Most recent
Gavekal Research
India Macro Update: The Road To Recovery
Udith Sikand, Tom Miller
7 Mar 2025
After slowing for four consecutive quarters, India’s economy is showing signs of perking up. GDP growth is back above 6%, buoyed by a monetary policy easing and healthy household consumption. Tax cuts will also help at the margin. But a dramatic acceleration in growth is unlikely, as the public infrastructure boom fades and private investment continues to disappoint.
Gavekal Research
Regime Change In The Eurozone Bond Market
Cedric Gemehl
7 Mar 2025
Eurozone sovereign bond yields climbed further on Thursday, even as the European Central Bank cut its policy rate once again. With the probability of a further series of aggressive policy rate cuts now greatly reduced, the question becomes: how much further can long yields rise? The answer is: potentially, quite a lot.
Gavekal Research
Sweden Fires Up
Cedric Gemehl, August Gudmundsson
6 Mar 2025
Having enjoyed a long boom that ran with only minor interruptions since the mid-1990s, Sweden has just endured a tough three years as its big firms suffered from Europe's energy-crisis-induced downturn. However, Cedric and August argue that Sweden has weathered that test and is now one of the best-positioned European economies to ride a new industrial cycle.
Gavekal Research
Get Ready For ‘Reciprocity’
Arthur Kroeber
6 Mar 2025
North American automakers have scored a one-month reprieve, but Donald Trump’s all-fronts trade war is still on. The question is not whether he will conduct it, but how. Arthur argues that whereas in Trump's first term, trade strategy was focused and legalistic, this time tariffs are viewed as an all-purpose tool to achieve a multiplicity of ends, all to establish global and political dominance for the US.
Gavekal Dragonomics
Who Loses More From Trade War?
Thomas Gatley
Keeping The Fiscal Pace
Wei He
What’s Wrong With China’s Consumption?
Andrew Batson
How To Boost Household Transfers
Ernan Cui, Andrew Batson
The Long Shadow Of A Currency Accord
Wei He
What’s At Stake With Vanke
Xiaoxi Zhang
A New Dawn For China’s Tech Sector?
Thomas Gatley, Tilly Zhang
A Solid Year-Open For Credit Growth
Wei He
Internet Platforms Are On Job-Creation Duty
Tilly Zhang
The Signals From Travel And Leisure
Ernan Cui
More research
Video: After Gaza, Grand Plans
Tom Miller
Webinar: Europe In The Eye Of The Storm
Anatole Kaletsky, Cedric Gemehl, Arthur Kroeber
Funding A US Crypto Reserve (And Sovereign Wealth Fund)
Will Denyer
Germany Chooses Growth
Cedric Gemehl
Beyond The Enthusiasm For European Defense Stocks
Louis-Vincent Gave
Buy On Rumor, Sell On Tariffs
Tan Kai Xian
The Case For The Soft Patch
Louis-Vincent Gave
First As A Tragedy
Louis-Vincent Gave
Geoeconomic Monitor: The Iran Pressure-Test
Tom Holland, Tom Miller, Arthur Kroeber
Tariffs On Everything, Everywhere, All At Once
Arthur Kroeber
Gavekal Research
Geoeconomic Monitor: The Iran Pressure-Test
Tom Holland, Tom Miller, Arthur Kroeber
28 Feb 2025
The US administration has been stepping up its “maximum pressure” campaign against Iran. But the campaign will have its work cut out to achieve its stated aim of driving Iran’s oil exports to zero. Meanwhile in Cairo the Arab street is responding to Donald Trump’s Gaza plans. And the green energy transition faces geopolitical and economic headwinds.
The global view
Get Ready For ‘Reciprocity’
North American automakers have scored a one-month reprieve, but Donald Trump’s all-fronts trade war is still on. The question is not whether he will conduct it, but how. Arthur argues that whereas in Trump's first term, trade strategy was focused and legalistic, this time tariffs are viewed as an all-purpose tool to achieve a multiplicity of ends, all to establish global and political dominance for the US.
First As A Tragedy
From a US viewpoint, Friday’s events were a reminder of Lord Palmerston’s dictum that in geopolitics there are no permanent friends, no enemies and only permanent interests. And clearly, President Donald Trump has decided that ending the financial bleed of the Ukraine war, downgrading the chances of a nuclear holocaust and mending the US’s relationship with China’s biggest provider of raw materials were higher on the list of US interests than keeping a strong relationship with Europe. So how are markets responding to all this?
