Trade War Webinar Slides 03-28-2017

Trade War Webinar Slides 03-28-2017

• 1.
  Trade War 28 March2018 War Room
• 2.
  War Room Idea Generation MacroCoaching 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
• 4.
  HiddenLevers THE SKINNY
• 5.
  Trade War –Why Ripe? sources: HiddenLevers China Eats World Return of Real Volatility First Economic Challenge Since Cold War
• 6.
  From Feb WarRoom: 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 NotYet Unleashed US/China Confrontation Inevitable Trade War – Take-aways Beware the Inverted Yield Curve Trade Deficits + GDP Growth Connected
• 9.
  HiddenLevers TARIFFS + TRADE101
• 10.
  101: Trade DeficitsNot So Bad sources: HiddenLevers, Investopedia Direct Correlation Growing Economy = More Consumption = Bigger Trade Gap
• 11.
  101: US TradeFlows 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* $280B*
• 12.
  101: Smoot-Hawley vsTrade War Today sources: HiddenLevers, World Bank, Pew Research, Barron’s Smoot- Hawley Tariff Act Smoot-Hawley (1929-1934) Proposed US Tariff Rate 40%  59% 5%  30% Implied Rise in Prices 13.5% 25% US Trade as %/GDP 9%  6% 26%  TBD Change in Global Trade -66% TBD USA = super low tariffs highest GDP
• 13.
  HiddenLevers CURRENT EXPECTATIONS
• 14.
  The Real Fight:China vs. US for Tech Hegemony sources: HiddenLevers, CNN, Reuters, Washington Post, Fortune, Fortune 2 Made in China 2025 aims to invest in high-tech industries. No more IP theft. Global Tech Leaders Company Revenue ($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 vsReality 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 EconFundamentals 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
• 18.
  HiddenLevers SCENARIO: TRADE WAR UPDATED
• 19.
  SCENARIO UPDATE: Chinain US Cross-Hairs Sources: HiddenLevers Ascension of the grasshopper? Return of the Legend? OR
• 20.
  BAD GOOD SCENARIO: Trade War S&P500 -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 NotYet Unleashed US/China Confrontation Inevitable Trade War – Take-aways Beware the Inverted Yield Curve Trade Deficits + GDP Growth Connected