Protectionism/Competitive devaluation
Feature The U.S.-China trade talks have not yet collapsed but they appear to be reaching a “make it or break it” moment. President Donald Trump renewed his threat of heightening tariffs on Chinese imports on May 5, in the interim between two weeks of shuttle diplomacy in Beijing and next in…
Highlights Evidence continues to mount that the Chinese economy is in a bottoming process. This suggests the path of least resistance for the RMB is up. Meanwhile, as the U.S. and China move closer to a trade deal, any geopolitical risk premium in the RMB will slowly erode. The ultimate…
Highlights So what? The U.S.-China deal is not shaping up as well as the consensus holds. Why? The odds of reaching a deal by June are rising, but no higher than 50%. Unemployment is a constraint on the Chinese side but stimulus reduces urgency. Structural concessions on currency and…
Dear Client, Instead of our regular Weekly Report, this week we are sending you a Special Report written on February 20 by our Geopolitical Strategy service colleagues that discusses China’s recent stimulating efforts. We have only made a few minor revisions to account for the past month’s…
Highlights Just when it looked like the agricultural complex was starting to perk up, it was slapped down again. After crawling its way back from a mid-2018 crash – retracing more than half of its decline – the CCI Grains and Oilseeds index plummeted in February, declining by nearly 9% (Chart Of…
Highlights The odds of a continued earnings contraction have not yet fallen to the point that would warrant an overweight stance towards Chinese versus global stocks over the coming 6-12 months. While we maintain Chinese stocks on upgrade watch and may recommend increasing exposure soon, the…
Highlights So What? A major antitrust suit could happen within the next couple of years, paradoxically ushering in a rewarding investment opportunity. Why? The current environment of corporate overreach, protectionism and popular discontent has often preceded large antitrust suits…
Highlights Global equities will remain rangebound for the next month or so, but should move decisively higher as economic green shoots emerge in the spring. A revival in global growth will cause the recent rally in the U.S. dollar to stall out and reverse direction, setting the stage for a…
Highlights So What? The late-cycle rally still faces non-trivial political hurdles. Why? U.S.-China trade talks, the U.S. threat of tariffs on auto imports, and Brexit continue to pose risks. A shocking revelation from the Mueller report could have a temporary negative impact on equity…
Highlights So What? Optimism over a U.S.-China trade deal is becoming excessive. Why? Presidents Trump and Xi appear to want a deal but their late March summit is not yet finalized. Several news reports supporting the bullish consensus are overrated. The odds of a “grand compromise”…