Archive | June, 2015

WHITE PAPER – The Gavekal Knowledge Leaders Indexes: Capturing the Excess Returns of Highly Innovative Companies

A rich academic history suggests equity returns can be explained by risk exposures, or factors. In our first white paper, we identified the Knowledge Effect, the tendency of highly innovative companies to experience excess returns. In this second report, we detail how we create the Gavekal Knowledge Leaders Indexes to capture the Knowledge Factor. Download […]

It’s Japan, not Europe, that Continues to Lead in 2015


Despite the popular news media focusing all their attention on European reflation, Draghi’s QE, Grexit or no Grexit, etc, the real story for investors remains in the seemingly forgotten Japan. Indeed, year to date Japan has outperformed Europe by more than 7% in USD terms and Portugal and Italy are the only two developed market […]

The Yen Is At The Most Undervalued Level In Nearly 30 Years


With the recent weakness in the Japanese yen over the last several days, the yen has fallen to nearly a thirty year purchasing power parity low against the dollar. Our purchasing power parity model using CPI differentials currently shows a 31.59% undervalued level relative to the dollar. The last time the yen was this undervalued on a […]

Is ECB QE Beginning to Appear in the Data?


In addition to PMI data released today, preliminary figures for German Consumer Prices also came out– with a surprise to the upside: And, (as we discussed in today’s earlier post) while German manufacturing PMI data was not overly inspiring compared to its southern neighbors, one thing they do have in common is rising input costs: […]

The Peripherals’ Positive PMIs


Today’s release of Markit’s Purchasing Managers’ Index for Manufacturing revealed Spain and Italy as the clear winners, with the former noting the strongest improvement in business conditions since early 2007. For both countries, the survey indicated that new export orders were the strongest component of the overall positive manufacturing environment, implying that the drastic drop […]

Energy Costs For Households At 12 1/2 Year Low

Energy costs, as calculated by the household energy obligations ratio, have dropped to the lowest level since 3Q2002. Households only spent 4.02% of their disposable income on energy in the first quarter. The overall household obligations ratio remains relatively on tame at just 15.27% of the one’s disposable income. The household financial obligation ratio has […]