Showing posts with label trade policy. Show all posts
Showing posts with label trade policy. Show all posts

2018-06-06

MacroView: US Trade Policy and US Interest Rates Impact Global Markets

US may prefer separate trade deals with Canada and Mexico

Financial Times (ft.com) video above published Jun 4, 2018: US President Donald Trump says he may prefer separate trade deals with Canada and Mexico rather than the North America Free Trade Agreement.

Editor's note: various factors may be differentiating the U.S. from global markets affected  by the Trump trade policy and Federal Reserve rate hikes--“The economic effect of a global trade war may be worse on Europe, Japan and China than they are on the U.S., and global equity investors have to put their money somewhere”--Why tech stocks give ‘an insulating force field’ to this market | MarketWatch.com: "The trade uncertainty also has helped squelch the 10-year Treasury yield supporting equities [U.S. stocks], according to Colas. And his fourth factor is that we [U.S.] might weather whatever comes better than other countries do."

Raghuram Rajan Says The U.S. Federal Reserve Will Stick To Its Pace Of Rate Of Hikes

BloombergQuint video published Jun 4, 2018: Former Reserve Bank of India (RBI) Governor Raghuram Rajan* on emerging markets, U.S. Fed Reserve hikes and more: "unfortunately accidents can happen ... my worry is what you may think of as bargaining employees working out the art of the deal soon becomes hardened positions which become very difficult to back off and then you enter actual conflagration and that combined with the high degree of leverage and asset prices which are you know price to perfection that's the potent volatile combination."

*Dr. Rajan is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business. He received his PhD from the MIT Sloan School of Management (1991).

He was the 23rd Governor of the Reserve Bank of India between September 2013 and September 2016. Between 2003 and 2006, Rajan was the Chief Economist and Director of Research at the International Monetary Fund. In 2015, during his tenure at the Indian Reserve Bank he also became Vice-Chairman of the Bank for International Settlements.

At the Federal Reserve annual Jackson Hole conference in 2005, Rajan warned about the growing risks in the financial system and proposed policies that would reduce such risks. Former U.S. Treasury Secretary Lawrence Summers called the warnings "misguided" and Rajan himself a "luddite". However, following the 2008 economic crisis, Rajan's views came to be seen as prescient and he was extensively interviewed for the Oscar-winning documentary Inside Job (2010).

