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Gavekal Research
Tan Kai Xian, Thomas Gatley, Cedric Gemehl, Vincent Tsui
Jan 14th 2022
Webinar: Global Investment Roundtable, January 2022
In the US and Europe, the new year has begun with a huge wave of workplace absenteeism due to surging omicron Covid cases. In China, policymakers are adopting a whack-a-mole approach to multiple Covid outbreaks, while other emerging economies are curtailing market opening measures. Our team outline their base case views for growth, inflation and markets in 2022.
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Gavekal Research
Nick Andrews
Jan 14th 2022
Video: The Quirinale Question
The possibility that Italian prime minister Mario Draghi could be installed as the country’s largely ceremonial president when parliament chooses a new head of state next month has raised fears of a new period of political instability. In this video interview, Nick Andrews assesses the implications for Draghi’s ongoing structural reform program, and for Italian asset prices.
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Gavekal Research
Louis Gave
Jan 12th 2022
Breakout Time... Again
In early 2021 US bond yields charged higher, and oil and gold both looked poised to break out decisively to the upside. The underperformance of value stocks seemed to be coming to an end. Then two developments pulled the rug out from under the cyclical trade. Fast forward, and today we might be back in early 2021. Louis asks what could shock markets this time.
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Gavekal Research
Simon Pritchard
Jan 10th 2022
Strategy Monthly: The Supply-Side Shock
Soaring infection rates due to the omicron Covid wave are causing widespread disruption to supply chains around the globe. A resolution to global supply issues rests on Beijing maintaining this balancing act, as it also moves to shore up growth.
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Gavekal Research
Nick Andrews
Jan 07th 2022
Peak Inflation, Peak Rotation
As investors reassessed the risk of central bank hawkishness, European equity markets took a hit on Thursday, with the MSCI EMU index falling -1.4% to wipe out almost all the gains made in the first three trading sessions of the year. The sell-off was not universal, however.
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Gavekal Research
Louis Gave
Jan 06th 2022
SWOT Analysis For 2022
Despite a spate of exogenous shocks in 2021, currency markets largely remained placid, bonds barely sold off and the US equity market continued to scale new heights. This year, however, the global policy backdrop is shifting. Clearly, 2022 will be different from 2021. But how different? Louis analyzes the strengths, weaknesses, opportunities and threats in the new year.
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Gavekal Research
Charles Gave
Jan 04th 2022
Of Prices, Profits, Energy And Markets
In various pieces over recent years, I have tried to show that most economic activity is nothing but energy transformed, and that economic value derives from "scarcity" or "efficiency". Further, US stock market returns can tell us a lot about "efficiency values" deployable in the future. These broad concepts can be tied together to assist in investment decisions.
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Gavekal Research
Charles Gave
Dec 21st 2021
Rethinking The International Liquidity Crisis
In recent weeks Charles has published a series of reports assessing changes in the reserve of value that underpins the global financial system. In this report, he returns to one of his older frameworks for the US-dollar-centered system to see if it still has explanatory power. He concludes that it does, but he is not reassured by the findings.
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Gavekal Research
Cedric Gemehl
Dec 21st 2021
The European Inflation Split
Europe is again being split along eastern and western lines. To the West, the European Central Bank is holding fast to its belief in the transitory inflation narrative, with Christine Lagarde barely acknowledging upside risks. Yet to the East, the CEE-3 countries—Hungary, the Czech Republic and Poland—are taking inflation as a serious threat. The Hungarian National Bank recently hiked interest rates for the seventh time in less than six months,...
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Gavekal Research
Anatole Kaletsky
Dec 20th 2021
Are Rock-Bottom Bond Yields ‘Irrational’?
What has been the most surprising financial event of 2021? The 20% gain in equity prices, the 40% jump in oil prices and even the fivefold leap in US inflation may all have been bigger than expected, but they were at least directionally understandable consequences of the fastest growth in the world economy for 40 years. That explosive growth, in turn, was a predictable response to last year’s unprecedented monetary and fiscal stimuli, magnified...
