Trinh Profile picture
Mar 30, 2020 18 tweets 6 min read Read on X
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! 🤗

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Trinh

Trinh Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Trinhnomics

Jan 22
President Trump was inaugurated and the big question is to whom tariffs will be applied, not whether. Markets priced 8-9% tariffs on world before inauguration & so the dollar softened as he did not do this on Day 1.

But rest assure, it's coming. Let's talk about consequences through answering 3 key questions.

Ready?
First, I talked about tariffs here on this thread if you didn't read before () & this is a follow-up.

Question #1: Who is most vulnerable to Trump 10% tariff to the world in Asia?
First, I want to talk about a few ideas that was talked about in the previous thread on impact of tariffs.

One is of course tariff level. He says 10% higher so that's our assumption here. Second, elasticity of demand assumption, which I took as 4, which is basically from the literature and also from the Fed paper.

Anyway, to think about impact on GDP, you have to think how big of a trader they are anyway in terms of exports to the US.

Chart 3 shows you that exports to the US is the highest for Vietnam & lowest for Australia, Indonesia and India.

Chart 2 shows you that what is the manufacturing share of GDP an the highest is Taiwan, China, Thailand, Vietnam & Malaysia. Lowest is Australia and India.

Okay, let's talk about what that means.Image
Read 19 tweets
Jan 14
Okay, yesterday, you had China rocking global trade with a USD1trn merchandise trade surplus, but by Friday (17th), we'll get news that China industrial profits are FALLING for a 3rd year in row.

What's going on? How does this work? And finally, what does it mean for the rest of the world?
Let's look at China industrial profits for 2024 from Jan to November.

It's down -4.5% & in 2023 it was down & in 2022 it was down.

Fine, but not all sectors experienced decline. These are the sectors with some profit: food manufacturing, textile, tobacco, furniture manufacturing, electricity, waste, and basically a few sectors kind of not that negative or flat - general equipment.
Sorry, meant to write a longer thread but had to go! Long story short, China is experiencing a balance sheet recession and with a few sectors growing so all that savings is being channeled to it.

That means reduced profits and which means to make more money it has to sell outward & thus that translates to profits being squeezed increasingly abroad too as it gains market share.

You can see that in the export data where exports grow but imports not so much. In Germany's case, it's losing out of both ability to export to China (Chinese imports of German stuff decline) & also China selling more of its goods in Germany.

But that is not all. The Germans are likely facing competition in third markets too.

And replace Germans with others like Japan, South Korea, and of course even not big traders like Indonesia.

So China's problem of weakening profits is global.
Read 4 tweets
Jan 13
Big news: China trade surplus reached 1trn in 2024. What are the losers of China trade surplus and what does that tell you about the world?

First, let me go through China's NOMINAL (volume is much higher) trade relationship with the world.
First, let's talk about the losers, as in DECLINE IN CHINA IMPORTS.

Germany saw imports from China decline by -10.7%, followed by France (-5.9%) and then Italy (-3.2%). Meaning, the Dutch still got something China want (ASLM chip making machine) but others saw decline of goods.

To add salt to injury, not only is Europe losing market share in China, Chinese goods have RISEN in Europe in nominal term or exports rose to 516bn.

But that's just Europe. It likely also lost out in other markets too, but the US. Europe gained US market share.
Who else lost out in LESS CHINESE IMPORTS (contraction in nominal term)??? Well, Thailand, which is a -5.2% contraction, Indonesia too! -4% (Chinese demand weak so commodity weak = less imports) And Japan -2.6% and also Australia -10% (Chinese demand weak so less demand for commodity etc)

And of course India at -3%. India is an interesting case because it loses in EXPORT TO CHINA BUT China has managed to export more and so India got a pretty large deficit with China at more than -100bn.
Read 9 tweets
Dec 20, 2024
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
Image
Image
Image
“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
Dec 6, 2024
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
Dec 2, 2024
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

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(