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Gavekal Research
Vincent Tsui, Dan Wang, Fathom China Team
May 14th 2021
Webinar: The Semiconductor Endgame
It is increasingly clear that shortages of semiconductors are both more widespread and intractable than first thought. In the near term, the fear is of cascading disruption along the Asian electronics value chain. In the medium term, however, it is possible that massive supply responses create a glut of chips that causes prices to eventually crater.
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Gavekal Research
Cedric Gemehl, Nick Andrews
May 14th 2021
Heading For The Med
“Sell in May and go away,” has long been a popular adage in Europe, a continent renowned for its predilection for long summer holidays by the Mediterranean. Last year, however, “sell in May” would have proved disastrous as an investment strategy. This year too investors should treat the old saw with circumspection.
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Gavekal Research
Dan Wang
May 13th 2021
The Future Of Chips Is Overcapacity
Semiconductors are tough to come by these days, and the shortage will be deep and long-lasting. Yet chips are about to turn into more of a commoditized product, just as companies make huge investments in production capacity and governments spend big to achieve self-sufficiency on national security grounds. This will lead to permanent excess capacity.
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Gavekal Research
Nick Andrews
May 12th 2021
Video: The Chill In EU-China Relations
Hailed as a breakthrough when it was struck back in December, the EU-China Comprehensive Agreement On Investment is in trouble, with little chance the deal will be ratified in the European Parliament amid a deep deterioration in bilateral relations. Nick examines what the political frost means for the earnings of European companies operating in China.
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Gavekal Research
Charles Gave
May 11th 2021
Ricardian Growth Is Fragile, Schumpeterian Growth Is Anti-Fragile
Capitalism works well when activity is undertaken using David Ricardo’s law of comparative advantage and Joseph Schumpeter’s process of creative destruction. Charles argues that an era of Ricardian growth for many countries and industries is running out of road and the drivers of Schumpeterian economic transformation are shifting.
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Gavekal Research
Anatole Kaletsky
May 10th 2021
A Post-Brexit Britain
Some long-term investors do seem to be worried that a breakup of the United Kingdom could add another element of uncertainty to what I described last year as the “triple whammy” of Brexit, Covid and the British Treasury’s surprising flirtation with tax increases and premature fiscal tightening. It now appears, however, that only one of these concerns is really justified.
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Gavekal Research
Tom Miller
May 07th 2021
The Global Pivot To The Indo-Pacific
The Indo-Pacific is at the heart of global geopolitics today. The US, UK, and European Union are all shifting their attention east. Tom argues that the new treatment of the Indian and Pacific Oceans as a single, connected space reflects a key shift in managing China’s regional power. The impact will be felt in both strategic and economic terms.
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Gavekal Research
Will Denyer, Anatole Kaletsky, Louis Gave
May 07th 2021
Webinar: Global Investment Roundtable, May 2021
Joe Biden's enormous fiscal initiatives mark a potential sea change in the US government’s role in the economy. They may yet get watered down as the US president negotiates with more conservative members of his party, but tax and spend is clearly the new mantra in Washington DC. The question for investors is what this means for assets in the US and around the world.
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Gavekal Research
Louis Gave, Cedric Gemehl, Didier Darcet
May 05th 2021
Webinar: French-Language Webinar, May 2021
As the US and Europe begin to emerge from the pandemic, Louis assesses the key relationships in global markets, Cedric asks whether Europe will have a summer this year and what the economic effects will be and Didier presents the “Yellow Jacket” multiplier, as he introduces a new asset allocation tool.
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Gavekal Research
Cedric Gemehl
May 03rd 2021
Fighting Europe’s Headwinds
Last Thursday, Nick Andrews and I argued that Europe’s economic recovery is set to defy dire predictions. The fly in the ointment, we argued, was a weakening in Europe’s hitherto robust manufacturing sector. Such concerns deepened on Friday, as more evidence emerged of slowing industrial activity. So does this headwind need to be taken more seriously?
