Louis-Vincent Gave

Founding Partner & CEO @Gavekal

[Louis-Vincent Gave @gave_vincent]

Today’s winner

[Lee Roach @leevalueroach]

I have read approximately 3,000 10-Ks in my life. I have read my wife’s emotional state correctly maybe 11 times. This is troubling because the skills should transfer. Both require you to look past the headline. Both require you to read the footnotes. Both require you to notice what was said last quarter that is not being said this quarter.

I can spot a goodwill impairment from 40 pages away. I cannot spot that my wife has been quietly furious since Tuesday. In a 10-K I notice when management changes the word “challenging” to “dynamic” and I correctly interpret this as a warning. In my marriage my wife changed the word “fine” to “fine.” and I did not notice the period. The period was the entire disclosure.

I missed it. I read a footnote last week in a packaging company’s annual report that disclosed a related-party transaction worth $400,000 and I caught it in 90 seconds. My wife told me three times this month that she was tired and I interpreted this as “tired” when in fact it was a Level 3 disclosure requiring immediate management response. I have a system for 10-Ks. I read the MD&A first, then the risk factors, then the cash flow statement, then the notes. I have no system for my wife. She is a company that does not file. She reports continuously and without warning and the format changes every quarter. Her risk factors are not enumerated.

Her MD&A is delivered through sighs of varying length and I have not yet developed the ear. Last week she said “do whatever you want” and I did whatever I wanted and it turns out the correct interpretation of “do whatever you want” was “do not do that specific thing” and I have no idea how I was supposed to know that, and yet, looking back, the signals were all there. The signals are always there. I have been trained to find signals. I find them in companies I will never meet. I miss them in the person I have lived with for nine years. My wife has started saying things like “you would notice this if I were a stock” and she is correct. She is correct. If she had a ticker I would have already built a 6,000-word model on her. I would know her seasonality.

I would know her capex cycle. I would know which quarters historically run hot. Instead I treat her like a private company and I am surprised every time the auditors arrive. I am going to bed now. She said good night in a tone. I do not know what the tone meant. I will find out in the morning. Or I will not. The 10-K of my marriage is filed in real time and I am, as always, three quarters behind.

[Louis-Vincent Gave @gave_vincent]

For this week’s Gavekal zoominar, I caught up with my friend and business partner Anatole @Kaletsky. We discussed everything from the Iran peace deal, where energy and commodities should head now, the painful underperformance of HK stocks, the outperformance of Japan and many other things beside. For those who pay really close attention, my chocolate lab Huxley even makes a brief appearance…

https://t.co/AgLzxRR3bv

[Louis-Vincent Gave @gave_vincent]

@AlexFromKharkiv @PauloMacro Fair point
Does it work out the second time around?

[Louis-Vincent Gave @gave_vincent]

A treaty signed in Versailles?
With hefty reparations?
Obviously no one here is superstitious… or alternatively no one ever read a history book?

[OSINTdefender @sentdefender]

As Iran confirms that they have signed the U.S.-Iran MOU the White House has released footage of the moment when U.S. President Donald J. Trump signed the MOU during a dinner with his French counterpart, President Emmanuel Macron, in Versailles, France.

[OSINTdefender @sentdefender]

As Iran confirms that they have signed the U.S.-Iran MOU the White House has released footage of the moment when U.S. President Donald J. Trump signed the MOU during a dinner with his French counterpart, President Emmanuel Macron, in Versailles, France.

[Louis-Vincent Gave @gave_vincent]

@leomironov @geo_fed @anasalhajji @DanielieGrey And very solid exports

[Louis-Vincent Gave @gave_vincent]

@Emmanuelle_UDE

[Louis-Vincent Gave @gave_vincent]

@Emmanuelle_UDE Trillions?

[Louis-Vincent Gave @gave_vincent]

@lighthousejerry @sam_gatlin Hard to have an iron rule for any market… let alone all emerging markets?

[Sean Pianka @seanpianka]

The central thesis of this episode of the Bloomberg Intelligence podcast with Leonid Mironov, a fund manager at Gavekal Capital, is that China is exiting its property drag into a stabilized, deliberately non-speculative housing market, and that the genuine investment story has migrated from real estate to a policy-curated set of sectors (semiconductors, power, commodities, AI).

Mironov's most load-bearing claim is that China's consumption weakness is a deflation-psychology problem, not a structural demand failure, and that a sustained PPI turn (which he dates to February 2026, confirmed in March) is the missing catalyst that could unlock large deferred savings.

Wrapped around both is a structural argument: Chinese capital markets are maturing toward sticky, return-of-capital-driven equity ownership, which changes the long-run quality of the opportunity.

Core Arguments and Talking Points

1. The drag from housing is dissipating, but this is a transition to a stable, low-speculation market rather than the start of a new property bull market.

2. Value-weighted vs square-meterage-weighted framing produces opposite pictures; tier-1/2 and tier-3/4 markets will resolve along entirely different paths.

3. Headline/raw inventory counts are misleading; the credible bearish signal is depressed and still-declining gross rental yields as completions roll in.

4. Property transmits to consumption through both jobs (direct and supply-chain) and the household wealth effect, which currently suppresses spending and inflates savings.

5. April retail weakness overstates structural softness because two large categories are lapping expiring subsidies; underlying services and online consumption are healthier.

6. Three years of deflation have trained consumers to defer purchases; only a sustained producer-price (PPI) turn can flip the mindset and release deferred spending.

