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Gavekal Research
Video: On The Ground And Upbeat In China
Tom Miller
14 Aug 2025
There is a difference between the typical story told about China in the West and the reality on the ground, says Tom, who just came back from a month-long visit. Tom lived in China from 2000 to 2015 and is impressed by the improvements made in recent years—despite several big policy errors—noting that the quality of life is approaching high-income-country status. On the flip side, the “anything goes” spirit that characterized the China of decades past, and encouraged people to take economic risks, has disappeared.
Gavekal Research
From Return OF Capital To Return ON Capital
Louis-Vincent Gave
14 Aug 2025
Any emerging market investor knows that, more often than not, the most money is made when the outlook for a given country goes from “truly atrocious” to “mediocre.” In such a transition, assets can massively rerate. Recently, Louis argues, international investors looking at China have gone from worrying about the return of capital to debating the return on capital.
Gavekal Research
Fade The CPI Rally
Will Denyer
13 Aug 2025
Equity investors clearly welcomed the US July CPI release on Tuesday, pushing US indexes to record highs. However, Will argues there are four reasons to fade the latest run-up in US equity markets.
Gavekal Dragonomics
Anti-Corruption Intensifies, Again
Christopher Beddor
13 Aug 2025
China’s anti-corruption campaign has been in high gear for more than a year, since investigations abruptly surged in mid-2024. Christopher argues that the economic damage from the stepped-up campaign is becoming more visible—but new investigations hit a fresh high in Q2, and the central leadership has given no hint it wants to dial back the campaign to previous levels.
Gavekal Dragonomics
Auto Exports Defy Speed Limits
Ernan Cui
The Polysilicon Consolidation Test
Tilly Zhang, Wei He
The Competition Crackdown Will Not Fix Deflation
Thomas Gatley, Wei He
Behind The Humanoid Robot Fever
Tilly Zhang
China’s Complacency On Trade
Arthur Kroeber
Who Believes In China’s Output Gap?
Andrew Batson
The Birth Of A New Social Benefit
Ernan Cui
Macro Update: New Deal, Same Problems
Andrew Batson, Dragonomics Team
What’s Really Happening With Manufacturing Capex?
Thomas Gatley
The Slow-Growth Vision For Property
Xiaoxi Zhang
More research
Building On Eurozone Construction
August Gudmundsson
The Power Of Politics
Laila Khawaja, Arthur Kroeber, Tilly Zhang, Wei He, Tom Hancock
A Different Kind Of Shadow Fed Chair
Will Denyer
Three Stages For A Rally In Euro Assets
Cedric Gemehl
India’s Perilous Path To A Deal
Udith Sikand
Video: The Fed Shakeup And US Equities
Tan Kai Xian
The Messages In Diverging Food Prices
Louis-Vincent Gave
The EU Labor Market’s Cyclical Bottom
Cedric Gemehl
When A Nation Re-Emerges
Charles Gave
What Could Stop The US Slide Into Recession?
Tan Kai Xian
Gavekal Research
The Power Of Politics
Laila Khawaja, Arthur Kroeber, Tilly Zhang, Wei He, Tom Hancock
11 Aug 2025
In this edition of Gavekal Technologies Briefing we explore the many forces at work trying to influence US-China talks on export controls, the risks to China’s booming pharmaceutical sector from security rules in Washington, and Beijing’s political campaign to undo the excess capacity in solar energy gear that a previous political campaign created.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
Chinese year-to-date aggregate financing rose to RMB24trn in Jul, from RMB22.8trn in Jun
Below expected RMB24.5trn
Persistently weak credit demand is unlikely to change given limited stimulus
Germany's wholesale price index rose 0.5% YoY in Jun, versus 0.9% in May
NA
Driven lower by food prices, even as energy-related prices rebounded
Australian employment rose 24.5k in Jul, versus 1k in Jun
Rise smaller than expected 25k; unemployment rate fell to 4.2% in Jul, from 4.3% in Jun
Volatile series; underlying trend points to loosening labor market conditions
Thailand cut benchmark interest rate by -25bp to 1.5%
As expected
With downside risks to growth and dovish incoming governor, expect more easing by BoT
Test Your Knowledge
Which group of Americans is turning its back on alcohol at the fastest pace?
