Most Recent
Gavekal Research
As January Goes, So Goes The Year?
Louis-Vincent Gave
13 Jan 2025
If the old market saying that “as January goes, so goes the year” has any truth to it, then investors have to acknowledge that the overall market setup is becoming more challenging. Louis considers the events of the past few weeks and ponders the investment implications.
Gavekal Dragonomics
The PBOC’s Aggressive Governor
Wei He
13 Jan 2025
The People’s Bank of China has been busy over the past year as its new governor, Pan Gongsheng, has overseen multiple interventions in financial markets and attempted risky policy changes. Wei argues that Pan’s aggressive policymaking style, along with a green light from top policymakers for more easing, means the chances of a large interest-rate cut are rising.
Gavekal Research
Southeast Asia Hedges Against Trump
Tom Miller
10 Jan 2025
Indonesia just became the newest member of the Brics group, while Malaysia and Thailand have signed up as Brics partner countries. Hedging is a way of life in Southeast Asia, which is dependent on both the United States and China. But the threat of fresh US tariffs, whether universal or targeted, makes it even more pressing to deepen ties with other partners.
Gavekal Research
The Rupee Under Pressure
Udith Sikand, Tom Miller
10 Jan 2025
On December 23 the rupee broke through the psychological barrier of 85 to the US dollar, hardly the Christmas present foreign investors in Indian securities were hoping for. So how much further can it fall? The answer ultimately rests with the value of the dollar. But as the Reserve Bank of India prepares to ditch the implicit quasi-peg to the greenback, it would be no surprise if the rupee crashes through the 90 barrier in 2025.
Gavekal Dragonomics
Meet The Central Financing Vehicles
Xiaoxi Zhang
Navigating The New Year Volatility
Thomas Gatley
Welfare Or Wealth
Andrew Batson
How Much To Fear Trump’s Tariffs?
Andrew Batson
The Trade War Artillery Moves Into Place
Arthur Kroeber, Thomas Gatley
The Shaky Sentiment Recovery
Wei He, Dragonomics Team
A Durable Policy Shift For 2025
Andrew Batson
Policy Signaling Works
Christopher Beddor
China’s Export Controls Send A Serious Signal
Tilly Zhang
Decoupling, Grand Bargain, And Everything In Between
Arthur Kroeber
More Research
Four Known Unknowns In The Year Ahead
Anatole Kaletsky
Intertwined Fates?
Louis-Vincent Gave
Video: US Financial Regulation Under Trump
Tan Kai Xian
Global Strategy: The Contrarian Report
Louis-Vincent Gave, Anatole Kaletsky, Tom Holland, Andrew Batson, Udith Sikand, Tan Kai Xian, Cedric Gemehl, Tom Miller, Will Denyer, Charles Gave
It’s Not Just Downside Risks In The Eurozone
Cedric Gemehl
Webinar: Can Crypto Continue Its Charge?
Louis-Vincent Gave, Charles Gave, Didier Darcet
Building Narratives Around Obvious Outliers
Louis-Vincent Gave
Trump’s Grand Tariff Plan
Will Denyer
Trump’s Evolving Immigration Stance
Tan Kai Xian
And The 2024 Awards Go To…
Louis-Vincent Gave
Gavekal Research
Global Strategy: The Contrarian Report
Louis-Vincent Gave, Anatole Kaletsky, Tom Holland, Andrew Batson, Udith Sikand, Tan Kai Xian, Cedric Gemehl, Tom Miller, Will Denyer, Charles Gave
8 Jan 2025
Before investors bed in strategies and reset portfolios for a new year, we wanted to offer 10 contrarian insights that may challenge their views. Expect to hear more from Gavekal authors in 2025 on these topics.
The global view
Four Known Unknowns In The Year Ahead
In his year-ahead article for 2024, Anatole suggested that global investment conditions would be determined by shifts in sentiment about three possible growth and inflation scenarios for the US economy. This year he thinks that a different analytical framework is needed.
Global Strategy: The Contrarian Report
Before investors bed in strategies and reset portfolios for a new year, we wanted to offer 10 contrarian insights that may challenge their views. Expect to hear more from Gavekal authors in 2025 on these topics.
Building Narratives Around Obvious Outliers
No two years are ever the same, but for Louis 2024 was unusual because there were so many outliers in terms of market behavior, economic data and the narratives that glued these all together. In this report, he seeks to unpick this apparent puzzle in a bid to better understand which stories may dominate in 2025.
And The 2024 Awards Go To…
Louis reviews the best trades of 2024 and explores their prospects for the coming year. In his sights are cryptocurrencies, gold, US growth stocks, Chinese bonds and the comeback emerging market of Argentina. In a follow-up report, he will look at 2024’s worst performers and consider whether they will remain raspberries or, in fact, offer improving prospects.
Chart of the Week
With a 4.6% dividend yield—more than twice the yield provided by the overall US equity market—US office REITs present a good dividend play amid the otherwise continuous decline in US stock market dividends. This yield is similar to that offered by 10-year US treasuries, with the added benefit that rental income generally rises with 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.
US economy & markets
Trump’s Grand Tariff Plan
The Washington Post reported Monday that Donald Trump's incoming administration planned tariffs on all countries, but not all goods, a "pare back" from earlier plans. Donald Trump slammed it as fake news. While the tariff outlook therefore remains highly uncertain, there may be some truth to glean from this back-and-forth. Uneven tariffs can be more disruptive, and more effective (from Trump’s perspective), than a universal tariff.
