Dollar Reserve Growth Didn't Fund US Deficit
I spend a lot of time tracking dollar reserve growth. Probably more time than anyone at the Fund. And I absolutely believe that the surge in reserve growth contributed to the rise in imbalances before the GFC. But dollar reserve growth didn't financing the US external account deficit in 25 1/
Europe and China Lead Global Imbalance Reassessment
The risk of an escalation in the Gulf seem reduced for at least a few days. So maybe there will be a bit of interest in my (somewhat novel) reevaluation of the relative contribution of Europe and China...
Jet Fuel Costs Double, Sparking Airline Crisis
Jet fuel prices have DOUBLED to over $200/barrel since the Iran war. Asian airlines and energy suppliers face MAJOR SHORTAGES. SIGNS OF A MAJOR CRISIS ARE APPEARING: Thousands of flights have already been canceled AIRLINES SHOULD SEND A BILL FOR DAMAGES TO...
Markets Underprice Prolonged Iran Conflict, Expect Sharp Correction
Month two. No de-escalation. More troops. Kharg Island occupation being planned. In my experience, markets that price short conflicts and get long ones reprice quickly and painfully. Kharg Island handles 90%+ of Iran's oil exports. The implicit assumption built into current market prices...
Markets Underprice Prolonged Conflict Amid Escalating War
War is entering month 2. No de-escalation signals. More troops being deployed. Kharg Island occupation being planned. Markets priced a short conflict. They haven't priced a long one. $SPY https://t.co/Vbt33yVHPd
Prediction Markets Boost Ceasefire Odds to 55% by End‑April
While there is clear doubt around the market's confidence in the US-Iran having productive talks, the prediction markets have shown a jump (from 39% to 55%) in the probability of a ceasefire by April 30th. Still, that implies a further...
U.S. Backstop Rescues Nations Facing Currency Crises
It's amazing what getting backstopped by the U.S. can do for a nation with a currency crisis.
Strong Dollar, High Oil Trigger Emerging Market Crisis
India rupee: 94/USD. Rs 80,000 crore of foreign capital pulled from India in March alone. DXY near 100. Oil at $112. That combination is an emerging market wrecking ball. Few understand this. https://t.co/urDfdNX6YF
1990 Fed Warned of Dollar Risk After Kuwait Invasion
funny how things change. This is how Fed staff assessed the risks to dollar after Iraq invaded Kuwait in 1990 https://t.co/XydwiGbPI5
Markets Accept Persistent Middle East Conflict If Hormuz Flows
A new geopolitical equilibrium could emerge in the Middle East that includes almost constant kinetic action and YET markets could be OK with that. The 1980 Iran-Iraq war is a good example of that. All that matters is whether ships...
US‑China Trade War Threatens 2025 Economy; Cooperation Needed
NEW: The US and China put parts of the global economy at risk in 2025 through their trade war over critical minerals & technology. Here I explore a novel path for Washington and Beijing to 'cooperate' over *HOW* they reduce their...
Unclear US War Goals Fuel Market Volatility
"US objectives remain unclear, making it impossible to measure progress (and thus the likely length of the war). Statements from top US administration officials give different and at times contradictory assessments of the war; in the absence of measurable objectives,...
Trump’s Self‑negotiation Lost; China Won 2025 Standoff
At the height of the tariff stand-off with China in April 2025, Trump was essentially negotiating with himself - threatening escalation and then pulling back - while China stayed silent. We're at that stage now on Iran. China won the...
US‑Israeli Strike Closes Hormuz, Triggers Global Gas Crisis
Thanks to the US-Israeli attack on Iran, the Strait of Hormuz is ‘closed’. As a result, countries worldwide are facing a gas supply CLIFF-EDGE. LNG from Qatar is NOWHERE TO BE FOUND. US-ISRAELI WAR ON IRAN = MASSIVE COLLATERAL DAMAGE. https://t.co/qE8zgTwxgC
Iran War Hits Potential Inflection Point, Analyst Says
Top market watcher on why this may be a real inflection point in the Iran war https://t.co/mltKPnPYb8 thanks from @AcadSecurities @MorganLBrennan for having us on! The segment, despite being before the 5 day pause post, hasn't aged too badly :)
Iranian Media Denial Halts Bond Yield Moves
Iranian media denied that negotiations had taken place, according to Bloomberg. Some bond yields went flat briefly on this news.
World Trade Revolves Around EU, China, and US
The basic geography of world trade is centered around three poles #1 EU, #2 China, #3 US. Chartbook Top Links of the day just dropped: https://t.co/DG0iBZBvfZ
Middle East Conflict Drives Global LNG Exports to Six‑month Low
Global LNG exports drop to the lowest level in six months due to Middle East conflict ⚠️ 🚢 This basically erases supply additions from the US and elsewhere during that period The drop is primarily from Qatar — and to a...
