Exposing WSJ’s Biggest China Mistakes: Louis-Vincent Gave's Analysis

Mauldin Economics COO Ed D’Agostino talks to Louis Gave, CEO of Gavekal Research, about China’s so-called economic crisis, the Fed’s unspoken third mandate, and “the real story of the summer.” You’ll also hear about Louis Gave’s top investment themes, the future of reshoring, and what the United States’ $30+ trillion debt train means for the US dollar.
You can learn more about Louis Gave here:
research.gavekal.com/author/l...
Stay informed on the big trends by subscribing to Global Macro Update here:
www.mauldineconomics.com/go/J...
Please stay in touch by following me on X (formerly Twitter) @EdDAgostino:
/ eddagostino
Time stamps:
Introduction: 00:00
The world’s most important asset class: 01:03
The Fed’s unspoken third mandate: 07:46
China’s non-crisis: 12:20
How China undermines US exceptionalism: 17:16
Why deglobalization is a misnomer: 24:23
What does the US get for $30+ trillion in debt?: 30:06
Louis Gave’s top investing themes: 33:50

[@juhantoon6524]

The difference between US and China : US run by a bunch of lawyers and reporters and China run by a bunch of engineers and professional bureaucrats. US politicians are beholden to big donors be it corporation or individual for their campaign funding which they MUST return the favors after winning the election and China politicians are beholden to 1 guy who in return must please the large populace to continue to hold on to power.

[@Andy-P]

China is governed by one man whose thoughts on everything become policy

[@nsebast]

In my democratic country: The politicians have a formula: Elected for 5years = 2 years to get my money back + 2 years of profit + 1 year for next election.

[@ggttuuxx]

Instead of "lawyers", we can subsitite "liars". There are congressman who lie their way to Congress, congressman taking bribes and out right lying about them, congresswoman (Speaker, no less) engaged in insider trading, presidents who revert on their promises, many promises, Supreme Court Justice taking bribes and refusing to acknowledge it, Supreme Court Justices lied to the Senate on their confirmations. All three branches of government, Liars all. The worst thing is: This is supposed to be a "democracy". The voters are supposed to have the power to do something. Either they enjoy having liars, or it is actually not a "democracy".

[@karllarsen8797]

Nah, Xi Jinpinpong does not give a damn about 1.4 billion Chinese anymore than I would give a damn about the 1.4 billion Chinese. Mao did not give a damn about this 1.2 billion Chinese either and Mao just let tens of millions of Chinese starve to death. Get real and stay real juhantoon6524.

[@bogdanlupu3496]

What a lot of s...t

[@fredfrond6148]

Louis is one of the few westerners that can actually understand the geopolitical and financial situation between the US and China.

[@kaimingraymondchoi9909]

He understands well and more importantly he speaks the truth.

[@pauloalex975]

Great interview. Louis always has tons of fantastic insights 👍👏

[@TheOldEuropean]

If you know his father Charles and his sister Emmanuelle, you know the apple doesn't fall far from the tree...

[@tyko2686]

Wow! Finally someone in the west who can and dare to describe the actual situations happening in the current situation in the world objectively with insights and accuracy

[@truezyf]

Is speaking truth good for the election? no. so why u said it?

[@tyko2686]

Election is a popularity contest, politicians will speak what the voters want to hear and like to listen. Speaking the truth and facts would be hard for the voters to accept and politicians will lose their votes instead

[@DubboU]

There’s actually lots of channels like that, if you cared to look for them. The algorithm just doesn’t actively show them. By design of course.

[@martinleepgg]

Bravo, the most honest overview and look ahead by Louis.

[@Jamie-nt3eh]

Very insightful without a narrative!

[@hylimm]

Lol China is US biggest chips client! Lol 😂 now the chip plants in US have no where to go!

[@lagrangewei]

US produce only 17% of the world chip, China produce 19%... majority of the chip are produce by the asian tigers. US publication will list revenue to mislead the picture. but revenue is not production...

[@taiwanstillisntacountry]

Start making fish&chips and sell to the 51st State of the USA, the UK

[@dave8212]

Awesome content, love Louis's insight - thank you 👍💛

[@peterchung7151]

Louis never disappoints. Great investment insights on the USA, China, EM .... An excellent counter to the prevailing Western narratives.

