Chaganomics.com

Goldman Sachs Research - Mexico - US Administration Proceeds With 25% Ad-Valorem Across the Board Tariff on All Imports from Mexico

2025-03-04T10:48:00.001-05:00

Bottom-Line: The Trump administration will proceed with a 25pp across the board tariff on all imports from Mexico (also on imports from Canada; with energy levied a lower 10% tariff) and a 10pp additional tariff on imports from China. The Feb 1 Executive Order directs the Secretary of Homeland Security to inform the President of any circumstances that indicate that the government of Mexico “has taken adequate steps to alleviate the illegal migration and illicit drug crisis through cooperative actions”, and upon the President’s determination of sufficient action to alleviate the crisis, the tariffs will be removed. In our assessment, the new tariffs on Mexico may not become a permanent feature of US trade policy, though how long they would last is uncertain.

The Mexican authorities expressed deep disappointment with the US tariff action and will announce on Sunday countervailing tariff and non-tariff measures. In the meantime, the Mexican authorities stated that they are open to dialogue with the US. We expect the authorities to continue to be pragmatic and cooperative in order to avoid a major escalation that disrupts the trade relationship with the US and narrows the window for a negotiation. The specifics of the Mexican countervailing measures are not yet known, but we expect the Mexican tariff retaliation to be measured (well short of tit-for-tat) and strategically focused on a narrow set of products that are also politically sensitive. We highlight that from a comparative-advantage standpoint, the fact the MXN has depreciated 21% since March 2025 and that the main Mexican competitors in the US market (China and Canada) were also subject to import tariffs reduces the loss of external competitiveness/profitability by Mexican exporters. Overall, we expect the Mexican authorities to remain engaged, and:

Increase cooperation on immigration and border control.

Commit more resources and step-up operations to disrupt the production of fentanyl and smuggling channels into the US;

Broaden the cooperation with US law enforcement agencies, to disrupt the smuggling of people and drugs into the US by Mexican cartels, and;

Tighten the screening of Chinese investment in Mexico, which based on recent reports and actions could include additional tariffs/barriers on Chinese imports, and to monitor and restrict the transshipment of Chinese goods to the US via Mexico. We note the Mexican authorities have recently announced a number of incentive measures (Mexico Plan) to attract FDI, reduce Chinese imports, and increase value-added in US-Mexico-Canada supply-chains.

Our analysis shows that trade policy uncertainty (TPU) in isolation can generate a ½-1% drag on Mexican GDP as uncertainty leads to more defensive investment and spending decisions.

Beyond TPU, in our model tariffs impact growth through the drag from real personal income and a reduction in exports to the US, which are only partially offset by currency depreciation and the domestic monetary policy response. Our model estimates show that in a scenario with partial retaliation the combined impact of the TPU drag and an across-the-board 25pp increase in US tariffs would lower Mexico's GDP by around 3.0%-3.5% and would lift prices by 80bp.

The $115 Trillion Global Economy in 2025: A Look Ahead

2024-12-31T15:08:00.001-05:00

The global economy is set to reach a staggering $115 trillion by 2025, according to recent projections by the IMF. This visualization reveals not only the scale but also the distribution of economic power across nations and regions. Here are some key takeaways:

Highlights:

1. U.S. and China Lead the Pack

The U.S. dominates as the world’s largest economy at $30.3 trillion.

China follows with $19.5 trillion, cementing its role as a global economic heavyweight.

2. Asia’s Growing Influence

With Japan ($4.4 trillion), India ($4.3 trillion), and South Korea ($1.9 trillion), Asia continues to rise as the world's economic hub.

3. Europe’s Steadfast Role

Germany ($4.9 trillion), the UK ($3.7 trillion), and France ($3.3 trillion) demonstrate Europe’s enduring economic significance.

4. Emerging Markets Expand

Nations like Brazil ($2.3 trillion) and Indonesia ($1.5 trillion) are driving growth in their regions.

5. Africa’s Gradual Rise

Economies like Nigeria and South Africa showcase steady growth, signaling potential for the continent’s future.

What Does This Mean?

As these projections unfold, the economic powerhouses of the world will continue to drive innovation, trade, and policy. At the same time, emerging markets are poised to play a larger role in shaping the global order.

Explore these trends and more insights into the global economy on Chaganomics.com. Stay informed, stay ahead.

New Substack by Chad

2024-02-02T14:27:00.005-05:00

Introducing ATLANTIC PLAYBOOK, a new substack by Chad focused on US + European econ and politics. Subscribe below. https://atlanticplaybook.substack.com/

Have We Seen The Worst In The Housing Market?

2024-01-23T22:19:00.001-05:00

Have We Seen The Worst In The Housing Market?

The Epoch Times

By Chadwick Hagan

Jan 23, 2024

As soon as the Fed started raising rates, I expected to see a housing market correction. Luckily, this never happened. I believe asset managers like BlackRock - who have been buying up the housing supply - have buoyed housing demand and stabilized prices. This has also caused average rental rates across America to skyrocket.

December 2023 was the worst for home sales since 1995, but according to a January 18th report from Fannie Mae, the situation is improving. The report from the Fannie Mae Economic and Strategic Research Group stated: "The housing market is expected to begin a gradual return to a more normal balance in 2024, following years of significant oscillations in mortgage rates and divergences of key housing market measures from their historical, pre-pandemic relationships.”

I’ve been curious about the mortgage market, so I spoke with a well-known Atlanta-based mortgage specialist - Mike Rishel - about the market. Here is what he said:

Chad: How is the mortgage market right now? With rates going from historic lows - the 15-year mortgage rate was at 2.19 percent, and the 30-year rate was at 2.73 percent in February of 2021 - to very high rates, the situation seems dire.

Mike Rishel: We are excited because rates have come down enough in the past two months to stir up the business. I have more pre-qualified buyers from applications taken in the past two months than in the previous six months.

