Wilfred Frost is joined by Louis Gave, the founding partner and CEO of Gavekal, one of the world’s leading independent research firms. With a focus on the shifting geopolitical landscape, Gave outlines why traditional investment assumptions – from the safety of US Treasuries to the dominance of US tech & defence stocks – are being fundamentally upended, and why China is screamingly cheap. The Middle East & The Inflationary "Air Pocket": Louis analyzes the ongoing conflict in the Middle East, noting that even a diplomatic resolution will leave a two-month "air pocket" in global supply chains. He argues that the resulting inflationary shock is definitely coming, and while it might be priced into commodities it isn’t priced into equities and bonds. The US-China Reset: Amidst these dark clouds, Gave identifies a potential silver lining: the economic pressure of inflation may force a "positive reset" in US-China relations. He suggests that both nations are now "condemned to get along" to avoid simultaneous inflationary shocks. He also wonders whether it might force Europe to finally adopt sensible energy policies. The Death of the "Capital-Light" Model: Louis offers a provocative take on the US market and the AI boom. He explains how the world’s most successful "platform companies" (like Microsoft and Amazon) are shifting from capital-light models to massive capital intensity, questioning if their 35x earnings valuations remain justified. The Bull Case for China: Contrary to popular sentiment, Gave argues that China is structurally undervalued. “China has the lowest cost of capital, the lowest cost labour, the lowest cost of electricity, and has the world's cheapest currency and it's not even close. And that makes for a very powerful combination.” He also thinks they are the economy best prepared for the Iran War. The Changing Face of Warfare: Louis explains his bearish stance on traditional defense stocks, arguing that the age of the "$275 million fighter jet" is being replaced by the age of the "$50,000 drone". He compares the current defense industry giants to IBM in the era of the personal computer. Sovereign Vulnerabilities: A look at why the bond markets in the UK, France, and the US are uniquely vulnerable due to their reliance on "the kindness of strangers" (foreign investors) rather than domestic savings. Finally he reflects on his overriding investment advice for listeners. "The first thing you have to know as an investor is to know yourself... making sure to not put yourself in the situation where you're going to make the wrong decisions." Recorded 29th April 2026 For more content like this, subscribe to The Master Investor Podcast Youtube Channel - https://www.youtube.com/@TheMasterInvestorPodcast And follow @WilfredFrost on X - https://x.com/wilfredfrost?lang=en And Linked In - https://www.linkedin.com/in/wilfred-frost-279667374/ Sponsored by BNY Investments, World Gold Council, London Stock Exchange Group (LSEG) and Interactive Brokers - ibkr.com/masterinvestor. The Master Investor Podcast is produced by Paradine Productions and Master Investor Ltd in association with Bird Lime Media. This podcast is for information purposes only. It does not constitute an invitation or inducement to engage in any investment activity. It is not a financial promotion as defined under section 21 of the Financial Services and Markets Act 2000 (FSMA). The views expressed by the presenter of this podcast are those of the presenter and are provided in the course of journalism. This podcast benefits from the exemption under Article 20 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO), It does not require approval by a person authorised under the FSMA. Generic information, not identifying any specific investment, fund, provider or service, about a class of investments such as shares, bonds, derivatives and cryptoassets, might be provided and/or discussed during this podcast. Such discussion falls within the generic promotions exemption (Article 17 of the FPO). Such discussion is not a financial promotion requiring approval by an authorised person under section 21 of the FSMA. Investing involves risk. You should consult a suitably qualified adviser who can assess your individual circumstances before making any investment decision