington, November’s...

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

    Gavekal Research

    Good News Is Bad News?

    The US posted a solid employment report on Friday, and the markets didn’t like it one bit. Some 200,000 jobs were added in January, better than the expected 180,000 and prior month gain of 160,000. But what really spooked investors was the faster than expected pickup in wage growth to 2.9% YoY. On the face of it, this is good for economic growth (certainly in nominal terms) and top-line corporate revenues. The worry is that without productivity...

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

    Gavekal Research

    Video: Playing The US Growth Picture

    Will outlines his view that real growth in the US will remain stable this year and that inflation will pick up, and discusses what this means for asset prices and portfolio construction.

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

    Gavekal Research

    Take Profits On US Homebuilders

    Our view that real growth in the US will remain supported this year at a similar level to 2017’s 2.5% rate is based on three main elements: rising business investment following December’s tax cuts; a moderation in consumption growth as labor market tightness slows job ceation, and a neutral to mildly positive view on residential investment (see The Outlook For US Growth And Prices). The third element—our neutral view on homebuilding—merits...

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

    Gavekal Research

    The Sustainable Rise In US Inflation

    In her valedictory meeting yesterday, Janet Yellen presided over a slight tightening of language to indicate that the Federal Reserve’s official inflation target of 2% should be hit some time this year. Investors were not surprised as break-even inflation rates have risen to 2% from about 1.8% late last year, while the chance of four rate hikes materializing in 2018 is now priced at 22%. The fly in the ointment is still sluggish wage growth,...

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

    Gavekal Research

    Keep Duration Short

    Washington may have temporarily sorted out its spending plans, but the bigger news for investors is the apparent breakout in 10-year treasury yields. The benchmark-of-benchmarks has risen to 2.65%, exceeding highs recorded in the months right after the Republicans’ election wins in November 2016. This can be ascribed to strong global growth, higher commodity prices, US tax cuts and tighter monetary policy. Hence, with US long-rates now offering...

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

    Gavekal Research

    Taxes And Yields

    US equity markets have started 2018 committed to the idea that Goldilocks is alive and well. Although no clear picture has emerged of its impact, the passage of the most significant tax reform since the 1980s has had S&P 500 firms opining publicly that they hope to invest more and treat staff better. The corollary is that this cycle might be getting a second wind. The fear is inflation, as shown by yesterday’s move in treasury yields to...

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

    Gavekal Research

    Stick With Dollar Depreciation Plays

    The last year has seen a rare outbreak of consensus at Gavekal. Since last January partners and analysts have been almost universally bearish on the US dollar. In that time, the DXY dollar index has slumped some -12% from its heavily overvalued level at the beginning of 2017. Now the first 12 trading days of 2018 have seen the DXY slide -1.9%, breaching September’s support level to sink to its lowest since the end of 2014. This latest...

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

    Gavekal Research

    The Yield Curve As A Duration Guide

    With US stock markets scaling new heights, there are multiple reasons why nervous equity investors might want to reduce portfolio risk. The usual way to do this would be by increasing allocations to long-duration treasury debt. But with long-dated yields now rising, what duration of treasuries should investors hold? And when and how should they adjust duration?

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

    Gavekal Research

    US Inflation Expectations: Further To Run To Catch-Up

    Over the last six weeks, market inflation expectations have undergone a signal shift to the upside. The US five-year break-even inflation rate has climbed from below 1.7% in early December to 1.95% this week. In other words, market expectations for US inflation, which had long remained markedly subdued, have now played catch-up with the Federal Reserve’s own projections, which see core PCE inflation rising to 1.9% this year and 2% in 2019....

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

    Gavekal Research

    Dare To Dabble In US High Yield

    Last week US high yield spreads narrowed to within a whisker of their cycle low, bringing them within striking distance of their 2007 low. When things cannot get much better, they seldom do. However, this may be one of those rare historical occasions when things do indeed go from good to even better. The US tax changes that went into effect last week have the potential to drive credit spreads to record depths.

    0
Show me: results