Transcript (auto-generated)
00:00 [higher US interest rates] is my guess
00:03 unless something really untoward happens
00:05 in the global economy or in the US
00:08 economy which in the U.S. certainly
00:10 there's no sign that something is bad is
00:12 going to happen we will have a couple
00:15 more rate hikes after which the Fed will
00:18 look around and see well are we getting
00:20 close so round two point seven five [2.75] --
00:22 three [3.0] is approximately where it will
00:24 stop maybe one more next year and and
00:26 perhaps pause at that point say we're
00:28 closer to neutral than before and maybe
00:31 we have to see the consequences because
00:32 monetary policy has lags we've seen
00:36 around recently in emerging markets and
00:39 your successor Dr. Patel has come out
00:42 to say that you know the tapering pace
00:44 of the Fed is to blame for what receive
00:47 recently do you agree with the view well
00:49 I don't know that
00:53 these the liquidity in the financial
00:56 markets has disappeared as of now I
00:59 think Dr. Patel is raising a question
01:03 about going forward if there is a
01:04 substantial withdrawal of liquidity
01:06 whether in fact it causes markets to
01:09 tighten overly but my guess at this
01:11 point is the U.S. is focused on growth
01:15 of itse domestic economy and thinks that
01:18 inflation is pretty much where it wants
01:20 it to be and with labor markets below
01:23 what it thinks is consistent with full
01:25 employment that is at three point seven
01:28 this is a historic low [unemployment] that really
01:31 they're focused inwardly and unless
01:33 there's something big outside that
01:35 happens to knock them knock their sense
01:38 of what is going to happen in the US you
01:52 know you know in a world where countries
01:55 take full cognizance of the
01:56 international responsibilities one of
01:59 the things that I have been pressing for
02:01 is really the sense that the big central
02:04 banks should look at the consequences of
02:06 their actions also on other countries
02:08 that said I think emerging markets are
02:11in a much better situation today with a
02:14 few exceptions where you know finances
02:16 as well as politics or creating some
02:19 uncertainty amongst international
02:21 investors but I think broadly they're in
02:23 a much better situation than they were
02:25 say around
02:26 time of the people tantrum that is not
02:28 to say accidents cannot happen that's
02:30 agreed with a view of Jerome Powell who
02:32 said that emerging markets are in a good
02:35 position to navigate the shifts in US
02:37 policy when you talk about they are
02:39 exceptions which countries I would say
02:43 they're in a better position I think
02:45 there will be still stress for the
02:47 emerging markets and they will have to
02:48 cope with the rising dollar as well as
02:50 rising international interest rates as
02:52 well as the flow back of capital flows
02:55 which always happens at times like this
02:57 so there will be stresses of course if
03:00 you look around the world and you ask
03:01 which countries are already stressed you
03:03 would say Argentina is stressed and of
03:06 course Turkey is undergoing some stress
03:08 the central bank has raised interest
03:10 rates considerably as well as simplified
03:12 the interest rate structure I think in
03:15 countries looking forward because Italy
03:18 depending on what the government does
03:20 and how much it wants to break the
03:22 fiscal constraints that the [European] Union puts
03:26 on it and the euro area that's going to
03:29 be a place to watch Brazil where
03:31 elections are coming up and of course
03:34 Brazil has a medium-term fiscal problem
03:36 which needs to resolve by dealing
03:39 primarily with the pensions of public
03:42 sector employees that is going to face
03:44 the next presidents not going to happen
03:45 before there's going to be something the
03:47 next president will have to opine on
03:48 very quickly and that's something to
03:50 watch out for so there are countries
03:53 issues that they have to deal with as we
03:56 go forward
03:56 you didn't mention any of the emerging
03:58 markets in Asia well I think Asian
04:00 emerging markets are in a healthier
04:03 situation than in the past because of
04:06 fairly narrow current account deficits
04:10 very small fiscal deficits as well as
04:13 moderate inflation so there is more
04:16 confidence their currencies many of them
04:18 have moved to inflation targeting
04:19 regimes and there is a sense that you
04:22 know they're not gonna let inflation get
04:24 out of control so they are in a
04:26 different position again I would say
04:28 that Southen can get stressed at this
04:31 point I would say you know amongst the
04:34 big ones no clear and present danger you
04:37 talked about Italy and we saw the fall
04:39 out of Italy throughout the world
04:41 two months ago I met chief Christine
04:44 Lagarde did say that she was confident
04:46 the eurozone was on a sustainable path
04:48 of growth does Italy changed prospects
04:51 for eurozone well I think certainly the
04:54 advent of a populist government in Italy
04:57 we'll raise the questions that have been
04:59 raised and have been sort of have quiet
05:01 down which is what is the periphery
05:03 getting now in truth the periphery has
05:06 got a lot in terms of inheriting
05:09 credible monetary policy much lower
05:12 interest rates than they were used to
05:13 but at this point in a relative sense
05:16 when they look at the past they feel
05:20 that the exchange rate is stronger than
05:22 they would like and the benefits of low
05:25 interest rates are being subverted to
05:27 some extent by fears about the these
05:31 countries and the spreads are widening
05:34 so on the one hand we don't have as
05:36 flexible and exchange rate as we would
05:38 want on the other hand interest rates
05:40 are higher for us than we would like
05:42 relative to what they were in the past
05:45 and so our [Italian] firms are paying these higher
05:47 interest rates are not being able to
05:49 match competition from say Germany or
05:52 the Netherlands and so the core
05:54 periphery sort of divide is growing
05:57 again
05:57 I mean there is a dialogue to be had but
06:01 it is going to be a tough one
06:02 Italy is one challenge the other
06:04 challenge is trade US and after US and
06:08 China and of course US and its US steel
06:12 and aluminium tariffs is Asia most at
06:16 risk when it comes to concern about
06:18 protectionism well unfortunately
06:20 accidents can happen
06:22 and the world is not well prepared for
06:25 the entity at the center of the global
06:28 financial and monetary order and trade
06:31 order turning around and saying I don't
06:33 believe in all this I want to change
06:35 things now the system has been built by
06:38 the U.S. around the U.S.. and now the
06:40 U.S. actually doesn't believe in using
06:43 the multilateral system this is a very
06:46 big change and we're not prepared for it
06:48 now you would hope that good sense
06:51 prevails and some of what we see are
06:53 bargaining tactics rather than actual
06:57 threats which should be carried out the
06:59 problem of course is positions hardened
07:01 you make a threat somebody else makes
07:04 the counter threat soon you find you
07:06 cannot back off and then we get into
07:08 this is true of war it's true of trade
07:11 war and one of the big worries is that
07:13 threat something made left right and
07:15 center by so strong I would say largely
07:20 been strong men who want to be seen as
07:23 strong and the rule to back off is far
07:28 more limited
07:29 and every country with a democratic or
07:31 authoritarian essentially the
07:34 governments want to look strong so my
07:36 worry is what you may think of as
07:40 bargaining employees working out the art
07:43 of the deal soon becomes hardened
07:46 positions which become very difficult to
07:49 back off and then you enter actual
07:52 conflagration and that combined with the
07:55 high degree of leverage and asset prices
07:59 which are you know price to perfection
08:01 that's the potent volatile combination


