In today’s briefing:
- A Secret US-China Accord? Will It Boost Global Liquidity?
- TRADE IDEA: Short GBP, Long USD
- Trump’s Trade War Revisited: Tariffs Did Reduce China’s Bilateral Surplus with US
- Spain Election Watch: Why Spain Is Not the Next Italy
- Rates Watch: Will curves bear-steepen if the cyclical rebound is confirmed?
- “The 70 Year Itch” For Communist North Korea & Visit to One of Karl Marx’s Favorite Pubs in London
- Energy | Jul 20, 2023
- What Are Rollups? Everything You Need to Know
A Secret US-China Accord? Will It Boost Global Liquidity?
- Did Treasury Secretary Yellen’s recent trip lead to a US-China Accord that allows the US dollar to weaken and China’s PBoC to ease again?
- Markets are acting as if this happened, but in reality this ‘accord’ simply reinforces existing forex and liquidity trends
- Emerging Market liquidity is currently high. This is inconsistent with an upcoming recession, but aligns with a rising Global Liquidity cycle. Expect more US and Chinese easing.
TRADE IDEA: Short GBP, Long USD
- Unlike US headline inflation UK inflation has ample room to come down in the remainder of the year.
- Lackluster GDP growth and headline inflation returning to target requires less tight monetary policy. This means that the gap between UK and US 2-year yields will likely turn negative again.
- The Bank of England is the only major central bank for which markets can still price out a considerable number of rate hikes.
Trump’s Trade War Revisited: Tariffs Did Reduce China’s Bilateral Surplus with US
- China’s share of US imports is down to a 16-year low of 15.1% in the year to May’23, from a peak of 21.77% five years ago. Trump’s tariffs worked.
- ASEAN was the main loser from China’s market-share gains in the US, and is now (alongwith India) among the major gainers from China’s losses in US market share.
- China’s bilateral trade surplus with the US has moderated only slightly, so it remains a live political issue in the US. China is likely to keep losing US market share.
Spain Election Watch: Why Spain Is Not the Next Italy
- During the early stages of the COVID-19 pandemic, the EU introduced a recovery fund called the Next Generation EU, aimed at providing financial assistance – through grants and loans – to member states affected by the crisis.
- Italy, being one of the countries hit hardest by the pandemic, has received 48 % of the EU recovery fund based on several criteria including timely spending and value-for-money.
- The new development is Spain, which after Sunday’s general election looks well-positioned for an Italian-esq ideological turnaround.
Rates Watch: Will curves bear-steepen if the cyclical rebound is confirmed?
- Welcome to this second asset-specific piece during our “Business Cycle Week”.
- Due to several of our indicators hinting at a short-term pick-up in cyclical activity (manufacturing), we take a look at every single major asset class and how it’s priced relative to the cycle outlook.
- In this piece, we will look at rates/curves relative to the cyclical outlook.
“The 70 Year Itch” For Communist North Korea & Visit to One of Karl Marx’s Favorite Pubs in London
- In this insight, I discuss the “70 Year Itch” for North Korea communism & a visit to one of Karl Marx’s favorite pubs in London.
- On 27 July 2023, it would mark 70 years since the signing of the armistice agreement and the Korean War is technically still in progress.
- North Korean nuclear threats could once again be highlighted globally in 2024/2025 as the timing of the US Presidential Election draws near in November 2024.
Energy | Jul 20, 2023
- On May 4, 2023, WTI futures experienced a significant drop of 6.58% before closing with a slight gain of 0.66%.
- Creating a bull flag reversal pattern, but prices did not make higher highs or higher lows in the following weeks.
- Therefore, a more stable, extended base formation was necessary instead of a quick V-shaped recovery.
What Are Rollups? Everything You Need to Know
- Addressing the shortcomings of Ethereum, Layer-2 blockchain scaling platforms continue to gain prominence and popularity in the crypto space.
- Powered by Rollup technology, these platforms have brought faster transaction speeds and reduced costs, thereby significantly enhancing the overall Ethereum user experience.
- This has led to increased interest and adoption of Layer-2 platforms among developers, as they provide a viable and scalable solution for building applications on the Ethereum network.
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