- Youngsters aged 18-34
- Adults with annual incomes under US$40,000
- Democrats
- Republicans
Chart of the Week
China’s solar-module industry faces a supply glut, with domestic production capacity more than twice the country’s combined domestic installations and exports in 2024. The industry has attracted plenty of foreign criticism, and China’s policymakers are now aiming to consolidate it in part by targeting upstream polysilicon producers. That will provide an early and high-profile test of the new policy campaign against “disorderly” and “involutionary” competition.
Open Chart
Gavekal Research
Essential Reading: A Book For Every Week Of The Year
Gavekal is often asked for a recommended reading list. So, here it is: a book a week that everyone interested in the world of macro investing—whether hoary veteran or eager apprentice—can benefit from reading.
Gavekal Research
Webinar: Gimcrack Goldilocks Or The Real Thing?
Arthur Kroeber, Will Denyer, Tan Kai Xian
11 Jul 2025
So far in 2025, the US economy has defied all the worst-case forecasts of looming stagflation. In this Gavekal webinar, US economists Will Denyer and Tan Kai Xian assess the strength and depth of this apparent Goldilocks dynamic, consider the impact of the newly passed Big Beautiful Bill on the US budget, and discuss the implications for financial markets. Gavekal head of research Arthur Kroeber offers updates on the tariff war latest.
Tariff Troubles
Where Tariffs Leave US Industry
Late Thursday the US president signed two executive orders cementing—for now—the new tariff rates announced piecemeal over recent days in a series of social media posts and bilateral deals. The higher tariffs on imported inputs are but one part of a broader story that is shifting the narrative for US manufacturing. In this Daily, Kai Xian examines the other factors.
Japan’s Flaky Trade Deal
The US-Japan trade deal announced late Tuesday in Washington triggered a powerful rally in Japanese automaker stocks. But the anomalies and distortions implied by the limited details of the deal so far available mean the provisions of this “framework agreement” are unlikely to survive in their current form, warns Udith Sikand.
Geoeconomic Monitor: Digital Currencies And Financial Power
As US lawmakers aim to fast-track legislation aimed at encouraging the development of privately issued cryptocurrencies, Arthur Kroeber assesses the probability that digital currencies will upend the established US-dollar-based international financial system. Separately, Tom Holland examines the likely effectiveness of US secondary tariffs aimed at curbing Russia’s energy exports, and Tom Miller takes the temperature of the political waters across the Taiwan strait.
Trump’s Caudillo Economics
The last week has seen a whole kaleidoscope of tariff threats by the US president, targeting everyone from Moldova and Libya to Brazil and importers of Russian commodities. For the most part, financial markets have shrugged these off as bluster. But, warns Arthur Kroeber, Trump’s strongman economic approach is an end in itself; there is no endgame. The long-run effects will inevitably be corrosive.
US economy & markets
Fade The CPI Rally
Equity investors clearly welcomed the US July CPI release on Tuesday, pushing US indexes to record highs. However, Will argues there are four reasons to fade the latest run-up in US equity markets.
A Different Kind Of Shadow Fed Chair
When Adriana Kugler resigned as a member of the Federal Reserve’s board of governors on August 1, Donald Trump had the opportunity immediately to nominate a “shadow” Fed chair. He kicked the can down the road by appointing Stephen Miran as an interim governor while the White House looks for a replacement. Some form of shadow Fed chair may yet emerge, and in this report Will considers the different possibilities.
What Could Stop The US Slide Into Recession?
Led by Friday’s weak payroll report and Tuesday’s soft PMI release, growth fears in the US are again on the rise. The sum of these economic readings duly raises a question, but does not yet point to a recession. On this basis, it is worth asking what factors could spur countervailing growth to offset the current soft patch. One such candidate is business capital expenditure.
Stablecoins: What Are They Good For?
US dollar stablecoins represent a market of some US$250bn today, but Treasury Secretary Scott Bessent reckons they could expand to as much as US$2trn within a few years. Backed largely by US Treasury bills, these coins could offer a new source of funding for an indebted US government. Yet widespread adoption will depend not only on market demand but also on regulatory developments and a slew of other factors, says Will.
China chartbook
Gavekal Dragonomics
Macro Update: New Deal, Same Problems
Andrew Batson, Dragonomics Team
24 Jul 2025
China’s growth will hold up better than many expected in 2025. But domestic demand is weak, with property a renewed drag, and deflation remains a threat. Despite more stimulus, China still isn’t generating strong nominal growth. In our latest quarterly chartbook, Andrew and the Dragonomics Team assess the state of the economy and outlook for policy and markets.
