Archive | November, 2015

This Chart is Too Ugly for Comfort


It’s quite easy to get carried away with the drawing of conclusions based on a few technical chart patterns (and we are not doing that here!), but this chart is just too ugly to at least go unmentioned. What we’re looking at is the percent of stocks in our own Gavekal Capital International DM Americas Index […]

Q: Is the IMF’s Inclusion of the Chinese Yuan in the Special Drawing Rights Basket a Reserve Currency Game Changer? A: No!

Today the International Monetary Fund (IMF) met economy watcher’s expectations and announced the inclusion of the Chinese yuan in the basket of currencies that make up the Special Drawing Right (SDR) units that the IMF uses in making loans. The yuan now joins the US dollar, euro, pound and yen as an “official” reserve currency […]

Do You Believe that China is “Fixed” as Copper Plunges to New Lows?

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The last two days have been met with the usual monthly slue of Chinese economic statistics including retail sales (+10.4% YoY), auto sales (+11.8% YoY), industrial production (+5.6 YoY), fixed asset (infrastructure) investment (+10.1% YoY), and bank loans (+15.6% YoY), among others (charts below). The fact that retail sales, auto sales, and bank loan growth have all […]

On Why Emerging Market Funds Are Ill Equipped to Capitalize on a Rebalancing China

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We’ve hashed out the arguments for a persistently slowing China in this blog many times, so we won’t go there again today. Instead, we want to focus on a different aspect of the slowing China reality: the fact that most investment products that focus on emerging markets are overweight exactly the wrong economic sectors. In […]

The Marginal Productivity of Chinese Debt Has Gone From Bad to Much Worse – Not Good for the Rebalancing Case


Taking the Chinese GDP statistics at face value (an increasingly big assumption these days) we point out a rather ominous scenario which seems to be developing in the productivity dynamics of Chinese debt-financed growth. Basically the amount of growth that each new unit of credit produces is plunging to levels not seen since 2009-2010 when […]

Don’t be Fooled by the Level of the Stock Market – Other Assets Say Deflationary Headwinds Still Very Much in Play


We’ve had some run in stocks over the last several weeks. With today’s rally US stocks are now nearly 13% above their late-August low and are in spitting distance of another all-time high. This would be great news if only other asset classes and the internal leadership of the stock market confirmed the seemingly outright […]