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Gavekal Research
Nick Andrews, Cedric Gemehl
Dec 17th 2021
A Tale Of Two Central Banks
On Wednesday, the Bank of England ended its expansionary £895bn asset buying program, only to raise its key interest rate by 15bp a day later. In contrast, the European Central Bank stuck to its cautious script, saying it would buy bonds through 2022 and beyond if necessary. Of the two, the UK’s tightening approach’ looks most prone to a forced reversal.
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Gavekal Research
Charles Gave
Dec 14th 2021
Missing The Forest For The Trees
In these strange times, I have recently published a few pieces looking at money’s “reserve of value” function. Yet in preparing these papers, I came to realize that over the last decade I made the classic mistake of focusing too much on what was visible, and missing what was obscured.
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Gavekal Research
Tom Holland, Louis Gave, Anatole Kaletsky
Dec 10th 2021
Webinar: Global Investment Roundtable, December 2021
Our senior team consider the big strategy questions that should be vexing investors in 2022. This includes an assessment of potential positive surprises that could present opportunities for investors who are positioned ahead of time. Our team also consider prospects for the undersupplied and underinvested global energy market.
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Gavekal Research
Anatole Kaletsky, Louis Gave, Arthur Kroeber, Rosealea Yao, Ernan Cui, Wei He, Thomas Gatley
Dec 07th 2021
Beijing Seminar & Webinar — December 2021
In our recent live-streamed seminar in Beijing, Anatole presented his case for why markets are right not to panic about high headline inflation numbers. Louis cast doubt on claims that this current bout of inflation is transitory. Arthur and members of the Dragonomics team presented on China's economy, policy goals and asset markets.
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Gavekal Research
Anatole Kaletsky, Cedric Gemehl, Nick Andrews
Dec 03rd 2021
Webinar: Europe's Winter Troubles
As winter sets in, Europe seems beset with uncertainties: around Covid, energy prices and inflation. Anatole Kaletsky, Cedric Gemehl and Nick Andrews weigh these and other forces that will be at work in 2022 to assess the outlook for Europe’s economy and markets in the new year.
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Gavekal Research
Nick Andrews, Cedric Gemehl
Dec 02nd 2021
Strategy Monthly: Europe’s Way Through The Woods
As 2021 draws to a close, economies and markets are once again beset by uncertainty. But looking beyond the immediate short term, there are reasons for cautious optimism about the eurozone’s economic performance in 2022, although investors are advised to assume a defensive stance.
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Gavekal Research
Nick Andrews
Nov 30th 2021
The Phantom Menace
Prices are rising around the world, but how do we know that all orders are real? If firms have responded to global supply congestion and long delivery times by ordering more than they need to meet demand, it is likely that some will end up not taking delivery of what is apparently due them.
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Gavekal Research
Charles Gave
Nov 29th 2021
Teaching An Old Dog New Tricks
The US dollar has long been a poor reserve of value. For decades, German bunds did the job. But negative yields mean they no longer fit the bill. That leaves the US equity market as the world’s chosen reserve of value—with far-reaching implications that Charles explores in this landmark paper.
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Gavekal Research
Udith Sikand, Tan Kai Xian
Nov 26th 2021
When Risk Appetite Returns
Whenever a currency crisis engulfs an emerging economy, investors nervously look around for the next shoe to drop. After the meltdown this week in the Turkish lira—down -20% in November; -40% year-to-date—precedents from the Asian crisis of 1997-98 to the 2013 taper tantrum suggest contagion might be about to spread to infect the rest of the emerging currency complex. However, despite the broad strength of the US dollar and steep falls in a...
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Gavekal Research
Charles Gave
Nov 25th 2021
Houston, We Have A Problem
Charles looks at global bond and equity markets, concluding that the combined effect of central bank policies and private sector indexation is creating a massive corner in the US dollar and US equities.The last time something similar happened was in late 1989, when Japanese equities made up more than half of MSCI World.
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