Market movers since the announcement of the 20bps cut - Asian FX doesn't like it for the following reasons:
a) Yuan weakness = pressure for Asian weakness
b) China economic weakness = Asian economic weakness.
Asian FX showing weakness vs USD again after the PBOC 20bps 7-day reverse repo cut to 2.2% & ahead of the
March China PMIs data tomorrow (Feb was historic low).
South Korea reported -21.4%YoY department store sales (considering the outbreak not so bad) and Discount stores sales -10.6%YoY.
Note that SK is considered a model for many in coronavirus fight (containment strategy vs suppression) & it's not doing well economically either.
There is no model of fighting this coronavirus that avoids a massive contraction of economic activity, whether the much lauded containment in SK or suppression.
A globalized world means that even SK avoids a free fall & just a contraction, then it still got ICU external demand.
Some positive news: Looks like San Diego County is bending the curve (+31 new cases yesterday & no new death (5 total so far); total case 519.
USA coronavirus daily change - notice the latest increase is smaller by a wide margin 👇🏻👇🏻👇🏻
Look at that slope flattening. That's a good sign but details vary vastly state-by-state!
Guys, relax, obviously the +4k is too low & will change as we get more data but notice that it was +19,252 on 28 March 2020, high for this data set.
If you see a daily increase less than +19,252, then the slope is being bent as BASE HIGHER. Just math here guys.,
🤷🏻♀️
Let me show you this differently: ignore the 30th & 29th of March, let's look at daily growth rates: What do you see? Slowing down of growth rates while testing rising very fast (>100k per day).
Deleted the 30th & 29th of March & still shows a slowing of growth rates.
Again, as the base is HIGH, u will still get massive increases of new cases.
Total tests 831k; Positive 139k; Negative 692k; Pending 66k:
Hospitalized 65k; Deaths 2,428
Btw, a 19% of 139k = 26,421 cases.
So if the # of new confirmed is below this, then the growth rate would go down.
We're COMPOUNDING at a very high rate. And hence lockdown on NYC & emergency rule in California. Don't analyze US states closely & only track San Diego County given my mom lives there but data there is positive as in absolute #s growth down. Can't say the same for other counties
Some people ask: a) Why is California doing much better than New York (CA is bigger than NY but has 1/10th of the cases & NY has half of the US cases);
Why??? Let me show u in 1 tweet why: MANAGEMENT! 🤗
Here we go, as I'll go on TV soon with @JoumannaTV to discuss data, let's take a look at China September trade data that just came out.
September exports rose 8.3%YoY in USD and imports increased 7.4%YoY.
Year-to-date, exports grew 6.1% while imports declined -1.1%YoY.
By destination, China exports to the US fell -16.9% but to Asia rising rapidly.
Exports to India rose 12.9% and India deficit with China is accelerating, with imports not just intermediates for production but also final consumer goods.
Shipment to ASEAN rose 14.7% with fastest growth to Thailand and Vietnam (+22.5% and 22.3%, respectively). The sharp increase of shipment reflect supply chain diversification but also rising imports for domestic demand in ASEAN that also poses challenges to domestic industries.
Exports to the EU rose 8.2% with shipment to Germany increasing +10.5%.
Interestingly, China exports to Russia has fallen this year by -11.3% as Russia puts up curbs to some Chinese exports.
China trade surplus in September:
#1 EU 22.9
#2 USA 22.8bn
#3 ASEAN 17.2bn
#4 India 10.3bn
From winning the Trump trade war, India is now the US President’s biggest target. The Trump administration imposed a 25% tariff on India. To add insult to injury, Trump announced another 25% tariff, effective tomorrow, on the grounds that India imports crude oil from Russia.
Indian goods bound for the US will now face tariff rates similar to China’s if we include the Trump 1.0 tariffs, making any China+1 strategy in India less competitive for US markets, and relative to Southeast countries, which for the most part face tariff rates of about 20 per cent.
Will the additional 25% tariff stick? While Russia’s war with Ukraine isn’t going to end by Wednesday, the secondary Trump tariff is likely temporary. Therefore, the question is not whether India will be able to bring the 50% back down to at least 25%, but when.
Eight months after Trump has been inaugurated and we of course have now the EU US deal. What do we know about Trumponomics?
I would say my read is the Miran paper is a blueprint for Trump actions so far on trade. Let's see what I mean by that. And this has consequences of how Trump sees India, which I think is not just escalation to gain leverage.
First, let's talk about an important ally, the EU. The details are out and I would say this is actually rather good for the EU in the context of out of control Trump tariffs.
Why? EU tariffs are NOT stacked. They are ceilings. As in, they get 15% max, including sectoral tariffs like auto (including car parts), pharma, semiconductor, lumber etc but not steel & alum, which they are still trying to negotiate. There are some additional exemptions for EU products such as aircraft, parts, generic pharmas & ingredients etc.
Meaning, to trade for this 15%, the EU is falling closer into the US orbit via investment and trade as well as defense, which it is working on being more self sufficient with increased spending but not just yet.
Anyway, what can you say about other allies? It means South Korea and Japan can and hopefully have similar terms.
Remember that reciprocal tariffs under IEEPA aren't the only ones. Section 232s are pretty scary and more stuff being added all the time without warnings.
An example is steel where a few days ago 400 more products were added to include steel derivatives.
So if you want to have access, this is basically what the costs are and so what does that tell you about others? Here I go back to the Miran paper.
Guys, let's do it. All things Trump tariffs. Here we go. First, let's talk about the basics. 10% is the floor as in everyone gets that. And these are the economies that get higher than that:
15% (EU, Japan, South Korea and 33 countries: Angola, Botswana, etc.)
18% (Nicaragua)
19% (Cambodia, Indonesia, Malaysia, Pakistan, Philippines, Thailand)
20% (Bangladesh, Sri Lanka, Taiwan, Vietnam)
25% (Brunei, India, Kazakhstan, Moldova, Tunisia)
30% (Algeria, Bosnia and Herzegovina, Libya, South Africa)
35% (Iraq, Serbia)
39% (Switzerland)
40% (Laos, Myanmar)
41% (Syria)
In Asia, it looks like this. Excluding China and Myanmar, Laos, India got the highest - 25% and maybe more.
China is waiting for talks on extension. Right now, it's 10% reciprocal + 20% fentanyl during extension + 25% during Trump 1.0
Southeast Asia gets 20% to 19% except Laos & Myanmar at 40%, Brunei is 25% but energy is exempt so...
India original was 26% so 25% seems bad but frankly not too far from the Southeast Asians. That being said, India was aiming closer to 15% as Vietnam got dropped from 46% to 20%.
Anyway, let's talk about details of the White House info.
It goes into effect 7th August. But if you got stuff in ports/front-loading and not yet consumed till 1 October, there are varied rates for them.
Long story short, there is still time to negotiate this down before it goes into effect basically.