Way to much Talk about the FED

The mystery of why we probably are headed into a recession is more about international trade than some other factors being mentioned.  Here is our take on some trade related issues.

Dominant US Presence

In general the US as the dominant economic nation since the early 1900 s has supported a protective trade posture, using bilateral agreements and selective tariffs while espousing free trade talk and support of the WTO and other International agreements. After the end of Bretton Woods in 1973 there was a radical move to acknowledge technology s impact and embrace globalism.

 Change in US Trade Posture

In 2017, with growing populist anger affecting politics, the US instead of leading a major international direction change in global trade agreements, a change to make trade more focused on global worker economic factors rather than corporations, the Trump administration retreated into a pre-970 tariff posture.

Effects of that Posture

Two effects of that posture have been realized, the first, and temporary, effect was the expansionary effect on US GDP as buyers bought a higher percentage of US products, the second, and more impactful long term effect was the deep disruption of global production and trade patterns. These disruptions are feeding back into US equity markets as close to half of US corporate revenues are generated offshore.

 

 

 

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