Deflation Coming, Cash And Counter Cyclicals Are King

GaveKal Capital thinks there's a storm brewing in the US economy, and investors are going to feel the brunt of the damage if they don't get their portfolios right. The research firm sees evidence of a powerful deflationary shock ahead, and implants one major message: in the coming environment investors want their money in cash and counter cyclicals.

The above chart shows the likelihood of investors based in US Dollars outperforming the currency in two different currency environments. It's clear that with a strong currency behind them, US based investors have a better chance of outperforming, but they need to know where to put their money.