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Gavekal Research
Anatole Kaletsky, Cedric Gemehl, Nick Andrews
Apr 15th 2020
Webinar: Will Covid-19 Tear Europe Apart?
Anatole Kaletsky, Cedric Gemehl and Nick Andrews discussed the Covid-19 outbreak in Europe and the unprecedented poilcy responses taken both to combat its spread and help the economy.
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Gavekal Research
Charles Gave
Apr 15th 2020
The Revenge Of The Little Grey Men
There is a strange contradiction in most developed economic systems as they have been driven by freely assembling entrepreneurs who operate on the basis of money, which is the ultimate tool of state coercion. Charles is worried that the private, risk-taking element of our economies may be fully extinguished by responses to the Covid-19 crisis.
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Gavekal Research
Louis Gave
Apr 14th 2020
An Anti-Fragile Beauty Contest
Following the 2008 crisis, the S&P 500 bottomed on March 9 2009. Since then, an investor in physical gold would have gained 82.2% while an investor in 10-year US treasuries would have made gains of 65.6% (with coupons re-invested). But with both assets testing their pre-crisis highs, there are several reasons to believe that gold is now set to outperform structurally.
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Gavekal Research
Louis Gave
Apr 09th 2020
New Concerns For A New World
We are in uncharted policy territory. Never before have we seen the kind of GDP contractions now being projected for most OECD countries, and never before have investors had to deal with such extremes of uncertainty. Against this backdrop, Louis attempts to answer 10 of the most burning questions posed by clients about the shape of the post-Covid-19 world.
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Gavekal Research
Charles Gave
Apr 08th 2020
Destroying The Economy To Save It
Remember the American military officer in Vietnam who explained US tactics by saying “it became necessary to destroy the town to save it?” Well in the not too distant future, we may have to accept that our economic policymakers have adopted the same tactics in the battle against the Covid-19 pandemic.
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Gavekal Research
Charles Gave
Apr 07th 2020
Rearranging The Deckchairs For Profit
When everything is falling apart around you, the urge to do something—anything—becomes irresistible. A good solution is to start rearranging the deck chairs on the Titanic. It may not change the bigger picture, but it keeps you busy and does no harm in the longer term. In this spirit, allow me to suggest a little rearrangement that should do no harm, and could even be very profitable.
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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
Louis Gave
Apr 06th 2020
Waiting For Godot (21st Century Edition)
For years, investors have been waiting for China’s massive accumulation of debt to lead to a “Minsky moment”. Instead, in the Covid-19 crisis it is Western central banks that are blowing out their balance sheets in a desperate attempt to stabilize financial markets and their economies—while Chinese government bonds have proved “anti-fragile”.
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Gavekal Research
Charles Gave
Apr 03rd 2020
Breaking Down An International Liquidity Crisis
These are hard times for the global system as big economies are effectively shuttered and risk appetite craters. The US dollar has surged and many leveraged countries face trouble servicing their debts. As these factors become self-reinforcing, Charles thinks it is worth standing back to assess what is causing what. He does this by explaining the dynamics of an international liquidity crisis and suggests specific investment strategies to handle...
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Gavekal Research
Tom Holland
Apr 03rd 2020
The Truth In Trump’s Tweets
Oil market pundits were quick to dismiss Donald Trump’s tweeted claim Thursday that Saudi Arabia and Russia are ready to agree crude production cuts of 10-15mn bpd as “absurd” and “incredible”. But oil production cuts of the magnitude flagged by Trump are certainly in the pipeline—whether as the result of a new Opec+ agreement or not.
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Gavekal Research
Research Team
Apr 01st 2020
Strategy Monthly: Lockdowns And Lost Output
Markets have been upended by the twin uncertainty of Covid-19’s rapacious spread and the economic effects of stopping it. Massive policy responses have convinced investors that a V-shaped recovery is possible, but this is far from certain. As the outbreak in Europe and the US hits its peak phase over the next month, markets will swing on the timing of any proposed exit from lockdowns.
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Gavekal Research
Nick Andrews
Apr 01st 2020
Another Crisis, Another Euro-Fudge
“Europe will be forged in crises, and will be the sum of the solutions adopted in those crises,” wrote European Union “father” Jean Monnet in his 1976 memoirs. Today Europe is once again facing a crisis. And once again the solution adopted by Europe’s fractious leaders is likely to be a short term fudge that defers hard decision-making to another day.
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Gavekal Research
Louis Gave
Mar 31st 2020
Who Will Win The War On Covid-19?
In recent weeks leaders around the world have deployed all the rhetoric of wartime to declare hostilities against Covid-19. Louis examines which, if any, of the three major global powers—the US, Europe and China—is likely to emerge from the war a relative “winner”, and draws the appropriate investment conclusions.
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Gavekal Research
Anatole Kaletsky
Mar 30th 2020
Too Early To Buy Equities, But Time To Sell Dollars
After the biggest weekly gain in the Dow and with the US government having just approved the biggest-ever fiscal stimulus, how should investors react? While unrepentantly bullish in the long term, Anatole still believes that it is too early to buy equities. But for two other asset classes conditions do seem to be more propitious to call a bottom.
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Gavekal Research
Charles Gave
Mar 27th 2020
What You See, And What You Don’t
In economics there is what you see and what you don’t see, and “there is no such thing as a free lunch.” As the world economy suffers a spasm the likes of which has rarely been seen in peacetime, it may help to go back to first principles to figure out what we are not seeing about this crisis, and who is going to end up paying for it.
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Gavekal Research
Arthur Kroeber
Mar 26th 2020
How Long For The Costly Cure?
Is the cure worse than the disease? This question is already being asked about the economic lockdowns being imposed in response to Covid-19. It will be asked a lot more in the coming weeks as the economic pain gets worse. The short answer is that the cure is costly, but needed; and well-designed policies can enable a transition to a much lower-cost approach by mid-May if not earlier.
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Gavekal Research
Nick Andrews
Mar 25th 2020
Video: What's Up With The Pound
Along with other second-tier currencies the British pound fell steeply between early and mid-March as investors dashed to get their hands on US dollar cash. That US dollar liquidity squeeze has now eased, and sterling has found a near-term bottom. But the outlook for the British currency remains clouded amid the UK’s coronavirus lockdown.
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Gavekal Research
Nick Andrews, Cedric Gemehl
Mar 25th 2020
Why Europe Can Survive The Storm
Economic activity indexes in Europe have collapsed to never-before-seen levels, yet markets have rallied as investors have become persuaded that policy responses are enough to avoid a full blown euro crisis from unfolding. Europe for once appears to be more decisive in managing a crisis situation than the US and it is possible it may manage a swifter pick-up once the public health situation stabilizes.
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Gavekal Research
Louis Gave
Mar 24th 2020
Four Baskets For Four Quadrants
As investors survey the shattered remnants of the past decade’s bull market, they can reasonably assume that the winners of the future will not be those who dominated in the last decade. Louis applies the Gavekal Four Quadrants framework to address the question of which asset class will emerge victorious in a new macro environment.
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Gavekal Research
Arthur Kroeber
Mar 23rd 2020
Lockdowns Loom; What’s The Exit Strategy?
We are heading into another difficult week. Covid-19 case numbers and fatalities outside China continue to grow rapidly. Social lockdowns are spreading to more US states and European countries. In the short run, fiscal support is on the way. Longer term, governments will have to start asking the uncomfortable question of when the economic pain outweighs the public health gain.
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