Let’s put together the meaning of softer US growth in Q4 2018 & abysmal trade/IP data in Asia in Q1 2019 & implications.

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via @Trinhnomics:

We know: a) Asian trade were gang-buster up until Nov 2018 b/c of 👍🏻US demand & front-loading; b) But Asian trade & IP started to lose steam rapidly in 2019

As the US is the largest economy in the world & also the largest customer for China (& key for other countries), what Asian exports, Americans import. Okay, let’s look at US imports in 2018 – amazing growth thanks to 📈demand + front-loading on expectations of higher tariffs 👇🏻

So US demand matters but we have a clue of US demand before US data is released from Asia. So wut does Asian data tell us about US demand in Jan+Feb ’19: a) China exports to the US -16% YoY; meaning US imports fell -16% from China; b) Chinese import of American goods -34%YoY 😬

Asian trade data tells us not just Asian demand but also US demand in Q1 2019, which means that: a) 2018 growth paid back in 2019 & it was superficially inflated by inventory build-up; b) US growth impacted by inventory draw down & Asian IP weakened by excess supply & 📉demand.

Here are some details of US real growth annualized QoQ: a) Grew 2.2% QoQ SAAR & 3.0% YoY (Q4 2019 vs Q4 2018); GDP peaked in Q2 2018; b) Consumption solid at 2.5% but slowing c) Private investment slowed to 3.7% vs 15.2% in Q3; d) Imports were massive in H218 so’ll slow in H119

 

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