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Gavekal Research
Will Denyer, Nick Andrews
Apr 06th 2020
The Atlantic Divide
Second order economic effects from the Covid-19 outbreak are ripping through industrialized economies, with soaring unemployment, shuttered industries and a fall in corporate profits. While China has eschewed large-scale government support, Europe and the US have adopted massive fiscal and monetary responses. These Western initiatives do, however, differ in key respects and when lockdowns finally end, one or other approach will likely have...
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Gavekal Research
Yanmei Xie, Will Denyer, Tan Kai Xian
Mar 30th 2020
Is US$2trn In Fiscal Support Enough?
Will the US$2trn fiscal packiage prove big enough? The initial market reaction might have suggested that it won’t. However, if extreme lockdowns last no longer than a month or two, the fiscal package may well succeed in its twin objectives of averting mass business failures and preventing a big rise in long term unemployment.
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Gavekal Research
Will Denyer
Mar 26th 2020
The Case For Corporate Bonds
Although the US spread of Covid-19 continues to accelerate, in the near term markets have been encouraged by promises of heavy fiscal support for the US economy and the Federal Reserve’s plans to take risk off private sector balance sheets, including by buying corporate debt. Is now the time to increase exposure to risk assets?
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Gavekal Research
Will Denyer, Yanmei Xie
Mar 24th 2020
The Importance Of The Fed’s Big Guns
On Monday, the US Federal Reserve rolled out some of its heaviest artillery. In a move reminiscent of the moves in March 2009 which finally succeeded in stabilizing markets, it both relaxed accounting rules for banks and launched a whole suite of programs designed to take risk off private sector balance sheets, including by buying corporate bonds.
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Gavekal Research
Udith Sikand, Will Denyer
Mar 19th 2020
The Dollar Squeeze Intensifies
Policymakers in the world’s biggest economic blocks are responding to the current crisis with fiscal and monetary “shock and awe”. Yet even as the much maligned European Central Bank joined the asset purchase party, markets have continued to crater. For all the coordinated economic responses to the coronavirus pandemic, there has been no serious effort to free up the offshore market for US dollars.
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Gavekal Research
Will Denyer
Mar 16th 2020
The Fed’s ‘Whatever It Takes’ Moment
While other US government agencies tackle the coronavirus crisis, the Federal Reserve has promised ample liquidity and functioning credit markets. Its “whatever it takes” plan is to ensure that US dollars are available at home and abroad, US credit markets remain liquid and solvent companies and individuals are not stopped out.
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Gavekal Research
Will Denyer
Mar 04th 2020
How To Ride The Liquidity Wave
On Tuesday the US Federal Reserve made good on its promise to counter the “evolving risks to economic activity” posed by the coronavirus, cutting its key policy rate. Monetary easing will neither cure the virus nor fix disrupted supply chains, but it will provide cheap funds for companies while they weather the storm.
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Gavekal Research
Will Denyer, Tan Kai Xian
Feb 28th 2020
Still Dollar Bears (Humbly)
The Covid-19 outbreak has sparked a flight to safety, reversing an incipient weakening of the US dollar. This is hardly unfounded, as the US so far has been spared a major outbreak and its economy is decently insulated. Yet most of the factors weighing on the US dollar late last year remain valid. Thus Will and KX advise a negative dollar bias.
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Gavekal Research
Will Denyer, Tan Kai Xian
Feb 18th 2020
A Surfeit Of Money
The fruits of the US Federal Reserve’s swing to monetary easing are ripening. In the last couple of months the about-turn in monetary direction has triggered a dramatic rebound in aggregate US money supply growth, which is outpacing GDP growth. This suggests excess cash may be piling up. If so, the excess is likely to further bid up US asset prices.
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Gavekal Research
Will Denyer
Feb 07th 2020
Bad Shocks Can Have Benign Effects
There are few people outside Donald Trump’s administration who think the US-China trade war was a good thing. There are surely even fewer who think the Wuhan coronavirus outbreak has any positive aspects at all. Nevertheless, while both last year’s trade war and this year’s viral epidemic are bad for global economic growth, they are both largely beneficial for US households.
