Gavekal Research

Udith Sikand

Apr 28th 2020

Yesterday, the Bank of Japan attempted to pull another rabbit out of the hat by announcing plans to turbo-charge its already aggressive monetary easing program, ostensibly to help deliver its fiscal stimulus package without roiling the JGB market. Look closer though, and it appears the BoJ’s real goal is to stop the yen from succumbing to fundamental pressures by appreciating.

Gavekal Research

Louis Gave

Apr 24th 2020

The Kitsune, the mythical Japanese fox which portends a change of fortune, has nine tails. Inspired by the unnatural conditions in markets, Louis has identified nine tail risks which could upend the investment world over the short to medium term. In the first installment of a two-part series, he outlines four tail risks that investors should consider hedging against.

Gavekal Research

Tom Holland

Apr 23rd 2020

Gavekal’s dynamite fishing analogy maintains that the biggest impact of a market shock only shows up after a delay, much like the effects of an underwater explosion. First the small fry float to the top, then the mid-size fish. Only much later does the dead whale break surface. After the oil price shock investors are asking if the Saudi riyal's peg to the US dollar could be that whale.

Gavekal Research

Arthur Kroeber

Apr 20th 2020

As the US and Europe prepare to enter their second month of lockdown, the good news is that social controls, where they are imposed, are working. The less good news is that the exit from lockdowns is going to be long and arduous. It is likely that in most major Western nations, economic activity will remain at levels significantly below normal until well into the fall.

Gavekal Research

Arthur Kroeber

Apr 15th 2020

The Covid-19 epidemic now seems firmly under control in most major economies, and the direction of the disease data is consistently positive. From an infection-control perspective, the outlook is much more positive than when we did our last major review. The path to economic recovery, however, still looks slow and rocky.

Gavekal Research

Louis Gave

Apr 14th 2020

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.

Gavekal Research

Louis Gave

Apr 09th 2020

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.

Gavekal Research

Charles Gave

Apr 08th 2020

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.

Gavekal Research

Louis Gave

Apr 06th 2020

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”.