The Wealth of Asia

By |2019-10-02T07:37:56-05:00September 4th, 2019|Global Market Update|

What is Hong Kong? Photo: Robster1983. Source: Wikimedia. CC0. Hong Kong is a former British Colony founded in 1840 as a trading station. It has a free market economy with almost no tariffs or duties, highly dependent on international trade and finance. In fact, the value of imports and exports, $1.2 trillion, is approximately four time the size of Hong Kong’s economy. It has very little arable land and no significant natural resources. All it has is a decent harbor, an advantageous location, and [...]

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Together but Apart

By |2019-08-02T05:59:08-05:00August 2nd, 2019|Global Market Update|

Where do trade conflicts come from? “Luncheon of the Boating Party” by Auguste Renoir. Source: Wikipedia. Markets around the world were roiled recently by the announcement of more US tariffs on Chinese-made goods. The President announced the levies as punishment for China’s failing to buy more agricultural products or stem the flow of illegal drugs into the US. But the real frustration many have with China has been the persistent trade gap we have with them: the fact that we buy more goods from [...]

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Big Bad Stories

By |2019-03-18T06:15:17-05:00March 18th, 2019|Global Market Update|

Are some myths dangerous? Paul Bunyan and Babe. Photo: Mike Baker. Source: Wikipedia Growing up, I read about the legendary lumberjack Paul Bunyan, and his faithful ox, “Babe.” They did amazing things, like create Minnesota’s 10,000 lakes, the St. Lawrence River’s 1,000 islands, and dig Lake Superior as a watering trough. The stories were a benign piece of folklore, a bit of boosterism about Americans settling the frontier in the 19th century. But some stories are dangerous. They shape the way we look at [...]

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The Heavy Down Under

By |2018-08-07T14:18:21-05:00August 7th, 2018|Global Market Update|

Is Australia doing some heavy lifting? Australian Paralympic powerlifter. Source: Wikimedia In the world of bilateral national relationships, the US-China nexus is tops. Together, our two countries constitute almost a third of global production, and our combined economic growth creates the equivalent of a new Australian economy every year. But the Australia-China relationship is also critical. Australia exports the raw materials that China needs to build its roads, factories, and ports. This connection allowed Australia to avoid a recession during the global financial crisis. [...]

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Playing Chicken with Trade

By |2018-07-10T07:24:43-05:00July 10th, 2018|Global Market Update|

Remember James Dean? Public Domain. Source: Wikimedia In “Rebel Without a Cause,” James Dean and a teenage rival play a game of chicken, racing two stolen cars towards a cliff. Both plan to jump out at the last moment. But the other guy’s jacket gets caught in his car door, and he goes over the cliff with his car. Sometimes trade negotiations seem like a game of chicken. Both sides want concessions. Neither side wants a trade war – raising prices for their own [...]

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Risk, Uncertainty, and Balance

By |2018-03-02T07:31:03-05:00March 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. [...]

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Mexican Trade Revolution

By |2018-03-01T14:16:43-05:00March 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 [...]

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The Merchants of Venice

By |2017-11-07T07:14:52-05:00November 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 [...]

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Trade Uber Alles

By |2017-09-08T07:36:36-05:00September 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 [...]

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The (Greater) Wealth of Nations (Part 2)

By |2017-08-18T06:17:08-05:00August 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 [...]

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