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Gavekal Research
China And St. Augustine
Louis-Vincent Gave
23 Oct 2026
Over the past year, Chinese equity market returns have been fairly dismal, despite the fact that excitement over all things “artificial intelligence” has been a key driver of global equity market performance and that China is one of the few countries outside of the US actually registering notable gains on the AI front. Louis asks how this happened, and what could change for Chinese equities in the next year.
Gavekal Research
Video: Indonesia's Identity Crisis
Rohan Daswani
22 Oct 2026
Indonesia’s equity market has suffered a sharp sell-off after MSCI warned that persistent concerns over ownership transparency, market manipulation and weak regulatory enforcement could see the country stripped of its emerging market status. In this video interview, Rohan discusses whether Jakarta’s latest reforms can restore investor confidence, the risks of further capital outflows and currency weakness, and what Indonesia’s troubles mean for other emerging markets.
Gavekal Research
Higher Yields And Corporate Profits
Tan Kai Xian
22 Oct 2026
Equity investors were served a morsel of optimism Wednesday, as Meta’s chairman Mark Zuckerberg claimed the company’s AI investments “are paying off". Yet after a sharp sell-off in the shares of indebted AI names, many investors remain jittery. They fear that with equity market performance powered heavily by the AI capex boom, higher yields will erode US corporate profits, triggering a broader sell-off.
Gavekal-IS
Complexity Versus Hierarchy
Didier Darcet
22 Oct 2026
In a world of growing complexity, identifying the few variables that really matter can be more useful than deploying ever greater computing power, says Didier. Building on Charles Gave’s recent revival of the Misery index, he argues that a simple combination of unemployment and inflation can explain much of the variation in expected equity returns across the US, Japan, Germany and France.
Gavekal Dragonomics
The Struggle To Commoditize AI
Tilly Zhang
Growth Target Secured
Wei He, Dragonomics Team
The Fruit Of Tariffs Is Fraud
Thomas Gatley
How Late Payments Became A Permanent Problem
Andrew Batson, Xiaoxi Zhang
A Speed Limit For EV Development
Ernan Cui
Gavekal Research
London Conference: October 2026
Research Team, Dragonomics Team
What Would It Take For Another Euro Crisis?
Cedric Gemehl
The Ultimate Contrarian Trade?
Louis-Vincent Gave
On Common Myths
Louis-Vincent Gave
Why Bonds Respond To The Fed, Not To Inflation
Anatole Kaletsky
Gavekal Technologies
Beijing Draws New Boundaries For AI Exports
Laila Khawaja
The State Of Chinese AI
Arthur Kroeber, Laila Khawaja
China’s Growing Grip On Printed Circuit Boards
Laila Khawaja
Can China Export Its Nuclear Boom?
AJ Cortese
Capitalizing On China’s Data Advantage In AI
Laila Khawaja
Gavekal-IS
The Big Neutral
Didier Darcet
Why Aren’t Stocks Plunging?
Didier Darcet
Amathia
Didier Darcet
When Asia Revalues…
Didier Darcet
Where Does The Money Go?
Didier Darcet
Gavekal Research
Desperately Seeking An Anchor
Charles Gave, Louis-Vincent Gave
14 Sep 2026
Charles and Louis argue that a new monetary anchor is emerging in Asia, centered on the renminbi, just as Western currencies and bond markets are becoming less reliable stores of value. With most of the world’s excess savings generated in Asia, more capital will stay in the region rather than flow into Western assets, eroding structural support for the US dollar, euro and Western bond markets.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US initial jobless claims fell to 194k for the week ended Oct 17, from 200k
Lower than expected 200k
The probability of a tighter US labor market is rising due to strong corporate profit growth
UK CBI industrial trends order book survey was -32 in Oct, versus -9 in Sep
Below expected -20
Manufacturing is recovering, led by exports, but the upturn is uneven and fragile
France INSEE manufacturing confidence index was 105 in Oct, versus 101 in Sep
Above expected 101; business confidence rose to 97 in Oct, versus 96 in Sep
Strengthening external demand supports while domestic activity is subdued
Japan CPI rose 2.1% YoY in Sep, from 1.9%
N/A; core CPI rose 2.1%, from 1.7%
Higher inflation increases the probability of a rate hike by the Bank of Japan
Test Your Knowledge
Delegates from Indonesia’s Financial Services Authority and its stock exchange held a conference on Sunday to discuss their response to MSCI’s threats to downgrade the country. Who else were invited?
