Many believe the trade war talk to be just that, talk. There is little if any damage being done. While I agree that it is more likely a trad...

American Economic Sentiment Riding High

Many believe the trade war talk to be just that, talk. There is little if any damage being done. While I agree that it is more likely a trade war will not happen, I falter at the anti-free market lunacy of the current POTUS. Can you not handle trade negotions with negotiations? We are not building a condomimim complex. POTUS is  putting economics in the hands of political economists, or whatever you’d like to call them...Men who use the science and art of economics to propel partisan rhetoric. What a crime! I will say that when politics die, they are generally destroyed. When these days vanish we will be in a much better place. There is no room for polite society inside   state run propaganda and US media. 

Fathom Consulting: Our US Economic Sentiment Indicator (ESI) may have slipped from 6.8% to 6.3% in March, but this was still one of the highest readings in 21 years. This comes in spite of growing fears of a trade war between the US and China, which many suggested would dampen sentiment and economic activity. Some of these fears may yet be reflected in the ESI reading for April, since some survey responses for March will have been submitted before China-specific tariffs were announced on 22 March.  However, fears of a trade war first surfaced in February, when the US announced tariffs on steel and aluminium imports, and there is no sign that this had a material negative effect on business and consumer sentiment last month. Even if a trade war is avoided, as we anticipate, we do not expect such bullish business and consumer sentiment to be maintained indefinitely — hard and soft measures of economic activity are likely to converge later this year.  Given the Q1 data released so far, official GDP growth looks likely to have been 1.5-2.0% (annualized). We have therefore revised down our forecast from 2.6% to 1.7%. However, GDP growth in Q1 has been systematically lower than growth in other quarters since 2000 and we do not think that this marks a slowdown in underlying economic activity; we expect growth to bounce back in Q2.

- Thank you Fathom Consulting 

U.S. President Donald Trump’s decision to impose tariffs on aluminium and steel imports on 1 March heavily dragged on the prices of so...

Overall Commodity Prices In Flux Amid Looming Trade Tariffs

U.S. President Donald Trump’s decision to impose tariffs on aluminium and steel imports on 1 March heavily dragged on the prices of some base and some precious metals in March, eroding investor confidence globally. Trump declared a temporary exemption for some economies, including Canada and the European Union, but left the levies for China in place, making it clear that China was the focus of his actions. This negative climate was amplified later in the month by Trump’s announcement of tariffs on USD 50 billion of Chinese imports in response for what he called China’s unfair trade practices, which have led to massive trade surpluses in favor of the Asian nation. China retaliated by announcing a reciprocal tariff package on U.S. imports including soybeans, planes and automobiles. Against this backdrop, commodity prices fell an aggregated 1.9% month-on-month in March (February: +0.8% month-on- month), the sharpest drop in one year. Base metals, along with palladium and platinum, were the main drivers behind March’s poor performance. Energy prices rose in March, however, due to strong fundamentals. Similarly, healthy global demand and fears of limited supply continued to boost prices for agricultural commodities. Global commodity prices are expected to withstand ongoing political uncertainties this year and next. Chinese officials adopted a more conciliatory tone in recent days, signaling a potential end to the ongoing trade war with the U.S. Moreover, data for Q1 confirms that the global economy remains in good shape, shoring up demand for commodities. Nevertheless, Trump’s aggressive stance toward China remains firmly in place, and he has threatened the country with additional tariffs of up to USD 150 billion. While China has offered to open some economic sectors, it has also stated that the country will retaliate against any punitive measure. If these threats materialize, the global economy will face an all-out trade war between the two countries, which would certainly disrupt global growth and commodity markets.
From Focus-Economics