US Begins NAFTA Talks, Leaves Canada Out
The U.S. has kicked off renegotiating NAFTA, but Canada was left out of the first round between Mexico and the U.S. Full Newsletter: https://t.co/FCIjtRSKp6 #nafta #trade #geopolitics https://t.co/t6Gl84ia32
Sell Imbalance Hits 2022 Levels, Hedging Costs Soar
From GS on Flows (BBG): - Biggest sell imbalance since 2022 (Friday) - Stresses no longer “ignored” - “can start talking at what innings we’re in because the game has finally started” - Hedging is so expensive that to break even, would need indexes...
Iranian Oil Routes to China via SWIFT Workarounds
Pfft. None of the desanctioned Iranian oil is going anywhere other than China, because only China can shield their payments from SWIFT. All of these masterful gambits assume the Iranians are idiots. They’re evil. Not idiots.
ADNOC Cuts LNG Output as Hormuz Closure Tightens Gas Market
Adnoc is now reducing LNG production because Strait of Hormuz is shut, tightening the global gas market 🇦🇪 ⚠️ Adnoc has “made temporary operational adjustments to production of Liquefied Natural Gas” They’re working with customers to fulfill commitments “wherever possible” https://t.co/dLBNlgiLER
PBoC Governor Says Global Deficits Unchanged in 40 Years
1/4 I am a little surprised by these comments from the governor of the PBoC. According to Yicai, yesterday he said that "the world’s major deficit countries are the same as 40 years ago because of the inherent flaws in the...
Iranian Rial Gains 12% Amid Early War Turmoil
Through the first 3 weeks of the US-Israel war on Iran, the Iranian rial has demonstrated surprising resilience. It has APPRECIATED 12% against the USD. https://t.co/eDotRHK77c
Kharg Island Seizure Won’t Halt Iran’s Oil Exports
[MUST READ] Iran’s Kharg Island - U.S. seizure would not necessarily end exports or re-open the Strait: https://t.co/yRYH1g1UAM
Polymarket Predicts 28% Chance Hormuz Reopens by April
Polymarket, a large prediction market, shows only a 28% chance that the Strait of Hormuz will open for normal traffic by the end of April. TRUMP & NETANYAHU’S WAR ON IRAN = MASSIVE COSTS. https://t.co/slk6gIZTUJ
Xi Pushes RMB as Global Reserve Amid U.S. Isolation
The U.S. is accumulating enemies faster than you can shake a stick. Chinese President Xi SEES AN OPENING. Xi has made a new push the renminbi to be a global reserve currency. https://t.co/qMpgMEp3Fo
Escalation Risks Iran Mining Hormuz, Deepening Humanitarian Crisis
At what point does this escalation by Trump-Netanyahu actually prompt Iran to mine the Straight of Hormuz... with these ships on it?! Then this humanitarian crisis goes from lock-down to existential pretty quickly.
Sachs Predicts US Loses Geopolitical Edge to China
Distinguished Columbia Univ. Prof. Jeff Sachs on current geopolitics: "In many ways, the US can not compete with China [in both manufacturing and diplomacy]... And I think we all feel it's not a temporary phenomenon but really the end of the...
Capturing Kharg Island Won’t Halt Iran’s Oil Flow
KHARG ISLAND — a thread: Trump has talked about taking Iran's Kharg Island for 40 years. The problem? Capturing it won't shut down Iran’s entire oil export system. And thus it won't lead to Hormuz re-opening fast enough. 🧵1/10 @Opinion FREE-TO-READ: https://t.co/ZOYtq3KESE https://t.co/xtLBqPShB6
Asia Reunites Historically; U.S. Unprepared for New Reality
In 2011, fifteen years ago, I wrote an essay for @TWQgw on the reemergence of an interconnected "historical Asia" instead of the fragmented "Cold War Asia" anomaly to which Americans had grown accustomed. A fantastic essay in Swarajya on the...
Iran's Hormuz Threat Emerges as Top Market Risk
⚠️ Iran threatening to shut down the Strait of Hormuz is NOT just geopolitical noise. It’s the single biggest macro risk in the market right now. ~20% of global oil flows through that choke point. If it closes: • Oil spikes • Inflation rebounds • Risk...
IMF Urges China to Boost Consumption, Cut Subsidies
IMF First Deputy Managing Director Dan Katz: "China can do more to increase consumption and domestic demand—especially for services—by boosting household incomes and reducing incentives for precautionary savings. That means shifting resources away from industrial subsidies and infrastructure." https://t.co/2Rvhxa5jsN
Satellite Shows Iran Exporting Oil with US Backing
Iran’s Kharg Island as seen **today** by the @CopernicusEU Sentinel-2 satellite. Iran is loading multiple tankers, exporting oil and making $$$ — now, with the help of the White House. The idea that Trump admin is using Iranian oil barrels...