- Islamic clerics
- Financial influencers
- Military officials
Chart of the Week
US inflation accelerated in September, with the headline consumer price index rising 3.7% year-on-year, up from 3.4% in August. This was hardly surprising given elevated energy prices, which were bound to feed through to consumer prices. The question for investors and policymakers is whether price pressures will spread through the economy, pushing up long-term inflation expectations, as some Federal Reserve officials fear.
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: Bond Market Blues
Anatole Kaletsky, Will Denyer, Cedric Gemehl
9 Oct 2026
Holders of developed world bonds experienced a world of pain in the third quarter of 2026, with long-dated US treasuries making a loss of -7.6% and equivalent French bonds down almost -15% in US dollar terms. In this webinar, founding partner Anatole Kaletsky, US chief economist Will Denyer and European economist Cedric Gemehl examine the forces driving the brutal sell-off in major debt markets and ask whether the time is approaching for investors to buy bonds once again.
The Iran War And Fallout
The Non-Threatening Energy Crisis
This weekend’s media made for sobering reading. Between bombs flying in the Middle East, more refineries blowing up in Russia and US senators calling for petroleum export bans, it felt like enough negative news flow to send hearts racing. But most major global equity markets remain close to all-time highs. Louis examines the possible reasons for this counterintuitive configuration.
No Good Outcomes For Energy Inflation
It is Wednesday. Warring parties in the Middle East are again exchanging fire, and energy prices are spiking. For investors, it may be tempting to shrug off the latest flare-up, but disregarding the latest escalation in the Persian Gulf would be rash. Developments in the region will matter greatly for the trajectory of inflation over the coming months, and therefore for financial markets.
The Record High Diesel Prices
Because of soaring crack spreads, diesel prices everywhere around the world are making new all-time highs, at least in nominal terms. In real terms, the diesel price is still lower than the 2022 spike that followed the start of the Ukraine war. But Louis points out that with a real term diesel price above US$5/gallon, few good things happen.
The Limits Of Economic Fury
The US administration is now switching its focus to a campaign of “economic fury” in an effort to achieve its strategic aims against Iran. It is not obvious that this latest phase of the conflict is any more likely to result in a quick and easy US victory than the kinetic war. However, the
economic implications of a prolonged stand-off may be less ominous than they at first appear.
US economy & markets
Higher Yields And Corporate Profits
Equity investors were served a morsel of optimism Wednesday, as Meta’s chairman Mark Zuckerberg claimed the company’s AI investments “are paying off". Yet after a sharp sell-off in the shares of indebted AI names, many investors remain jittery. They fear that with equity market performance powered heavily by the AI capex boom, higher yields will erode US corporate profits, triggering a broader sell-off.
Another Leg Up In US Inflation?
US inflation accelerated in September, with the headline consumer price index rising 3.7% year-on-year, up from 3.4% in August. Looking ahead, geopolitics and energy prices will, of course, remain key swing factors for inflation. But beyond energy, the question for investors and policymakers is whether price pressures will spread through the economy, pushing up long-term inflation expectations, as some Federal Reserve officials fear. Two scenarios are worth considering.
Hedging US Growth Stocks
US growth stocks have proved remarkably resilient, with the MSCI US growth index generally outperforming its value counterpart since 2007. But when everything is going well, prudent investors look for potential pitfalls. So, what could derail the strength of US growth
stocks, and how to hedge against these risks?
Are Yields Rising Too Fast For Banks?
US bank stocks have lagged the broader equity market since the start of September, with the S&P 500 bank index down -7.5% against a 1% gain for the S&P 500. Curiously, this has happened during an inflationary boom, which should favor banks. While higher yields typically benefit lenders by allowing them to charge more on loans and earn higher returns on their securities holdings, a rapid rise in yields can break things and hurt the sector. KX argues there are reasons to think these concerns will prove short-lived.