Read the full article below

https://link.theepochtimes.com/mkt_app/business/have-we-seen-the-worst-in-the-housing-market-5572101?utm_source=andshare

NEW HAMPSHIRE 2024 POLL

2024-01-11T12:53:00.005-05:00

A new Emerson College Polling/WHDH New Hampshire survey finds former President Donald Trump leading the Republican Primary with 44% support, followed by Nikki Haley with 28%. Haley has gained ten points since November, while Trump has lost five. Chris Christie, who suspended his campaign on Wednesday evening, received 12% of voter support. Ron DeSantis holds 7%, and Vivek Ramaswamy holds 4%, while five percent remain undecided.

“Haley’s support has grown in New Hampshire from 4% in August to 28% with under two weeks until the primary,” Spencer Kimball, Executive Director of Emerson College Polling, said. “Haley’s base is among older voters, independent voters, and those with postgraduate degrees. Haley leads Trump 38% to 35% among those over 70, leads among voters with postgraduate degrees, 40% to 31%, and among independent voters, 37% to 31%.”

Trump’s support is highest among young Republicans:

54% of voters under 30 support Trump, while 20% support Haley, 8% Christie, 6% DeSantis, and 6% Ramaswamy.

Trump leads Haley among male Republican Primary voters by eleven points, 42% to 31%, and by 20 points among women Republican Primary voters, 46% to 26%.

Among the 12% of Chris Christie’s supporters, 52% name Nikki Haley as their second choice, 12% Hutchinson 10%, DeSantis and 2% Trump; 16% are undecided.

In the Democratic Primary, 49% of voters plan to write-in President Biden, as he will not appear on the ballot. Sixteen percent plan to vote for Dean Phillips, 5% Marianne Williamson, and 3% plan to vote for someone else. Twenty-seven percent are undecided.

“Voters who plan to write-in Joe Biden increase with age: from 16% of voters under 30, to 35% of voters in their 30s, 43% of voters in their 40s, 57% of voters in their 50s, 74% of voters in their 60s, and 77% of voters over 70s,” Kimball noted. “Forty-one percent of voters under 30 are undecided, while 32% support Dean Phillips.”

Twenty-nine percent of New Hampshire presidential primary voters say the economy is the top issue facing the state, while 21% find housing affordability to be the most important issue, 15% find ‘threats to democracy’ to be the top issue, 10% immigration, 7% healthcare, 6% education, and 6% find abortion access to be the top issue.

JP Morgan 2024 Predictions

2024-01-07T20:36:00.002-05:00

Resignation of President Biden for health reasons

President Biden withdraws sometime between Super Tuesday and the November election, citing health reasons. Biden passes the torch to a replacement candidate named by the Democratic National Committee. Biden has a low approval rating for a President with ~10% job creation since his inauguration, although that figure is the by-product of his inauguration coinciding with the rollout of COVID vaccines and a reopening US economy.

1. The US dollar remains stable

2. The DoJ/FTC win a big antitrust case

3. President Biden withdraws from the November election

4. The driverless car backlash is coming

5. Broadly syndicated loan losses rise above private credit losses for the first time

6. Argentine dollarization will fail if implemented

7. Russian invasion of Ukraine drags on with no ceasefire in 2024

8. Despite storm clouds over US regional banks, their stock will do well

9. Due to retirement of dispatchable power, major cities will face electricity outages and/or natural gas outages

10. Researchers will complete work on an inhaled Covid vaccine

Full report from JP Morgan

2024 Election Forecast Map

2024-01-04T12:13:00.006-05:00

Chief Justice Roberts Year End Report - SCOTUS

2023-12-31T22:02:00.002-05:00

Chief Justice Roberts Issues 2023 Year-End Report

Sometimes, the arrival of new technology can dramatically change work and life for the better. Just one century ago, for example, fewer than half of American homes had electricity. During the New Deal, the federal government set out to “bring the light” to homes across rural America. Representatives recruited farmers to join electricity co-operatives for $5 each.

Then came teams of men to clear the brush, sink the poles, and wire homes to the still inert grid. As Robert Caro relates in The Path to Power, in some places the project took so long that many forgot about it, or were certain they had been duped.

Read the rest here

The Truth About Income Inequality In America

2023-12-23T21:08:00.002-05:00

Published at The Epoch Times

December 22, 2023

Income and wealth inequality are contentious issues in the United States. The mainstream media often declares that millionaires, billionaires, and capitalists take more than their fair share of income and wealth, but this is highly inaccurate.

While income inequality is a reality in every country, wealth distribution in America is relatively equitable compared to other nations.

Pre-pandemic numbers showed that 100 million Americans were in the top 10 percent, and over 19 million Americans were in the top 1 percent globally.

According to 2021 figures, the top 1% in the U.S. holds 35.1% of wealth, in contrast to Germany (31.7%), China (30.5%), and Canada (25.1%). More extreme disparities exist in Russia (58.6%), Brazil (49.3%), and India (40.6%).

Concerned leftists obsessing over inequality should tackle rampant inflation and stop supporting the destruction of our local economies and regional small businesses. If they really care about average Americans, robust tax incentives for working married couples with children could be a valuable step.

Furthermore, why don’t they work on a robust home-buying and affordable mortgage program for working families with children instead of allowing crony corporations to purchase all the single-family homes and shock the system by gobbling up the housing supply and jacking up rental prices?

Inequality exists even in socialist and communist countries, making it impossible to eliminate all forms of inequality worldwide. According to Edward Paul Lazear of the Hoover Institute, China’s shift from a communist system to a market-oriented economy between 1985 and 2010 led to an annual income growth of 9.6 percent.