Week of High-Stakes Events Deepens Economic Fragility
Here are the links to the weekly look at the global economy and markets—a discussion of a week characterized by both high-stakes developments and an increasingly fragile economic and financial outlook. https://www.linkedin.com/feed/update/urn:li:share:7441107748030693376/ https://open.substack.com/pub/mohamedelerian/p/the-weekly-look-at-the-global-economy-7d1?r=33wip&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true #economy #markets #middleeastwar
China, Korea, Taiwan, Singapore Led Pre‑
But it is more accurate -- Before the latest oil shock the really big surpluses were China, Korea, Taiwan and Singapore (more an investment income dollar but ... )
Trade Slowdown Milder than Expected, but Conflict Threatens Sharper Dip
Global merchandise trade will slow less this year than the WTO predicted, but risks a sharper downturn if prolonged Middle East conflict keeps energy prices elevated https://t.co/nhU9axrKFm via @b_muzz https://t.co/Vo7S63a3JN
Iran Risk Unpriced, Trump‑Netanyahu May Ignite Nuclear War
Iran risk is still not priced in. And neither is Trump-Netanyahu’s potentially diabolical reaction: US-Israel nuclear war
US Markets Hold Up as Global Stocks Falter Amid War
This WSJ chart comparing the decline in US and international stock markets reflects the underlying economic reality: While the global economy is reeling from the Middle East War, the US is relatively better positioned. This is especially true for energy where the...
U.S. Leaders Debate China Without Ever Visiting
Washington Is Flying Blind on China Americans talk incessantly about the need to compete with their country’s greatest rival and how to do it. Yet many U.S. policymakers have never been to China. Impacts quality of the debate clearly... https://t.co/ghNp4u7uqt
Trump, Iran Threaten Gulf Energy Targets, Raising Global Crisis Risks
TEL AVIV/JERUSALEM/WASHINGTON, March 22 (Reuters) - U.S. President Donald Trump and Iran threatened to escalate their war by attacking energy facilities in the Gulf, a potential widening of hostilities which could deepen a regional crisis and add to concerns in...
Iran Rakes $2.5B From Oil Amid War
Aside the relaxation of US sanctions on Iranian oil, for Tehran the big win is the fact that >20 days into the war, it’s still exporting oil via Hormuz. At ~1.5m b/d (and assuming $85 a barrel) that’s a ~$2.5...
China's Premier Acknowledges Trade Surplus Amid Export Surge
1/4 Bloomberg: "Chinese Premier Li Qiang has responded to growing calls from trading partners to address a rising trade surplus, with China’s exports continuing to surge in the first two months of the year." https://t.co/EMOs1RWaAX
Trump's Iran Ultimatum Threatens Supply Chain Stability
Trump gives Iran a 48 hour ultimatum and warning. Iran replies. Will things get worse? Supply of supply chains.
Modi’s Calm Highlights India’s Strategic Autonomy Advantage
While the US and Israel escalate, Modi plays it cool. INDIA'S STRATEGIC AUTONOMY = A WINNING HAND. https://t.co/T87Vj30GN9
Middle East War Expands Threat to Global Supply Chains
This, from Bloomberg, illustrates how the Middle East War threatens a widening set of global supply chains. (On Monday, the FT is scheduled to post my column on a separate global risk that has yet to receive sufficient attention: the likely...
Iran's Qatar Attack Fuels US LNG Demand Surge
Iran’s attacks on Qatar’s LNG export plant could be one of the biggest tailwinds yet to the fast-growing US LNG sector 🇺🇸 🚢 🇹🇼 Taiwan said it plans to buy more LNG from the US from June 🇧🇩 Bangladesh is exploring...
Trump Demands Iran Open Hormuz Strait in 48 Hours
TRUMP GIVES IRAN 48 HOURS TO OPEN STRAIT OF HORMUZ=== this ain't no tariffs deadline
China No Fixed Taiwan Timeline, No 2027 Invasion Plan
The US intelligence community now assesses that China has no fixed timeline for unification with Taiwan and that no invasion of Taiwan is planned for 2027. I'm no China expert but this dovetails with how I see Xi and the upside...
China Onshore Stocks Crowned Top Asset Amid Conflict
With the onset of the US-Israeli attack on Iran, my good friend Chris Wood, Global Head of Equity Strategy at Jefferies, believes China’s onshore stocks are the top assets. CHINA = WINNER.