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Gavekal Research
Will Denyer
Jan 30th 2020
Don't Fret About The Fed's Balance Sheet
As if investors didn’t have enough to worry about just now, many have been spooked by this month’s dip in the size of the US Federal Reserve’s balance sheet. Happily the Fed is one thing investors don’t need to fret about. The Fed’s statement and press conference on Wednesday confirmed that US monetary policy remains clear and predictable—and accommodative.
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Gavekal Research
Will Denyer
Jan 20th 2020
The Dark Side Of A Strong US Economy
The US’s growth outlook has been bolstered by easy financial conditions and trade deals being reached with China and its near neighbors. Yet, those prospects are also hampered by a tight labor market that threatens corporate profits. What recent data releases highlight is both the enduring strength of the US economy and niggling late-cycle factors that could yet undo it.
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Gavekal Research
Will Denyer
Jan 13th 2020
A Qualified Bull On US Equities
US unemployment is at its lowest in half a century. Yet for investors, the strength of the US jobs market is far from an unalloyed good. The biggest macro risk to the bull market in US equities this year is a sharp rise in inflation. And such a rise in inflation could have two probable causes: a steep rise in energy prices, or a marked rise in labor costs.
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Gavekal Research
Tan Kai Xian, Will Denyer
Jan 03rd 2020
Echoes Of 2017
Global markets began 2020 on a bullish note, with the US S&P 500 climbing to a fresh record close, up a chunky 4.3% over the last month. Indeed, the US monetary backdrop at the start of 2020 is reminiscent of that in early 2017, a year which saw the S&P 500 climb 19.4%. History may not repeat this year, but there are good reasons to believe it may yet rhyme.
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Gavekal Research
Louis Gave, Anatole Kaletsky, Arthur Kroeber, Will Denyer
Dec 19th 2019
Audio — Gavekal Research Call December 2019
In the final Gavekal Research Conference Call of the year Louis-Vincent Gave, Anatole Kaletsky, Arthur Kroeber and Will Denyer reviewed the current investment environment and outlined their expectations for 2020.
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Gavekal Research
Will Denyer
Dec 17th 2019
The Repo Paradox
Following the US dollar liquidity squeeze and repo rate spike in mid-September—an event which went on to trigger hearty liquidity injections from the Federal Reserve—the market has been on the lookout for new stressors in the US dollar money markets. There were concerns of renewed stress on Monday as the Treasury sucked up an estimated US$84bn on the settlement of new debt issues and through the receipt of corporate taxes. US money market rates...
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Gavekal Research
Will Denyer
Dec 11th 2019
What Would Volcker Do?
Paul Volcker, who died this week aged 92, leaves a legacy of public service with a backbone. He managed the monetary affairs of the world’s leading economy during its post-WW2 nadir, and so his perspective on conducting monetary policy in times of political turmoil is without match.
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Gavekal Research
Will Denyer
Dec 09th 2019
Parsing Payrolls And The Fed
November’s employment figures show that the US jobs market is slowing, but the slowdown is gradual and not sufficient to worry investors to any significant degree about an impending recession. Nor, with inflation expectations subdued, do recent jobs data give the Federal Reserve reason to act either one way or the other at this week’s policy meeting.
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Gavekal Research
Will Denyer, Tan Kai Xian
Dec 06th 2019
A Safety Rope On The Wall Of Worry
Markets are heading into the end of 2019 on a broadly constructive note. Yet there are daunting risks hanging over 2020. And although a number of these risks may be of modest probability, the impact on portfolios should they arise will be great. This means investors are to an extent climbing a wall of worry. Fortuitously, there is a safety rope to hand.
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Gavekal Research
Charles Gave, Will Denyer, Tom Miller, Anatole Kaletsky, Udith Sikand, Arthur Kroeber
Nov 28th 2019
Seminar Series Multimedia — Fall 2019
Partners and analysts present their core ideas for the big economic regions and global markets heading into the year-end and looking forward to 2020.