The fact stated above is one of the best examples of the magic of a market-based economy over the false promise of socialism. China’s transition from a communist economy to a hybrid (state-supported) market-based economy proves that what Adam Smith, Hayek, and dozens of other free market economists have been saying for hundreds of years is irrefutable. The free market works.

https://link.theepochtimes.com/mkt_app/business/the-truth-about-income-inequality-in-america-5551920?utm_source=andshare

The Long View: Wars, Inflation, Recession, and Domestic Sleeper Cells

2023-10-24T14:51:00.004-04:00

War often leads to inflation, and while inflation is not directly responsible for recession, price increases and decreased economic activity often lead to a recession.

When I wrote about the resilience of the U.S. dollar weeks back, I had no idea we would step into another conflict. Granted, the Israel conflict is a conflict I support and understand, but it does not take much to figure out that bombing a territory while simultaneously sending billions in aid to the territory being bombed—Gaza—makes for an interesting narrative.

The United States has spent more than $75 billion on the Russia–Ukraine war, and that amount does not count the money given to allies to support the effort.

Between Jan. 24, 2022, and July 31, 2023, the United States has sent $26.4 billion in financial support, while $46.6 billion has gone to military expenses.

Now, President Joe Biden has asked Congress for $105 billion for Ukraine, Israel, and the border.

For a $180 billion, where does this leave us?

Read the complete article at The Epoch Times

The Global Crypto Heist Report – A Decade of Billion-Dollar Crypto Hacks (2011-2023)

2023-10-20T17:14:00.001-04:00

Since the arrival of cryptocurrencies, it caught worldwide eyeballs from being proposed as an alternative currency and digital money to becoming one of the lucrative investment choices.

Apart from regular users, it also caught the eyeballs of hackers and cyber attackers. As a result, several crypto exchanges, crypto companies, blockchain networks, and others face crypto hack attacks from time to time.

So, how many crypto hacks usually occur in a year? How much amount has been lost to crypto hacks? What are the popular types of hacks?

Let’s find out all these in this mega crypto hacks report:

Key Insights and Stats

In 2023 alone, $1.89 billion was lost in 297 crypto hack attacks. That is $289K lost every hour due to crypto hacks this year.

In 2022, crypto hacks reached an all-time high of $3.5 Billion stolen in 284 heist incidents.

Since 2011 to till date, Crypto companies and exchanges have lost a total amount of $12.36 billion in 1207 incidents.

Since 2011, about 192 crypto exchanges have been hacked and lost $3.80 billion in total.

2018 was the worst for crypto exchanges as they collectively lost $1.1 Billion to hacking and theft incidents.

There is also a significant rise in DeFi or decentralized finance hacks – the number stands at 93 and 76 for 2022 & 2023, respectively, leading to a collective loss of $1.12 billion.

Talking about lost Bitcoin and Ethereum, since 2011, there has been a total loss of 1,454,762 BTC and 1,175,082 ETH to different hacks. If you look at these numbers from today’s BTC & ETH price points, the numbers will stand at $40.27 billion and $1.93 billion, respectively.

Contract vulnerability and flash loan attacks are two common hacks, leading to a cumulative loss of $2.75 billion since 2011.

Link to full report

The Growing Importance of Ukraine as a Transit Country for Heroin Trafficking

2023-09-25T23:14:00.002-04:00

The division among producer, transit, and consumer states of illicit drugs has clearly broken down since the late 1980’s. The 1990’s produced a globalization of illicit drug markets, with at least 134 countries and territories facing drug abuse problems in the 1990’s. Seventy-five percent of all countries

report the abuse of heroin and two-thirds the abuse of cocaine.

Whereas previously Western Europe and

the U.S. were the primary consumers of heroin, there has been a dramatic increase in heroin addicts in countries that previously had no problem, e.g., Pakistan and Iran. At the global level, heroin and cocaine are the most significant drugs in terms of treatment demands, drug mortality, and drug related violence, including organized crime.

Opiates are the primary problem drugs in Western and Eastern Europe. On average, opiates account for three quarters of all treatment demand, and are also responsible for the large majority of drug-related mortality and morbidity cases.

In the years since its independence, Ukraine has become a significant conduit for Southwest Asian (Afghanistan and Pakistan) heroin bound for European markets.

The volume of Southwest Asian heroin available for world markets has increased sharply in recent years and growing amounts are smuggled through Ukraine. Porous borders, understaffed and under funded counter-narcotics entities and the rise of organized crime syndicates have enabled traffickers to utilize Ukraine as a viable transit point.

Further, Ukraine has become an opiate producer in its own right, cultivating approximately 300 new hectares of illicit poppy in 2000 (Khruppa).

Full report by Abt Associates

Despite Domestic Turmoil, the Dollar Still Dominates

2023-09-23T14:09:00.004-04:00

The death of the U.S. dollar has been greatly exaggerated.

The death of the U.S. dollar has been greatly exaggerated, especially as of late. While COVID-19 and recording breaking spending from Washington D.C. has only empowered countless rumors of the U.S. dollar's impending doom, it is clear the U.S. dollar is still very much the world's de facto reserve currency.

In July, data from SWIFT, the global transfer network, reported “transactions involving the dollar at 46%,” an all-time high. By comparison, just over 3 percent were settled in China’s Yuan.

America’s economy is incredibly diversified. Internationally we have petrodollars, which are dollars paid to oil exporters for oil imports. This is unlikely to change and enhances the U.S. dollar's liquidity, not to mention, solidifies the narrative of the U.S. dollar as the unchallenged global reserve currency.

Naysayers can attack all they want, but the OPEC member countries of Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates, Venezuela need petrodollars. The United States is the largest consumer of oil in the world, and these OPEC countries count on oil exports to the United States as their main source of revenue.

You hear lots of rumbling about changes in Saudi Arabia, but with nearly 15 percent of the world's oil reserves, and more than 85 percent of revenues from oil sales, at the present moment, Saudi Arabia can only dream of independence from the United States, and the U.S. dollar.

