…the much-ballyhooed U.S. current-account deficit is largely a product of antiquated statistical measures that mainly miss the favorable impact of surging U.S. corporate cash flow and profitability. Likewise, no housing bust impends, according to GaveKal, a respected strategic adviser to some of the globe’s largest financial concerns, including some of Wall Street’s largest mutual funds. In fact, third-quarter federal data indicate, the consumer has never been more flush on a net-worth basis, with stock gains more than offsetting the flattening of homeowners’ equity.

Nor is Wall Street poised on a precipice. Stocks actually are cheap by many measures, says GaveKal. And shares of a certain type of nimble and tech-minded U.S. multinational could rise the most in coming years.

GaveKal asserts that the global economy is on the cusp of a decades-long deflationary boom that will lift America and much of the emerging world to unprecedented prosperity. In a book entitled Our Brave New World, the research outfit even invites derision by asserting that, these days, “things are indeed different.”

The optimism arises from a clutch of profound economic changes that GaveKal’s founders, Frenchman Charles Gave, his Hong Kong-based son, Louis-Vincent, and British financial writer Anatole Kaletsky (the firm’s name is a contraction of the principals’ last names) argue have been largely ignored by most commentators. GaveKal’s central aper├žu revolves around a business model that has evolved in advanced nations, such as the U.S., Sweden and Great Britain. They call it the “platform company.”

These corporations concentrate on high-value-adding functions in which knowledge and technology are paramount. The platform company farms out to low-cost manufacturers at home and, increasingly, abroad low-return, volatile portions of its operations, including manufacturing. In essence, they are focused as much on the sizzle as the old multinationals were on the steak. “Instead of producing everywhere to sell products around the world, the platform company harnesses endemic global overcapacity and cheap information transmission to produce almost nothing directly, but sell everywhere,” Charles Gave says in an interview at his loft apartment in Manhattan’s trendy Soho district … [read more here]


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