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Trade War Webinar Slides 03-28-2017
- 1. Trade War 28 March 2018 War Room
- 2. War Room Idea Generation Macro Coaching Scenario Updates HiddenLevers runs on SCENARIOS like Instagram runs on PHOTOS
- 3. The Skinny Tariffs + Trade 101 Current Expectations Scenario: Trade War Trade War UPDATED
- 5. Trade War – Why Ripe? sources: HiddenLevers China Eats World Return of Real Volatility First Economic Challenge Since Cold War
- 6. From Feb War Room: China/US Trade War sources: HiddenLevers, Vanguard, WSJ, Market Realist China Recession hits EM hard, but US not so much China Recession Impact by Region GDP Breakdown By Sector, 2014 China USAManufacturing = 36% of China GDP vs 12% in USA. Mfg trade war hurts US far less than China. Tech espionage is real China threat: Tencent, Alibaba, Baidu are real competitors to FAAMG
- 7. Trade War – Let’s take a Look See it on HiddenLevers
- 8. Big Weapons Not Yet Unleashed US/China Confrontation Inevitable Trade War – Take-aways Beware the Inverted Yield Curve Trade Deficits + GDP Growth Connected
- 9. HiddenLevers TARIFFS + TRADE 101
- 10. 101: Trade Deficits Not So Bad sources: HiddenLevers, Investopedia Direct Correlation Growing Economy = More Consumption = Bigger Trade Gap
- 11. 101: US Trade Flows sources: HiddenLevers, Federal Reserve, US Dept. of Commerce, US Treasury USD leaves USA via imports, and comes back via FDI + bond purchases *Intl finance havens, 3rd party funds US Balance of Payments: Trade Deficit vs Net Borrowing + Investment Foreign Lending + Investment Trade Deficit Flat since 2010 Country US Treasuries Held China $1,168B Japan $1,066B Ireland* $328B Brazil $266B Switzerland* $251B Country 2016 US FDI UK $598B Canada $454B Japan $424B Germany $373B Ireland* $280B*
- 12. 101: Smoot-Hawley vs Trade War Today sources: HiddenLevers, World Bank, Pew Research, Barron’s Smoot- Hawley Tariff Act Smoot-Hawley (1929-1934) Proposed US Tariff Rate 40% 59% 5% 30% Implied Rise in Prices 13.5% 25% US Trade as %/GDP 9% 6% 26% TBD Change in Global Trade -66% TBD USA = super low tariffs highest GDP
- 14. The Real Fight: China vs. US for Tech Hegemony sources: HiddenLevers, CNN, Reuters, Washington Post, Fortune, Fortune 2 Made in China 2025 aims to invest in high-tech industries. No more IP theft. Global Tech Leaders Company Revenue ($B) Apple $283 Amazon $177 Google $111 Microsoft $90 Huawei $78.5 JD.com $55.7 Facebook $40.7 Tencent $21.9 Alibaba $23 Baidu $10.2 R+D Spending
- 15. CURRENT: Rhetoric vs Reality Sources: HiddenLevers, CNN Money, NY Times 2018 TARIFF TALK SMALL MEASURES - Meh BIG MEASURES – Real Pain CURRENTLY PROPOSED NOT YET PROPOSED USA Duties on steel + aluminum Block M+A Block real estate purchases CHINA Duties on luxury foods Drop Boeing for Airbus Unload Treasuries Step 1 Trump makes outrageous executive order Step 2 Media distracts, alarms, sensationalizes, ignores data Step 3 Some of agenda ends up happening, with compromise Step 4 Trump gets embroiled in trivialities, killing momentum THE TRUMP MO
- 16. CURRENT: Winners + Losers sources: HiddenLevers, CNBC, Barron’s Winners Losers Spared from Tariffs Domestics No Impact Importers suffer Neutral
- 17. CURRENT: US Econ Fundamentals Vulnerable sources: HiddenLevers, Marketwatch US economy humming – like last stages of business cycle? Yield curve flattening as Fed hikes, and payroll expansion about to surpass 1990s S&P 500 bouncing along 200d SMA 200d SMA50d SMA Yield curve went flat in 2000 and 2007 Danger in 2018? 1990s vs Current expansion cycle
- 19. SCENARIO UPDATE: China in US Cross-Hairs Sources: HiddenLevers Ascension of the grasshopper? Return of the Legend? OR
- 20. BAD GOOD SCENARIO: Trade War S&P 500 -30% US GDP .75% S&P 500 +10% US GDP 2.8% Better trade relationship more US exports S&P 500 -7% US GDP 2.4% No eye for an eye from China US-China Truce Muted China Response UGLY Repeat 1930s Mistakes Opposite to 90 years trend of lower tariffs
- 21. China Eats World – Let’s take a Look See it on HiddenLevers
- 22. Big Weapons Not Yet Unleashed US/China Confrontation Inevitable Trade War – Take-aways Beware the Inverted Yield Curve Trade Deficits + GDP Growth Connected
Editor's Notes
- 10. AS: homebuilder stocks / etfs / mutual fund performance (US incomes rising, economy growing, Re construction) 14. AS: history – how long has SALT deduction been around? Mortgage deduction? 1985 attempt to repeal SALT deductions… mortgage interest deduction created mid 2000s bubble Property taxes diferentiated from SALT State property and mortgage interest What When introduced Attempts to repeal /limit