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Gavekal Research
Yanmei Xie, Louis Gave, Anatole Kaletsky
Oct 09th 2020
Webinar: Global Investment Roundtable, October 2020
Yanmei Xie discussed the US team’s assessment of risks surrounding the US election, Anatole Kaletsky explained the reasons for his return to bullishness and Louis Gave talked about global asset allocation and how to find “anti-fragile” assets.
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Gavekal Research
Nick Andrews
Oct 09th 2020
Video: The Euro's Next Move
The euro’s appreciation against the US dollar has stalled out as resurgent Covid-19 infections threaten new lockdown measures, and a possible upending of the economic recovery. Nick argues that the euro’s decade-long run as a “weak currency” was down to policy settings that kept domestic demand weak. A convincing reversal is not likely until those domestic drivers are again firing.
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Gavekal Research
Nick Andrews
Oct 08th 2020
European Divergence Is Back
Like a car, the more excess weight you add to an economy, the slower it drives. Slapping restrictions on normal activities, even if income support measures are offered, makes it harder for an economy to grow. In Europe, the second wave of Covid-19 infections is having an uneven effect depending on the severity of the outbreak and the sector composition of the affected economy. The result will be to deepen the divergence in European growth and...
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Gavekal Research
Cedric Gemehl
Oct 01st 2020
A Dove With Ammunition
Hawks want the European Central Bank to wind down its monetary stimulus once the immediate Covid crisis is over. On Wednesday, ECB president Christine Lagarde poured a large bucket of cold water over that idea. Speaking in Frankfurt about the central bank’s current strategy review, she made clear that the ECB regards deflation, not inflation, as the main monetary risk, and opened the door to a symmetric inflation target going forward. In the...
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Gavekal Research
Nick Andrews
Sep 30th 2020
The UK’s Savings Problem
The British government's new job support scheme to take effect next month offers much less generous subsidies, and job losses are inevitable. Heightened job insecurity will mean increased precautionary savings, compounding the downturn in consumption. But the government faces institutional constraints on how much it is willing and able to borrow to plug the gap.
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Gavekal Research
Cedric Gemehl
Sep 23rd 2020
Lockdown-Lite
A series of controls have been announced by European countries in reaction to sharp increases in the numbers testing positive for the Sars-CoV-2 virus.This has raised fears of renewed lockdowns and economic havoc. But it appears European policymakers are opting for a lockdown-lite approach to public health restrictions in order to minimize the economic damage.
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Gavekal Research
Cedric Gemehl
Sep 18th 2020
Riding Europe’s Second Wave
The latest Covid figures from Europe make sobering reading, with countries including France, Spain and others seeing pronounced second waves of new cases. Equity markets, however, have reserved judgment. Yes, the rebound that started in mid-March has been stalled for the last two months as infections have mounted. However, European markets have not sold off significantly, despite this month’s US volatility. And an examination of the opposing...
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Gavekal Research
Charles Gave, Louis Gave
Sep 16th 2020
The Challenge Of Valuing Gold
Gold ranks as the ultimate “scarcity asset”, as its value is dictated not by its utility but because it is rare. Valuing such assets is tough as there is no “underlying value” to reference and prices are driven by the immediate supply and demand situation. Yet, in periods when both government budget deficits and monetary aggregates have rapidly grown, gold has historically outperformed—and it is doing so now.
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Gavekal Research
Andrew Batson, Thomas Gatley
Sep 16th 2020
When Export Strength Is A Sign Of Weakness
China’s manufacturers are back to normal, and then some. Exports and manufacturing output are running faster than their pre-pandemic trend in 2019, even as global trade is contracting. In this piece, Andrew and Thomas explain what’s driving those strong numbers, and why they are actually a sign of continued weakness in the global economy.
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Gavekal Research
Louis Gave
Sep 15th 2020
Death, Taxes And Covid-19: Things That Cannot Be Avoided
Six months after the first western countries went into lockdown, data suggest that unless imposed very early on, lockdowns did little to avert excess deaths. With weekly death rates in many western countries now running close to decade lows, Louis argues that this leaves politicians in an awkward spot, with one of three possible policy paths.