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2017-06-05

BSA Trade Agenda: Modernizing Digital Trade, NAFTA & Beyond

Modernizing Trade for NAFTA and Beyond | bsa.org (The Software Alliance)--BSA.org’s digital trade agenda is intended to create a modern trade agreement that recognizes the enormous impact software has on the US economy. BSA sent a letter (embed below) to the Trump Administration outlining these trade priorities and emphasizing digital trade’s role as an engine of growth for the American economy in the coming decades.


The full agenda:


BSA members
See also: software.org -- BSA Foundation

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2017-04-14

China, EU & Russia Foreign Trade Barriers: Internet, Digital, Domain Names

Cover of The 2017 National Trade Estimate Report on Foreign Trade Barriers
2017 National Trade Estimate Report | United States Trade Representative | ustr.gov: The 2017 National Trade Estimate Report on Foreign Trade Barriers (NTE) is the 32nd in an annual series that highlights significant foreign barriers to U.S. exports, and is a companion piece to the President’s Trade Policy Agenda published by USTR in March. 

Full Report here (pdf)--excerpts:

Regulation of Domain Names in China:

Web Filtering and Blocking of Websites in China:

EU Right To Be Forgotten: extraterritorial application of domestic law on the Internet, creating significant market uncertainty for businesses worldwide:

Google Tax in Russia:


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2017-02-13

MacroView: Three Weeks In, 'Trump Team USA' Is Clearly Winning

MacroView |  ©2016 DomainMondo.com
Domain Mondo's weekly review of  macro economic and investing news:
 
MacroView Feature •  Ignore the MSM noise, fake news, and click bait; take off your NYTimes-WaPo goggles, and take another look: with just 3 weeks under their belt, Trump Team USA is clearly winning despite some "rookie mistakes"--

•  Majority in US Now Optimistic About Job Market | Gallup.com: "For the first time since Gallup began tracking the question in 2001, a majority of Americans (54%) say it is a "good time" to find a quality job."

•  Daily Presidential Tracking Poll | RasmussenReports.com Friday, February 10, 2017: The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 52% of Likely U.S. Voters approve of President Trump’s job performance.