[@jbrown6367]

He's like Ray Dalio. He has a lot of eggs in a Chinese basket, so he can't afford to be too critical. A lot of questionable assumptions on China went completely unchallenged by Ed.

[@hdvoice]

​@@jbrown6367like what assumptions specifically?

[@LazyTravellers3824]

@@jbrown6367… so he makes a lots of money, and if he invests a lots in US he would be in trouble already …

[@dreamaker1]

a

[@user-we8kr3yq4n]

The Media is especially getting the Chinese Economy wrong recently as well. Yes, China's Economy does have some serious problems right now, but the reality is that the 6.3% growth we saw in Q2 is significantly better than the 4.5% in Q1, even if it didn't hit growth forecasts, but I think just over 6% should be the expectation right now though, because the recovery phase will have its ups and downs, which is why that 6.3% is just where growth should be. Great show as well.

[@johnyossarian9059]

Come on, man. Get with the program, okay. We are supposed to look at China and laugh at them. Don't question the narrative, okay?

[@jbrown6367]

Your assumption is that those number are not completely made up.

[@calvyncraven1141]

​@@jbrown6367and you're assuming it is.

[@rap3208]

@@jbrown6367 That's always the way of the US, they say "China is lying!" if all their assertions were proven wrong.

[@billinsf88]

@@jbrown6367you mean like the red ballon?🤭

[@louistan7560]

Does Debt Really Matter? According to the latest tale spun by Janet Yellen, apparently it doesn't. To support this story, reference was made on Japan. However, the difference between the US and Japan is that most of Japan's national debt is being held by the Japanese while US Debt is globally held. With US interest rates continuing to go up and affecting the exchange rates of countries holding US Treasury Bills many have no choice but to reduce their holdings to support their own currencies while US financial sanctions are pushing countries towards direct exchange instead of using the US$.

[@righteousmammon9011]

70% of us treasuries are held in the US

[@lagrangewei]

Japanese national debt is recycle into shares, the government is in debt not because it is spending but because it is buying share. this is why people rarely talk about investing in Japanese market, because government purchase inflate the stock price. Japan has a surplus in capital, the problem with what abenomic did is now japan cannot sell the share without causing market to drop, so they are kinda struck with their shares...

[@ggttuuxx]

@@lagrangewei Abe and Kuroda screwed the next generations in Japan for their own short term personal glory. Japan is screwed. 50 years from now, the re-evaluation of Abe and Kuroda will not be so kind. They are purely selfish.

[@istvandarvas3372]

This was awesome! I loved it! Thanks!

[@jamespier7801]

very edifying. Thank you.

[@richardsagala3186]

Brillant talk, thks!

[@guenthermichaels5303]

What a delightful stumble, finding your channel. I'm a new sub. The analysis, discussion and pragmatism in a Language we can understand is appreciated. Kind regards from Toronto

[@nickavanti]

Great stuff.

[@willemprinselaar3808]

Merci

[@kheesanlee6375]

Most in depth view not clouded by the fog.

[@rui-9-cs315]

insightful

[@nsebast]

Most accurate detailed analysis of the stuffs happening right now. But how long will it get there? I would say it's still 20 years to come.

[@philipwong895]

The US is leaving no knees untouched in its Tonya Harding competition strategy.

[@guenthermichaels5303]

Speaking of commodities, please consider having Mark Mills on your program.

[@richardlo4867]

".. obviously you get wars.."

[@charliecheng3340]

Louis is being honest tell it as it is

[@gordonsteen8415]

When will the presidential candidates be asked about the debt? Haley and Christy have talked about it.

[@johnmarsh5390]

Thanks for another interesting interview! I think Louis misspoke when he said BYD sold 10,000 Seagulls in Australia in 24 hours, though. I believe he was referring to the 10,000 orders BYD reported after the the Shanghai Auto Exhibition. I don't think BYD has any plans to sell the Seagull anytime soon in Australia due to concerns that it is not ready to meet all Australian safety requirements. While the Seagull is interesting news in the auto world, I don't think we will see an $11k USD EV in the US, Australia or many other places in the near future. Hopefully, I will be proven wrong.

