Wednesday, August 5, 2015

US Trade Defict Increased in July


Merchants external to the U.S. lowered the prices of their exports to the U.S. in USD terms and this (of course) resulted in an increase of imports and THEN a resultant strengthening of the USD in forex terms.


Americans bought more drugs and cars from Europe because the austerity-on-steroids Europeans desperately lowered the price for these products in USD terms FIRST.

7 comments:

mike norman said...

"Makes the euro harder to get," as we trade down to parity.

No, but seriously...this price discounting should be ending it seems, because they are experiencing an export boom. Demand at current exchange rates is very strong. No?

Matt Franko said...

Could be stabilizing in here Mike... at least short term...

but iirc BMW (and possibly I heard Toyota?) had a bad number yesterday and steel price keeps falling and oil is back below $50 down near $45 and I think Brent hit below $50 again this week... container rates down 22% last week... so if they want to discount further they probably can...

Raw input prices are still falling as well as transport/logistics costs and these are near real-time data... very recent data .. we just have to keep monitoring the situation as best we can...

rsp,

Matt Franko said...

Mike this on Steel from just Monday:

http://www.meps.co.uk/viewpoint715.htm


Its soooooo bearish it reads like a dark comedy or something....


Matt Franko said...

Mike I think in the past, one could see bearishness like this and then fade it BUT, what would reverse the bearishness was that we would get a fiscal response that would end up turning it around....

I'm not so sure we see that these days tho... seems like instead of the fiscal response we are getting continued fiscal austerity (we are flatlined at the $4.1T at best...)

iow If by somehow we could get the $4.1T up to $4.3 or $4.4 then you would want to fade this... but I just dont see how we get the increase in here... the only potential thing I see is a rate increase increasing the flows via Interest on Treasury Securities but short of that, I dont have much hope...

Now we have to see how the foreigners react to this in their pricing strategies.... they may lower prices even further in reaction to this in order to get their desired sales gains or market share gains...

rsp,

Anonymous said...


" ...and oil is back below $50 down near $45..."

http://dailyreckoning.com/the-next-energy-sector-collapse-coming-soon/

Matt Franko said...

Toyota here:

http://fortune.com/2015/08/04/toyota-earnings-disappointment-overtaken-sales-drop/

If we were to get a fiscal response at this point then their problems would go away... but that doesnt look forthcoming... so now what are they going to do?

Joe said...
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