Gavekal

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When Donald Trump surprised almost everyone in 2016 and won the US presidency, the first victim was Mexico. The peso tanked and Mexican bonds and equities both sold off. This made sense: Trump had spent the campaign insulting Mexicans and promising to build a border wall to be paid for by the US’s southern neighbor. This time, the perceived victim is China. As Trump’s campaign momentum picked up through October, Chinese stocks went back to falling. Very few people in the market seem to think that a “grand bargain” with China is likely, but Louis argues there are reasons for both countries to want one. Watch a webinar in which Louis discusses this possibility below, and read today's Daily: https://lnkd.in/eTBfNg58

When Donald Trump surprised almost everyone in 2016 and won the US presidency, the first victim was Mexico. The peso tanked and Mexican bonds and equities both sold off. This made sense: Trump had spent the campaign insulting Mexicans and promising to build a border wall to be paid for by the US’s southern neighbor. This time, the perceived victim is China. As Trump’s campaign momentum picked up through October, Chinese stocks went back to falling. Very few people in the market seem to think that a “grand bargain” with China is likely, but Louis argues there are reasons for both countries to want one. Watch a webinar in which Louis discusses this possibility below, and read today's Daily: https://lnkd.in/eTBfNg58

Gold, widely viewed as a hedge against inflation, has traditionally had an inverse relationship with US real yields. However, that relationship seemingly broke down in 2022, coinciding with Russia’s invasion of Ukraine and the subsequent freezing of its forex reserves. This implies that one of the major drivers of the ongoing rally in the gold price is the demand for diversification of reserves—where the security of the asset is prioritized over its prospective returns. #gold #markets #forex

Enthusiasts for the revitalization of US manufacturing have been heartened by recent news that TSMC’s Arizona chip fabrication plant is delivering higher production yields than the company’s fabs back home in Taiwan. This appears to be good news for the competitiveness of US manufacturing. But digging beneath the surface, Tilly Zhang and Tan Kai Xian find things are less simple. TSMC’s high yields were achieved in small-scale trials, and may not be replicable in full-scale production. And even if they can be delivered consistently, they are unlikely to offset higher US construction and operating costs. With other companies and sectors similarly affected, tariffs and subsidies are unlikely to do the job. Only a much weaker US dollar will allow the US to reindustrialize: https://lnkd.in/epMZW339 #video #interview #chips #semiconductors #USA #TSMC #reindustrialization #chipmaking #Arizona #macroresearch #macro #economy #trade #reshoring

Catch up on today's edition of The Close as Andrew Sullivan, Founder of Asian Market Sense and Will Denyer, Chief US Economist at Gavekal join Nitin Dialdas to discuss the British Labour government’s budget for 2025 announced last night - and the positive data out of China as their PMI numbers show expansionary growth for the first time since April. Paul Smith, CFA, Co-Founder of SustainFinance Limited takes a deep dive into how the world of investing in sustainability is evolving in the first of a two part series. Maaike Steinebach, CEO and Founder of FemTech Future tells us what FemTech is and why it’s an interesting sector to be keeping tabs on. https://lnkd.in/gzkT66GZ 🎧 RTHK #Radio3｜ 🕗Every weekday 5:00pm-6:00am, except public holidays ▶️Listen live here: https://lnkd.in/geprnEU9  📩 Email: moneytalk@rthk.hk  💡 WhatsApp us questions for our guests: http://wa.me/85268998518  Listen on Spotify: https://lnkd.in/gC4i5KPY  And on Apple Podcasts: https://lnkd.in/gPG78nV5 

While the bosses of Western car companies were asleep at their wheels, they were suddenly overtaken by zippier Chinese rivals. And it’s not just car company bosses. In dozens of industries, Chinese companies are now leading their global fields. Yet in the West, the dominant view of China remains overwhelmingly negative, including among investors. In this unlocked article, Louis-Vincent Gave considers the reasons for this skepticism and examines its potential costs: https://lnkd.in/gX6fCiYP

Cyclical equities are beginning to outperform defensives and US high-yield corporate bonds are outperforming US investment-grade corporate bonds, suggesting that investors are starting to price in stronger US growth. Lingering summer concerns about an impending soft patch in the US economy were also crushed by the robust September payroll report. The Citi economic surprise index shows that since August 22, US economic data started to surprise less on the downside, and since October 1 has surprised more on the upside. Looking ahead, investors are likely expecting the potential for a wider fiscal deficit and easier Federal Reserve policy next year to put upward pressure on US economic growth. #chart #chartoftheweek #macroresearch #macroeconomy #assetallocation #investing #markets #USA #economy #Citi #investors

The US has become Europe’s second-biggest natural gas supplier, which has resulted in a substantial energy trade deficit with the US. Despite this, Europe’s total trade surplus with the US has continued to make new highs as its non-energy trade balance has surged. Robust US consumer demand, a strong US dollar and asymmetric trade policies benefiting European exporters are to thank for this. But if the next US administration turns more protectionist after the election, these tailwinds are at risk. #chart #chartoftheweek #macroresearch #macroeconomic #trade #Europe #USA #assetallocation

Fresh back from kicking the policy tires in Washington and Brussels, Gavekal geopolitical analyst Yanmei Xie describes the growing debate in the US between the “industrialists,” who favor protectionism in a bid to revitalize US manufacturing, and the “economists” who fly the flag for free trade. The debate in the European Union is couched in different terms, but in both economies policymakers are grappling with how to live and thrive in the same world as an ever more competitive China: https://lnkd.in/et8H62-D #video #interview #trade #Europe #USA #China #tradewar #macroresearch #assetallocation #investing #geopolitics #geoeconomics