[@johnyossarian9059]

You really think the US will let Australians buy Chinese cars? Even if they pass all safety standards requirements? I don't think so, mate. Albanese would have a swimming accident or something like that.

[@junkscience6397]

@@johnyossarian9059 Wow, "mate", you have everything figured out, don't you?

[@kevinlin4895]

Umm . They already are. BYD Atto 3, Dolphin, and MG4 are all selling well

[@lagrangewei]

pretty sure BYD car pass the safety requirement, as european standard are higher. it is supply side concern that they are not selling there. they think they can make more money selling to Europe, they will need to oversupply those market before they move to smaller market.

[@leonardneversleeps]

Gavekal research is very legit

[@sale3278]

So what will be the end-game ?

[@DavidWestwater-vq6qy]

What will the dollar fall in relation to? What could they buy instead

[@exa0zi88]

US gov, through 10 years on almost 0% rate, did locked in lots of long-term debt in lower rate.

[@BigHenFor]

Absolutely. But with so much debt being rolled over and servicing it costing over $650bn a quarter, those gains are long gone.

[@stephenyang2844]

Trillions of new debt comes with higher interest payment obligations, a burden on the economy.

[@yinchoongng8986]

30 over trillions in debt and that's sitting time bomb for America.

[@guenthermichaels5303]

Interesting, ( I looked it up) TSMC plant is a massive endeavor. Each chip requires just shy of eight gallons of water; a cotton plant requires around ten gallons. To operate just one fab, TSMC will use 8.9 million gallons a day. Then there is electricity. The plants require as much as 2,400 megawatts each day-as much as 50,000 homes and more than many other industrial uses. HVAC systems can be responsible for as much as 65 percent of energy consumption. In addition to requiring exceptionally clean air, cleanrooms require very particular-and consistent-humidity and temperature levels. Chillers operate year-round, providing cold air for AC units. Sounds like they should build this in Quebec, lots of cheap hydropower and water, and reduced cooling costs.

[@cestmoi4252]

TSMC's move to the US was doomed to failure before it even started. Not only because of hardware/physical difficulties but software (people, culture..etc..) difficulties as well. The move is a political decision, not an economic one.

[@ggttuuxx]

@@cestmoi4252 US Politicians don't make choices based on the benefits to the Nation, nor sanity, they make decisions and spend the taxpayers' money based on the benefits flowing to themselves. When they happen to make decisions that are good for the People, it is by pure luck.

[@varivavariva6045]

👍👍👍

[@johnpanos2332]

read " planet ponzi "

[@jeffklugman9757]

it was herb stein, ben's father

[@rusticbox9908]

ROFL😂 this is just sooo FUNNY!!! The US has a pile of debt and nothing to show for it!

[@zenam83]

a strong dollar would be tough for the us economy probably

[@teresabarrett8676]

China supplies eighty-percent of the active ingredients NEEDED FOR R MEDIcine. I have had a fifo inventory for seizure meds&migraine meds since 2012. In Nevada we're in a megadrought. Bankrupting American semi-conductor manufacturers doesn't help me.

[@mdhvsnkr2657]

Louis is amazing!....but he's not American, why does he have to say " SEE MY CONDUCTORS"😅

[@GooguserSmith-ku1kh]

I think the decision to build manufacturing plants in Arizona is a very good idea. Every big move costs money, but the goal justifies the investment (means).

[@davidlai399]

LOL. TSMC was not about to deliver its crown jewel in gift wrap. It chose Arizona precisely to fail. Chip plants require vast amount of water and Arizona has none. The state also has little to offer in terms of lifestyle for Taiwanese engineers who would need to move there. But it’s ok because the bill is on Uncle Sam.

[@eliso5973]

No, the Arizona plant will be useless after this show is over.

