President Trump will use his Asia trip to discuss America's swollen trade deficits with the region. Trade imbalances are caused by macro factors: America saves too little, Asia saves too much. This Chart, however, does indicate that America's penetration of some key Asian markets is far lower than their access to the US market. China [...]
Category: Chart of the Day
Wages and Inflation: A Mystery
Despite falling (and in some cases cyclically low) unemployment rates, wage gains are more modest now than a year ago. Central bankers are stumped by this mystery. Whatever happened to the Philips Curve, which showed a strong relationship between unemployment and wage/price inflation? At any rate, as long as wage gains remain modest, central bankers [...]
US Equities: Small Caps Will Outperform
US Small Cap stocks have underperformed since February as doubts about the Trump agenda have grown. However, smaller firms will benefit most from US tax reforms as there tax rates are higher than average. Also, small caps are more domestically oriented, and will benefit from the stronger US dollar I expect during the next six [...]
Mexico Peso: Still Cheap!
Despite the recent rally, in real terms the Mexican peso remains near the lows seen during the 1994 Tequila crisis!