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Gavekal Research
Hedging The Energy Risks In A Portfolio
Charles Gave
3 Feb 2026
As Charles often notes, the economy is nothing but energy transformed. If this assessment is correct, it follows that a disorderly move in energy prices could have catastrophic consequences for both the economy and financial markets. The purpose of this paper is therefore to outline a framework for constructing a portfolio hedged not against time risk, such as interest rate levels or movements, but against the risk of a sustained shift in energy prices.
Gavekal Research
The Odd One Out
Tan Kai Xian
3 Feb 2026
Despite recent ructions in overbought markets, 2026 has seen bets on an “inflationary boom” continue to play out, with energy, materials and industrials doing well. The odd one out in this scenario has been US financials, despite a macro backdrop that should have favored them. For investors, the key question is whether US banks will benefit in the usual way from a steepening yield curve, or instead become conduits for populist policy risk in an election year.
Gavekal Research
A Hawkish Fed Choice
Will Denyer
2 Feb 2026
Investors have reacted decisively to Kevin Warsh’s nomination to be the next chair of the Federal Reserve, with a series of crowded trades being unwound. Assuming Senate confirmation, Will explains what his appointment would mean for the future of US monetary policy, US central bank independence, the US dollar, gold and other assets.
Gavekal Dragonomics
The Other Side Of Europe’s China Shock
Thomas Gatley, Cedric Gemehl
2 Feb 2026
There is no doubt that China’s manufacturing presents a challenge to the European economy. But Thomas and Cedric argue that this is not a simple story of inevitable de-industrialization: there are also opportunities. The European winners from the rise of China’s manufacturing capacity will be firms able to make the best use of cheaper Chinese industrial inputs, and continue commanding higher sales prices both at home and abroad.
Gavekal Dragonomics
Which Investment Data To Believe?
Andrew Batson
Anti-Corruption Strikes Again
Christopher Beddor
Global Reflation Versus Domestic Deflation
Wei He, Thomas Gatley
Crossing A Currency Threshold
Wei He
Vanke Reaches A Deal
Xiaoxi Zhang
Gavekal Research
The Message From Crypto's Disappointing Run
Louis-Vincent Gave
Beware Catching Indonesia’s Falling Knife
Udith Sikand, Tom Miller
The Auntie Of All Trade Deals
Cedric Gemehl, Udith Sikand
Webinar: The Global Reach Of A Renminbi Rerating
Louis-Vincent Gave
Video: Middle Powers And The New World Disorder
Tom Miller
Gavekal Technologies
China’s Vision For AI-Powered Manufacturing
Laila Khawaja
The Lidar Revolution
Tom Hancock, Huang Shichan, Laila Khawaja
Beijing Accelerates Semiconductor Localization
Laila Khawaja
Manus AI’s Regulatory Odyssey
Laila Khawaja
China’s Bet On The Electrotech Stack
Arthur Kroeber, Laila Khawaja, Thomas Gatley
Gavekal-IS
The Big Long 2.0
Didier Darcet
Measuring Imitation
Didier Darcet
The Manager’s Unspoken Truth
Didier Darcet
Gold And War
Didier Darcet
The Catastrophe
Didier Darcet
Gavekal Research
Geoeconomic Monitor: Greenland Derangement Syndrome
Tom Miller, Yanmei Xie
23 Jan 2026
On a dramatic day in Davos, President Trump climbed down on Greenland and diplomacy won out. But trust has dissolved on both sides, which gives Europe another reason to beef up defense budgets. Also in this edition of the Geoeconomic Monitor, we look at China’s latest attempt to punish Japan for crossing its red line on Taiwan.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US ISM manufacturing index rose to 52.6 in Jan, up from 47.9 in Dec
Above expected 48.5
Driven by surge in new orders; employment and prices remain a lingering concern
Germany retail sales rose 0.1% MoM in Dec, up from -0.5% in Nov
As expected; YoY, retail sales rose 3.2% in Dec, up from -1.6% in Nov
Expected domestic demand to strengthen in 2026 amid cyclical recovery
South Korea CPI rose 2% YoY in Jan, down from 2.3% in Dec
As expected; core CPI rose 2% YoY in Jan, the same pace as in Dec
Expect BoK to remain on hold amid financial stability concerns due to HH leverage
Indonesia CPI rose 3.6% YoY in Jan, up from 2.9% in Dec
Below expected 3.8%; core CPI rose 2.5% YoY in Jan, up from 2.4% in Dec
Low base effect boosted headline inflation; expect BI to remain on hold
Test Your Knowledge
Which astronomical phenomenon is being considered for timing SpaceX's IPO?
