The US trade deficit improved slightly in April 2015, but imports and exports are both decelerating, suggesting slowing US and global economic growth. While currency devaluations in countries like Canada, Mexico, Japan and Germany could theoretically boost their exports, US imports from these nations continue to decline. Exports to major trade partners like China, Canada and Mexico are also slowing, reflecting weakening global demand. Overall, the April 2015 trade data indicates ongoing stagnation in US domestic demand and a significant downturn in China's economy, pointing to continued weakness in both US and global economic conditions.

1. US Trade Balance Data April 2015
Conclusion
April 2015 US trade data suggestcontinuedslowdownsinUSand global demand.
The US trade deficit improvedby$6mon a trailingtwelve monthbasis. Onthe surface,thisportends
positivelyforUSGDP. That said,we continue tobelieve thatUSGDP doesnot necessarilyreflectthe
underlyingeconomicconditions. RelatingthistoApril 2015 trade data, while the trade deficitdid
improve leadingtoslightimprovementin2q15 GDP expectations,importsandexportsbothcontinue to
decelerate tolevelssuggestingbothaUS andglobal economicslowdown.
US importgrowth hasstalledat2011 levelsbothwhen includingandexcludingthe impactfrom
petroleum. Inshort,longtermtrendsinUS importssuggeststagnatingUSdomesticdemand.
From a more global perspective,China’sgrowthappearstobe ina significantdowntrend. USexportsto
Chinaare decliningona y/ybasisand the currentrate of change inconsistentwiththe pace seenlast
headingintothe 2008 recession.
Finally,lookingatthe data,it doesnotappearthat currency devaluationsare helpingJapanand
Germany(andEurope more broadly) astheirexportactivitytothe US isdeclining.
Analysis
The overall US trade deficit,fromalevel perspective, onatrailing12 monthbasis,improvedby$6m
monthovermonthbut remainsveryclose topost-recessionhighs, somethingwe believereflectsoverall
global currency,monetaryandfiscal policyimbalance:

2. Shownina differentway,importsare growingfasterthanexports butbothare deceleratingand
growingat verylowlevelssuggestingslow USandglobal growth. The slowingimportdatas surprising
giventhe surge inthe USD while the weakeningexportgrowth isnotsurprisinggiventhe strongerUSD
and weakeningglobal demand:
(900,000)
(800,000)
(700,000)
(600,000)
(500,000)
(400,000)
(300,000)
(200,000)
(100,000)
0
12/1/1993
9/1/1994
6/1/1995
3/1/1996
12/1/1996
9/1/1997
6/1/1998
3/1/1999
12/1/1999
9/1/2000
6/1/2001
3/1/2002
12/1/2002
9/1/2003
6/1/2004
3/1/2005
12/1/2005
9/1/2006
6/1/2007
3/1/2008
12/1/2008
9/1/2009
6/1/2010
3/1/2011
12/1/2011
9/1/2012
6/1/2013
3/1/2014
12/1/2014
US Trade Balance, TTM
US Trade Balance, TTM

3. Generallyspeaking,USimports,excludingpetroleum,continuetosoftendespite the re-openingof the
WestCoast ports and have not grownsince 2011:
-35.0%
-25.0%
-15.0%
-5.0%
5.0%
15.0%
25.0% 12/1/1994
9/1/1995
6/1/1996
3/1/1997
12/1/1997
9/1/1998
6/1/1999
3/1/2000
12/1/2000
9/1/2001
6/1/2002
3/1/2003
12/1/2003
9/1/2004
6/1/2005
3/1/2006
12/1/2006
9/1/2007
6/1/2008
3/1/2009
12/1/2009
9/1/2010
6/1/2011
3/1/2012
12/1/2012
9/1/2013
6/1/2014
3/1/2015
US Imports and Exports, TTM, Y/Y
US Exports, TTM, Y/Y US Imports, TTM, Y/Y

4. The top 5 largestsourcesof US importsare, inorder,(i) China; (ii) Canada;(iii) Mexico;(iv) Japan;and(v)
Germany. Onlytwoof these countries,ChinaandJapan,were atleasttheoreticallyimpactedbythe
westcoast port closures. Fourof these countries,Canada,Germany,Japan,andMexico,have seen
massive devaluationsof theircurrencyversusthe USD.
US importsfromChinaactuallyslowedona TTM basis:
90
95
100
105
110
115
120
125
1/1/2002
7/1/2002
1/1/2003
7/1/2003
1/1/2004
7/1/2004
1/1/2005
7/1/2005
1/1/2006
7/1/2006
1/1/2007
7/1/2007
1/1/2008
7/1/2008
1/1/2009
7/1/2009
1/1/2010
7/1/2010
1/1/2011
7/1/2011
1/1/2012
7/1/2012
1/1/2013
7/1/2013
1/1/2014
7/1/2014
1/1/2015
US Imports, Excluding Fuel (January 2000 = 100)
US Imports, Excludng Fuel (January 2000 = 1000)

5. US importsfromCanada continue toslow despite the CADdevaluationrelativetothe USD:
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0% 12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
6/1/2002
4/1/2003
2/1/2004
12/1/2004
10/1/2005
8/1/2006
6/1/2007
4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Imports from China, TTM, Y/Y
US Imports from China, TTM, Y/Y
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
12/1/1994
11/1/1995
10/1/1996
9/1/1997
8/1/1998
7/1/1999
6/1/2000
5/1/2001
4/1/2002
3/1/2003
2/1/2004
1/1/2005
12/1/2005
11/1/2006
10/1/2007
9/1/2008
8/1/2009
7/1/2010
6/1/2011
5/1/2012
4/1/2013
3/1/2014
2/1/2015
US Imports from Canada, TTM, Y/Y
US Imports from Canada, TTM, Y/Y

