Risk, Uncertainty, and Balance

By | 2018-03-02T07:31:03+00:00 March 2nd, 2018|Global Market Update|

The Era of Low Volatility is Over. Photo: NOAA. Source: Wikimedia That’s what I thought when I looked at last month’s returns. Equity markets around the world were down around 5% last month, led by economic stalwarts like Johnson & Johnson and Samsung Electronics. Growth-oriented companies, like Amazon and Microsoft, still keep chugging along. But the market’s unbroken string of monthly advances – with barely a pause to admire the scenery – ended in February. A series of scary stories has spooked market participants. [...]

Mexican Trade Revolution

By | 2018-03-01T14:16:43+00:00 March 1st, 2018|Global Market Update|

Has trade with Mexico fundamentally changed?     Emelio Zapata. Public Domain. Source: Wikimedia Mexico runs a trade surplus with the US. Global supply chains mean that many component parts are shipped to Mexico from all over the world, assembled, and then exported to the US. Historically, Mexico also exported oil to the US. But that’s changed over the past few years. From 2006 to 2014, Mexico exported around $35 billion per year in energy products to the US. But then the value and [...]

The Merchants of Venice

By | 2017-11-07T07:14:52+00:00 November 7th, 2017|Global Market Update|

Whatever happened to Venice? Piazza San Marco, by Canaletto. Source: Metropolitan Museum of Art Venice used to be one of the richest cities in the world. After the fall of the Roman Empire, the world devolved into competing factions. There was no uniform standard of exchange, and no central authority. But trade in spices, grains, cloth, and slaves was booming. By 1330, Venice was as big as Paris, and probably three times the size of London. One of the keys to Venice’s success was [...]

Trade Uber Alles

By | 2017-09-08T07:36:36+00:00 September 8th, 2017|Global Market Update|

How did Germany get so lucky? Source: Global Sourcing Blog China entered the World Trade Organization in 2001. This has an immense, positive impact on their exports. With trade came growth, and China’s growth meant low-skilled jobs were at risk. In the US, workers who lost their jobs had a hard time finding new employment, and often dropped out of the workforce. Our labor participation rate peaked in the year 2000, and has fallen steadily since, despite our growing economy. But this didn’t happen [...]

The (Greater) Wealth of Nations (Part 2)

By | 2017-08-18T06:17:08+00:00 August 18th, 2017|Global Market Update|

Is trade enough? Source: Brookings Institute In order to understand the effect of trade on the global economy, it’s not enough to map out gross flows from one economy to another. Countries and companies are enmeshed in a complex web of relationships – called the Global Value Chain. Cars aren’t just built in Japan from Japanese steel and glass and plastic and then shipped to the US or Europe anymore. They might have Chinese steel and Mexican seats and a Canadian motor and software [...]

Benefits to Trade

By | 2017-07-17T12:21:23+00:00 April 10th, 2017|Global Market Update|

What’s your favorite business movie? Fair Use. Source: Wikipedia One of the best is “Trading Places,” a modern take on Mark Twain’s Prince and the Pauper starring Dan Ackroyd and Eddie Murphy. It tells the story of a privileged commodities broker and a homeless street hustler who are thrown together when they are made the unwitting subjects of an elaborate bet. Apart from a minor role by now-Senator Al Franken, it also includes a fairly accurate description of the commodities business, with scenes from [...]

Dangerous Myths

By | 2017-07-17T12:21:27+00:00 March 13th, 2017|Global Market Update|

Are some made-up stories hazardous to our health? Mjöllnir on Tórshavn Coat of Arms. Source: Wikipedia Some tall tales seem benign – like accounts of Mjöllnir, Thor’s battle hammer that always comes back to him after he throws it. In Norse mythology, Thor is kind of a dumb ox, always misplacing his things. So it’s convenient for him to have something that he won’t lose, even after he gets angry and throws it. But some stories are dangerous. They shape the way we look [...]

Xi Loves Pencils

By | 2017-07-17T12:21:31+00:00 January 23rd, 2017|Global Market Update|

Where do pencils come from? Photo: Daniel German. Source: Wikipedia In 1958 economist Leonard Read wrote a charming essay entitled “I, Pencil” about the miracle that the humble pencil represents: wood, zinc, glue, and graphite combined in a form that makes writing possible. There’s no hive-mind directing the countless individual actions necessary to bring pencils into being. Rather, individual shippers and machinists and miners and foresters work in their own individual interests, and their know-how is organized to offer a coherent product—at a miniscule [...]

Limits to (Trade) Growth

By | 2017-07-17T12:21:36+00:00 December 7th, 2016|Global Market Update|

Why is global trade under attack? Public Domain. Source: NOAA Global trade has generated an unprecedented level of prosperity. From Foxconn-built iPhones to Novo-Nordisk-designed insulin therapies to Airbus and Boeing and Embraer competing to build and sell airliners, global companies competing in a global marketplace produce an incredibly broad range of goods at reasonable prices. Trade works because a larger market allows for more specialization, and more specialization enables people to be more productive. Workers can be more focused and more innovative. New ideas [...]

Trade War Worries

By | 2017-07-17T12:21:37+00:00 November 17th, 2016|Global Market Update|

Are we headed for a trade war? Author: Tony Cohen. Source: Wikipedia The rhetoric from the Presidential election would make you think so. Donald Trump campaigned on renegotiating trade deals with countries around the world. While some of the more extreme measures – like an across-the-board 45% tariff on all imports – would require Congressional action and are therefore less likely, he will have the authority, as President, to pull the US out of the North American Free Trade Agreement or the World Trade [...]