- A solar eclipse
- A planetary alignment
- A meteor shower
- A supermoon
Chart of the Week
China’s anti-corruption campaign has netted its biggest catch in years: Zhang Youxia, deputy chairman of the Central Military Commission. But Zhang is hardly alone: anti-corruption investigators launched more than one million probes last year, and disciplined nearly as many officials. This year the anti-corruption watchdog has vowed to focus on enforcing the upcoming five-year plan, which in practice means the anti-corruption drive will probably function as another tool for top leader Xi Jinping to constrain the power of local-government officials and centralize authority in Beijing.
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: The Global Reach Of A Renminbi Rerating
Louis-Vincent Gave
30 Jan 2026
For years, the extreme undervaluation of the Chinese currency has been the biggest single anomaly in global financial markets. In recent weeks, however, the renminbi has begun to appreciate at an accelerating pace, with the Chinese authorities setting their daily fixing at successively stronger rates. By the standards of other currencies, the moves so far are small. But the implications are far-reaching, and potentially even epochal. In this webinar Louis-Vincent Gave unpacks the importance of the renminbi’s exchange rate for global investors.
Tariff Troubles
The EM Triple Whammy On Full Display
It would be tempting to ascribe the simultaneous US dollar, bond, and equity market sell-off to the self-owned “crisis” around Greenland and to Trump’s threat to use tariffs against (former?) friends to force a change of sovereignty. Still, the current sell-off in bonds, and equities, may also be driven by other important factors, says Louis.
How Europe Will Respond To Trump’s Greenland Tariffs
On Saturday, US president Donald Trump threatened new tariffs on eight European countries over their opposition to his plans to annex Greenland. Since then, attention has shifted to how Europe might respond. Cedric argues that conciliation and deescalation remains Europe’s first response to Trump’s new tariff threat, but there is now a greater chance that the EU retaliates in earnest if that strategy fails.
Video: Supreme Court v. Trump’s Trade Policy
Initial questioning by US Supreme Court justices in a landmark trade policy case suggests that a majority believe the Trump administration unlawfully invoked emergency powers to impose broad tariffs on importers. In this interview, Will outlines the key issues at stake and considers Trump’s possible next steps if the government loses.
Geoeconomic Monitor: Understanding The New Trade Regime
In today’s Monitor, we continue our analysis of what Donald Trump’s new trade regime means for the world economy, explain how Indian prime minister Narendra Modi blundered and wound up facing a 50% tariff, and argue that none of the conditions for a quick end to the Russia-Ukraine war are in place.
US economy & markets
The Odd One Out
Despite recent ructions in overbought markets, 2026 has seen bets on an “inflationary boom” continue to play out, with energy, materials and industrials doing well. The odd one out in this scenario has been US financials, despite a macro backdrop that should have favored them. For investors, the key question is whether US banks will benefit in the usual way from a steepening yield curve, or instead become conduits for populist policy risk in an election year.
A Hawkish Fed Choice
Investors have reacted decisively to Kevin Warsh’s nomination to be the next chair of the Federal Reserve, with a series of crowded trades being unwound. Assuming Senate confirmation, Will explains what his appointment would mean for the future of US monetary policy, US central bank independence, the US dollar, gold and other assets.
Behind The Dollar’s Decline
The US dollar took another leg down in Asian trading Wednesday. The DXY index dropped to 96, down -3% from levels around 98.8 as recently as last Thursday, breaking decisively below its trading range of the last seven months. Why is this weakness occurring now? And will it persist?