ENERGY | Strong fundamentals prompt prices to recover In March, energy prices recovered some of the ground lost in the previous month, when oil prices tumbled in the wake of the massive sell-off in U.S. equity markets. 3 April 2018 oil markets were oversupplied. Energy prices rose 1.4% month- on-month in March (February: -4.2% mom). The all-important Brent and WTI oil prices climbed in March amid the strong compliance level to the oil-cap deal by Russia and OPEC members, along with signs of strong global growth and rising geopolitical tensions in the Middle East. Gasoline prices surged in March, reflecting higher oil prices and strong demand. In turn, natural gas prices benefited from China’s environmental push, posting solid gains in March. Conversely, China’s decision to allow higher coal production put downward pressure on thermal coal prices. Strong global growth will continue to spur energy prices this year. That said, the rise will be limited by increasing production of shale oil and natural gas prices in the U.S. Moreover, stricter environmental regulation in China and a broader preference for cleaner energy globally will dampen demand for coal. Analysts surveyed by FocusEconomics expect energy commodity prices to rise 8.1% year-on-year in Q4 2018 before logging a mild decline of 0.5% in Q4 2019.

BASE METALS | China-U.S. trade tensions lead prices to decline Prices for base metals logged their worst performance in over two years in March amid fears that the ongoing trade war between China and the United States could derail the current stellar global economic growth. Base metals declined 3.4% month-on-month, contrasting February’s mild 0.9% increase. Prices for base metals struggled in March on the back of concerns about the impact on global economic growth of the trade rift between China and the U.S. Iron ore, a key input for steel, was particularly hit by Trump’s announcement to impose tariffs on steel and aluminium imports on 1 March. Aluminium prices were also sharply down as reduced U.S. imports for the metal are expected to increase global oversupply and lower non-U.S. prices. Almost all the remaining base metal prices tracked by FocusEconomics were down in March, reflecting a potential slowdown in China due to the trade dispute with the U.S. Half of most metals that are used in industrial processes are consumed by China. On the flip side, U.S. steel prices soared in March; reduced global imports for the metal will tighten the domestic steel market. Analysts polled by FocusEconomics still see increasing base metal prices in 2018 and 2019 amid signs that China and the United States are willing to negotiate to end trade disputes. Analysts foresee base metal prices rising 2.0% in Q4 2018 from the same quarter in 2017. Base metal prices should lose some steam in 2019, with a year-on-year expansion of 1.9% penciled in for Q4 2019.

PRECIOUS METALS | Geopolitical risks and Fed’s tightening cycle send prices down Prices for precious metals declined for the second consecutive month in March, with all commodities in the group recording lower Change in Base Metals Forecasts. Precious metal prices fell 0.8% on a month-on-month basis in March (February: -0.3% mom). Palladium and platinum prices were the worst performers in the category. Fears that the trade rift between China and the U.S. could hurt economic growth and reduce global demand for cars weighed on prices for the two commodities. Gold prices were negatively affected by the ongoing monetary tightening in the United States and expensive equity valuations. That said, ongoing trade disputes between China and the U.S., a conflict escalation in Syria and rising tension between Russia and Western nations are all expected to fuel demand for the safe-haven asset. Silver prices largely followed gold’s performance and declined slightly in March. Strong global economic activity and limited supply growth should spur industrial demand for palladium, platinum and silver this year and next, supporting prices for the three commodities. Moreover, heightened geopolitical tensions bode well for gold and, to a lesser extent, silver prices. An expected uptick in purchases of jewelry and bullion, especially in China, will add further upward pressure on precious metal prices. Analysts polled for this month’s survey see precious metal prices for Q4 2018 rising 3.3% from the same quarter in 2017. The panel sees a mild deceleration next year, with precious metal prices increasing 3.2% year-on-year in Q4 2019.