Read the entire article by Chad here.

India's Extraterrestrial Assassination In Canada

2023-09-21T22:50:00.002-04:00

Canada has evidence linking Indian diplomats to killing of Sikh activist

According to the Guardian: "Canada has evidence linking Indian diplomats to killing of a Sikh activist."

Arindam Bagchi, a spokesperson for India’s foreign ministry, denied the allegation but stated: "elements linked to organised crime, linked to terrorists, secessionists or extremists who are operating freely, are being politically condoned, they seem to have a free run”.

This is quite interesting. India comes in with a Russian-like heavy hand, and kills in another country. While all countries are involved in covert state affairs, the most recent countries to act like this have been Russia and Saudi Arabia. Both of those countries are known to be heavy handed (to put it lightly).

The statement from Bagchi is also revealing. On one hand he denys any involvement, and then follows with a critique of Canada's liberal laws. As a Westerner, I find myself at a crossroads toleraring terrorists, and allowing counterinsurgency operations to take place in the very country they intend to target. Still, assassinations are fascinating to read about, but bonkers to think about as a reality.

- CH

Full report at the Guardian

Above image from AP Photos. "Secret Service agent brandishes a submachine gun while agents and police subdue John Hinckley behind him after he shot President Ronald Reagan and others in Washington on March 30, 1981."

Syria's Assad: International Narco King

2023-08-18T07:54:00.001-04:00

‘Countering Assad’s Proliferation Trafficking And Garnering Of Narcotics Act’’ or the ‘‘CAPTAGON Act’’.

The act is an "INTERAGENCY STRATEGY TO DISRUPT AND DIS-MANTLE NARCOTICS PRODUCTION AND TRAFFICKING AND AFFILIATED NETWORKS LINKED TO THE REGIME OF BASHAR AL-ASSAD IN SYRIA."

This is new to me. I had no idea Assad was a drug kingpin. But the threat is very real. Congress is notoriously slow, so the fact that Congress put forth a bill targeting Assad's international drug manufacturing and trafficking network, speaks volumes.

It seems Syria has turned into a narco-state since the destruction from the civil war. Assad is building up his fortune with drug money, creating a problem and offering to help solve the very same problem, but for a price.

"Captagon, a drug that is relatively unknown outside the Middle East, helped Syria turn into a narco-state after much of the international community cut off its economy due to its brutal crackdown on an uprising in 2011. It is a synthetic amphetamine-type stimulant, fenethylline, which goes by the trade name captagon, and has become the center of an increasing number of drug busts across the Middle East. Experts say the vast majority of global captagon production occurs in Syria, with the Gulf region being its primary destination."

Here's a link to the full story at MSN.

Poland's Economic Outlook

2023-08-02T12:56:00.001-04:00

POLAND'S ECONOMIC OUTLOOK IMPROVES
GDP rebounded quarter on quarter in Q1, but the economy likely swung back to contraction in Q2. Industrial production shrank month on month in April−June, while the PMI was stuck in contractionary terrain throughout the quarter and business confidence remained downbeat. Moreover, the external environment was unsupportive and interest rates remained elevated in the quarter. On the flip side, both inflation and the unemployment rate fell throughout Q2. Meanwhile, in mid-July the government announced that its embargo on Ukrainian grain would be extended until at least end-2023 to help support domestic agricultural prices.

Also in July, the cabinet approved a plan to build the country’s first nuclear plant—which should start producing energy in 2033—in order to diversify the energy mix. Meanwhile, the country is massing troops on its border with Belarus following maneuvers by Wagner mercenaries.

GDP will expand at a slower pace this year. Sticky inflation, high interest rates and a subdued Euro area economy will restrain activity. That said, lower energy prices compared to 2022 should lend some support to activity. Further spillovers from the ongoing Russia-Ukraine war pose a downside risk. An agreement on the disbursement of EU funds poses an upside risk. FocusEconomics panelists see GDP expanding 1.1% in 2023, which is up by 0.1 percentage points from one month ago, and expanding 2.8% in 2024.

Inflation fell to 11.5% in June (May: 13.0%). The reading was the lowest since March 2022 but remained well above the Central Bank’s 1.5–3.5% target band. Inflation should continue to fall during the remainder of the year but will remain above target due to pass-through effects and a higher minimum wage. Volatile commodity prices are a factor to watch. FocusEconomics panelists see consumer prices rising 12.0% on average in 2023, which is down by 0.4 percentage points from one month ago, and rising 6.0% on average in 2024. • At its 5–6 July meeting, the National Bank of Poland (NBP) kept its policy rate unchanged at 6.75%, as had been anticipated by markets. The NBP stood pat one again in July due to moderating inflation and softening economic growth, as it expects previous rate hikes to support disinflation. Our panelists expect rates to remain high this year amid sticky inflation. FocusEconomics panelists see the NBP reference rate ending 2023 at 6.43% and ending 2024 at 5.08%.

The zloty traded at PLN 4.41 per EUR on 28 July, appreciating 1.8% month on month. The PLN should lose ground by end-2023 as the Central Bank starts easing its monetary policy stance thanks to a moderation in inflation. The interest rate differential with the Euro area, the evolution of investors’ risk appetite and geopolitical tensions are factors to watch. FocusEconomics panelists see the zloty ending 2023 at PLN 4.59 per EUR and ending 2024 at PLN 4.60 per EUR.

