Tag Archive: Trade

Tensions Beyond Trade

2018-08-01

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2018-08-01

Chinese officials do not seem to appreciate the extent of its isolation. The disruption from the US as Trump positions the US as a revisionist power-one that wants to alter the world order, which it was instrumental in constructing, may have obscured the fact that China's practices are a source of frustration and animosity broadly and widely.

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FX Weekly Preview: For the Millionth Time: Investors Exaggerate Trade Tensions at Their Own Peril

2018-07-16

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2018-07-16

You would never have guessed it reading many of the op-eds and pundits pronouncing the end to globalization or the West, or liberalism. Global equities have rallied.  Of course,  stock prices are not the end all and be all, but it stands in stark contrast to the cries that the sky is falling.

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FX Daily, July 11: Escalating Trade Tensions Set Tone for Capital Markets

2018-07-11

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2018-07-11

The US took the first step in making good its threat to put a 10% tariff on $200 bln of Chinese goods in response to the PRC retaliating for the 25% tariff on $34 bln of its exports. The US provided a list of products that will get the new tariffs after the public comment period is completed at the end of next month. This time the list included numerous consumer goods, like digital cameras, baseball gloves, but have left off popular products, like...

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FX Weekly Preview: Trade and Data Driving Markets

2018-07-02

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2018-07-02

US President Trump is intent on disrupting the post-WWII arrangement that prioritized and ideological conflict over economic rivalries. Last week, it was reported that Trump told his counterparts at the G7 summit that NATO was as bad as NAFTA. NATO's annual meeting is July 12.

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Bi-Weekly Economic Review

2018-06-22

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2018-06-22

10-Year Treasury Constant Maturity Rate 1990-2018
Is the rate hiking cycle almost done? Not the question on everyone’s minds right now so a good time to ask it, I think. A couple of items caught my attention recently that made me at least think about the possibility.  There has been for some time now a large short position held by speculators in the futures market for Treasuries.

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Bi-Weekly Economic Review: As Good As It Gets?

2018-06-06

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2018-06-06

US Treasuries
In the last update I wondered if growth expectations – and growth – were breaking out to the upside. 10 year Treasury yields were well over the 3% threshold that seemed so ominous and TIPS yields were nearing 1%, a level not seen since early 2011. It looked like we might finally move to a new higher level of growth. Or maybe not.

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FX Daily, May 30: Italian Reprieve, Euro Bounces, Trade Tensions Rise

2018-05-30

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2018-05-30

After what could be described as a 15-sigma event yesterday in the Italian bond market, a reprieve today has seen the euro recover a cent from yesterday's lows. While the political situation in Italy is worrisome, many observers suspect that the new banking rules exacerbated the illiquidity that explains outsized moves.

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Bi-Weekly Economic Review: Oil, Interest Rates & Economic Growth

2018-05-09

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2018-05-09

Economic Growth and Investment
The yield on the 10 year Treasury note briefly surpassed the supposedly important 3% barrier and then….nothing. So, maybe, contrary to all the commentary that placed such importance on that level, it was just another line on a chart and the bond bear market fear mongering told us a lot about the commentators and not a lot about the market or the economy.

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FX Daily, April 06: Trade Trumps Jobs

2018-04-06

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2018-04-06

Trade and equity market volatility, which are not completely separate, continue to dominate investors' interest. Many had come around to accept that while trade tensions were running high, it was likely to be mostly posturing. This conclusion may have helped lift the S&P 500 around 3% over the past three sessions.

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FX Weekly Preview: The Start of Q2

2018-04-02

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2018-04-02

The chief uncertainty has shifted from monetary policy and macroeconomics to the increase of volatility in the stock markets and the prospects of a trade war. Some of the major benchmarks, including the S&P 500, the MSCI Asia Pacific Index, the MSCI Emerging Markets Index, and Shanghai Composite held above the February lows in the retreat during the second half of March.

