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Gavekal Research
The Next Set Of AI Winners
Udith Sikand, Rohan Daswani
14 Aug 2026
Everyone can see the macroeconomic effects of the AI excitement playing out in the US, South Korea and Taiwan. But if the AI capex boom continues, it will spread to a second tier of economies. Udith Sikand and Rohan Daswani argue that Mexico, Malaysia, Japan, Singapore and Hong Kong will be the next round of beneficiaries.
Gavekal Research
How Sustainable Is The AI Capex Boom?
Will Denyer
14 Aug 2026
The AI capex boom is supporting economic growth, equity markets, and bond yields around the world. If the boom rolls over, it will not only weigh on the profits of companies directly exposed to AI capex spending, such as Nvidia. It would weigh on corporate profits throughout the economy. This means investors need constantly to be on the lookout for threats to the AI boom and signs that capex is rolling over.
Gavekal Dragonomics
Can Deregulation Drive Services Spending?
Ernan Cui
14 Aug 2026
After two years of high-level policies that subsidized consumer purchases of goods, China’s policymakers are shifting their focus to services—and in particular, looking to deregulation as the way to unlock more services spending. Ernan argues that deregulation can indeed sometimes boost consumption, but competing policy priorities mean that it will be hard to take the practical steps needed to liberalize.
Gavekal Research
Video: China Crashes The AI Party
Will Denyer
13 Aug 2026
China’s arrival as a serious AI competitor threatens to upend an investment boom so far dominated by a small group of mostly US and allied companies. Chinese labs are already producing frontier-level models despite restricted access to advanced chips, while a determined push to build a domestic semiconductor supply chain could eventually challenge the incumbents in AI hardware. Will considers the winners and losers from the disruption.
Gavekal Dragonomics
These Unemployment Numbers Are Going Up
Andrew Batson
The Offshore Tax Grab
Xiaoxi Zhang, Christopher Beddor
How Anti-Corruption Threatens Investment
Christopher Beddor
State Subsidies Subside Further
Thomas Gatley
Macro Update: Pushed And Pulled
Wei He, Dragonomics Team
Gavekal Research
Trump’s New Coercive Toolkit
Tom Miller
Less Than Zero
Tan Kai Xian
Back To Keynes
Charles Gave
Europe’s Public Investment Boom Changes Shape
August Gudmundsson
The Two Natural Rates
Charles Gave
Gavekal Technologies
The Next Stage Of The LLM Race
Laila Khawaja
The Tech Truce Starts To Fray
Arthur Kroeber, Laila Khawaja, AJ Cortese, Tom Hancock
China’s Export Engine Meets Europe’s Carbon Rules
AJ Cortese
On The Ground At The 2026 World AI Conference (Part II)
Laila Khawaja, Huang Shichan
What Just Happened, Kimi?
Laila Khawaja, Arthur Kroeber, Tom Hancock
Gavekal-IS
The Macroeconomics Of AI In Simple Terms
Didier Darcet
Currency Momentum Trading
Didier Darcet
The End Of The Risk-Free Asset
Didier Darcet
The Great Confusion Over Economic Quadrants
Didier Darcet
The Bond Portfolio For A Swiss Investor
Didier Darcet
Gavekal Research
Who Is Copying Who? Part IV
Louis-Vincent Gave
27 Jul 2026
The growing push to restrict Chinese AI models could mark a major escalation in US-China tensions—and a watershed for the US economy. Louis argues that a ban would protect US tech giants at the expense of start-ups, consumers and productivity, while accelerating the fragmentation of the global technology system. Over time, the result could be weaker US equities, a softer dollar and higher bond yields, raising the question of whether such a policy would truly serve the public good or merely entrench corporate power.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US PPI rose 4.7% YoY in Jul, versus 5.5% in Jun
Cooler than expected 4.9%; PPI ex-food & energy rose 4.2% YoY in Jul, versus 4.7% in Jun
Broad-based downtick gives Fed more room to remain on hold
UK GDP rose 0.4% QoQ in 2Q, versus 0.6% in 1Q
As expected; YoY, GDP rose 1.2% in 2Q, versus 0.9% in 1Q
Growth flattered by temporary effects; underlying momentum remains weak
Eurozone industrial production 0% MoM change in Jun, versus 0.3% in May
As expected; YoY, industrial production rose 0.1% in Jun, versus -0.1% fall in May
Tentative recovery continues, but remains uneven across sectors
Norway left benchmark rate unchanged at 4.25%
As expected
Norges Bank pausing as inflation undershoots; rate hike cycle still in play
Test Your Knowledge
Last Friday, Saudi Arabia, Turkey and Pakistan signed a mutual defense pact. Combined, how did their military spending rank globally in 2025?
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Chart of the Week
US inflation remains above the Fed’s 2% target, and there are plenty of factors that might push it higher from here, such as positive consumer wealth effects, a continued war in the Middle East, and restocking of oil inventories. That being said, there is at least one reason to hope that US inflation might moderate from here. US unit labor costs (which factor in productivity and wages) grew at a benign 1.4% year over year in the second quarter. All else equal, this implies downward potential for US inflation.
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: Regime Change Can Cause Market Madness
Anatole Kaletsky, Tom Holland
3 Jul 2026
Markets continue to behave as if the world has not fundamentally changed, even as inflation, interest rates, geopolitics and global capital flows enter a new regime. Anatole argues that investors are systematically mispricing four major shifts: the long-term outlook for inflation and bond yields, the global growth cycle, the rotation from AI-led growth to cyclical value and the end of US exceptionalism.