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Gavekal Research
Anatole Kaletsky
Sep 14th 2020
A British Mad Man
The world’s worst performing major currency, stock market and economy have all been located in Britain since Boris Johnson was reelected last December. This is not surprising. With hindsight, his decision to outlaw any possible extension of the Brexit transition period as soon as he was reelected fully justified the switch from bullish to bearish on sterling assets that I recommended immediately after this announcement.
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Gavekal Research
Louis Gave, Didier Darcet
Sep 11th 2020
The Trouble With Covid Testing
Last week, professional rugby started up again in France. The authorities have decreed that if any team finds that three or more of its players test positive for Covid-19, its games must be played at a later date. This ruling is being rigidly enforced even though in reality a player who tests positive has less than a 50% probability of actually having the disease.
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Gavekal Research
Charles Gave
Sep 11th 2020
Of Gold And Gold Miners
In recent weeks, attention has focused on the surge, and subsequent correction, in US technology stocks. Yet an asset class that has greatly outperformed the Nasdaq 100 this year is gold-mining equities. In this piece, Charles seeks to develop firmer investment rules for managing gold and gold-mining stocks within a portfolio.
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Gavekal Research
Will Denyer, Anatole Kaletsky
Sep 11th 2020
Webinar: From Bearish To (Conditionally) Bullish
Anatole and Will presented their views on the efficacy of US fiscal and monetary policy in response to the Covid crisis, and outlined the prospects for the economy and asset markets.
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Gavekal Research
Charles Gave, Louis Gave, Cedric Gemehl, Didier Darcet
Sep 09th 2020
Webinar: Global Investment Roundtable (in French), Sept 2020
In a turbulent economic environment, Louis sought to identify assets with “anti-fragile” qualities; Cedric deciphered the message from European markets; Didier Darcet refreshed refresh an old Gavekal framework with “Four Quadrants 2.0” and Charles moderated the discussion.
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Gavekal Research
Cedric Gemehl, Nick Andrews
Sep 08th 2020
Better Days For Europe’s Domestic Plays
It is hardly surprising that euro strength is generally bad for European exporter stocks and good for domestically-focused firms; or that exporter-heavy markets, like Germany, tend to lag at such moments. We saw this in 2017, when the euro rose almost 12% against the dollar between April and August, spurring a -2.4% fall in the DAX and a 0.7% gain in the broad Eurostoxx. So how to explain this year’s topsy-turvy markets, where the sprightly DAX...
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Gavekal Research
Louis Gave
Sep 08th 2020
Desperately Seeking Anti-Fragility (Part II): In The Eye Of The Beholder
Previously, Louis outlined the four asset classes that investors appear to regard as anti-fragile, now that US treasuries no longer fit the bill. With each of these four asset classes enjoying a roaring bull-run, today Louis examines the typical life cycle that lifts an asset class from unloved hell to anti-fragile heaven.
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Gavekal Research
Charles Gave, Louis Gave, Will Denyer
Sep 04th 2020
Webinar: Global Investment Roundtable, September 2020
Charles Gave, Louis Gave and Will Denyer joined Arthur Kroeber at the global investment roundtable to discuss what's going on in the global economy. Charles identified three big trends that will affect the investment environment in the long term, Will gave an in-dept update on the US economy, and Louis examined where to find assets with “anti-fragile” properties.
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Gavekal Research
Anatole Kaletsky
Sep 03rd 2020
Why I Was Right To Turn Bullish
Previously, Anatole tried to explain why he had abandoned the bearish view on equities. We will not know for a long time whether any of his explanations make sense, but Jerome Powell’s speech about the Federal Reserve’s new operating philosophy bolstered his confidence in a once-in-a-generation economic regime change.
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Gavekal Research
Charles Gave, Louis Gave
Sep 03rd 2020
Strategy Monthly: Eight Questions, 11 Answers
With US equities once again at record highs and the Fed promising to keep rates nailed to the floor, it is time to ask hard questions of the bull market that won’t die. That interrogation is conducted by Charles and Louis Gave. In these strange times, the case for owning anti-fragile assets has rarely been stronger, they contend. Four stand out for having weathered the pandemic and should be treated seriously.