We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: Global trade, Imports by country, U.S. Mexico relations, Mexico jumps China in trade, Trade war, U.S. China relationship, Mexican equities, Mexican Peso, Tesla shareholders, retail investors, SPY ETF, Nvidia stock, Nvidia rumors, Nvidia insiders sell, Chinese economic troubles, Chinese equities, Chinese Yuan, Powell and the FED, Interest Rates, FOMC decision, Debt from the government, SEC ends misleading fund names, ESG investing, MAAM turns 22.
Mexico “Trumps” China
Bloomberg ran an article last week that said Mexico had just eclipsed China as the largest exporter to the U.S. Bloomberg used a 12-month rolling average to conclude this number. The Wall Street Journal and MarketWatch reported that Mexico overtook China for all this year through their simple calculation for exports which measures quarterly trade on a balance of payments basis. Some other publishers reported that Mexico surpassed China earlier this year. The reporting by each outlet and database is inconsistent in timing but not on the major theme we are exploring.
We will not get into the weeds on these two publishers sparring as it is irrelevant to us. Either way, Mexico now is a larger partner than China for the U.S., a huge milestone. The part that interests us is Mexico surpassing China as a trading partner for the U.S.
As the U.S.-China relationship has deteriorated for several reasons, Mexico has slowly slid in to fill the void. This pivot by the U.S. is strategic as the U.S. attempts to decrease its dependence on Chinese products. The relationship between China and the U.S. began to sour during the Trump administration when the former President demanded China buy American products and placed tariffs on the country. The relationship continued to deteriorate at the onset of COVID-19 when China hid the virus from the world. Even though many believed Biden would reverse Trump’s policy, which was nationalistic and anti-China, he did not. Most of Trump’s Chinese trade barriers and tariffs remain in place today as the world’s largest economies combat a major trade war that could accelerate rapidly.