[@qake2021]

👏👏👏🇨🇳🇨🇳🇨🇳👍👍👍

[@qake2021]

😱🇺🇲✌️🙏🙏🙏🙏🙏🤞

[@cuzmariosaidso]

I am the only moron who thinks the fed actually won’t cut

[@luizbranco8350]

30 tri for nothing caused by NIRP and ZIRP

[@M.Richter-gm4um]

China has a state-Administered Banking system, thats why you don’t See Trouble

[@bigqueue]

The thing that strikes me at the core of all of this is the idea of a command control government. We have never in my entire life of 65 years actually had very much of a free market. Worse than that, it's becoming more and more centrally command control, not just in communist China, but definitely within the USA. This to me is a very disheartening realization and won the changes my understanding of how to operate.

[@eikoGoldstein]

Exactly Mr Q! The great wars of the 20th century gave great impetus to the notion of War Socialism, ie the command and control of the nation’s economic life. The trend has proceeded and accelerated since 1945, under the rubric of Keynesian economics. Even the US central bank has joined the ranks, assuming for itself, authority over unemployment and inflation. Is it possible for the Genie to go back into the bottle? Probably not in our lifetimes. The day of reckoning approaches!

[@bigqueue]

​@@eikoGoldsteinChange of this magnitude can really only come as slowly as it has come into effect. That is, if there was a revolution, I'm not sure the system that came to replace it would be even as good.... IMHO, it will require a slow gradual removal of our authoritarian situation....that is, to make sure it is done right. That will require changing the hearts and minds of the populace....and so education is the key. A very difficult thing to do without a centralized control / focus....but alas, this is our task.

[@gregwang8628]

The US needs to attract 60% of the world’s savings by waging wars against them, how pathetic is that? I really don’t think God condone this kind of behavior!

[@timetraveller2300]

"communist China" that's what I expected from a 65-year-old.

[@ggttuuxx]

@@bigqueue When SVB failed, many Americans cry out for putting their savings at the Federal Reserve -- i.e. in times of crisis, the free-market ecnonmy types don't trust that the Market can handle it, they want to nationalize the banks, and store all their savings with the Big Brother. That is a very big problem in the US. People can rah rah rah freedumb and market all day long, but in a pinch, they only trust and want an authoritarian government. It is very sad for the US.

[@dashong8912]

China can print the reminbi and people would want it but why would people accept India's rupee? What can u buy with that?

[@simonbarrett9568]

Garert soloway said that Chinese stock market is ready to take off if not for the worry of taiwan it take off big time

[@turtlesoup8134]

No it won't. 90% of the investor in chinese stocks are still retail investors. If there is a stock boom, these people will pull in their friends and family to invest. This means these people don't focus on work and have their eyes glued to the stock ticker like gambling. If there is a major company stock that is rising too fast, the gov will launch investigation which usually result in the stock price moderating or even declining in value. The govt wants the stock to be stable and rising sustainably, not a volatile stock market where the ordinary people can get hurt since most retail investors knows nothing about how the system work. For them its just gambling and a fantasy to get rich quick. When doing business in china, don't trust capitalist analysis, especially if the specialist is foreign. Always be able to anticipate how the gov think and how it wants the market to benefit the people and the nation.

[@simonbarrett9568]

@@turtlesoup8134 world traders will go into China to buy stock there very cheap as american tech companies will crash it coming your see the smart Money knows where to go and place like Brazil will go up and commodities but tech go down it coming your see

[@fredfrond6148]

All news stories can now be written by chat GPT. We basically don’t need them anymore as they are bereft of the ability to do critical thinking 🤔and question nothing.

[@aajas]

It's puzzling that he chides the US for running a current account deficit, but when it comes to building a high-tech semiconductor facility in America, he's like "no no no, it will need water" Brother it's 10km from Lake Pleasant 😂- an enormous reservoir. He says deglobalization should be called de-sinofication, but he gave that talk probably summer 2023. At this point it's safe to just leave it at deglobalization. Shipping lanes from the Red Sea, Black Sea, Panama Canal are all threatened at once. It's likely that global trade will decrease.... bringing specialized manufacturing investment back to the local continent is a Good Idea

[@user-ok6re8gv1q]

Where will the mass robotics for automation come from? Guess which is the only country with the available know how skilled workforce to adjust/customise/build the automation/machines and robotics at a reasonable cost? ….C H I….NA more so than any other country. Hahahahha

[@opensky6580]

Maybe you are chasing the wrong theory for decades if you have to ask does it "finally" mater.

