Most recent
Gavekal Research
Is Deflation Bad For The Stock Market?
Charles Gave
24 Jun 2025
When prices start falling, economists usually announce that the end of the world is nigh and the 1930s were a walk in the park compared to what is coming, says Charles. Central banks, we are told, are stuck behind the curve. Yet is that really so? In this short report, he checks whether deflation is indeed automatically bad for stock market performance and applies the findings to today’s market situation where the pricing outlook varies greatly across major economies.
Gavekal Research
Asia’s Oil Vulnerability
Udith Sikand
24 Jun 2025
After Iran's pre-warned missile attack against the main US military base in Qatar and Donald Trump's announcement of a ceasefire spurred a full collapse in the oil price back to its pre-conflict level. What comes next in this Middle East is far from certain, and Asian economies still have reason to fear a blockade of the Persian Gulf, even if they treat it as a tail risk, rather than a base case.
Gavekal Research
Webinar: Will Chinese Outperformance Continue?
Louis-Vincent Gave, Charles Gave, Russell Napier
23 Jun 2025
The meeting focused on China's economic performance, global influence and potential future scenarios. The panelists debated the potential of the renminbi as a reserve currency, China's economic model and capital controls, and the implications of China's debt situation for global markets.
Gavekal Research
The Fog Of War
Louis-Vincent Gave
23 Jun 2025
The typical way to judge a military operation is whether it has been undertaken safely, quickly and effectively. In the American air operation no US lives were lost, and it was undeniably speedy. But its effectiveness remains an open question, as does the nature and targets of Iran's response.
Gavekal Dragonomics
Negotiating From Strength
Thomas Gatley
Testing The Limits Of Industrial Policy
Thomas Gatley
Assessing The Consumption Push
Andrew Batson
Growth After The Trade Truce
Wei He, Dragonomics Team
When Deposit Rates Decline
Xiaoxi Zhang, Wei He
The New Technology Hubs
Tilly Zhang
The Fading Boost From Consumer Subsidies
Ernan Cui
Payment In The Time Of Sanctions
Xiaoxi Zhang
Limits To The Export Shock Absorber
Christopher Beddor
The Wrong Kind Of Competition
Andrew Batson, Ernan Cui, Tilly Zhang
More research
Geoeconomic Monitor: Ends, Ways And Means In Iran
Tom Holland, Tom Miller
A Devil’s Advocate For Dollar Bears
Will Denyer
Video: The US Immigration Flip-Flop
Tan Kai Xian
The Economy Is Nothing But Energy Transformed: Iran-Israel Edition
Charles Gave
Trump Sets A Golden Precedent
Tan Kai Xian
Eurozone Consumers Versus The Oil Market
Cedric Gemehl, August Gudmundsson
Why I Am Still US Bearish
Anatole Kaletsky
Mapping Out The Israel-Iran Scenarios
Louis-Vincent Gave
Unstable Equilibriums
Louis-Vincent Gave
Doom Loop Redux?
Tan Kai Xian
Gavekal Research
After London, What’s The Deal Space?
Arthur Kroeber
12 Jun 2025
The latest trade negotiations drama in London probably leaves us back where we were a month ago—though the precise terms of the agreement are not yet public. China’s hardball tactics have exposed some vulnerabilities among the US and its allies and marginally increased the chance that Washington will give some ground. But the deal space remains narrow.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US S&P Global composite PMI fell to 52.8 in Jun, down from 53 in May
Above expected 52.2; mfg PMI unchanged at 52; services PMI at 53.1 vs 53.7
Upswing in prices sub-components reflects tariff impact
Eurozone HCOB composite PMI at 50.2 in Jun, unchanged from May
Below expected 50.5; mfg PMI unchanged at 49.9; services PMI at 50 vs 49.7
Stable aggregate overlooks improvement in Ger and deterioration in Fra
UK S&P Global composite PMI rose to 50.7 in Jun, up from 50.3 in May
Above expected 50.6; mfg PMI at 47.7 vs 46.4; services PMI at 51.3 vs 50.9
Headline improvement masks deterioration in most sub-components
Singapore CPI rose 0.8% YoY in May, down from 0.9% in Apr
As expected; core CPI rose 0.6% YoY in May, down from 0.7% in Apr
Balanced inflation outlook; MAS to keep SGD on current appreciating path for now
Test Your Knowledge
Over the past 40 years, global average temperatures have risen by about 0.30°C per decade. What is that figure for South Asia?