•  “We support the [Trump] Administration’s policies to level the global playing field and make U.S. manufacturing competitive worldwide through new regulatory standards and investment policies.”--Intel CEO Brian Krzanich in an email to Intel employees.--Intel and Trump tout new $7 billion investment to create 10000 jobs | TheHill.com: Intel Corp. announced a $7 billion investment Wednesday [Feb 8, 2017] that the company projects will create 10,000 new jobs. The company will use the $7 billion to complete its Fab 42 factory in Chandler, Arizona, Intel CEO Brian Krzanich said at a meeting at the White House with President Trump. Krzanich said the decision to make the announcement with the White House was borne out of Intel’s support for Trump’s economic and trade policies.

•  Trump will get all of his Cabinet picks confirmed despite the dysfunction, obstruction, and delay tactics of "loser" Democrats on Capitol Hill.

•  Wall Street hits records again, boosted by Trump economy hopes | Reuters.com:
The Trump Rally extends its run: DJIA and S&P 500 Index (source: google.com)
•  Despite manifold predictions and chatter among Trump's critics and doomsayers inside the beltway and the coastal bubbles, this new administration hasn't come close to the disasters of other new first term Presidents. Want some facts? John F. Kennedy took office on January 20, 1961. Only 74 days after taking office, President Kennedy approved, on April 4, 1961, the CIA's disastrous Bay of Pigs invasion plan. The resulting damage to U.S. prestige globally, and foreign relations with Cuba and beyond, has now lasted for generations, but MSM doesn't want you to remember that. Journalist Glenn Greenwald nails it including the current MSM mindset:
•  Dear Europe re: NATO--Trump says US taxpayers no longer willing to be EU's paying patsy--NATO's target for all of  NATO's 28 member states is that defense spending equal 2 per cent of each member state's economic output. At present, only the US, UK, Estonia, Poland and Greece meet the target (even NATO member Canada falls short!). One accounting shows Germany should spend $30 billion more each year, Italy $18 billion, Spain $16 billion, and France $6 billion. One problem: increases in defense spending for many EU nations would put them in violation of EU budgetary rules, which means EU members may have to re-allocate their spending to meet NATO's target, perhaps cutting their contributions to the EU budget?--more at FT.com.

•  Chaos and confusion in the EU as "kicking the can" and "extend and pretend" nears the end, and Poland and other nations demand an overhaul of the European Union.
•  At least the UK hasn't floundered and is on track for Brexit, even UK Prime Minister May is now "prepared to walk away from the European Union (EU) without a deal"-- 

Brexit ©2017 John Poole | DomainMondo.com
British House of Commons gives green light to Brexit process:

Video above published by FT.com Feb 9, 2017.

Brexit's impact on U.K. banks?

Diamond on Brexit: "The challenge is more for Europe than it is for the UK." Video above published Feb 10, 2017, by FoxBusiness.com: Atlas Merchant Capital CEO and former Barclays CEO Bob Diamond on Brexit, European banking, Atlas Merchant's strategy and the shift of regional banks to a more local focus rather than a global focus.

Who's Afraid of Brexit?  According to a PwC study, the UK's economy is set to grow faster than any other major advanced economy up until 2050, even if the UK takes a significant financial hit as a result of its exit from the European Union:
Infographic: UK set to outpace G7 in economic growth for decades | Statista
source: Statista

Trump and the ‘One China’ policy

US President Donald Trump has told Chinese president Xi Jinping that he will respect the “One China” policy, in his first conversation with the Chinese leader since entering the Oval Office. The move is expected to ease tensions between the two powers. Video above published by FT.com Feb 10, 2017.

•  It's Not Just Trump Derangement Syndrome affecting Coastal Bubble Elites and MSM: Some investors [and news media] really are this stupid | evidenceinvestor.co.uk: "The Super Bowl Indicator is, of course, complete and utter nonsense. But that still hasn’t stopped at least half a dozen semi-respectable media outlets in the United States discussing its significance over the last few days."

One More Thing: 
"If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.”--Friedrich von Hayek, Nobel Prize Lecture 1974

-- John Poole, Editor, Domain Mondo 

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