Central Bank Balance Sheets In 2026
After spiking money market rates forced the US Federal Reserve to switch from balance sheet contraction to balance sheet expansion via asset purchases in December, Cedric and Will look at whether liquidity stresses could trigger a similar U-turn in 2026 from the European Central Bank.
China chartbook
Gavekal Dragonomics
The Chinese Consumer In 2025
Ernan Cui
24 Nov 2025
China’s household consumption growth has weakened further in 2025, primarily driven by the weak labor market and slowing household income growth. Policymakers have announced several new measures to boost spending, but there are also reasons to think that the slowdown might continue. In her annual chartbook, Ernan breaks down the key cyclical and structural drivers of household consumption, and explores what it means for consumer spending in the months to come.
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: Middle Powers And The New World Disorder
Tom Miller
29 Jan 2026
In late January, Keir Starmer paid his first visit to China as UK prime minister, proclaiming his desire for “a more sophisticated relationship” between London and Beijing. In making his trip, Starmer becomes the latest middle-power head of government to head to China bearing a conciliatory message as relations with the US deteriorate. In this video interview, Tom Miller explores how this attempt at geoeconomic derisking could play out, and examines what it all means for global investors.
Strategy Chartbook
Gavekal Research
Global Strategy: Best And Worst Trades For 2026
Louis-Vincent Gave, Charles Gave, Anatole Kaletsky, Will Denyer, Tan Kai Xian, Cedric Gemehl, August Gudmundsson, Thomas Gatley, Udith Sikand, Tom Miller
8 Jan 2026
Past performance is no guide to future returns, and the trend is not always your friend. As such, Gavekal writers consider their most compelling 10 macro trades for 2026, on both the upside and the downside. If one theme runs through our developed-market views, it is the expectation for a sustained inflationary boom. That story is different in China, but Chinese firms look to be on the right side of an energy transition with room to run. The view on gold is nuanced, especially seen through the lens of Japanese investors facing extreme asset valuations.
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
The Other Side Of Europe’s China Shock
There is no doubt that China’s manufacturing presents a challenge to the European economy. But Thomas and Cedric argue that this is not a simple story of inevitable de-industrialization: there are also opportunities. The European winners from the rise of China’s manufacturing capacity will be firms able to make the best use of cheaper Chinese industrial inputs, and continue commanding higher sales prices both at home and abroad.
Central Bank Balance Sheets In 2026
After spiking money market rates forced the US Federal Reserve to switch from balance sheet contraction to balance sheet expansion via asset purchases in December, Cedric and Will look at whether liquidity stresses could trigger a similar U-turn in 2026 from the European Central Bank.
How Europe Will Respond To Trump’s Greenland Tariffs
On Saturday, US president Donald Trump threatened new tariffs on eight European countries over their opposition to his plans to annex Greenland. Since then, attention has shifted to how Europe might respond. Cedric argues that conciliation and deescalation remains Europe’s first response to Trump’s new tariff threat, but there is now a greater chance that the EU retaliates in earnest if that strategy fails.
The Next Stage Of The Eurozone Cycle
The eurozone economy ended 2025 in an apparent not-too-hot, not-too-cold equilibrium. At first glance, it seems like Europe is stuck in first gear, but looking at 2026, it is more likely that the eurozone economy shifts up a gear into a mild inflationary boom, as strengthening domestic demand offsets the drag from external shocks.
Currencies
On The False Price Of The Yen
Behind The Dollar’s Decline
A New Reflationary Force?
Don’t Bet On A Forever Weak Yen
How To Think About Renminbi Appreciation
Rubik’s ECB
Oil & commodities
Geoeconomic Monitor: A Bad Oil Bet In Venezuela
Geoeconomic Monitor: Working On Credibility
Axis Of Energy
Convictions And Concerns
The Petro-Currency That Wasn’t
Geoeconomic Monitor: Digital Currencies And Financial Power