- 0.09°C
- 0.23°C
- 0.58°C
Chart of the Week
China’s corporate margins have been contracting since 2021, and are now near the lowest level in a decade. The reason is that producer prices have been falling for three years. Historically, swings in the producer price index have been matched by changes in corporate margins. The government’s industrial-policy push is expanding supply, but demand remains weak, leading to lower prices and squeezed margins.
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: Will Chinese Outperformance Continue?
Louis-Vincent Gave, Charles Gave, Russell Napier
23 Jun 2025
The meeting focused on China's economic performance, global influence and potential future scenarios. The panelists debated the potential of the renminbi as a reserve currency, China's economic model and capital controls, and the implications of China's debt situation for global markets.
Tariff Troubles
Negotiating From Strength
Nearly three months after US President Donald Trump dramatically escalated tariffs on China, it is clear that the administration overestimated its leverage against Beijing. Thomas argues that the latest trade data underscore that China is negotiating from a position of strength resting on two foundations: rare-earth export controls and a remarkably resilient export sector.
Webinar: China's Economic Strategy Amid Trade Conflict
China and the US are talking again, after the first phone call between Presidents Trump and Xi since Trump took office. But the path toward a substantive trade agreement is strewn with boulders. Arthur Kroeber and Andrew Batson discussed how China will handle the trade talks, what it will do to support its economy, and how seriously we should take its policy pivot towards more consumption-led growth.
After London, What’s The Deal Space?
The latest trade negotiations drama in London probably leaves us back where we were a month ago—though the precise terms of the agreement are not yet public. China’s hardball tactics have exposed some vulnerabilities among the US and its allies and marginally increased the chance that Washington will give some ground. But the deal space remains narrow.
Asia’s Plan To Keep America Sweet
On Tuesday, the US and China agreed to extend their trade war truce pending a check in with both sides’ leadership. In the meantime, other Asian nations are attempting to tread a path that placates Donald Trump without picking sides in this great power standoff. It means that as the July 9 deadline approaches for the potential imposition of Trump’s “reciprocal tariffs”, Asian economies are adopting survival strategies. In this piece, Tom and Udith explore how those are breaking down across a heterogeneous region.
US economy & markets
A Devil’s Advocate For Dollar Bears
The consensus in the market, and in our firm, is increasingly dollar bearish. There are good reasons for this, and one does not want to be contrarian for the sake of it. Still, it makes sense to step back and ask what could cause the US dollar to rebound, if only in a counter-trend rally.
Trump Sets A Golden Precedent
On Wednesday, Nippon Steel finalized its US$15bn takeover of US Steel. To ensure compliance with the agreement, the US government is getting a golden share that grants the president a veto over some of US Steel’s activities. As such, the deal sets a precedent that could be a model for future foreign purchases of businesses operating in “critical” US industries. Such arrangements may not, however, be an unalloyed positive for shareholders, says Kai Xian.
Doom Loop Redux?
A few hours before Israel attacked Iran last Thursday, the DXY US dollar index fell below its recent low. In a “normal” market backdrop of the type that has existed for the last 50-odd years, such a military action could have been expected to spark a “risk off” appreciation of the dollar. It raises the question: will the drop in the American currency cause foreign investors to abandon US equities?
The End Of QT?
Federal Reserve policymakers meet Tuesday and Wednesday to review US monetary settings. They are unlikely to adjust interest rates or promise cuts in the near future. While soft inflation data may justify such a dovish shift in rate guidance, factors like policy uncertainty, war in the Middle East and presidential pressure may deter Jay Powell from promising rate cuts. There is, however, a growing case for the Fed to end quantitative tightening.
