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Trinh Profile picture
@Trinhnomics
Mar 30, 2020 • 18 tweets • 6 min read • Read on X
Scrolly
Tonight we got Dallas Fed Manufacturing Activity & tomorrow is China March PMIs (still weak) & US March consumer confidence (less confident).

And of course ADP & NFP this week.
PBOC cuts 7-day reverse repo to 2.2% from 2.4%

Note this is ahead of PMIs tomorrow!
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.
#BREAKING Breaking:

Indonesia stocks drop -5%, triggering circuit break. 😬😬😬
#BREAKING

S&P report says APAC current credit conditions to be as bad as 1997

😬😬😬
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! 🤗

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More from @Trinhnomics

Trinh Profile picture
Dec 20
It is a beautiful day in HK. I’m at lunch, well, waiting for my bff at a wonderful Italian place called Cantina (next door was our wedding reception 5 yrs ago) & opened up my fav pink paper & the FT Big Read was Ursula choking Europe with regulations (she also chairs a paper that also supposed give her more money to deregulate). There lies the rub. Can u let the person who has led Europe down this rabbit hole be the person to lead it out of it? Some pics from my walk from home to lunch. Hong Kong 🇭🇰 is lovely, best time to visit is October, November & December.Image
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“Inflexible EU rules set Europe’s car 🚗 industry for failure” says critics according to the paper.

“Conservatives & far-right lawmakers accuse the bloc’s ambitious green & digital agendas of punishing citizens & businesses.”

Interesting the definition of conservative & far-right. But irrespective, you can see the results.

She & Draghi chaired a report that says the EU is uncompetitive & too regulated & strangled. Behind.

Okay, but who has been in charge?
Not the conservative & far-right. Ursula has been in charge. All along.

So if we have to measure her performance with, well, outcome, then what is the score card? She said it herself in the report.

If kept at the same rate path, well, well…
Read 7 tweets
Trinh Profile picture
Dec 6
The RBI just cut the cash rate by 50bps and kept the policy rate on hold at 6.5% as slowing government spending and a weakening manufacturing sector is dragging down GDP growth.

This is my short thread on examining the India-Japan investment and trade relationship & why they haven't changed much in 10 years despite India being a big domestic demand market that Japan needs.

I argue that this is symptomatic of what is happening to Indian firms themselves. They find it hard to scale and leverage the labor endowments the country has.

How do we change this? Well, by changing the norms of thinking that the government needs to micro manage everything. It should set framework but let Indian private sector flourish.

Let's go.
First, what is the India Japan relationship? Well, it's getting better but remains SMALL relative to the ASEAN Japan (Vietnam Japan for example). Japan investment to India despite India being a huge domestic demand market that is super complementary to Japan weak demographic trends is at 4% of total. Look at ASEAN. Yes, at peak around 28% and settling about 24% of total.

India is a ginormous market. So why growing just from 2 to 4% of total???Image
Now let's look at Japan imports from India - it basically remains flat at a small level of 1% of total. Meanwhile, imports from China is 22% and ASEAN 15%.

So Japanese FDI to India has increased to 4% of total but imports remain small.

Basically this relationship remains small and has a lot of scope to grow.Image
Read 10 tweets
Trinh Profile picture
Dec 2
I'm going to Delhi this Thursday for the India Japan Conference. Excited to go. The key thing I will emphasize while India is how much India needs manufacturing.

The contraction of manufacturing in Q3 2024 led to sharp slowdown of GDP to 5.4%YoY.

India needs manufacturing not just for cyclical growth but social stability. There is no way you can absorb that many people from the rural sector without manufacturing.

The government needs to put all its effort behind this. Manufacturing is the future. It is an essential ingredient to growth.

Why? Because we still live in a material world. How do I know? India has about USD100bn deficit with China in manufactured goods.
Shared my views in this documentary:

My op-ed on India jobs & manufacturing and why there must be more emphasis on manufacturing:

asia.nikkei.com/Opinion/India-…
Read 4 tweets
Trinh Profile picture
Nov 21
Guys,

Are you ready for a Trump tariff thread and what this means? This is going to be a bit of a technical one but I'll make it easy & fun & we'll go through literature & analysis.

