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Trade Wars and Big Picture Economics

A Microcosm of Macro Thinking

Fears of a global trade war escalated yesterday, as the US announced tariffs on steel and aluminium imports. How this plays out in the weeks ahead could have major market implications and below we present a selection of the best papers published on the topic in recent weeks.

Of course, trade is not the only geopolitical or economic concern for financial markets at present. Why not give yourself time to step back and think about the big picture... 

Savvy Investor

Trade and Tariffs

Free trade under attack: misconceptions and lessons (DWS AM, May 2018)
(For compliance reasons, this paper is only accessible in the UK)
DWS Asset Management considers three common misconceptions about free trade and draws four lessons that investors should keep in mind when assessing the impact of recent trade tensions.

The End of Sovereignty? Globalization, nationalism and implications (PGIM, 2018)
(For compliance reasons, this paper is only accessible in the United States)
In this paper, PGIM examines the dichotomy between the forces of globalization and nationalism, as well as the implications for financial markets and asset management professionals.

A Roadmap for Navigating Protectionism (BNP Paribas AM, Mar 2018)
As a result of the continued tensions surrounding trade policy and protectionist measures, BNP Paribas describes the carnage would likely result from a trade war, as well as a roadmap for navigating risky trade-related scenarios.

Video: Will Trade War Threats Derail Global Growth? (PineBridge, May 2018)
Markus Schomer discusses why global trade and growth are still accelerating in spite of trade war threats.

Implications of rising trade tensions for the global economy (ECB, May 2018)
This report discusses the possible implications of rising trade tensions for the global economy.

US-China Trade dispute shouldn't derail global economy (Capital Group, Apr 2018)
(For compliance reasons, this paper is only accessible in Europe)
Capital Group examines US-China trade and the impact of a trade war upon multinationals.

China-US Trade War on Hold (Pictet WM, May 2018)
A softened US stance would increase the probability of reaching a final agreement.

Italy and Politics

How Worried Should We Be about an Italian Debt Crisis? (PIIE, May 2018)
As a follow-on piece to a previous article, PIIE discusses the tenuous political environment in Italy and whether rising rates are a harbinger of an impending crisis.

Italian Debt Under Fire (Pictet WM, May 2018)
After the prospect of a populist government last week, investors now have to grasp with the possibility of new elections, maybe in September.

An Investor's Guide to the World's Real Political Risks (Barings, May 2018)
Barings presents an assessment of today’s global geopolitical risks and describes why coordinated responses to further global crises could be unlikely.

Global Economy and Markets

Global Economic Perspective (Franklin Templeton, May 2018)
(For compliance reasons, this paper is only accessible in the EMEA region)
In this issue of Franklin Templeton's monthly Global Economic Perspective document, they discuss the US economic expansion, global growth prospects, and ECB monetary policy.

Global Macro Outlook (AB, May 2018)
(For compliance reasons, this paper is only accessible in North and South America)
Weaker data, particularly in Europe, has raised concerns that the global recovery is under threat. We think that the data are more noise than signal, and we remain confident about the global outlook.

Global Investment Outlook Q2 2018 (BlackRock)
(For compliance reasons, this paper is only accessible in the United States)
BlackRock updates readers on their 2018 investment themes against the macro backdrop of global growth, rising inflation, and economic uncertainty.

Technology Sector Attractive Despite Recent Decline (Capital Group, Apr 2018)
(For compliance reasons, this paper is only accessible in Europe)
Irfan Furniturewala, technology analyst with Capital Group, relates his long-term outlook for the technology sector and is positive on FAANG stocks, despite the myriad of issues that have arisen recently.

Winds of change blow through the US utilities sector (Hermes IM blog, Apr 2018)
The U.S. utilities sector is facing pressure to 'go green' and is in the process of shifting towards cleaner power. Hermes investigates the ongoing transformation within this industry.

Secular Trends

A Silver Lining - Investment Implications of an Aging World (PGIM, 2017)
(For compliance reasons, this paper is only accessible in the United States)
The global population is aging, and institutional investors should be aware of all opportunities created by this demographic megatrend.

Technology: Everywhere and always a deflationary phenomenon (Kames Capital, 2018)
(For compliance reasons, this paper is only accessible in the United States)
Kames Capital examines the impact of technology developments upon inflation.

The enduring link between demography and inflation (BIS, 2018)
The Bank for International Settlements studies demographic trends within a 146-year data set and across 22 advanced economies in order to determine whether these trends can explain increases or decreases in inflation.

The economic impact of population ageing and pension reforms (ECB, 2018)
This article examines the macroeconomic and fiscal implications of population ageing in the euro area and looks at how pension reforms can help to address these challenges.

The Future Fortunes of R-star: Are They Really Rising? (FRBSF, May 2018)
FOMC committee member and FRBSF President John Williams speaks about the factors that point towards r-star (the natural rate of interest) remaining low for the foreseeable future.

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