Thread by @Trinhnomics

Good morning🐦 - today is deflation day w/ the main star being Japan w/ September PPI falling to -1.1%YoY from -0.9%. Core machine orders -14.5% in August so no rebound in H2.

In Asia, we got Korea, Japan and China w/ deflated PPI. U know what that means for earnings 😬.

Get yourself some strong coffee (got mine - if I don't drink home-filtered coffee then it's defo Fuel downstairs as I think Nespresso is meh even though it's free) b/c I'm going to show you Asian imports

Are you ready? Asian imports, or shall I say LACK OF DEMAND. BUYERS WANTED!

#Breaking US weighing current pact w/ China as part of partial deal

Fixing is 7.0730

Time running out until 15 October 5% tariff increase (25% of 250bn becomes 30%) & 15 December for the rest. Both CNH & CNY rallied after the news 👇🏻👇🏻👇🏻

Okay, back to imports in Asia, which is the real news here guys. But let me tell you how bad in August:

Philippines -11.8 🇵🇭
India -13.5 🇮🇳
Indonesia -15.6 🇮🇩
Malaysia -12.5🇲🇾
Thailand -15.5🇹🇭
Japan -11.9🇯🇵
Singapore -6.4🇸🇬
Korea -4.2🇰🇷
China -5.6🇨🇳
Taiwan -3.1🇹🇼
Vietnam +7.5🇻🇳

What do you see? The current account deficit countries (India, Indonesia, and the Philippines) are doing rather badly in terms of imports (imports = domestic demand = what these economies want from abroad & that's down!)

Why? Not trade-war as exposure to trade is lowest in Asia.

So what is it that is hurting these economies? The tightening they did in 2018 (remember the hikes & import curbs) filtering through this year; the lack of liquidity from a tightening dollar from both reduction of portfolio investment & trade credit, &also FDI underwhelming🇮🇳🇮🇩🇵🇭

Asia's imports are 32% of global total (value & in USD). After the Asian Financial Crisis, it dropped from 25% to 20% but steadily rose to 32% (or ~1/3 of total).

Chart shows Asia import growth & global as well as Asia's share rhs 👇🏻

2019'll dip roughly ~10%. What about 2020?