14 things about U.S. trade and trade tariffs

1. The U.S. has the 13th lowest average tariffs in the world as per the World Trade Organisation

We wrote about average import tariffs or custom duties per country, the United States has the 13th lowest tariffs in the world (out of the 165 members of the World Trade Organization) at only 3.48%.

2. … but the U.S. only charged 1.65% in tariffs in 2017

The WTO number is averaged across all products; the actual tariffs could be different based on the product mix of imports as well as any special trade deals the country may be part of.

In the case of the U.S., the actual import tariff or custom duty was just $38.49 billion or 1.65% of the value of $2.34 trillion in imports in 2017.

3. The U.S. did have a Trade deficit with Canada in 2017

Canada was the largest export market with exports of $282.47 billion in 2017. Canada was also the third largest market for imports behind only China and Mexico with total imports of $299.98 billion and a trade deficit of $17.5 billion. The trade deficit itself with Canada was the 12th largest for the U.S. in 2017.

4. All constituent countries taken together, the European Union was the largest export market for the U.S. in 2017

The U.S. had exports worth $284 billion to the 28 European Union Countries in 2017, beating Canada with $282.5 billion of exports in 2017. Continue reading “14 things about U.S. trade and trade tariffs”

The U.S. and mainland Europe have moved in different directions over the past year on interest rates, equity returns, bond yields and government borrowing

Interest Rates

What a difference a year makes. The Federal Reserve has hiked interest rates thrice (in December, March and June) with a target rate range of 1.75% to 2% now. The Eurozone meanwhile maintains its zero-interest rate policy.

Continue reading “The U.S. and mainland Europe have moved in different directions over the past year on interest rates, equity returns, bond yields and government borrowing”

Those three U.S. recession indicators – how near or far are those from being invoked?

We wrote recently about three slightly different U.S. recession indicators that have been predictive of the past few recessions. How near or far are those from being invoked?

30-year and 10-year Treasury yield

The 10-year Treasury yield has been greater than the 30-year Treasury yield three to six months before each of the past four. Currently the difference is just 19 bps.

And the 30-year, 20-year and 10-year Treasury yields have almost converged three to six months before each of the past five recessions as well. The 20-year yield already 3 bps higher than the 30-year yield, they have been converging for the past two weeks.

Continue reading “Those three U.S. recession indicators – how near or far are those from being invoked?”

The machines are slowly learning but they can and will be fooled

We get over 400 distinct bots that scan our website each month, the large majority of them look at the sentiment of our posts to provide signals to trading systems (well at least they claim to do that). Is machine learning helping shape the future? Is Artificial Intelligence going to drive the financial world?

The answer to both those questions is yes and no. There are several examples where Artificial Intelligence is being used in the financial world,

1. Image processing is being using to scan and clear or cash cheques/checks in real time.
2. Car driving pattern boxes or telematic devices which track how a driver is driving are helping drive down (or up) car insurance premiums.
3. It is claimed that data from wearable devices is being used to provide better health insurance premiums. Continue reading “The machines are slowly learning but they can and will be fooled”

Does the global economy run on fake data?

The picture below shows the distribution of an evening newspaper at London Bridge Rail station in London on a typical weekday. Every evening, thousands of copies are dropped off at the station, the paper is free for anyone to pick up and take away. And most evenings a large proportion of untouched and obviously unread papers are collected later during the evening by a recycling company.

Newspaper distribution in London
Newspaper distribution in London, how many copies are really read?

Continue reading “Does the global economy run on fake data?”

This is what is likely to happen when the European Central Bank ends bond buying

The European Central Bank (ECB) announced on Wednesday that it will halve its bond buys to 15 billion Euros (from the current 30 billion Euros) a month from October then shut the programme at the end of the year.

Source: European Central Bank

ECB’s balance sheet has increased by 2 trillion Euros since 2015 when it announced its bond buying programme. 2-year yields for most of the Eurozone countries are currently negative and 10-year yields in most cases are lower than that of the United States. The European Central Bank (ECB) is by far the biggest holder of European bonds and the biggest (almost 90%) buyer of the weaker Eurozone (Italy, Spain, Portugal and Greece) countries debt since 2015. The ECB balance sheet is now over 4.5 trillion Euros, some 45% of Eurozone GDP.

Continue reading “This is what is likely to happen when the European Central Bank ends bond buying”

Three slightly different US recession indicators

Here are three slightly different US recession indicators that have been predictive of the past few recessions,

30-year and 10-year Treasury yield

The 10-year Treasury yield has been greater than the 30-year Treasury yield three to six months before each of the past four recessions. Graph below for the past decade, the shaded areas indicate recessions,

US 30 year and 10 year yield 2008 to 2018
Source: Board of Governors of the Federal Reserve System (US)

And the 30-year, 20-year and 10-year Treasury yields have almost converged three to six months before each of the past five recessions as well. Graph below, the shaded areas indicate recessions,

US 30 20 and 10 Treasury Yield
Source: Board of Governors of the Federal Reserve System (US)

Continue reading “Three slightly different US recession indicators”