China chartbook
Gavekal Dragonomics
Testing The Limits Of Industrial Policy
Thomas Gatley
20 Jun 2025
China’s lavishly subsidized industrial policy has delivered some substantial achievements in key technology sectors. But the costs of that strategy started to become more apparent in 2024, Thomas argues in his annual chartbook on the state of the corporate sector. A strategy that relentlessly expands supply while leaving domestic demand weak results in steady erosion of margins and profitability, which will make it harder for firms to continue to push the technological pace.
India chartbook
Gavekal Research
India Macro Update: Hold The Confetti
Udith Sikand, Tom Miller
5 Jun 2025
India’s economy is in the early stage of a cyclical recovery enabled by supportive policy settings. Sustaining the positive momentum will, however, be tricky, say Udith and Tom. A continued recovery in domestic consumption is encouraging, but external uncertainty could dampen sentiment and weigh on investment.
Latest video
Gavekal Research
Video: The US Immigration Flip-Flop
Tan Kai Xian
19 Jun 2025
US President Donald Trump has been sending confusing messages on his immigration stance. In response to protests over mass deportations, he paused raids at farms, hotels, and restaurants, before reversing that order on Tuesday. In this interview, Kai Xian updates his view on whether or not the US is softening its immigration stance.
Strategy Chartbook
Gavekal Research
Global Strategy: Investing After Exceptionalism
Will Denyer, Tan Kai Xian, Udith Sikand, Thomas Gatley, Cedric Gemehl
30 Apr 2025
The first four months of 2025 have seen a succession of shocks severely damage the narrative of US exceptionalism that has prevailed in global financial markets for the last few years. In this strategy chartbook, Gavekal analysts examine what this diminution of belief in the US means for US markets, and look at which assets and markets outside the US stand to benefit and which to avoid.
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
Eurozone Consumers Versus The Oil Market
Oil accounts for 37% of Europe’s primary consumption and most of it is imported. That makes Europe especially vulnerable to an oil shock should the Israel-Iran conflict widen to create huge disruption to oil shipments and a potential spike in the crude price. Yet despite oil prices rising 15% in the last five days, Cedric and August argue that the situation looks manageable, at least for eurozone consumers.
The ECB Beyond 2025
On Thursday, the European Central Bank duly delivered the 25bp interest rate cut expected by most investors, leaving monetary policy in an apparent sweet spot. ECB President Christine Lagarde offered no guidance on whether policymakers will do more in the coming months, but the key variable influencing their reaction function seems to be the state of EU-US trade relations.
Ending US Exceptionalism: Regime Change Or Cyclical Blip?
Usually, the short-term economic outlook—where unemployment will be next month, or growth next quarter—is quite certain. And long-term trends are nicely predictable. It is the mid-term that confounds forecasters. Donald Trump has turned all this on its head. No one has clue about the short term. And the long run is any one’s guess. But paradoxically, argues Anatole, the medium-term outlook is unusually clear—it’s just that financial markets have not yet priced in this clarity.
Gaming The Transatlantic Trade War
Investors will take comfort from Trump and European Commission President Ursula von der Leyen having agreed on Sunday to extend talks until July 9, with the US president saying his 50% tariff threat will be held in abeyance. The issue seems to be that the two sides are talking past each other. The EU speaks of pursuing “strategic patience” and complains that the US is
making maximalist demands rather than properly negotiating.
Currencies
Where Will The Excess Dollars Go?
Good News To Make You Happy From The JGB Market
Carefully Controlling Appreciation
Asia’s Potential Repatriation Flows
One Country, Two Currencies
Conversation: The Six Sigma Event In Asian Forex
Oil & commodities
Asia’s Oil Vulnerability
The Fog Of War
The Economy Is Nothing But Energy Transformed: Iran-Israel Edition
Trading The Israel-Iran Conflict
The Implications Of Israel’s Action
Back To The Sanctions Weapon
