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Brad Setser
@Brad_Setser
, 4 tweets, 1 min read Read on Twitter
This probably should be getting more attention --

US-Brazil soybean price spread has disappeared ...

question is why
from the economist

economist.com/finance-and-ec…
But don't think the economist answered the question posed by the chart --

can think of three reasons for the convergence:

1) Market has gotten better at arb'ing the differential with time
2) Market has realized Brazilian inventories are low and China has to buy American or
3)
3) the market has responded to resumption of modest Chinese purchases after Buenos Aires and is anticipating a deal ...
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Brad Setser
@Brad_Setser
Useful color on the current state of the trade negotiations

reuters.com/article/us-usa…
a couple of points

1) Find it odd (and a bit disappointing) that China's "buy China" local preferences haven't been singled out as a structural issue worthy of top tier concern
2) am not a diplomat and it seems like both sides are looking for agreement not to highlight areas of disagreement, but treating China's subsidies for China 2025 sectors as a standard non-tariff barriers feels from afar like it relegates what should be a top tier issue
Read 4 tweets
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Brad Setser
@Brad_Setser
So, I understand the criticism @niubi is making here --

But I actually think this is a hard not an easy issue. China is a managed economy, and it isn't going to stop managing its economy overnight, even if it makes moves toward becoming a more market oriented economy.

1/x
Take the issue I know best -- currency.

China manages its currency, and it isn't realistically going to stop managing its currency -- nor would it be in the United States narrow interest for China to open its financial account and let its currency float down right now.

2/x
Discussing how China manages its currency strikes me as reasonable. The U.S. doesn't currently really want China to float right now, so why pretend?

(of course the US also shouldn't name China for manipulating when China is helping the US by resisting depreciation)

(3/x)
Read 13 tweets
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Brad Setser
@Brad_Setser
I didn't exactly hedge here.

China's (latest) stimulus won't kick in until later in the year, and all indicators suggest that the impact of the tariffs will be significant in q1.
Am also a fan of this indicator, in part because I think it got the 14-15 slowdown right.

Was reluctant to argue China had slowed significantly until it turned down, but, well, it has
know it is nominal (so yes, semiconductor prices have an impact on the y/y numbers) and includes imports for re-export as well as as imports more tied to Chinese domestic demand. Right now tho both imports for reexport and imports for internal use are down
Read 4 tweets

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