Conversation: What The World Looks Like After Germany’s Election
Louis and Anatole sat down to discuss the outcome of the German election. Chances have improved for a removal of the debt brake, paving the way for big changes in both German and European fiscal policy. At the same time Europe is facing a dramatic shift in its relationship with the US.
Trump’s Three Market Priorities
The new US administration of Donald Trump has three clear financial market objectives: to lower long-dated US yields, weaken the US dollar and bring down energy prices. In this paper, Louis looks at the tools available to the administration in pursuit of these goals, examines the arguments for and against its success, and considers the economic and market consequences.
Test Your Knowledge
The Texas measles outbreak has been blamed on low vaccination rates during Covid. What percentage of Texan children born in 2020 have received at least one dose of the measles, mumps and rubella vaccine?
Post Your Answer
Chart of the Week
Germany usually stands out as the most vulnerable to US tariffs among European economies. This makes sense because it accounts for nearly half of the EU’s trade surplus in goods with the US alone. But smaller countries could also be in Trump’s crosshairs. Ireland, for example, also has a sizable trade surplus with the US, reflecting tax optimization by US multinational firms. Denmark also stands out due to Novo Nordisk’s large sales in the US. Outside the EU, Switzerland looks to be at risk and had already been labeled a currency manipulator by the US Treasury Department between December 2020 and April 2021.
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.
US economy & markets
Funding A US Crypto Reserve (And Sovereign Wealth Fund)
Having gotten caught in a market downdraft in the last week of February, crypto-currency investors had been feeling bruised. Then on Sunday, President Donald Trump restated his plan to create a “strategic crypto reserve”. Ahead of a “crypto summit” to be held at the White House on Friday, Will looks at likely funding sources for such a reserve.
Buy On Rumor, Sell On Tariffs
Things never come in quite the shape investors look for. On Monday, US president Donald Trump issued an executive order imposing a second additional 10% tariff on US imports from China, and on Tuesday the 25% tariffs on imports from Mexico and Canada postponed from a month earlier went into effect. In immediate anticipation of these moves, the US dollar weakened. This forex move was precisely the opposite of what we have all been schooled to expect from the imposition of tariffs. Paradoxically, this was no great surprise.
Fade The US Growth Scare
The market is concerned about the outlook for US growth. US defensive sectors have outperformed cyclicals year-to-date, and especially over the last two weeks of February. In the bond market, 10-year treasury yields have fallen back to where they were on the eve of November’s US election, at around 4.26%. If the growth concerns persist, so will these market trends. However, there are reasons to think the current growth scare will fade, leading to a reversal of the recent market trends.
Soon We’ll Be Shipbuilding
The US administration has declared the revitalization of the US shipping and shipbuilding industries to counter Chinese dominance to be an economic and security priority. However, the US effort is starting from a very low base. KX argues that if the US is to succeed in its aim, it will only be with heavy investments from Korean and Japanese shipbuilders, which are the most likely winners from the program.
Gavekal Research
Webinar: Europe In The Eye Of The Storm
Anatole Kaletsky, Cedric Gemehl, Arthur Kroeber
6 Mar 2025
European policymakers face the biggest strategic upheaval since World War II and a potential trans-Atlantic trade war for good measure. On the plus side for those with a Keynesian bent, the European Union may be spurred to cast off self-imposed fiscal rules which have constrained its performance over the last 15 years. In this webinar, Anatole and Cedric assess the choices that Europe faces and what different outcomes will mean for growth and markets.
Emerging markets
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.
Video: The Yen Carry Trade And Emerging Markets
Usually when developed market volatility spikes, the world’s emerging markets fall victim to collateral damage. Things have been less simple this time around. Although Latin American currencies, especially the Mexican peso, have been hit hard by the unwinding of the yen carry trade, East Asian currencies have risen strongly. Udith Sikand explores what lies behind the divergence.
Latest video
Gavekal Research
Video: After Gaza, Grand Plans
Tom Miller
6 Mar 2025
Incredulity and outrage have greeted Donald Trump’s mooted Gaza redevelopment plan across the Arab world. Just back from a research trip to Egypt, Gavekal senior analyst Tom Miller discusses the Arab states’ rival proposals for Gaza, touches on how US policy has affected America’s standing in the region, and looks at how the developments of the last few years have affected Egypt’s own economic prospects.
India chartbook
Gavekal Research
India Macro Update: The Road To Recovery
Udith Sikand, Tom Miller
7 Mar 2025
After slowing for four consecutive quarters, India’s economy is showing signs of perking up. GDP growth is back above 6%, buoyed by a monetary policy easing and healthy household consumption. Tax cuts will also help at the margin. But a dramatic acceleration in growth is unlikely, as the public infrastructure boom fades and private investment continues to disappoint.