[@opensky6580]

You are saying you have no explanation for the situation. Maybe its time to throw your outdated theory over board if it's not doing the job.

[@jbrown6367]

LOL. US stocks may be down over the "past 12 months", but China stocks are flat... at levels seen in 2005. China is not investable. Maybe you can get a short-term trade out of it.

[@windsong3wong828]

USA tech stocks were brilliant in 2021. You would have lost 90%. Being flat is NOT BAD.

[@freedomworks3976]

It’s called the almighty dollar 💵 because it is almighty ❤😊

[@ML-un1gr]

Today the 2 largest communist countries are in battle with each other. Communist China versus Communist America (at best socialist). Who wins will be intriguing but my gut feeling says the US has had its day. It's not only the economical problems that shape a countries future, but its also the social and moral outcomes in a country and in that regard North America is heading south at a rapid rate.

[@WingkKong]

China does not has communist ideology anymore That is the secret of China success

[@charlesoleary3066]

He said nothing about vaccine harm, I can’t take anyone seriously who doesn’t see that

[@njaisson]

How can you call the Chinese investment in the BRI productive, when the transport networks are staying idle? It was productive as long as it provided financing to the building companies to build the road/railway networks, that traverse the connected countries supposed to benefits from these investment to develop their commerce with China. But you don't speak a word about the investment fallouts in terms of economic development or the trade activities between China and their BRI partners. What has happened to the Central Asia countries that benefited in the fist place from these Chinese grandiose constructions? They have bene colonized by the Chinese banks with no returns in sight for the people what concerns the retail commerce and the increase of revenues to be spend in consumption. What is the point in connecting Hambourg with Beijing if the German imports in retail goods are staying flat?? It is not surprising then that you don't say a word about how Beijing is killing its home international business (see the collapse of the special economic zones) to serve the needs of the western consumers. Maybe the consumer markets have migrated to Africa. I would be interested to know about that. More surprising you don't even explain the financing sources of the BRI which is supposed to be the printing press of the PBOC, when the Chinese debt in Renminbi was morphed into debts on the eurodollars markets through off balance sheet operations to tap the endless ressources of the debt market in US dollars. Actually you don't give any reasons, but a list of non sensical propositions because not rooted in reality but macro fiction, which comme directly from the Chinse government propaganda. By the way, I would be also very interested if you could explain the future of the Chinese high speed rail network without the external capital financing, let alone the technologies to manage the rail networks originating in Japan, South Korea or Japan. To substantiate my point with just one practical example. Any inflation/deflation expansion in China to report since the Xi decision to cut the Chinese economy financing with foreign capital/debts following the Covid lockdown??? How many defaults on Chinse bonds??

[@JimMiller-oi5cx]

Bidenomics - the process of discovering that deficits finally matter.

[@BigHenFor]

That's funny, but the die was cast a very long time before Biden. Not only did the decision to offshore to China set the chickens free, the trade spat started by Trump racked up a good amount of debt as it compensated farmers for lost sales to China. So... Chickens will come home to roost, but stop laying eggs. Everything Biden claims is true, but nobody wants to listen. America needs to invest in itself, to build value in its own economyq, but it needs to look long term at the problem, because surpressing wage growth, while racking up profits offshore does nothing to help an econony that is 70% based on consumer spending. And the world cant afford to buy your debt any more. So sonething has to be done, as the party is in the process of winding down. Wait too long and the pain might be even greater.

[@tomcockcroft9394]

Ha saying China has become the largest exporter of cars in the world and not mentioning the US company who did it by building the worlds largest car factory. 1m a year in Shanghai. Tesla. All evs are made in China. Thanks to a us company lol

[@johnyossarian9059]

GM has been selling more cars in China than in the US for the last few years If it wasn't for China, GM would have gone bankrupt a long time ago. Or at least another US taxpayers funded bailout

[@kevinlin4895]

Err.. you do know that BYD sells more plug in vehicles than Tesla right? Substantially more.