REAL SECTOR
Decline in industrial output softens in June Industrial output declined 1.4% compared to the same month of the previous year in June, which was above May’s 2.8% decrease. Looking at the details of the release, mining and quarrying output plummeted in June, while manufacturing output declined at a milder pace. Meanwhile, electricity, gas and utilities production also dropped at a milder pace. On a seasonally adjusted monthly basis, industrial output rebounded, rising 0.7% in June (May: -1.0% mom). Meanwhile, the trend pointed down, with the annual average variation of industrial production coming in at minus 9.6% in June, down from May’s minus 9.3%. FocusEconomics panelists see industrial production expanding 0.1% in 2023, which is down by 0.6 percentage points from one month ago, and expanding 4.1% in 2024.

Retail sales growth rises in June Retail sales grew 2.1% year on year in June (May: +1.8% yoy). Looking at the details of the release, June’s pickup was broad-based, with the motor vehicles, motorcycles and parts, textiles, clothing and footwear and furniture, radio, tv and household appliances sub-sectors all improving. Meanwhile, annual average retail sales growth fell to 12.7% in June (May: +14.2%), signaling a worsening trend in the retail trade sector. FocusEconomics panelists see retail sales expanding 5.7% in 2023, which is down by 0.5 percentage points from one month ago, and expanding 5.9% in 2024.

Manufacturing PMI falls in June The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 45.1 in June, down from 47.0 in May. Consequently, the index moved further below the 50-threshold, signaling a sharper deterioration in business conditions in the manufacturing sector from the prior month. Faster contractions in output, employment, new orders and purchasing activity were behind the deterioration in the headline reading. On the price front, input prices continued to decline, partially thanks to a further easing of supply chain pressures, leading output prices to fall at the sharpest pace on record. Lastly, output expectations for the year ahead remained subdued. FocusEconomics panelists see fixed investment expanding 3.7% in 2023, which is up by 0.3 percentage points from one month ago, and expanding 2.6% in 2024.

OUTLOOK
Business sentiment falls in July Business confidence fell to minus 14.0 in July from June’s minus 11.4. Therefore, the index moved further below the 0-threshold, indicating growing pessimism among businesses. Businesses’ assessments turned more negative over order books, the current general economic situation, the financial situation and employment. Moreover, firms were increasingly downbeat regarding expectations of future output, financial situation and the general economic situation.

MONETARY SECTOR
Inflation falls in June Inflation came in at 11.5% in June, down from May’s 13.0%. June’s reading represented the lowest inflation rate since March 2022. The slowdown was primarily driven by slower rises in prices for food and non-alcoholic beverages and utilities as well as by falling prices for fuels. Annual average inflation declined to 15.9% in June from 16.3% in May. Meanwhile, core inflation fell to 11.5% in May (the latest month for which data is available), from the previous month’s 12.2%. Lastly, consumer prices were unchanged from the previous month in June, matching May’s reading. Commenting on the release, Rafal Benecki, senior economist at ING, stated: “At this rate of decline, we will see CPI at 9.8% year-on-year in August, so we think the National Bank of Poland (NBP) can cut rates in September. By year- end, CPI inflation may slow closer to 7% yoy. [...] Hence another interest rate cut in October is also very likely.” FocusEconomics panelists see consumer prices rising 12.0% on average in 2023, which is down by 0.4 percentage points from one month ago, and rising 6.0% on average in 2024.

Central Bank maintains pause in July At its 5–6 July meeting, the National Bank of Poland (NBP) left the key reference rate unchanged at 6.75% once again, following June’s hold. The NBP also kept the Lombard rate at 7.25%, the discount rate at 6.85%, the rediscount rate at 6.80% and the deposit rate at 6.25%. July’s decision fell in line with market expectations.

The NBP stood pat again in July due to moderating inflation and softening economic growth. On the price front, lower commodity prices, easing supply chain disruptions, weaker domestic activity and previous interest rate increases continued to support a disinflationary trend: Inflation fell to 11.5% in June (May: 13.0%). This prompted the Bank to revise its previous inflation forecast range for 2023 to 11.1–12.7%—previously estimated at 10.2–13.5% in March. Meanwhile, the NBP stressed that economic conditions have deteriorated globally and domestically, with annual output in retail sales, manufacturing and construction declining in May.

In turn, the Bank lowered its 2023 GDP growth forecast range to -0.2–1.3%, from -0.1–1.8% in March, further supporting the rate hold. In its communiqué, the NBP reiterated its commitment to take upcoming decisions on the basis of incoming data on inflation and economic activity, while remaining ready to “take all necessary actions in order to ensure macroeconomic and financial stability,” including through foreign exchange market interventions. Going forward, the majority of our panel anticipates interest rates ending the year at current levels. That said, Central Bank Governor Glapiński signaled in the NBP’s press conference that rate cuts could begin in September if inflation were to fall within single digits by then.

From the August edition of FocusEconomics Consensus Forecast - Central & Eastern Europe

French Riots - Letter From The French Police Unions Translated

2023-07-01T20:57:00.004-04:00

Original attached. Translated.

Facing these savage hordes, asking for calm is no longer enough, it must be imposed!

Restoring the republican order and putting the apprehended beyond the capacity to harm should be the only political signals to give.

In the face of such exactions, the police family must stand together.

Our colleagues, like the majority of citizens, can no longer bear the tyranny of these violent minorities.

The time is not for union action, but for combat against these "pests". Surrendering, capitulating, and pleasing them by laying down arms are not the solutions in light of the gravity of the situation.

All means must be put in place to restore the rule of law as quickly as possible.

Once restored, we already know that we will relive this mess that we have been enduring for decades.

For these reasons, Alliance Police Nationale and UNSA Police will take their responsibilities and warn the government from now on that at the end, we will be in action and without concrete measures for the legal protection of the Police, an appropriate penal response, significant means provided, the police will judge the extent of the consideration given.

Today the police are in combat because we are at war. Tomorrow we will be in resistance and the government will have to become aware of it."