China chartbook
Gavekal Dragonomics
Macro Update: Tending The Green Shoots
Andrew Batson, Dragonomics Team
31 Jan 2025
After China’s pivot to stimulus in late September, green shoots have appeared across the economy, with property sales bouncing, consumption improving and deflation easing. But the turn in growth is tentative and markets are still unconvinced: the green shoots need more tending from government policy support. In our latest quarterly chartbook, Andrew and the Dragonomics team assess the prospects for 2025.
Europe's economy
Regime Change In The Eurozone Bond Market
Eurozone sovereign bond yields climbed further on Thursday, even as the European Central Bank cut its policy rate once again. With the probability of a further series of aggressive policy rate cuts now greatly reduced, the question becomes: how much further can long yields rise? The answer is: potentially, quite a lot.
Sweden Fires Up
Having enjoyed a long boom that ran with only minor interruptions since the mid-1990s, Sweden has just endured a tough three years as its big firms suffered from Europe's energy-crisis-induced downturn. However, Cedric and August argue that Sweden has weathered that test and is now one of the best-positioned European economies to ride a new industrial cycle.
Germany Chooses Growth
In a defining moment for German—and European Union—fiscal policy, on Tuesday the party leaders of Germany’s prospective coalition government announced they have agreed to cast aside the country’s constitutional budget constraints in order to jack up government spending on infrastructure and defense. The plan could still face hurdles, but chances are that the proposals will pass.
European Militarism: Bad Politics But Good Economics?
All across Europe, governments and respectable opposition leaders in “centrist” parties are suddenly obsessed with arming themselves for World War III in the paradoxical hope of currying favor with Trump, while simultaneously denouncing him. There will be major macroeconomic consequences of the new militarism in Europe that could have a much broader investment impact than the sensational gains already notched up by European defense stocks.
Strategy Chartbook
Gavekal Research
US Strategy: Towards A Tighter Labor Market
Tan Kai Xian
21 Jan 2025
On day one of Donald Trump’s administration, executive orders flowed to constrain immigration into the US. Follow-up measures may further limit the supply of workers. The US labor market has cooled off from its red-hot level seen after the pandemic. The result has been an easing-up of wage growth that has allowed US inflation to fall toward the Federal Reserve’s target. This somewhat stable equilibrium is, however, unlikely to last long.
Equities
The Interregnum Ends
As January Goes, So Goes The Year?
Four Known Unknowns In The Year Ahead
Navigating The New Year Volatility
Building Narratives Around Obvious Outliers
And The 2024 Awards Go To…
Oil & commodities
What We Don’t Talk About When We Talk About Ukraine
The Upside Surprise In Commodity Demand
The Trouble With Energy Dominance
Video: Why Now For Russian Oil Sanctions?
Building Narratives Around Obvious Outliers
The Syrian Revolution
China tech
What DeepSeek Means For China’s AI
Video: The DeepSeek Leap
Another Sputnik Moment
Biden’s Last Salvo Of Tech Protectionism
China’s Export Controls Send A Serious Signal
Xi Goes All In On Tech
Then Yen Carry Trade Unwinds
Video: The Yen Carry Trade And Emerging Markets
Usually when developed market volatility spikes, the world’s emerging markets fall victim to collateral damage. Things have been less simple this time around. Although Latin American currencies, especially the Mexican peso, have been hit hard by the unwinding of the yen carry trade, East Asian currencies have risen strongly. Udith Sikand explores what lies behind the divergence.
More Questions Than Answers
It’s a dedicated Frenchman who consents to work in August. But the financial market volatility of the last week has seen Louis hard at it, fielding client questions about the outlook for global markets and economies. In this paper, he sets out the most salient questions, and offers his answers.
The Root Cause Of Summer Ructions
Investors are no longer seeing virtue in a Goldilocks scenario of moderating demand and easing price pressures, but having a summer freak-out over faltering global growth. Udith and Kai Xian diagnose the market jitters and say that the sell-off in high-yield currencies and tech stocks likely stems from movements in Japan rather than disappointing US economic data.
The Yen And Deindustrialization
There is a theory out there which holds that the extreme undervaluation of the yen is a consequence of Japanese deindustrialization, as Japan Inc. has shipped its factories abroad, pushing Japan's economy into an irreversible trade deficit even while it continues to run a monster current account surplus. Not so fast, says Charles, whose analysis of Japan’s external balances throws up a different explanation—and suggests a compelling investment opportunity.