7. Beijing's campaign to curb destructive competition is tailored per industry (EVs vs lithium vs solar), and that granularity is why Mironov expects it to succeed.

8. China exposure should be built bottom-up from excellent companies that pass a top-down policy-alignment filter, with no index exposure.

9. A concrete sector map of where policy alignment plus earnings quality overlap.

10. Mega-cap internet names sit ambiguously between funding sources and AI beneficiaries; there will be winners, but value articulation is the swing factor.

11. Allocator willingness to even meet on a new China fund has shifted markedly, signaling thawing institutional sentiment despite a more difficult macro.

12. Two catalysts could change the China narrative, a slow-burn structural reform toward sticky, capital-allocation-driven markets, and the symbolic milestone of a first trillion-dollar company.

Cross-Cutting Themes

- Two-speed / K-shaped everything: The same bifurcation recurs across property (tier-1/2 vs tier-3/4), the macro economy (exports vs consumption), and the consumer recovery itself (luxury / top-end first, trickling down). It is Mironov's default lens.

- Policy alignment as the master variable: "Houses for living," the 15th Five-Year Plan, anti-involution, semiconductor indigenization, and financial-market reform are all treated as a single coherent policy signal that should drive both sector selection and exclusions.

- Deflation-to-reflation as the hinge: The consumption case, the property-yield case, and the equity-flows case all ultimately depend on a durable shift from deflation psychology to rising prices, with the Feb/Mar 2026 PPI turn as the pivot.

- Structural market maturation: Buybacks/dividends exceeding net issuance, pension/insurance sticky money, M&A normalization, and consolidation toward fewer, larger producers all point to a more institutional, capital-allocating China market.

Contrarian or Non-Consensus Views

- "Bottoming, not rebounding" explicitly splits from both the bullish rebound camp and the still-bearish camp Mironov says divide the street roughly in half.

- Consumption bears are over-reading the data: April weakness is attributed to subsidy base effects (>15% drops in white goods and EVs), not structural demand failure.

- Anti-involution will succeed because it is industry-specific; implicitly counters skeptics who treat it as ineffective sloganeering.

- Fully ditch the index rather than manage relative to a benchmark, a stance against conventional China beta exposure.

- Solar involution is a deliberate strategic positive China will not aggressively curb, contrary to a uniform "crack down on overcapacity" read.

- A dissenting equity pick, not Tencent or Alibaba, as the first Chinese $1T company post-IPO, this year. Listen to the full episode to find out which one.😉

As always, a fascinating discussion on a widely misunderstood capital market from @Gavekal.

[Louis-Vincent Gave @gave_vincent]

My friend and colleague @leomironov went on Bloomberg’s Asia Centric pod to discuss the challenges of investing in China against the backdrop of the unfolding balance sheet recession of recent years. A great listen… https://t.co/CwLM8hPgBS

[Louis-Vincent Gave @gave_vincent]

@PeterChung13 Yes

[Louis-Vincent Gave @gave_vincent]

👇
My man shrub, using a picture to sum up a thousand words…

[Le Shrub🌳 @agnostoxxx]

Anyone else feel the same about their China exposure? 🥹🌳🙏$KWEB $FXI

[Louis-Vincent Gave @gave_vincent]

I always enjoy catching up with my friend @alex_larrain_ . Alexandre is my go to person to underestand any developments in Latam. This year, once again, Latam bonds are quietly outperforming all other bond markets. Alex and I discuss why that is, why the Latam outperformance should continue, and what might interrupt it. The paywall has been removed for this conversation…

[Alexandre Larrain @alex_larrain_]

@gave_vincent and I had a chat on Thursday to discuss Latam Fixed income markets: the elections in Colombia, Peru, and Brazil; valuations in the global context and the outlook for the next year.

check it out here, no paywall.

https://t.co/GlWVBqTrLw

[Louis-Vincent Gave @gave_vincent]

@reticulosaurus I know this may come as a surprise but very very few right wing politician, if any, who have been called “Hitler” by their left wing opponent in the past 80 or so years, did, in fact, turn around and build “a new Reich”…

[Louis-Vincent Gave @gave_vincent]

@seanpianka Thank you! Great summary

[Louis-Vincent Gave @gave_vincent]

For French speakers

A show I taped in Paris earlier this week on my sister’s and dad’s YouTube channel. French speakers should subscribe. Show comes out Sunday evening Paris time…

[Université de l'Epargne @Epargne_UDE]

🏮🏮🏮Demain, une émission spéciale avec @gave_vincent à 18h30, à ne rater sous aucun prétexte!

On y parlera de la valorisation actuelle des semi conducteurs, de l'IA, des perspectives asiatiques sur les marchés et de ce que l'on pourrait envisager de positif en Amérique du Sud, Brésil compris pour les années à venir.

N'hésitez pas à souscrire à la chaine afin de ne rien en rater.
👇👇👇👇
https://t.co/dwTG0a5Kl2

[Kuppy @hkuppy]

Wonder if the IRGC is still taking hummus tolls in #Bitcoin, or they’ve switched to something else that holds value…🤭🤭

[Louis-Vincent Gave @gave_vincent]

@BanksterCorp @VincentDeluard Merci!

[Louis-Vincent Gave @gave_vincent]

Montreal on a nice Spring evening has to be one of the best cities in North America. Great dinner tonight at Chez Lévêque brasserie with long time friends @VincentDeluard and Monseigneur de Rochebrune. We tried to solve the world’s problems but probably didn’t drink enough Bordeaux to get the job done…