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Trinh Profile picture
@Trinhnomics
Aug 27, 2019 • 5 tweets • 3 min read • Read on X
Another great paper highlighted by @StephenSpratt on the USD as King👑. The USD is more key than the EUR or JPY in its KEY role in global finance. If the Fed tightens, markets expect USD assets to decline & demand up. In times of stress, demand for SAFE USD assets rise 👇🏻👇🏻👇🏻
@StephenSpratt USD denominated assets are not just issued by the US but also sovereigns, quasi sov, banks, firms as demand for safe dollar assets & convenience yield drives people to issue in USD.

But key here is that they got the ORIGINAL SIN highlighted earlier on implications of weaker CNY
@StephenSpratt Imagine the Fed after a decade of ZIRP & QE creates a lot of incentives for issuance of USD-denominated debt. But when the Fed tightens, the supply of safe USD-denominated shrinks. For those that depend a lot of USD funding, the local currency depreciates MORE & 👉🏻 ORIGINAL SIN😱
@StephenSpratt Not just offshore USD issuance but onshore in the USD. B/c of the role of the USD & strong demand globally for USD assets, a lot of incentives for issuance of USD bonds/debt backed by risks collateral (junk bonds).

Author says dominance of USD in credit markets rose since 2008!
@StephenSpratt In other words, because of this relative differential in US growth vs the rest of the world (US slowing but not as bad as elsewhere), the USD is tightening global finance. Remember that I always say the FED IS MORE KEY THAN TRADE-WAR. This is why the Fed is under pressure to cut.

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More from @Trinhnomics

Trinh Profile picture
May 13
This article in the FT doesn't make any sense. The author argues that Modi fails to create job for low-skilled people, esp labor-intensive manufacturing. It also faults Modi for its high-end growth (services, high-tech, infra, etc)

But then it ends with saying, well, don't bother to even develop manufacturing and just work on service exports.

Wait a minute. How is India going to generate jobs? ft.com/content/c4631d…
Btw, all the critiques of India makes sense. The issue I have with Rajan and also Congress is their solutions.

They don't have one. Literally. Rajan tells India to forget about trying to do manufacturing & focuses on services.

India exports a lot of services. Manufacturing is the weak spot, not services!!! And if u want a lot of jobs, u need labor-intensive manufacturing.
A country with such a large population needs to growth via all sectors - services, manufacturing, agriculture etc. You can't leapfrog development & go to services.

India & the Philippines have tried that. Not working & hence need to include manufacturing & infrastructure building.
Read 4 tweets
Trinh Profile picture
Apr 19
Who likes higher fuel prices in Asia??? Well, no one except Indonesia and Malaysia and by that I mean exporters.

The biggest deficit as a share of GDP goes to Thailand but mostly in LNG. Second is South Korea.

Obvs this is as a share of GDP. Higher fuel costs = higher import costs = someone has to pay for it & eg higher inflation or higher fiscal costs.Image
Who likes higher food prices? Well, a few - Thailand, Malaysia, Indonesia, Vietnam and India. Obvs this is EXPORTERS only who gain. EM has high food as a share of consumption basket. But net food exporters have levers to pull. They can BAN exporting of food.

Who is most vulnerable? The Philippines. South Korea imports a lot too.Image
Putting food and fuel together as a share of GDP: Who is most exposed?

Well, South Korea and the Philippines. KRW doesn't like this news.

PHP doesn't like it. One caveat is that SK is much richer so can afford it more than say PH where this will hurt more.

Winners? Malaysia. Yes, Malaysia.Image
Read 4 tweets
Trinh Profile picture
Apr 12
Good morning,

Did you know that South Korea exports more to the US now than it does to China?

Actually, it isn't alone. A lot of Asian countries, due to supply chain reshuffling and also geopolitics and industrial policies, are exporting now more to US than China.

Why is South Korea doing more trade with a country far away than a country next door?Image
First, growth of exports to the US is faster than exports to China. In fact, China hasn't been importing much more and it is Korea that has been importing more from China for goods such as intermediate goods etc.

This has raised a big concern in Korea that China is a competitor & it's hard for SK to compete with its industrial policy and subsidies.Image
And so South Korea has 1 lever it can pull that is better than China - GEOPOLITICS. South Korea is an ally to the US. And as a country w/ a US FTA, it is being favored.

Whether it's the Chips Act or the Inflation Reduction Act (IRA), the whole point is to exclude China.

So what?
Read 8 tweets
Trinh Profile picture
Mar 8
Happy International Women's Day! First, I think we should celebrate women everyday (& men). Anyway, here is a thread about women and the labor force participation with a focus on India. Ready? Let's go!

India's Womenomics? Modi’s Decade of Formalisation of Jobs Marches Forward👈 Image
By 2030 or roughly the end of Modi's 3rd term should he win, 1 out of 5 working age people will be Indian on earth.

To transform that demographic change into dividend, we need a lot of jobs. For India to grow >7% sustainably, we need to do to have more jobs. Let's talk about it Image
India women labor force participation rate (LFPR) is the LOWEST in Asia. It is at 37% according to the latest labor survey, which is already a lot higher than before.
The average in Asia is 63% w/ Australian, Japan, Vietnam the highest. People talk about womenomics for Japan but Image
Read 18 tweets
Trinh Profile picture
Feb 8
Another Five Years of Jokonomics? More Infrastructure, Metals and Mining FDI, and Even Greater Dependency on China

A thread 🧵
Image
Indonesia elects a new president in a week. The leading candidate is riding high on Jokonomics, or the continuation of his policy & popularity, as Jokowi's eldest son is VP.

Prabowo promises 8% average GDP growth or Jokonomics. How realistic & what is Jokonomics anyway? Image
While people believe that Prabowo is the best bet of doing more of what popular Jokowi has done for Indonesia in the past decade & he promises the highest growth, Jokowi 10-year only produced 4.2% GDP growth on average. Stripping out 2020 (Covid), it's 4.9%. No where near 8% 👈 Image
Read 26 tweets
Trinh Profile picture
Feb 6
Indonesia elects a new president next week to replace Jokowi. The leading candidate - Prabowo - is riding the president's coat tail as many hope that he is the best hope for continuation. But what is Jokonomics exactly? From 2014 to 2023, Indonesia grew on average 4.2% per yr👈.
If we strip out 2020, which economy contracted, then under Jokowi, the economy grew 4.9% on average (4.2% if we don't strip it out).

So that's sub 5%. In fact, GDP barely deviates from 5% level. So why do people think that Prabowo is the key to escape the middle income trap?
Pres Jokowi's biggest accomplishments come from the fiscal side. Indonesia got investment grade in 2017. By weaning Indonesia slowly off expensive energy subsides, the expenditure side was contained. And with the commodity boom, Indonesia fiscal positions were leaner than most.
Read 12 tweets

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