Chart - United States Population Shift

2023-07-01T14:58:00.005-04:00

Germany June 2023 - FocusEconomics Consensus Forecast

2023-06-27T17:05:00.000-04:00

Germany June 2023 - FocusEconomics Consensus Forecast

OUTLOOK IS MODERATE
The economy fell into a technical recession in Q1, driven by a sustained fall in private spending. Consumers spent less on food and drinks, clothing and footwear and cars, likely as a result of high inflation. Turning to Q2, our panelists see the economy rebounding weakly. Inflation has retreated in the quarter thus far, helping to boost consumer sentiment. Retail sales rebounded in April, while services activity rose at the fastest rate since April 2022 in May. In addition, the external sector appears to be performing well, with merchandise exports up in April. That said, various data suggests ongoing weakness in the economy: Industrial output grew less in April than in Q1, and business conditions in the manufacturing sector fell to a two-year low in May, according to PMI data.

Since GDP figures were revised downward in late May, our panelists have downgraded their forecasts for GDP growth in 2023 by 0.3 percentage points on average. The Consensus is for GDP to fall slightly this year. Private spending will be knocked by high inflation and exports by a weak global economy. Key factors to watch include energy prices and world GDP growth. FocusEconomics panelists see GDP contracting 0.2% in 2023, which is down by 0.2 percentage points from one month ago, and expanding 1.1% in 2024.

Harmonized inflation fell to 6.3% in May from 7.6% in April as energy prices rose less. Inflation this year is set to linger above the 10-year average of 2.1% but ease compared to last year as the base effect toughens and domestic demand declines. Key factors to watch include natural gas prices and the government’s power price cap scheme. FocusEconomics panelists see harmonized consumer prices rising 6.2% on average in 2023, which is down by 0.1 percentage points from one month ago, and rising 2.9% on average in 2024.

REAL SECTOR

Industrial output rises in April Industrial production rose 0.3% on a calendar- and seasonally adjusted month-on-month basis in April (March: -2.1% c.s.a. mom). The rebound came on the back of an improvement in industrial output and mining and quarrying production. Lastly, construction sector production gained steam, while energy output dipped at a steeper pace than in the previous month. On an annual basis, industrial production increased 1.6% in April, which was below March’s 2.3% expansion. Meanwhile, the trend improved, with the annual average variation of industrial production coming in at a one-year high of 0.2% in April, contrasting March’s minus 0.2%. FocusEconomics panelists see industrial production expanding 0.3% in 2023, which is up by 0.3 percentage points from one month ago, and expanding 1.0% in 2024.

REAL SECTOR

Composite PMI deteriorates in June The HBOB Flash Composite Purchasing Managers’ Index (PMI) fell to 50.8 in June from May’s 53.9. As a result, the index remained above the 50.0 no- change mark, pointing to a continued, albeit moderating, improvement in private sector operating conditions from the previous month. The Manufacturing PMI stood at 41.0 in June, down from May’s 43.2 and a more than three-year low. Lastly, the Services PMI fell to 54.1 in June (May: 57.2), a three-month low. The print suggests that business activity is losing steam as demand weakens. In the manufacturing sector, output and new orders fell at the quickest rate in eight months, and employment rose only marginally. In the services sector, output and new orders expanded at slower paces, while employment grew at a slightly faster rate. In both sectors, respondents to the PMI survey pointed to elevated inflation and higher interest rates as the main brakes on activity. Looking at prices, in the manufacturing sector, input and output prices fell, while in the services sector, input and output prices continued to rise at a sharp pace. Finally, sentiment fell in both sectors.

United States and United Kingdom - July 2023 - FocusEconomics Consensus Forecast

2023-06-27T16:14:00.003-04:00

The July 2023 edition of the FocusEconomics Consensus Forecast

United States - Outlook improves

After growing 1.3% in quarter-on-quarter annualized terms in Q1, the economy likely saw a similarly resilient outturn in Q2, notwithstanding banking sector stress and tighter monetary policy from the Fed. Payroll gains beat market expectations in April–May, which, together with ebbing inflation, has likely aided private spending—as suggested by rising retail sales in the first two months of the quarter. Moreover, the composite PMI averaged well above its Q1 level in Q2, pointing to an upturn in business activity. In other news, at the start of June, the Senate approved a bill to raise the debt ceiling, averting default. Finally, in mid-June, U.S. Secretary of State Blinken visited China in a bid to strengthen ties; however, diplomatic tensions and trade frictions between the two superpowers will persist given their opposing economic and political models.

The economy will lose steam this year on a sharper fall in investment and softer growth in exports and private spending. That said, GDP forecasts have been upgraded by 0.9 percentage points since the turn of the year. The key downside risks are faster-than-expected Fed tightening, more bank collapses and a total breakdown in relations with China. FocusEconomics panelists see GDP expanding 1.2% in 2023, which is up by 0.1 percentage points from one month ago, and expanding 0.7% in 2024. Inflation eased to 4.0% in May from April’s 4.9%, the weakest rate since March 2021. The drop was primarily driven by slower rises in prices for housing and food, and a fall in transport prices. However, inflation was still double the Fed’s 2.0% target. Inflation should continue to decline later this year but will stay above the Fed’s target throughout 2023.

FocusEconomics panelists see consumer prices rising 4.1% on average in 2023, which is down by 0.1 percentage points from one month ago, and rising 2.6% on average in 2024. At its 13–14 June meeting, the Fed left the federal funds target range at 5.00–5.25%, but suggested it could hike rates further at upcoming meetings. Our panelists are split, with some seeing rates unchanged and other expecting 25–50 basis points of extra tightening. The Consensus is for the fed funds target range to be slightly above its current level at end- 2023. FocusEconomics panelists see the upper bound of the fed funds target range ending 2023 at 5.30% and ending 2024 at 3.95%. The U.S. dollar index traded at 103 on 23 June, depreciating 0.6% month on month. The debt ceiling agreement removed a key source of economic uncertainty and boosted risk appetite, likely weighing on safe-haven demand. Looking ahead, global interest rates, safe-haven demand and U.S. financial stability will be key drivers of the USD.