[@tomcockcroft9394]

@@kevinlin4895 I said export lol. Byd sells 85% of sales in China

[@Mr-qr5kv]

特斯拉来中国之前被各种投资专家认为是骗钱的工具，来中国之后，马上变成广受欢迎的EV。在中国这个新能源的大水池里，游的不快的全得死~。中国市场最终一定会卷出一个怪兽。

[@taiwanstillisntacountry]

The PRC is the biggest market. Not the USA, aka IOU-country.

[@George-jm4rn]

Spoiler alert: Louis thinks the U.S. has too much debt and would invest in commodities. Everything else was complaints and criticisms. Not that's he wrong about the debt (or commodities). It's just that there's nothing new or uniquely insightful here.

[@simplenothing]

Personally, I thought his comments on China were especially insightful.

[@lagrangewei]

@@bigredfan123this myth about HK losing freedom need to end. HK was a colony, its people could not even vote for it governor. you really think racially chinese people in hk voted for all those WHITE governors? this is just whitewashing by the british to pretend they left HK as a democracy, it never was. and the one china policy was a Taiwan policy, the UN block PRC from joining because Taiwan claim it is the only legitimate government. so this problem isn't even created by the PRC, the PRC simply inherited the one china policy of the UN. Karma is a bitch.

[@taiwanstillisntacountry]

Let me remind you, the people of the Chinese Island of Taiwan, are Chinese 😂😂😂. And HK SAR of the PRC is ranked higher on having freedoms then the USA, aka IOU-country.

[@billinsf88]

@@bigredfan123what freedom did HK had under the British colony?

[@LazyTravellers3824]

@@bigredfan123… what kind of freedom has HK people lost except cannot separate HK from mainland nor throwing molotov to police?

[@tonysu8860]

This video was published only 2 weeks ago but in that time the opening remarks and presumptions/assumptions of this talk are already undermined... The US economy is not weak but still ungodly strong, US debt is not suffering from too much indebtedness, and it doesn't sound like this guy considers the economic benefits of non-infrastructure spending. I understand that a lot of economists consider spending on healthcare, welfare, unemployment and other social programs as non-productive but upon closer inspection healthier individuals can work harder and better than those suffering from smoking related diseases, don't eat well and so on. There are measurable, objective benefits to a happier, healthier workforce that's properly taken care of by progressive government policies. Although the WSJ can be criticized for bias and at times lack of journalistic ethics particularly after the Murdochs bought the publication, the content of this video is not accurate or supportable so the criticism is no better.

[@MauldinEconomicsYouTube]

Thank you for taking the time to watch and comment. Please allow me to respond. With regard to US debt, the point is the US has not been living within its means, but instead borrowing from the rest of the world at an unsustainable level. What happens if the world ceases to lend at current levels? It doesn't matter where the borrowing has gone - healthcare, social welfare, defense, infrastructure - the point is we could be approaching the limits of debt and the world's capacity (or willingness) to lend. That could have serious consequences. We already see nations actively working to reduce reliance on the US dollar. As to your comment re: this video, everything here is supportable, but comes from a perspective different than your own, or mine, for that matter. That's important and is one of the reasons why I conduct these interviews. I feel it important, as part of my own investment and economic research, to hear from people who think differently, have different backgrounds, and are not standing in the same place as me. While I do not agree with everything Louis Gave says, I have immense respect for him, his intellect, and his integrity. As someone born in France who then spent much of his career in Asia, his perspective is unique and worth considering. Again, thanks for the comment and for your time. -Ed

[@ggttuuxx]

Most of the US Politicians work for the Military-Industrial Complex. The future generations' liabilities are spent on weapons, which also create massive negative good will from the rest of the World. What happier healthier workforce? If you want measurable, objective benefits, look at the life expectancy in the US. How's that measuring up? Look at the facts. Stop believing the liars that are the US Politicians. Wake up.

[@skydragon23101979]

The problem with US huge debt in recent years is not social welfare but helicopter money.

[@DavidWestwater-vq6qy]

China is not getting better

[@yongdeng1813]

So said an american who never live there and doesnt know how the chinese economy works