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Tag Archives: Trade Wars

Where The Global Squeeze Is Unmasked

Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances. It was reported last week that Maersk and MPC would “temporarily suspend” their sailings on one of the biggest routes between Europe and Asia. Weakening demand and plummeting...

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The ISM Conundrum

Bond yields have tumbled this morning, bringing the 10-year US Treasury rate within sight of its record low level. The catalyst appears to have been the ISM’s Manufacturing PMI. Falling below 50, this widely followed economic indicator continues its rapid unwinding. Back in November 2018, at just about 59 the overall index had still been close to its multi-decade high. Over the next nine months through the latest update for August 2019, it has shed almost 10 points. Dropping into the 40s,...

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2/9/19: Trump’s Tariffs of War…

Two charts summarizing the effects of the ongoing Trump Trade War on U.S. tariffs (overall, first chart) and on bilateral U.S.-China trade (second chart) Source: @Soberlook Source: https://www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide In the mean time, China's tariffs vis a vis the rest of the world are falling: Source: ibid. Someone is winning in this war (maybe...

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15/8/19: Winning Trade Wars: Round 3

A couple of days ago, Germany's info Institute published two scenarios estimating the impacts of the latest President Trump threats to China, the imposition of a 10% tariff on Chinese exports to the U.S.Per ifo's Scenario 1: "If the US imposed 10 percent tariffs on additional imports worth USD 300 billion, this would mean additional income of EUR 94 million for Germany, EUR 129 million for France, EUR 183 million for Italy, EUR 25 million for Spain, and EUR 86 million for the United...

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31/7/19: Fed rate cut won’t move the needle on ‘Losing Globally’ Trade Wars impacts

Dear investors, welcome to the Trump Trade Wars, where 'winning bigly' is really about 'losing globally': As the chart above, via FactSet, indicates, companies in the S&P500 with global trading exposures are carrying the hefty cost of the Trump wars. In 2Q 2019, expected earnings for those S&P500 firms with more than 50% revenues exposure to global (ex-US markets) are expected to fall a massive 13.6 percent. Revenue declines for these companies are forecast at 2.4%.This is hardly...

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Monthly Macro Monitor: Market Indicators Review

The markets we use to monitor the economy (and those that influence it, which amounts to the same thing) have been tracking an economic slowdown since the 4th quarter of last year. That’s when interest rates, real and nominal, long term and short term, started to decline, credit spreads started to widen and the copper to gold ratio started to fall. Those are all classic market signals of an economic slowdown. Some of those have moderated since the beginning of the year though and today...

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Monthly Macro Monitor: We’re Not There Yet

It’s been a slow turnin’ From the inside out A slow turnin’ But you come about   Slow learnin’ But you learn to sway A slow turnin’ baby Not fade away   Now I’m in my car I got the radio on I’m yellin’ at the kids in the back ‘Cause they’re bangin’ like Charlie Watts   Slow Turning by John Hiatt   “How did you go bankrupt?” Bill asked. “Two ways”, Mike said. “Gradually and then...

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Contracting Factories, Curiously Rebounding Inbound Cars, And the Confirmed End of Decoupling

The US manufacturing sector may not be in as bad a shape as its German or Japanese counterparts, though it appears to be catching up on the downside. The Census Bureau reports today that new orders for all types of goods in all industries fell 1.6% year-over-year (unadjusted) in May 2019. This was the first minus sign for the broad category which includes both durable and non-durable goods manufacturing. Orders hadn’t fallen on annual basis since 2016. It is further evidence that the supply...

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Curve Sanity (Not What Most People Want To Hear or See)

Rate cuts will be insurance against whatever “trade wars” will throw at the global economy. That’s the current line from monetary officials in the US, anyway. The real question to ask is, how would they know? Starting with trade wars. Is that really what’s behind all this? The evolution of the curves told you everything you need to know, and tell you what to prepare for. It’s not just inversion that is noteworthy. They said all along there was no boom, even during the most maniacal parts of...

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Energy and commodities highlights: Middle East tensions, Panama Canal, global EV sales

The past week was marked by heightened geopolitical tensions as attacks on ships and oil infrastructure in the Middle East spread jitters through oil markets. On May 12, the UAE government said that four commercial vessels suffered “sabotage” in the Gulf of Oman, without giving more specific details about the nature of the attack. The following day, a drone attack halted flows through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea. The recent incidents...

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