The Iran War And Fallout
Geoeconomic Monitor: Dominance And Decline
One upshot of the wars in the Persian Gulf and Ukraine is that the US oil and gas industry is booming. The drawback is that US consumers are paying twice Trump's target price for gasoline. With the midterms approaching, there is a risk the US administration might decide export controls are the only way to square the circle, writes Tom Holland. Meanwhile, Cedric Gemehl looks at how Germany is warming to the idea of protectionist measures to insulate its industries from Chinese competition.
The Energy Risk Remains (Part II)
The energy risk from the conflicts in the Middle East and Ukraine continue to escalate, and away from the limelight, listed pureplay oil refiners (outside of China and its price and export controls) have been having a monster year of their own, with recent gains starting to go parabolic. The obvious risk is that as crack spreads rise, so does the pressure on politicians to do something about the rising price of gasoline and diesel. So how can investors guard their portfolios against such risks?
The Energy Risk Remains (Part I)
Energy stocks, as a GICS sector, have delivered the best total return performance of any US sector over the past five years. Yet, tech stocks now account for almost 40% of the S&P 500’s market capitalization, while energy stocks—with their 3% weight—are close to record lows. So why are energy stocks so unloved, especially in the midst of an oil shock?
Geoeconomic Monitor: Latin America Turns Right
With tensions cooling in the Middle East, global attention is shifting elsewhere. In Latin America’s rambunctious political landscape, electorates continue to vote in right-wing leaders. But the wave may yet break before it reaches Brazil, where Luiz Inacio Lula da Silva is favorite to win his fourth term in October’s election, says Tom Miller. Back in the Strait of Hormuz, Tom Holland explains why Iran’s emerging protection racket sets a dangerous precedent for global trade.
US economy & markets
How Sustainable Is The AI Capex Boom?
The AI capex boom is supporting economic growth, equity markets, and bond yields around the world. If the boom rolls over, it will not only weigh on the profits of companies directly exposed to AI capex spending, such as Nvidia. It would weigh on corporate profits throughout the economy. This means investors need constantly to be on the lookout for threats to the AI boom and signs that capex is rolling over.
Less Than Zero
Emboldened by the continued climb of stock prices, Americans are spending more of their incomes, and saving less. If the savings rate continues to decline, individuals will at some point be spending more than they earn. If they want to maintain their spending, they will have to either borrow or sell assets. These two courses have very different macroeconomic implications.
The (Better) Case For European Banks
After more than a decade in the wilderness, European bank stocks have now had four good years, outperforming their US counterparts since 2022 in US dollar terms. The question is whether this outperformance can continue. The short answer is yes. European bank stocks are no longer priced at distressed levels, but with the earnings outlooks for European and US banks both solid, there is still room for European valuations to improve compared with the US.
Bessent, The Yen And US Yields
Scott Bessent says he will do “whatever it takes” to help Japan prop up the ailing yen “in a way that helps the American economy.” The US Treasury secretary’s qualification is important. It strongly suggests that while the US administration wants the yen to appreciate, it very much does not want Japan to sell down any of its armory of US treasuries to fund interventions in the FX market. Will argues this points to another course of action for the US on the yen.
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 Macro Update: Downside Risks Abound
Udith Sikand, Tom Miller
23 Sep 2025
India’s domestic economic recovery is at risk as Prime Minister Narendra Modi’s government faces a lose-lose choice: continue to import cheap oil from its long-time ally Russia or face punitive tariffs in its biggest export market. Last week’s US interest rate cut will give the central bank more room to cut rates, but the underperformance of Indian asset prices looks set to continue.
Latest video
Gavekal Research
Video: China Crashes The AI Party
Will Denyer
13 Aug 2026
China’s arrival as a serious AI competitor threatens to upend an investment boom so far dominated by a small group of mostly US and allied companies. Chinese labs are already producing frontier-level models despite restricted access to advanced chips, while a determined push to build a domestic semiconductor supply chain could eventually challenge the incumbents in AI hardware. Will considers the winners and losers from the disruption.
Strategy Chartbook
Gavekal Research
Quarterly Strategy Review: 2Q26
Louis-Vincent Gave
3 Jul 2026
The second quarter was dominated by an extraordinary surge in risk appetite as semiconductor stocks powered one of the largest increases in global equity market capitalization on record, yet beneath the exuberance, markets underwent significant macro shifts. Louis reviews the quarter's defining developments.
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
Europe’s Public Investment Boom Changes Shape
The end of the EU’s post-Covid investment program at the end of this month will bring a significant shift in Europe’s public investment cycle, but not necessarily the investment cliff that might have been feared. As Brussels-funded civilian spending winds down, investment will rotate toward defense and geographically from Southern and Eastern Europe toward Germany and Northern Europe. August examines how these shifts will reshape Europe’s growth impulse in 2027 and change the beneficiaries of public spending.
The (Better) Case For European Banks
After more than a decade in the wilderness, European bank stocks have now had four good years, outperforming their US counterparts since 2022 in US dollar terms. The question is whether this outperformance can continue. The short answer is yes. European bank stocks are no longer priced at distressed levels, but with the earnings outlooks for European and US banks both solid, there is still room for European valuations to improve compared with the US.
Europe’s Broad Earnings Recovery
Investors who question the sustainability of the AI earnings boom, but who nevertheless want to retain some exposure to the growth of artificial intelligence, may want to look again at European equities. Today, Europe offers a powerful earnings-recovery story, with a significant AI element. But best of all, the continent’s earnings growth is diversified across a broad range of sectors, and therefore stands a good chance of surviving even if the AI boom turns to bust.
Foreign Issuers Flock To Euro Debt
Record numbers of non-resident issuers are tapping the eurozone’s debt market in order to take advantage of favorable funding costs. But far from crowding out domestic borrowers, the influx of foreign issuers is deepening euro-denominated debt markets to the benefit of local issuers, writes August.
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
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
The State Of World Oil Stocks