AGRICULTURAL | Prices continue to rise on strong demand and shortage fears The upward trend in agricultural prices continued in March on weather supply concerns and resilient demand for industrial usages, food supplies and animal feed. That said, the rally is expected to moderate going forward due to improved weather conditions in key producing areas such as Western Africa and parts of the United States. Moreover, investors will likely take advantage of the recent surge in some agriculture prices. Agriculture prices grew 3.9% on a month-on-month basis in March (February: +5.1% mom). Five out of the nine agriculture commodities tracked by FocusEconomics saw price increases in March, with cocoa recording the largest increase, followed by cotton. Conversely, prices for coffee and wool declined in the month. Sugar prices continued to decline in March amid oversupply. Supply shortages and healthy demand for agriculture products will continue to exert upward pressure further down the road. Our panel of analysts forecasts a 16.5% annual increase in Q4 2018. Agriculture prices are seen expanding a solid 4.5% year-on-year in Q4 2019.

Apart from the Amazon of 1999-2010 - let's refer to those as the innocent years of Amazon -  Amazon has now grown to be such a beh...

The Problem With Amazon

Apart from the Amazon of 1999-2010 - let's refer to those as the innocent years of Amazon -  Amazon has now grown to be such a behemoth and problem to American commerce that even mainstreet is against the proposed HQ2 - all across America. In an article I published last August I stated: Despite the frenzy and furor over Amazon on both sides - shareholders and antitrust types alike - AMZN could have a rough patch ahead. While growth and market share dominate the culture and drive of $AMZN what is happening in their quest for dominance is destruction. When sales competitor Wal-Mart Stores (NYSE:WMT) is compared to Amazon the difference is intense: WMT has an enterprise value of $271B with revenues at $486B, Amazon is currently at an enterprise value of $478B with revenues of $150B. The joke in the past was Amason sold $1.00 for $.99, now AMZN is creeping towards selling $1.00 for $.50.”  (See article  - Cool Down Time For AMZN)

The joke is there is no more joke about Amazon selling $1.00 for 0.50 or 0.80 cents on the dollar. Now they will just give the product to you. The website and portal giant they operate is a never ending black hole where staffers brainstorm on the next product or vertical they can swallow and convert into digital thumbnails for sale, no matter the price,  or lack of quality control or absurdism behind a third party selling you a $75,000.00 tractor online. 

I use Amazon - I began in 1999 buying books. Now I buy random varieties of goods that I refuse to assemble in the real world thru retail experiences. However, I’m not going to buy my next car on Amazon, I’m not going to buy my next surfboard on Amazon. I’m not going to buy fine art on Amazon. 

From the AJC: Some fear what Amazon might do to their companies, commutes, neighborhoods and even local and state budgets as job-hungry leaders dangle what will likely amount to billions of dollars in tax breaks and other perks for the Seattle-based company (Link).

REAL SECTOR | Trade war threatens to derail stellar global growth momentum A complete GDP dataset revealed that global growth lost...

