Trade Slowdown Flashes Reminder of 2008 and Have Treasury Yields Bottomed?

While stocks have edged higher off encouraging trade war news this week, as you’ll see in the charts below, Chinese investment in the US has plummeted over 80% since 2016, the Yuan has depreciated so significantly that the exchange rate can only exacerbate costs rather than offset them, and world trade as a whole is contracting at the fastest pace in nearly a decade—i.e. since the great recession. Are we in too deep at this point for olive branches and goodwill gestures to make any meaningful long-term impact? Australia, at least, is reaping the benefits of a U.S./China standoff as their surging exports to China have contributed to the nation reaching a record trade surplus. And there may be some more good news, as the 10-year UST yield has dropped below Financials’ dividend yield, which historically has dramatically increased the probability of the sector outperforming over the next 12 months. We’ll be keeping our eyes open to see if that trend continues.

1. When fear becomes reality…

Source: Financial Times, as of 9/11/19

2. We are not sure if this is a trade war weapon, casualty, or a little of both…

Source: WSJ Daily Shot, as of 9/10/19

3. A great depiction of how currency can be used in a trade war… will the Yuan continue to sink against the USD?

 Source: Nordea Markets, as of 9/10/19

4. Resource rich economies can buck the global trend…

Source: WSJ Daily Shot, as of 9/10/19

5. Good news for the Financial Sector?

Source: Fidelity Investments, as of 8/31/19

6. Is the over-extended bond market beginning to correct?

Source: WSJ Daily Shot, as of 9/11/19

7. Has the bottom been put in place for global bond yields? Germany’s 30 year yield just turned positive.

Source: WSJ Daily Shot, as of 9/10/19

8. Here is a bipartisan topic that Washington should pounce on!

Source: WSJ Daily Shot, as of 9/11/19

9. And screen time does not replace our need to interact socially.

Source: WSJ Daily Shot, as of 8/2/19