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Gavekal Research
Anatole Kaletsky, Louis Gave, Arthur Kroeber
Jul 12th 2019
Audio & Transcript — Gavekal Research Call July 2019
In yesterday’s Gavekal Research conference call, Louis-Vincent Gave, Anatole Kaletsky and Arthur Kroeber conducted a mid-year review of the investment environment and outlined their expectations for the rest of the year onward.
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Gavekal Research
Vincent Tsui
Jul 12th 2019
Normalizing Tech Disruption
Investors have been cheered by the US and China deescalating a trade dispute that has focused on China’s use of US technology. So what to make of a stand-off between two US allies in North Asia that could disrupt highly integrated technology supply chains? Could this action reflect the normalization of trade sanctions being used in bilateral disputes?
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Gavekal Research
Tom Miller, Udith Sikand
Jul 10th 2019
Foreigners And The Deepening Of Indian Finance
India’s new government delivered a careful budget last Friday, preferring to keep a veneer of fiscal rectitude than to prioritize growth and jobs with heavy spending. Yet there was one exception amid the caution: for the first time, India is set to issue sovereign debt in foreign currency. This is an intriguing development for foreign investors wanting exposure to India while avoiding currency risk.
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Gavekal Research
Udith Sikand
Jul 09th 2019
Emerging Markets After The Trade War
Emerging markets did nicely out of the rumor, less well from the fact. As hopes grew through June for some form of trade détente between the US and China, EM assets staged a broad rally. Similarly, EM currencies pushed broadly higher, on the back of a wider US dollar softness. Over the last week, however, EM equities and currencies have pulled back.
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Gavekal Research
Louis Gave
Jul 08th 2019
An Investment Thesis For The 2020s
A look back at the last 50 years shows that the dominant conviction among investors at the end of each decade about what would drive markets over the following decade was invariably wrong. With this in mind, and on the basis that avoiding losers is easier work than picking winners, Louis asks what beliefs dominate investors’ minds today, and how they are likely to be proved wrong in the 2020s.
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Gavekal Research
Tom Miller
Jul 04th 2019
Can Vietnam Eat China's Lunch?
Vietnam has the potential to be a big winner from the US-China trade war as companies move manufacturing out of an increasingly high-cost China. This trend can be seen in sharply rising foreign investment and fully occupied export-focused industrial parks. Yet the issue is how to deal with bottlenecks that impede the path to high value-added activities.
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Gavekal Research
Anatole Kaletsky
Jul 02nd 2019
Strategy Monthly: Should We Believe Equities, Or Bonds?
Record-high US equity prices seem hard to reconcile with the message sent by the lowest bond yields since 2016. Should investors hunker down due to the inverted yield curve, or jump aboard the equity bandwagon? In fact, both markets may be right in their own way.
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Gavekal Research
Louis Gave
Jun 26th 2019
Trade War II, The Dollar And Gold
After the opening Twitter salvo in "Trade War II" by Donald Trump in May, markets have reacted quite differently from "Trade War I" in the spring of 2018. This time, the Federal Reserve is sounding more dovish, US bond yields have fallen back to 2%, the dollar seems to be rolling over, and gold and EMs are doing well. This raises the question whether the investment environment is changing before our eyes.
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Gavekal Research
Tom Miller, Chen Long
Jun 26th 2019
Can Vietnam Win The Trade War?
Vietnam is being touted as the big winner of the US-China trade war as companies shift their supply chains toward the low-cost export powerhouse. In the long term that is likely. In the short term, however, an improved export performance may be partly down to Chinese exports being routed through Vietnam to escape US detection.
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Gavekal Research
Tom Holland
Jun 25th 2019
The Iran Wildcard
Of the many risks besetting investors right now, the hardest to assess is the confrontation between the US and Iran. Should tensions escalate into a shooting war, the consequences would be far-reaching and severe. However, looking beyond the bellicose rhetoric there are reasons to believe that the balance of probability still weighs against a marked escalation.
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Gavekal Research
Louis Gave
Jun 19th 2019
Investing For A New Cold War
Earlier this year, Louis and Charles published a book whose main thesis was that an era of globalization is ending and the world is breaking into three separate economic zones.The question Louis addresses in this piece is how investors should play this macro shift. Those strategies that did best over the last decade are unlikely to outperform in the next period.
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Gavekal Research
Udith Sikand
Jun 17th 2019
Japan's Fiscal Dilemmas
As investors worry about global economic weakening, attention is turning to the cavalry, which in recent years has been central banks. In Japan poor survey and sentiment readings have sparked surprisingly dovish public comments by the BoJ governor. In fact, investors may be better off listening to the prime minister, as the real game may now be fiscal.
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Gavekal Research
Udith Sikand, Tom Miller
Jun 14th 2019
India Macro Update: Post-Landslide Lethargy
After the victory party, Narendra Modi’s reelected government's focus is shifting to structural reform, but Udith and Tom have fairly low expectations that this will materialize anytime soon and hold a cautious view on Indian risk assets. Such an environment should offer a reasonable outlook for government bonds.
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Gavekal Research
Anatole Kaletsky
Jun 13th 2019
Video: Bull Markets Don't Die Of Old Age
The US economic expansion is entering its 11th year, which makes some wonder whether the end of the business cycle is nigh. Anatole thinks that’s asking the wrong question, because bull markets don’t die of old age. They are, however, more susceptible to diseases of old age. He identifies three events that would cause an economy to keel over. Also on the docket is the seemingly contradictory signals sent by bullish US equity markets and bearish...
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Gavekal Research
Udith Sikand
Jun 03rd 2019
EMs Hit The Trade Wall
It is not clear if the latest trade actions launched by the US against Mexico and India form part of coherent plan. Such moves do signal that the US-centered multilateral trading system is hanging by a thread. This upending of the post-WWII order is especially bad news for trade-dependent emerging economies.
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Gavekal Research
Research Team, Tom Holland
Jun 03rd 2019
Strategy Monthly: Who Suffers Most In A Long Trade War?
Markets have started to price in a long US-China trade and tech war, and we agree. The odds now favor an indefinite conflict. Damage from the trade war will vary based on a country’s trade-dependency and policy space. Big problems could emerge in Europe and in EMs exposed to China’s supply chain.
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Gavekal Research
Tom Miller
May 24th 2019
India After The Victory Party
After Narendra Modi’s landslide victory in India’s general election, the economic issues that must be tackled quickly are stacking up. Tom runs through the Indian leader’s inbox and concludes that the scale of the short term problems he faces rules out a 2014-style euphoric run-up in Indian equity.
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Gavekal Research
Louis Gave
May 24th 2019
A Change In The Market Mood
Thursday was an ugly day for global equity markets, with losses that brought total returns on US equities almost back to their January 2018 level, and non-US equities to the brink of bear market territory. It is hard to shake the feeling that the investment environment has changed. What lessons should we draw from the tumultuous trading session?
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Gavekal Research
Tom Holland
May 17th 2019
Oil Market 1, Commentariat 0
As if the macroeconomic impact of a full-blown US-China trade war weren’t enough to worry about, over the last couple of weeks investors have also had to contemplate the risk of a real shooting war between the US and Iran, the effect it would have on the price of oil and the threat that would pose to a fragile global economy and jittery world markets.
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Gavekal Research
Udith Sikand, Edward Hookey
May 16th 2019
A Less Than Bonza Outlook
Australian politics has been a psychodrama for more than a decade, but for investors it barely mattered. The country has grown rich on selling ever more rocks to China and following smart, evidenced-based policy at home. That, however, looks to be changing as this weekend voters go to the polls after an election campaign that may come to be seen as a watershed.
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