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Gavekal Research
Nick Andrews, Cedric Gemehl
Apr 28th 2021
Europe Surprising On the Upside
Europe may not yet have the pandemic in the rear-view mirror but infection rates in most countries are falling, vaccinations are surprising on the upside and a full opening of most services this summer seems likely. Since expectations for the eurozone remain constrained, there is a good chance that its yield curves soon steepen and the single currency strengthens.
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Gavekal Research
Will Denyer
Apr 23rd 2021
Taxing Capital
Next week Joe Biden will set out plans to double the rate of capital gains tax for Americans making over US$1mn a year. The president’s proposal is the latest element of his initiative to levy higher taxes, from one direction or another, on the elusive earnings of multinational corporations and wealthy individuals in order to help fund higher government spending. Whatever the political merits of Biden’s plan, his multi-pronged approach will be...
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Gavekal Research
Charles Gave
Apr 22nd 2021
Discontinuity Risk In A Bipolar World
For the first time in generations, the world now has two economic poles—the US and China. And they are following diametrically opposed monetary and fiscal policies. US policy is as Keynesian as you can get, while China has read the book on Wicksell and is turning restrictive. This divergence is the single most important challenge investors face today.
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Gavekal Research
Tan Kai Xian
Apr 21st 2021
Trading The Vaccination S-Curve
Vaccination programs around the world have gotten off the ground at widely varying speeds. But everywhere they tend to follow a similar S-curve trajectory. While most countries are still in the early stages of their vaccination programs, a very few are in their late stages, where the S-curves begin to flatten. Their experience provides an investible roadmap.
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Gavekal Research
Nick Andrews
Apr 19th 2021
Doom Loop? What Doom Loop?
Ahead of the European Central Bank’s meeting this Thursday, there has been the usual chatter about what the ECB can do to alleviate stresses in the eurozone’s financial markets. This is unsurprising, given that Covid infection rates remain stubbornly high in several of the bloc’s leading economies, and that peripheral spreads have widened in recent weeks, with the Italian 10-year spread over bunds increasing by some 10bp.
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Gavekal Research
Charles Gave, Didier Darcet
Apr 16th 2021
Webinar: Asset Allocation Amid Low Interest Rates
Charles Gave likes to say he is a rules-based investor, and he’s never been short of ideas. In this webinar, Charles and Gavekal TrackMacro’s Didier Darcet presented their latest work on portfolio construction, including a tool to help fixed-income managers to get satisfactory returns despite punitively low yields.
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Gavekal Research
Tan Kai Xian, Udith Sikand, Louis Gave
Apr 09th 2021
Webinar: Global Investment Roundtable, April 2021
In the long years between the 2008-09 financial crash and the 2020 Covid crisis the US stock market massively outperformed equities in the rest of the world. In recent quarters, however, the US market has lost its edge. Yesterday, Louis, KX and Udith weighed the merits of ex-US equities versus US stocks in a post-pandemic world.
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Gavekal Research
Cedric Gemehl
Apr 09th 2021
The Eurozone’s Sub-Surface Slack
At first glance, with the unemployment rate down from a peak of 8.7% last September, it looks as if the degree of slack in the eurozone’s labor market may be small by historical standards. However, a look at the level of employment (including employees and self-employed) shows that employment is down by 3.1mn compared with the pre-pandemic baseline.
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Gavekal Research
Tan Kai Xian, Cedric Gemehl, Udith Sikand
Apr 08th 2021
Living With The Next Covid Wave
Global markets are looking ahead to a post-pandemic world, but Covid-19 is still very much with us. Globally, new infection rates have risen sharply since late February, reversing their earlier decline. In the last few weeks, the US has experienced an alarming uptick in infections. The European Union is struggling to contain its latest Covid wave, which in several major countries compares with November’s for severity. And across the developing...
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Gavekal Research
Anatole Kaletsky, Cedric Gemehl, Nick Andrews
Apr 02nd 2021
Webinar: The Macro And Market Implications Of Europe’s Pandemic Response Shambles
As the European Union’s vaccination program stumbles from one misstep to another, investors are being forced to put back their expectations for European economic recovery, while a procurement scandal in Germany raises the probability that the pandemic will have a long-term effect on the EU’s political landscape. Anatole, Cedric and Nick examined the near-term market impact and long-term economic policy implications.
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