trade war effect on US economy
do you think the trade war will lead to a global recession? do you think countries will pick a side between US/China or just work collectively with both?
india’s economy is struggling significantly and had its worst auto sales in 20 years. Central bank is dropping rates from 20s to 10s. Oil prices are increasing due to the saudi arabian production hit by 5m barrels/day (50% of their production) and india is a net buyer of energy, which doesn’t look good for the nation. Having said that, Trump is having a rally in Houston with Modi called Howdy Modi GREAT NAME BY THE WAY which is where they will likely finalize a trade agreement between US-India
at the same time, Japan has had negative interest rates for many years and if i recall correctly over half of all Japanese market public equity shares are owned by the central bank of Japan. Aging population will be an issue. Major producer of steel and trades heavily with China. Used to be reliant on nuclear for energy but after fukushima they are now importing coal and wood derivatives for their energy needs. WeWork was a failure for the giant SoftBank fund (think they lost a couple billion on this alone). Japan-US is near a trade deal.
Argentina’s Kirchner party may win coming up which has spooked markets and led to its first debt default in years; IMF providing $50 billion loan to a country that really doesnt seem like they have enough industry to pay back the loan. Peso has dropped significantly this year. Private industry could once again become part of the government as it was a few years ago. Only market they’ve got a chance of building revenue is the soybean crushing / export market, which china has started buying finally to punish US tariff situation….plus oil in NW part of country
US has strong relations with Brazil via Bolsonaro - Brazil is building rail capacity in the years to come to accommodate farm exports: softwoods and grains. This is being led by the large sugar co. Brazil is by far the world’s largest producer of sugar, India comes next and India’s consumption is off the charts. Brazil has been exporting quite a bit of grain to China and it has gained significantly from the trade war between US-China. Iron ore mainly exported to China.
China - focused on geographical tariffs to hurt Trump supporting states. for example, southern yellow pine has a higher tariff rate than west coast wood types. Regardless, West coast is getting crushed from the drop in trade volumes. Struggling with Hong Kong control. China produces 50% of world steel: last year’s production was UP 10% y/y. Where is this steel going? 90% of Chinese steel is produced via blast furnace ie by IRON ORE. Rest of world barring a few focus on electric arc furnace using steel scrap as main input. Why does this matter? bc China is a huge piece of the iron ore demand from Brazil and Australia. 50% of world aluminum is produced in China. approx 7% of total chinese energy consumption is through aluminum production.
Canada - Saudis have quietly bought large volumes of grain elevators/terminals. Still have massive amounts of oil in Alberta but struggling to bring to market: not enough pipelines and not enough rail. Restrictions on production, max ceiling set earlier this year. Accused of subsidizing milk/cheese industry as well as forest products to USA. Trade agreement w Europe about to go into effect.
Europe - brexit coming up in october (finally…) GBPUSD dropped from 1.60 (probably even 1.80) down to 1.25. Germany has negative ‘growth’ rates due to crushed auto demand worldwide. Threat of tariffs. CETA coming online (trade agreement with Canada), and agreement with Mercosur coming up too.
guyana - exxon next big oil production
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