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FX Weekly Preview: The Investment Climate

2018-03-26

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2018-03-26

The investment meme of a synchronized global upturn has been undermined by the recent string of US and European economic data. The flash March eurozone composite reading fell to 55.3, the lowest reading since January 2017. Although Q4 17 US GDP may be revised higher (toward 2.8% from 2.5%) mostly due to greater inventory accumulation, the curse of weak Q1 GDP appears to be showing its hand again, with forecasts now coming in below 2%.

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Cool Video: Let’s Not Declare Trade War Yet

2018-03-23

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2018-03-23

Trade tensions have risen. No doubt about it, but to consider this a trade war is premature. We should not pretend that this is the first time that the US adopted protectionist measures that ensnarled are military allies. We have been to this dance before.

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Bi-Weekly Economic Review: The New Normal Continues

2018-03-14

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2018-03-14

There has been a lot of talk about the economic impact of the recent tax reform. All of it, including the analyses that include lots of fancy math, amounts to nothing more than speculation, usually informed by little more than the political bias of the analyst. I am guilty of that too to some degree but I don’t let my personal political views dictate how I view the economy for purposes of investing.

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FX Weekly Preview: Thumbnail Sketch Four Central Bank Meetings and US Jobs Data

2018-03-05

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2018-03-05

The German Social Democrats have endorsed the Grand Coalition, ending the period of political uncertainty and paralysis in Germany since the last September's election. The polls have suggested nearly 60% of the SPD would support joining the government and the actual outcome looks to be closer to 66%. In 2013, when the SPD had a similar vote, three-quarters favored a Grand Coalition. Among the differences is that the SPD public support has waned,...

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US Trade Balance is Deteriorating, Despite Record Exports

2018-02-07

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2018-02-07

The US trade deficit swelled in December, and the $53.1 bln shortfall was a bit larger than expected. It was the largest deficit since October 2008. For the 2017, the US recorded a trade deficit of goods and services of $566 bln, the largest since 2008. The deterioration of the trade balance may be worse than it appears. There has been significant improvement in the oil trade balance. In 2017, the real petroleum balance was just shy of $96 bln, the...

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FX Daily, December 18: Trade Tensions with China Set to Escalate

2017-12-18

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2017-12-18

The two main legislative initiatives in the US this year, the repeal of the Affordable Care Act and the tax changes, are not particularly popular. However, the next items on the agenda appear to enjoy broader support. The infrastructure initiative is likely to be unveiled as early as next month. Before that, the US is poised to ratchet up the tension on China.

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The Latte Index: Using The Impartial Bean To Value Currencies

2017-12-09

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2017-12-09

The Impartial Bean
Like any other market, there are many opinions on what a currency ought to be worth relative to others. With certain currencies, that spectrum of opinions is fairly narrow. As an example, for the world’s most traded currency – the U.S. dollar – the majority of opinions currently fall in a range from the dollar being 2% to 11% overvalued, according to organizations such as the Council of Foreign Relations, the Bank of International Settlements, the...

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China Exports, China Imports: Textbook

2017-08-09

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2017-08-09

China Exports 2013-2017
China’s export growth disappointed in July, only we don’t really know by how much. According to that country’s Customs Bureau, exports last month were 7.2% above (in US$ terms) exports in July 2016. That’s down from 11.3% growth in June, which as usual had been taken in the mainstream as evidence of “strong” or “robust” global demand.

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Bi-Weekly Economic Review: Draghi Moves Markets

2017-07-03

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2017-07-03

In my last update two weeks ago I commented on the continued weakness in the economic data. The economic surprises were overwhelmingly negative and our market based indicators confirmed that weakness. This week the surprises are not in the economic data but in the indicators. And surprising as well is the source of the outbreak of optimism in the bond market and the yield curve.

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Questions Persist About China Trade

2017-06-17

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2017-06-17

Chinese trade statistics were for May 2017 better than expected by economists, but on the export side questions remain as to their accuracy. Earlier this year discrepancies between estimates first published by the General Administration of Customs (GAC), those you find reported in the media, and what is captured by the National Bureau of Statistics (NBS), backed up by data from the Ministry of Commerce, became noticeable.

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