Let's go.
We start with the basics. How does tariff work? First, as you know, the US is a big free trader. Still is despite tons of tariffs on China. So goods in the US generally are tariff free to import & hence proliferation of foreign goods in the US.

But that being said, it does impose tariffs & duties. Sometimes overtly targeting a specific product to protect domestic sector due to lobbying. Anti-dumping duties is an example. A country that is not a market economy is an easy target (China, Vietnam) as u can say those countries have subsidized excessive production & hence duties.

But comes Trump. He has been consistent since the 1980s about the US trade deficit which he has railed against in public interviews and what does he do.

He started a US-China trade-war on washing machine duties.

Before we talk about what has Trump 1.0 (=first term 2017 to 2020) & Biden (2020 to 2024) done in terms of tariffs, I want to talk about the practicality of WHO PAYS FOR TARIFFS.
The IMPORTERS pay for tariffs. By that, American importers pay for tariffs. So when an item say costs 100 goes to 125 because of a 25% tariffs, there are a few things that COMPANIES that import can do.

They can PASS ON that cost to CUSTOMERS (buyers of goods). They can ABSORB that cost. They can FIND A NEW SOURCE to import. Or the SELLER can make the item cost 80 or a 20% reduction of previous price to then when the seller pay 25% that is just 100 BUCKS of import costs so the SELLER ABSORBS this margin compression.

That 25% goes to the IRS as government revenue. Who pays for it? Well, it depends on who ABSORBS THAT COSTS of 25% but surely 25% tariffs happen.
Read 18 tweets
Trinh Profile picture
Nov 8
Two days after the elections & as Trump team prepares their team, let's talk about economic impact. This morning, I will read with you a few papers that have analyzed what he said as literal policy translation.
First, Trump 2.0 will not be as messy as Trump 1.0. Why? Well, dude is gonna prolly get enough people to approve his thousands of people that will be appointed so DC.

This is what you get when you have total power (likely House, Senate).

Second, he has done it already so got a few people in the bags to choose from and the troops in the GOP have rallied behind him.

What does that mean? Trumponomics is going to be pretty forceful, whatever that may be.
There are a few things we know that he is very consistent:
a) On domestic policy - he will like extend his Tax Cuts and Jobs Act (TCJA) or basically corporate tax cuts and also income cuts. That will help boost economic growth but WIDENS THE DEFICIT.
b) On immigration - he will at the minimum TIGHTEN the policies. Whether he will actively deport all these people that entered illegally is a question mark. Irrespective, Biden towards the end of the term got the memo that the open border thing isn't good for politics and since tightened.
That said, he said he would deport so some deportation is likely. Magnitude is question mark.
Read 15 tweets
Trinh Profile picture
Oct 25
Prabonomics Wish List: Higher Tax Revenue, More Social Welfare and Rapid GDP Growth.

A thread on Indonesia's 8th President who will lead Southeast Asia's largest economy & fourth most populous in the world in the next five years. Let's go! 🇮🇩
First, what is Prabonomics? Well, we don't know yet but he won on the promise of continuity of Jokonomics that comprised of infra capex, fiscal prudence, and downstreaming of metals (nickel).

Still, let's talk about his objectives. On the economy, he wants:

GDP to rise by 8% in the next 2-3 years (Jokowi only managed 4.1% on average in 10yrs and excluding Covid years then 5.1%) so that is raising GDP growth by 3-4% higher than its current batting average.Image
How will achieve this 3-4% higher average GDP growth?

Well, more social welfare spending is where we wants to do it. Basically, more free school food, more housing, more self sufficiency of food.

So a mix of social capital & some infra but generally more about social welfare vs the emphasis on highways and new capitals.

How much more? Well, he floated IDR450trn or 30bn for free school lunch for 81m Indonesian or 2% of GDP.
Read 20 tweets

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