United Kingdom - Outlook improves

The economy registered a mild quarter-on-quarter expansion in Q1, thanks to growth in fixed investment and private spending. In contrast, public spending, exports and imports all contracted. Turning to Q2, the economy has likely had a muted outturn. Activity will have been weighed on by sticky inflation, tightening monetary policy, strike action, weak external goods demand, competitive losses stemming from Brexit and the extra bank holiday in May for the King’s coronation. That said, a robust labor market and improving consumer sentiment have likely supported household spending, with retail sales beating market expectations in April–May. In June, the government announced tariff cuts on imports from developing economies. That said, the expected reduction in import costs of GBP 770 million per year is only worth slightly over 0.1% of total goods imports.

GDP is set to rise this year, following a series of forecast upgrades in recent months. A robust labor market and government fiscal support will aid activity. That said, the UK economy will still underperform G7 peers, weighed on by Brexit, sticky inflation and worker strikes. Prolonged strikes and higher-than-expected interest rates pose downside risks. FocusEconomics panelists see GDP expanding 0.2% in 2023, which is up by 0.2 percentage points from one month ago, and expanding 0.9% in 2024.

Inflation beat market expectations to remain at 8.7% in May, above the rates of G7 peers. The tight labor market and rapid wage growth have kept price pressures elevated in recent months. Looking ahead, inflation should gradually trend down on tighter monetary policy but is still forecast to average over double the Bank of England’s 2.0% target in Q4 2023. FocusEconomics panelists see consumer prices rising 7.0% on average in 2023, which is up by 0.1 percentage points from one month ago, and rising 2.8% on average in 2024. • On 22 June, the Bank of England (BoE) increased the bank rate from 4.50% to 5.00%, in response to higher-than-expected recent inflation and wage growth. This took total tightening in the current cycle to 490 basis points. Looking forward, further hikes are forecast this year as the BoE tries to root out stubborn price pressures, with risks likely skewed to the upside. FocusEconomics panelists see the bank rate ending 2023 at 5.50% and ending 2024 at 4.58%.

The pound sterling traded at USD 1.27 per GBP on 23 June, appreciating 2.4% month on month. Expectations of tighter monetary policy boosted the pound over the last month. The GBP is seen ending this year slightly weaker than its current level. Safe-haven demand for the U.S. dollar and the relative paces of rate hikes between the BoE and the Fed are key risk factors. FocusEconomics panelists see the pound sterling ending 2023 at USD 1.25 per GBP and ending 2024 at USD 1.30 per GBP.

Years Ago My Investment Company Was Approached By A Small Submarine Company

2023-06-22T15:13:00.017-04:00

- Deepsea Challenger piloted by

James Cameron in 2012 -

Years ago I was approached by a small submarine startup for investment. I was pitched by one of the co-founders. I knew him through mutual contacts.

At the time I was the chief investment officer for our group (we don't use titles like that anymore). I would get a lot of requests for investment meetings.

Regardless, I heard the entry points, the potential market share, and the promise of profits. I didn’t see it. I did not have any interest. We wrapped up the meeting, and I went on with my day.

Did I see a market for this? I did not.

Was there a "cool" factor with this investment? Not for me. Many others thought it was the ultimate. Still, I didn’t see how you could escape the business liability for a personal submarine. It reminded me of investments like small airplanes, jet packs, and "toys" like that. There’s a reason we have strict regulation for machines and vehicles like that. Personal submarines seemed like a disaster waiting to happen, for a number of reasons.

In the past, I spent a lot of time climbing mountains. The mountain tops of the earth often attract the same type of people who aspire to go to the deepest depths of the ocean.

Despite the fact that mountains are different than the deep sea, you can easily attribute what is called "summit fever" to deep sea exploring, and "exploring the wreckage of the Titanic in a small submarine."

In the world of mountaineering, summit fever is the compulsion to reach the summit of the mountain no matter the cost.

Summit fever is dangerous, it clouds your judgment and many times leads to catastrophic outcomes.

I believe that this is what happened with OceanGate.

Regardless, I’d like to say something about certain types of exploration. I believe we must limit “commercial” submarine diving operations in the deep sea and at the Titanic site. I think we should do the same with our most popular mountain tops. I don’t believe commercial expedition keeps the best interest of the planet in mind. Take a look at the litter on Mount Everest when you get a chance.

Also, I find that ocean conservation, and ocean oriented scientific field research is infinitely more important for humans, and the earth, than commercial deep sea travel. Granted, this is just my opinion.

I feel very sad for the families who lost loved ones, and I have tremendous respect for the rescue crews that clambered together, to solve this puzzle. God bless.

-CH

National Geographic article on Everest waste

https://education.nationalgeographic.org/resource/trash-and-overcrowding-top-world/

High Interest Rates, High Inflation, and Record Debt

2023-06-17T11:38:00.006-04:00

Financially, it’s going to be an interesting summer. At the moment, mortgage rates are hitting 7 percent, median rent prices are at $1,850 per month, and the average car payment is about $950 per month. Household debt is currently at $17.1 trillion, mortgages are at $12 trillion, and auto loans are at $1.6 trillion. Soon, student loan payments are set to resume. All of this will create quite a ripple effect.

While it’s true that unemployment is lower than it was 20 years ago, maybe the era of cheap money put everyone in such deep debt that Americans are working two or three jobs to make ends meet.

The very dark cloud that has been looming over our economy is now turning into a perfect storm.

Coronation of King Charles III

2023-05-06T10:05:00.007-04:00

Understandably since 1776 Americans have had mixed feelings about the British monarchy. In reality, most of the legal basis of our freedom and wealth stems from the examples and processes created by the royal courts, inheritance and the Magna Carta.