Global Economic Outlook G7

REAL SECTOR | Trade war threatens to derail stellar global growth momentum A complete GDP dataset revealed that global growth lost some steam in the fourth quarter of 2017, despite remaining robust overall. The global economy expanded 3.4% annually in Q4, which was a notch below both the 3.5% rise estimated last month, and the 3.5% expansion recorded in Q3 2017. The slightly lower figure was the result of weaker-than-expected growth in Latin America, particularly in Brazil. Conversely, newly released GDP data for India came in above market expectations. Data for Q1 signals that the economy continues to sail smoothly, propelled by largely accommodative monetary policies, tight labor markets and robust global trade. Against this backdrop, our analysts expect the global economy to expand 3.5% in Q1 on improved dynamics in both advanced and emerging market economies. Despite the solid economic backdrop, the threat of rising protectionism has dominated headlines in recent weeks. Notably, the United States announced on 22 March its first set of punitive actions against China by proposing tariffs on up to USD 60 billion of imports from the Asian giant. Although China showed readiness to retaliate by announcing tariffs on USD 3.0 billion of goods, the U.S. decision leaves room for negotiation before implementation, an opportunity Beijing is unlikely to ignore in a bid to prevent further escalation. The risk remains that if negotiations fail, U.S. protectionism will spiral out of control and cause an all-out trade war with China, which would harm both economies and throw a wrench in the works of the global economy. The U.S. decision to impose trade restrictions on China came only two weeks after the Trump administration announced tariffs on steel and aluminum products, citing national security grounds under Section 232 of the Trade Expansion Act. That said, many economies were given temporary exemptions before the tariffs came into force on 23 March, including the European Union and NAFTA partners Canada and Mexico. Negotiations over the North American trade agreement are still ongoing, and, although progress is painfully slow, the U.S. recently softened its stance on rules of origin in an unexpected sign of goodwill. All told, while the U.S. has turned more belligerent on the trade front in recent weeks, it has also taken a less aggressive stance in some areas. On a more positive note, eleven countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Global 
Note: GDP, real annual variation in %, Q1 2015 - Q4 2019. 
Note: GDP, evolution of 2018 and 2019 forecasts during the last 18 months. FOCUSECONOMICS Summary FocusEconomics Consensus Forecast |
  • 3 April 2018 partnership (CPTPP) on 8 March, a trade liberalization deal that removes most tariffs for a bloc representing nearly 500 million people and more than 13% of global trade. The bloc—from which the United States withdrew last year—should stir trade flows across the Pacific and fuel stronger economic growth in all the countries involved. The CPTPP is expected to go into effect two months after most of the participants have domestically ratified the agreement. In the European Union, a whirlwind of political news has kept analysts on their toes. On 4 March, parliamentary elections in Italy yielded a hung parliament, with anti-establishment parties gaining over half of the seats and traditional parties being relegated to a state of political limbo. Despite signs of rapprochement between the North League and the 5-Star Movement, the country is unlikely to find a way out any time soon, heralding a period of political uncertainty ahead. Conversely, Germany put an end to over five months of political gridlock following the formation of the second consecutive alliance between the Social Democrats and Angela Merkel’s Christian Democratic Union. Ongoing negotiations over Brexit have also grabbed headlines, with a draft withdrawal agreement reached on 19 March finally signaling progress in EU-UK talks. The draft establishes a transition period that will kickstart once the UK leaves the EU in March 2019 and last until 31 December 2020. This should provide more certainty to businesses and prevent an outflow of capital from the UK, although thorny issues remain largely unaddressed, mainly regarding the border with Northern Ireland.

OUTLOOK | Global economy to accelerate marginally this year despite growing protectionism fears The sweet spot in which the global economy finds itself could quickly come to an end amid rising trade disputes between China and the United States. While the trade war appears to be circumscribed to these two countries for now, further antitrade measures against economies with large trade surpluses against the U.S., particularly the European Union, remain a possibility. Should these fears materialize, the ongoing stellar global trade cycle could sharply slow, hitting economic growth worldwide. Moreover, central banks are adopting a more hawkish tone in response to reduced economic slack which is beginning to push up inflation. Less accommodative monetary policies by key central banks could tighten financial markets and add downward pressure to global economic growth. FocusEconomics panelists expect the global economy to grow 3.4% in 2018, which is unchanged from last month’s estimate and would represent the strongest rate in seven years. In 2019, the global economy is seen decelerating slightly, to 3.2% growth. Although the 2018 GDP growth projection was unchanged from last month’s report, the economies of the Euro area and the United States both saw upgrades to their growth estimates. Growth prospects for Canada, Japan and the United Kingdom were left unchanged. 

4 April 2018 Among developing nations, China’s resilient economic growth, a strong global trade cycle and improving dynamics in India are shoring up economic activity in the Asia (ex-Japan) region. Eastern Europe, meanwhile, is benefiting from the ongoing economic recovery in Russia, solid growth among some key regional economies such as Romania and Turkey, and robust dynamics in the European Union. While the economic outlook in Latin America appeared to be more stable in recent months, political uncertainty in some countries continues to dent the region’s growth projections. Despite mounting geopolitical risks and economic imbalances, the outlook in the Middle East and North Africa, and in Sub-Saharan Africa, are gradually improving on the back of a higher commodity price environment.

Report and Data from FocusEconomics.

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