Trump’s Evolving Immigration Stance
President-elect Donald Trump sided with Elon Musk and other supporters of the H-1B skilled worker visa, against hardliners like Steve Bannon. This is a material softening in his tone on immigration, at least the high-skilled legal variety. But it does not change the fact that US labor supply growth will be crimped by Trump’s overall strict immigration policies.
Higher For Longer
Did we just see the last Federal Reserve rate cut for a while? No one knows, including Fed chair Jerome Powell. But after the Fed cut by -25bp on Wednesday, Powell said the decision had been a “closer call” than previous cuts, and that policymakers will likely be “more cautious” about future easing. Powell’s guidance for slower, more cautious rate cuts should be taken seriously.
The Crypto Capital And The (Non) Strategic Bitcoin Reserve
Bitcoin has broken through US$100,000 on the belief that Trump 2.0 will be friendlier to the crypto industry. The question for investors is whether the surge in crypto-currency prices since the US election can be sustained. Will argues that the price gains have been driven by two main hopes, one of which is justified and the other of which may not play out as crypto bulls hope.
Gavekal Research
Webinar: Can Crypto Continue Its Charge?
Louis-Vincent Gave, Charles Gave, Didier Darcet
8 Jan 2025
Crypto-currencies had a stellar 2024, with a particularly strong run after Donald Trump’s win in the November election. The president-elect has appointed crypto enthusiasts to his cabinet and mused on adopting a Strategic Bitcoin Reserve. Our panel looked at both structural factors like the prospect of mass crypto adoption and more pressing cyclical issues such as how the vertiginously positioned asset class handles a likely more challenging liquidity environment in 2025.
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: US Financial Regulation Under Trump
Tan Kai Xian
8 Jan 2025
Michael Barr is stepping down from his role as the Federal Reserve’s vice chair for supervision earlier than expected. In this video interview, Kai Xian discusses what this move signifies about Fed independence in the upcoming Trump administration and what is likely to be the shape of US regulation.
India chartbook
Gavekal Research
India Macro Update: A Normal Slowdown
Udith Sikand, Tom Miller
10 Dec 2024
Despite consternation over the sharp deceleration in GDP growth, India’s economic slowdown looks cyclical rather than structural, argue Udith and Tom. A continued pickup in private consumption together with a revival of government spending is expected to improve the growth outlook in the near term.
China chartbook
Gavekal Dragonomics
The Chinese Consumer In 2024
Ernan Cui
25 Nov 2024
China’s consumption growth has weakened for most of 2024, as the property-market downturn has softened the labor market and eroded household balance sheets. But since late September, policymakers have pivoted to a more stimulative approach to economic policy. In her annual chartbook, Ernan breaks down the key cyclical and structural drivers for household consumption, and examines how the stimulus could change the current trajectory.
Europe's economy
Four Known Unknowns In The Year Ahead
In his year-ahead article for 2024, Anatole suggested that global investment conditions would be determined by shifts in sentiment about three possible growth and inflation scenarios for the US economy. This year he thinks that a different analytical framework is needed.
It’s Not Just Downside Risks In The Eurozone
Heading into 2025, the eurozone’s economic outlook is not much to write home about. Surveyed economists have been revising down their forecasts in recent months, and the somber mood is reflected in markets. Cedric reckons such gloom is justified—up to a point. Negative expectations do mean the bar is lowered for upside risks, of which there are a few.
The Upside Of Political Turmoil
Investors generally regard political turmoil as unwelcome. The German government’s toppling and the fall earlier of the French government are no exceptions. Yet a rational optimist can find good reasons for cheer in the political upheavals convulsing the EU’s two leading economies. The fears of a procyclical fiscal consolidation that have loomed over the eurozone’s growth outlook for much of the last year have now been dispelled. For investors, this no small silver lining.
The ECB’s Best Is Yet To Come
On Thursday, the European Central Bank cut its deposit facility rate by -25bp to 3%. This brought its cumulative reduction in interest rates since June to -100bp. More importantly, the ECB sent at least three strong signals that more rate cuts are coming in the first half of 2025.
Strategy Chartbook
Gavekal Research
Global Strategy: The Contrarian Report
Louis-Vincent Gave, Anatole Kaletsky, Tom Holland, Andrew Batson, Udith Sikand, Tan Kai Xian, Cedric Gemehl, Tom Miller, Will Denyer, Charles Gave
8 Jan 2025
Before investors bed in strategies and reset portfolios for a new year, we wanted to offer 10 contrarian insights that may challenge their views. Expect to hear more from Gavekal authors in 2025 on these topics.
Equities
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…
China And The US: Different Views Of Market Performance
Oil & commodities
Building Narratives Around Obvious Outliers
The Syrian Revolution
Conversation: What Could Derail The Inflationary Boom
Hedging The Inflationary Bust
The Energy Faceplant
Who Is Going Bust?
China tech
China’s Export Controls Send A Serious Signal
Xi Goes All In On Tech
Webinar: Setting The Agenda For China's Plenum
The Localization Drive Steps Up
After The Melt-Up In Semiconductors
Vietnam’s Bamboo Diplomacy
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.