India chartbook
Gavekal Research
India Macro Update: Hold The Confetti
Udith Sikand, Tom Miller
5 Jun 2025
India’s economy is in the early stage of a cyclical recovery enabled by supportive policy settings. Sustaining the positive momentum will, however, be tricky, say Udith and Tom. A continued recovery in domestic consumption is encouraging, but external uncertainty could dampen sentiment and weigh on investment.
Latest video
Gavekal Research
Video: On The Ground And Upbeat In China
Tom Miller
14 Aug 2025
There is a difference between the typical story told about China in the West and the reality on the ground, says Tom, who just came back from a month-long visit. Tom lived in China from 2000 to 2015 and is impressed by the improvements made in recent years—despite several big policy errors—noting that the quality of life is approaching high-income-country status. On the flip side, the “anything goes” spirit that characterized the China of decades past, and encouraged people to take economic risks, has disappeared.
Strategy Chartbook
Gavekal Research
US Strategy: The Equity Rally’s Drivers And Threats
Will Denyer, Tan Kai Xian
29 Jul 2025
Having underperformed in the early part of 2025, US equities are back to outperforming. This is an issue for investors who had begun to see the US as uninvestible. With the much-maligned Federal Reserve having seemingly pulled off a soft landing, the rally has been aided by Goldilocks-type macro data. What comes next depends on how growth-boosting drivers like bank deregulation run up against short-term threats such as fiscal drag. There are good reasons to think US equities will hit fresh highs, yet risks loom.
Emerging markets
Video: Are EMs Back?
It’s been a good quarter for the broad emerging markets complex. The MSCI EM index has returned almost 7% in US dollar terms, while US equities are down by some -3.5%. So should investors jump on the EM train? Udith points out that there is a wide divergence in the performance of individual emerging markets, and the threat of tariffs hangs heavy over EM corporate earnings. Investors need to be selective.
Video: Southeast Asia Under Trump 2.0
Global investors are rightly focused on the potential losers from the United States pursuing an aggressively protectionist trade policy agenda, but there may be winners as well. Tom went in search of such economies last week. Today he explains how such “swing states” are likely to perform in an intensified period of great power rivalry between the US and China.
China Turbocharges EM Investment
As the rich world pulls up the protectionist drawbridge, investors risk missing a bigger story
in emerging markets. Here, Chinese outbound investment is rebounding after the fallow Covid years, and is driving a new wave of industrialization that promises to lower the cost of the green-energy transition.
Why This Time Has Been Different
During past episodes of risk-off volatility, the correlation between emerging market risk assets has shot up. But early August’s bout of market volatility saw a bifurcation in EMs, and no broader macroeconomic spillover effects—which speaks well of the growing maturity of emerging markets as an asset class.
Europe's economy
Three Stages For A Rally In Euro Assets
So far in 2025, global investors have warmed up to the eurozone’s economic prospects and financial assets. Yet after rapid gains in the first half of the year and a recent pullback in the single currency, those who stayed on the sidelines are asking if this is as good as it gets for eurozone equities—or if there is still time to join the rally.
The EU Labor Market’s Cyclical Bottom
A curiosity of the European Union economy over the past three years has been the labor market’s resilience in the face of multiple shocks. At 5.9%, the single market area’s unemployment rate was near a historical low in June. There are, however, reasons to be skeptical about such apparent aggregate stability.
The Petro-Currency That Wasn’t
On paper, the Norwegian krone offers much to attract global investors. It is one of the most undervalued G10 currencies and is a major producer of oil and natural gas. However, closer inspection reveals at least two reasons why the currency may not function as a straightforward
hedge against higher oil prices.
How Britain Can Resolve Its Growth And Fiscal Problems
On Wednesday, Anatole argued that Britain’s poor economic performance is largely the result of self-inflicted policy mistakes, but that a collapse of the current fiscal framework—akin to 1992—could trigger a strong recovery. In this piece, he explains how: by adopting true counter-cyclical policies and gradually raising income taxes on the broader population, which has grown accustomed to some of the lowest rates in the industrialized world.
Currencies
Three Stages For A Rally In Euro Assets
When A Nation Re-Emerges
When Markets Stay Irrational
What Could Restart Dollar Strength?
Down The Drain
How Concerning Is Euro Strength?
Oil & commodities
The Petro-Currency That Wasn’t
Geoeconomic Monitor: Digital Currencies And Financial Power
Oil Surplus Not All It Seems
Webinar: Pricing Another Middle Eastern War
Asia’s Oil Vulnerability
The Fog Of War
