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Trinh Profile picture
@Trinhnomics
Mar 30, 2020 • 18 tweets • 6 min read • Read on X
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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
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
Trinh Profile picture
Oct 14
Here is a short thread on why China fiscal policy, specifically central government support, is sorely needed & monetary support so far is not enough.
First, China got triple D problems - deflation, debt, demographic. All going badly.

Regarding deflation, it reflects an imbalanced economy where supply-side support for a long time has led to too much supply relative to demand domestically.

The easiest way to see it? China's producer price index. It's -2.8%YoY for September 2024. Meaning, producers get less money for the same stuff they make vs last year.

Okay, how is this bad? Margin compression. Your revenue is lower if you are a producer. Or DECLINING INDUSTRIAL PROFITS.
The positive side of this equation is that as they produce so much stuff that is not in demand and prices are cheap, then they can sell ABROAD (exports) for much cheaper than the competition.

A cheaper yuan (meaning depreciated) also helped. All those reasons led to China gaining global market share in manufactured goods to the chagrin of big traders like the EU, South Korea, Japan, and even the not big trader like India that has a about USD100bn of deficit w/ China.

Okay, so it's a bright spot as it gets more income than it spends (imports) so it has a trade surplus.

But that is also a source of geopolitical tensions as other countries are not happy w/ their firms going out of business as they can't compete w/ Chinese goods that are literally deflated.

So tariffs are going up, started by Trump in 2018 but frankly increasingly the EU and likely more and more...
Read 12 tweets
Trinh Profile picture
Oct 4
Great story about India rice policy. What I find interesting about this is of course the agriculture gets the most subsidy in the budget & one can say that India gives so much more to farmers and the sector than any sector by a wide margin.

That is a distortion that favors them as they are a powerful vote bank. But at the same time, the government also banned the exporting of rice when rice surged and that meant farmers couldn't make more money.

What India does with farming is very interesting. As it is a country with food surplus and the budget gives most weight to farming while most farmers remain very poor and more than 75% work for sub minimum wage.
India's central government expenditure budget. Rural development + agriculture gets so much.

There is a lot of talk about production linked incentives but it really just got 1.5bn in FY25. So that means this budget is just mostly agrarian.

Meanwhile, farmers were blocked from exporting rice, causing rice to rot. This is a policy to prevent rice price from rising, causing CPI to spike.

This is a sector worth paying attention to as most Indians live in rural areas & they matter even if farming is only 16% of GDP.Image
One of the reasons India deal with w/ the energy and thus the food crisis is that it is a country that has a SURPLUS in food. As in they EXPORT food.

So to make sure domestic prices & supply stay ample during GLOBAL SHORTAGES due to shocks, India curbed food exports from wheat to rice and sugar.

Meaning, India exported less & so the Philippines saw a huge increase in rice price imported (btw, good for Vietnam & Thailand obvs).

Modi reversed his non-basmati white rice introduced in July 2023 but still have export duty on parboiled rice and minimum price imposed on shipments abroad of the white variety of grain.
Read 8 tweets
Trinh Profile picture
Sep 4
The best research on India is written by the @RBI and it's called the RBI Bulletin (very similar to BOE bulletin) & it's amazing. Go to the state of the economy for charts/details on what's going on in India & then they always have essays on specific issues.

Central banks are consistently the best place to get information on a particular country. I also like the RBA website as well. Enjoy!

We can read some of these together in case you find it intimidating reading central bank language.

rbidocs.rbi.org.in/rdocs/Bulletin…
Some charts of interest from my reading.

India annual installed capacity of solar + wind + other renewables > coal, oil and gas since 2017. Image
India merchandise export contribution:

Positives = Electronic goods + engineering goods + pharma

Bad = petroleum, jewels/gems, rice & ceramics Image
Read 7 tweets
Trinh Profile picture
Sep 3
Germany is in structural decline & the path for that was waved by Angela Merkel who:
a) Allowed for mass irregular migration since 2015 that paved ways for Brexit, the far right rise in Germany and Europe
b) Appeasing Russia after its annexation of Crimea and expansion dependency on Russian gas
c) Phasing out nuclear energy.

As a result, Germany today deals with HIGHER input costs (energy is obvs) & also the political fallout of irregular migration.

Sholz of course is a worse politician than Angela Merkel but the path of its demise is paved by her.
The fact that China has pursued:
a) Expansion of coal, solar, wind, and nuclear to REDUCE INPUT COSTS
b) Subsidies in high-tech
c) Allowed for it to be competitive despite higher tariffs in Europe.

Meanwhile, Sholz asleep at the wheels. This is his reaciton: “Our country cannot and must not get used to this,” he went on. “The AfD is damaging Germany. It is weakening the economy, dividing society and ruining the country’s reputation.”
Germany doesn't understand that it cannot pursue its current path of extreme liberalism that worsens its competitiveness and destabilize its own society & expect to do well to lead Europe out of this mess.

Extreme liberalism can only exist in a vacuum or hypothesized world.

We exist in a world of limited resources. Countries like China are just better organized. Believe it or not. Sholz has no clue & will lose in 2025 but before he is gone he is still around to make a big mess.

Continuing to close the last 3 nuclear plants was a disaster.
Read 8 tweets

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