China chartbook
Gavekal Dragonomics
Macro Update: Pushed And Pulled
Wei He, Dragonomics Team
3 Aug 2026
China’s economy is being pushed and pulled by two external shocks: the supply shock from the Iran war and the demand shock from the AI capex boom. Both are creating lots of volatility in trade flows, prices and profits, although the underlying trend of the domestic economy has not yet changed much. Neither are China’s policymakers showing much sign of significantly changing course. In our latest quarterly chartbook, Wei and the Dragonomics team diagnose the current situation and the policy outlook.
India chartbook
Gavekal Research
India Corporate Update: Waiting For Capex
Rohan Daswani, Udith Sikand
28 Aug 2026
India remains one of the world’s strongest growth stories, supported by resilient domestic demand, improving corporate balance sheets and strong credit growth. Yet as the boost from public infrastructure investment fades, the big question is whether these strengths can finally translate into a sustained revival in private investment. Rohan and Udith assess the prospects for that transition and the implication for Indian equities, where performance is increasingly diverging across sectors.
Latest video
Gavekal Research
Video: Indonesia's Identity Crisis
Rohan Daswani
22 Oct 2026
Indonesia’s equity market has suffered a sharp sell-off after MSCI warned that persistent concerns over ownership transparency, market manipulation and weak regulatory enforcement could see the country stripped of its emerging market status. In this video interview, Rohan discusses whether Jakarta’s latest reforms can restore investor confidence, the risks of further capital outflows and currency weakness, and what Indonesia’s troubles mean for other emerging markets.
Strategy Chartbook
Gavekal Research
Quarterly Strategy Review: 3Q26
Louis-Vincent Gave
5 Oct 2026
After the third quarter saw a brutal sell-off in major government bond markets, with yields breaking out to a generational high, Louis takes stock. In this Quarterly Strategy Review, he examines the forces driving the sell-off and asks the key questions facing investors everywhere.
Emerging markets
EMs Are The New DMs
Emerging-market bonds have dramatically outperformed their developed-market peers since 2020, helped by greater policy credibility, deeper domestic financial markets and reduced reliance on foreign investors. With DM bond yields now hitting multi-year highs, policymakers may increasingly look to the EM playbook, including softer forms of financial repression, to stabilize their markets, says Udith. From the US to Japan, signs of this shift are already emerging, suggesting that EMs may have a thing or two to teach DMs.
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.
Europe's economy
What Would It Take For Another Euro Crisis?
The widening of French sovereign bond spreads has revived fears about another euro crisis, but today's eurozone is far better equipped to contain financial contagion than it was in 2012. The ECB's expanded financial backstops, greater European integration and the moderation of Euroskeptic parties all help explain why markets are treating France's difficulties as a national credit problem rather than a threat to the monetary union, says Cedric.
The Cost Of Protection
China appears to have accepted export restraints on hybrid cars in exchange for the European Union dialing down its confrontational trade rhetoric. However, a de-escalation in rhetoric should not be mistaken for a retreat from the protectionist impulse taking hold within the EU. Germany’s hardening stance toward China has brought Berlin closer to Paris and revived the Franco-German axis as a driver of EU policymaking.
Three Tests For French Spreads
After touching 150bp last Friday, October 2, the 10-year OAT-bund spread retraced to 127bp on Tuesday, before widening again to 139bp Thursday. Rather than beginning a meaningful tightening, the spread appears to be undergoing a repricing which is likely to see it settle somewhere between 125bp and 300bp. However, this is a remarkably broad range. So, what forces could push spreads towards either the floor or ceiling of this band over the coming months?
Reasons To Start Buying Bonds
After four and a half years of steadfast bearishness on bonds, Anatole argues that after the latest sell-off, the relentless rise in US yields may be coming to an end—at least for the next year or two. This is not because fundamentals have improved. Rather it is because the bond market no longer trades on fundamentals, but on short term expectations of Federal Reserve policy, and the Fed has a mandate to preserve US government solvency. In this report, he explains why it now makes sense to start buying bonds again.
Currencies
Important Recent Developments
The Slump In Asian Currencies
A Concentrated Inflationary Boom Or A Bet On The Fed?
Demand And Supply Of Money
Dialing Back Expectations For Appreciation
Monetizing US Budget Deficits
Oil & commodities
No Good Outcomes For Energy Inflation
Video: Towards An Uncertain Winter For Energy
The Quid Pro Quo That Wasn’t
The Energy Risk Remains (Part I)
Energy Markets Are Too Complacent
Video: Oil After Hormuz
