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Similar to Us as Bully War Room slides -- 07-19-2018
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Us as Bully War Room slides -- 07-19-2018
- 1. World’s New Bully? 19 July 2018 War Room
- 2. War Room Idea Generation Macro Coaching Scenario Updates HiddenLevers runs on SCENARIOS like Instagram runs on PHOTOS
- 3. The Skinny US Economy v World World’s New Bully? Scenarios: China Eats World Europe Falls Behind World’s New Bully? UPDATE NEW
- 5. World’s New Bully? – Why Ripe? USD + Interest Rates Rising EM Correction NATO Uncertainty EU Reducing Growth Forecast
- 6. World’s New Bully? – Let’s take a Look See it on HiddenLevers
- 7. Fed Unwinding necessarily sucks money out of China + EM World’s New Bully? – Take-aways Trade War Meaningless So Far US GDP > EU GDP since Q1 2015
- 8. HiddenLevers US ECONOMY V WORLD
- 9. US v World: US Economy sources: HiddenLevers 1, 2, 3, 4
- 10. US v World: Global Comparison sources: HiddenLevers, Federal Reserve, Federal Reserve 2, MarketWatch, IMF, Trading Economics Gross Domestic Product: China, USA, EU China USA EU China USA EU GDP (PPP) per capita $16,624 $59,495 $37,205 Unemployment 3.9 4.0 7.1 Wage Growth 7.7 2.7 1.8
- 11. US v World: Demographics = Destiny sources: HiddenLevers Replacement Rate = 2.1% Annual US Births (millions) US- Born Women Foreign- Born Women Fertility Rates: US / China /EU USA EU Chin a • All developed countries currently below replacement rate • US birth rate is being supported by first generation immigrants
- 13. BULLY: TRADE WAR RHETORIC sources: HiddenLevers No divergence between S&P 500 + Shanghai Index during trade war rhetoric S&P500 + Shanghai sharply diverged in April 2018, when Powell Fed Era began
- 14. BULLY: CURRENCY FLOWS sources: HiddenLevers, Economist, Bloomberg Rising US Rates Less global liquidity + Flight to US bonds
- 15. sources: HiddenLevers, EDN Hub BULLY: US TARIFF IMPACT 2018 US Tariffs: March 2018 Steel 25% Aluminum 10% June 2018 China 10% Proposed Autos 25% Tariff Impact In Context: 10% Tariff on all Chinese imports: $51B Total US GDP: $19,960B
- 16. BULLY: FED GLOBAL IMPACT sources: HiddenLevers World Markets have moved substantially since US Fed April Release of Hike Plan Global FX Impact: • USD +6% • Major currencies -5% • EM Currencies -10-15% Global Equities Impact: • China -20% in USD terms • Europe flat • EM -6% Fed Hike Plans USD SPY USD IEFA EEM CNY EUR ZAR BRL
- 17. HiddenLevers SCENARIOS: CHINA EATS WORLD US-EUROPE DIVERGENCE UPDATE NEW
- 18. SCENARIO: BIG RISKS sources: HiddenLevers, FullFact.org, Bloomberg CHINA EUROPE EMERGING MARKETS Less accommodating monetary policy inevitably pops credit bubble EM infrastructure adventures come back to haunt China Declining birthrates in Europe dramatically reduce GDP Populist immigration policies keep out new talent Hawkish Fed means end of easy money for EM, but not all EM created equal. Look for stability in EM 1. Current account deficit 2. Capital inflows
- 19. BASELINE GOOD SCENARIO: Europe Falls Behind S&P 500 -15% DAX -30% S&P 500 +8% DAX +15% S&P 500 +5% DAX -5%Divergence Continues BAD Population Decline NO NEW PEOPLE = NO GDP GROWTH EU REPEATS 2017 GDP UPSIDE SURPRISE LONG TERM TREND SINCE 2002, HARD TO REVERSE Closes the Gap
- 20. Sweating Inflation? – Let’s take a Look See it on HiddenLevers
- 21. Fed Unwinding necessarily sucks money out of China + EM World’s New Bully? – Take-aways Trade War Meaningless So Far US GDP > EU GDP since Q1 2015