However, something all American's will love about the Magna Carta: "with regard to the case of James Somerset, and enslaved African, came before Lord Mansfield in 1772, one of Somerset’s supporters, Granville Sharp, argued that Magna Carta prohibited slavery. Mansfield ruled that there was no basis for slavery in the common law of England and Wales, common law that was underpinned by Magna Carta. Any person in slavery in that jurisdiction must therefore be free. In establishing the rights for some, the English barons inadvertently established the rights for more."

The British monarchy represents a reality greater than the dreary dread of politics & infinitely greater than the false promise of revolution. An institution devoted to the strength of nation and state, a triumph of civilization over the godless chaos of anarchy and barbarism.

An American cannot appreciate the inheritance we have without acknowledging the influence of the UK's laws and liberties.

Chadwick Hagan
May 06, 2023

Magna Carta Antislavery Reference - https://www.antislavery.org/magna-carta-slavery/

FocusEconomics Consensus Forecast - China - May 2023

2023-04-28T10:15:00.003-04:00

The economy outperformed market expectations in Q1, with annual GDP growth accelerating to 4.5% from 2.9% in Q4. The lifting of Covid-19 restrictions, fading virus cases and government measures to support the property sector more than offset mild external demand. Looking at sectors, a pickup in services activity drove the reading, while industrial output growth slowed slightly despite the normalization of supply chains. Moreover, the real estate market saw a partial recovery; while housing investment continued to decline, home sales rose year on year in Q1. The economy appeared to end the quarter on a strong footing, with retail sales, credit and merchandise exports readings surprising on the upside in March. The first quarter’s GDP outturn puts the government’s cautious target of around 5% growth for 2023 comfortably within reach.

2023 GDP forecasts have been upgraded for the fourth straight publication. Economic reopening and looser housing restrictions will boost activity. However, slowdowns in developed economies and trade tensions with the West will cap momentum. A further deterioration in relations with the West and renewed regulatory pressure on domestic private-sector firms are key risks. FocusEconomics panelists expect GDP to expand 5.3% in 2023, which is up 0.2 percentage points from last month’s forecast. In 2024, the panel foresees GDP expanding 5.0%.

Consumer inflation eased to 0.7% in March from February’s 1.0%. Producer prices fell 2.5% annually in March, following February’s 1.4% drop. Price pressures should rise later this year as domestic demand and tourism recover, although the upturn will be checked by car retailer discounts, a stronger yuan, reduced supply disruptions and milder external price pressures. Our panelists forecast that consumer inflation will average 2.3% in 2023, which is down 0.1 percentage points from last month’s estimate. In 2024, our panel sees inflation averaging 2.3%.

New yuan loans beat market expectations in March, supported by strong growth in loans to both households and corporates. Meanwhile, the People’s Bank of China (PBOC) cut the reserve requirement ratio by 25 basis points in mid-March. The Consensus is for policy rates to be fairly stable ahead, with the ongoing economic recovery reducing the need for further easing. Panelists project the 1-Year Loan Prime Rate to end 2023 at 3.60% and 2024 at 3.60%. • The PBOC allows the yuan to trade within 2.0% of a reference rate which is updated daily. On 21 April, the yuan was down 0.1% month on month at CNY 6.89 per USD. The yuan is seen gaining ground by end-2023 thanks to China’s economic recovery and the likely end of the Fed’s tightening cycle. The rate differential between the Fed and the PBOC will be key to watch. Our panelists see the yuan ending 2023 at CNY 6.78 per USD and 2024 at 6.66 per USD.

https://www.focus-economics.com/

The Fair Tax Act Can Benefit All Americans

2023-03-09T15:43:00.003-05:00

On Jan. 10, 2023, Rep. Buddy Carter (R-Ga.) introduced H.R. 25, the Fair Tax Act, to replace the current tax code with a national consumption tax known as the FAIRtax. “Each household will receive a monthly prebate based on federal poverty levels and household size that will allow families to purchase necessary goods, such as food, shelter, and medicine, essentially tax-free.

This is similar to our current individual exemption and refundable tax credit system,” said Rep. Carter Reps. Andrew Clyde (R-Ga.), Jeff Duncan (R-S.C.), Kat Cammack (R-Fla.), Scott Perry (R-Pa.), Bob Good (R-Va.), Thomas Massie (R-Ky.), Ralph Norman (R-S.C.), Bill Posey (R-Fla.), Gary Palmer (R-Ala.), Jim Banks (R-In.), and Barry Loudermilk (R-Ga.) joined Rep. Carter as sponsors of the bill.

The beginnings of the Fair Tax originated in the 1990s. In 1995 and 1996, a number of tax reforms attempting to move away from the present income tax were proposed by Republicans.

Steve Forbes promoted the idea of a 17 percent flat tax, and then the first iteration of a fair tax / flat tax bill was introduced in 1999 by Georgia congressman John Linder.

Since then the “FAIRtax” has become the leading tax reform movement in the country. The bill eliminates all personal and corporate income taxes, the death tax, gift taxes, and the payroll tax, and replaces them with a national retail sales tax.

Further, the Fair Tax would eliminate the need for the Internal Revenue Service and the filing of forms and keeping of receipts. Each of taxpayer gets their entire paycheck and the prebate for their family’s size.

Therefore, a taxpayer pays their federal taxes each time there is a purchase of “new” retail goods and retail services.

At the moment, the FAIRtax Act has a good amount of support, but it needs more. Democrats and certain GOP members in Congress are rolling up their sleeves to fight the fight against dismantling our current income tax system. So are special interest groups.

While it’s not surprising that the politicians who oppose the FAIRtax Act may be misguided, or influenced by lobbyists, the irony is that the FAIRtax Act hits tax policy where it matters most, and offers up a worthwhile solution.