6. US importsfromMexicoare alsoin a slowingtrend despite the Pesodevaluation:
EvenUS importsfromJapancontinue todecline despite massiveYendevaluation:
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
6/1/2002
4/1/2003
2/1/2004
12/1/2004
10/1/2005
8/1/2006
6/1/2007
4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Imports from Mexico, TTM Y/Y
US Imports from Mexico, TTM, Y/Y
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
6/1/2002
4/1/2003
2/1/2004
12/1/2004
10/1/2005
8/1/2006
6/1/2007
4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Imports from Japan, TTM, Y/Y
US Imports from Japan, TTM, Y/Y

7. Finally,evenUSimportsfromGermanyare decliningdespite the Eurodevaluation::
US exports (blue line) are alsoslowing, growing0.1% y/yona TTM basis, asto be expectedfromthe
USD appreciation(blue line):
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
6/1/2002
4/1/2003
2/1/2004
12/1/2004
10/1/2005
8/1/2006
6/1/2007
4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Imports from Germany, TTM, Y/Y
US Imports from Germany, TTM, Y/Y

8. The largest3 destinationsforUS goodsand servicesare,inorder:(i) Canada;(ii) Mexico;and(iii) China.
Lookingat the chart below,we see thatUS exportstoChinaare now decliningforthe firsttime since
2006-2007, somethingthathasnot beenimpactedbycurrencyrelatedissuesasthe RMB is peggedto
the USD:
-35.0%
-25.0%
-15.0%
-5.0%
5.0%
15.0%
25.0% 12/1/1994
9/1/1995
6/1/1996
3/1/1997
12/1/1997
9/1/1998
6/1/1999
3/1/2000
12/1/2000
9/1/2001
6/1/2002
3/1/2003
12/1/2003
9/1/2004
6/1/2005
3/1/2006
12/1/2006
9/1/2007
6/1/2008
3/1/2009
12/1/2009
9/1/2010
6/1/2011
3/1/2012
12/1/2012
9/1/2013
6/1/2014
3/1/2015
US Imports and Exports, TTM, Y/Y
US Exports, TTM, Y/Y US Imports, TTM, Y/Y

9. Parenthetically,withUSexportstoChinadecliningandUSimportsfromChinagrowing,the US trade
deficitwithChinacontinuestoincrease andhitnew records:
-15.0%
-5.0%
5.0%
15.0%
25.0%
35.0%
45.0% 12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
6/1/2002
4/1/2003
2/1/2004
12/1/2004
10/1/2005
8/1/2006
6/1/2007
4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Exports to China, TTM, Y/Y
US Exports to China, TTM, Y/Y
(400,000)
(350,000)
(300,000)
(250,000)
(200,000)
(150,000)
(100,000)
(50,000)
0
US Trade Balance with China, TTM
U STr ad eB alan cew i t hC hin a, TTM

10. US exportsto Canadaand Mexicoare declining,likelybecause of the currencydevaluationsversusthe
USD:
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
12/1/1994
11/1/1995
10/1/1996
9/1/1997
8/1/1998
7/1/1999
6/1/2000
5/1/2001
4/1/2002
3/1/2003
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1/1/2005
12/1/2005
11/1/2006
10/1/2007
9/1/2008
8/1/2009
7/1/2010
6/1/2011
5/1/2012
4/1/2013
3/1/2014
2/1/2015
US Exports to Canada, TTM, Y/Y
US Exports to Canada, TTM, Y/Y
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
12/1/1994
11/1/1995
10/1/1996
9/1/1997
8/1/1998
7/1/1999
6/1/2000
5/1/2001
4/1/2002
3/1/2003
2/1/2004
1/1/2005
12/1/2005
11/1/2006
10/1/2007
9/1/2008
8/1/2009
7/1/2010
6/1/2011
5/1/2012
4/1/2013
3/1/2014
2/1/2015
US Exports to Mexico, TTM, Y/Y
US Exports to Mexico, TTM, Y/Y

11. Our final stopacrossthe globe isinEurope.US exportstothe Euro Areaare decelerating:
As theyare to the EuropeanUnion:
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
11/1/2006
3/1/2007
7/1/2007
11/1/2007
3/1/2008
7/1/2008
11/1/2008
3/1/2009
7/1/2009
11/1/2009
3/1/2010
7/1/2010
11/1/2010
3/1/2011
7/1/2011
11/1/2011
3/1/2012
7/1/2012
11/1/2012
3/1/2013
7/1/2013
11/1/2013
3/1/2014
7/1/2014
11/1/2014
3/1/2015
US Exports to Euro Area, TTM, Y/Y
US Exports to Euro Area, TTM, Y/Y

12. -20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0% 12/1/1994
10/1/1995
8/1/1996
6/1/1997
4/1/1998
2/1/1999
12/1/1999
10/1/2000
8/1/2001
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4/1/2003
2/1/2004
12/1/2004
10/1/2005
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4/1/2008
2/1/2009
12/1/2009
10/1/2010
8/1/2011
6/1/2012
4/1/2013
2/1/2014
12/1/2014
US Exports to EU, TTM, Y/Y
US Exports to EU, TTM, Y/Y