Keeping trade in the spotlight

17 Feb 2025 2 min read

Daily update

Selected European countries are meeting in Paris to discuss the Russia-Ukraine war. This is not likely to be market moving. Europe has allocated about 14% more money to Ukraine than the US, and countries like Germany do spend military aid on new production rather than using existing stockpiles. However, the sums involved are still economically small, limiting their impact.
The EU December trade balance is not traditionally market moving, but the US administration鈥檚 obsession with trade taxes has thrust this into the limelight. There is speculation about European responses to trade taxes including non-tariff measures (e.g. reciprocity in agricultural standards, and regulation of technology companies).
Japanese fourth quarter GDP was stronger than expected, with some positive revisions to the previous quarter. Business spending bounced back after a third quarter decline. Net exports were also stronger than expected, which may be due to US companies stockpiling in anticipation of an increased tax burden.
There have been calls for the impeachment of Argentinian President Milei after their social media account endorsed a crypto, the price of which went first to USD 5,000, then to less than USD 1. Bursting bubbles, whether crypto, NFTs, or tulips have similar economic effects. Wealth is transferred from bubble buyers to bubble sellers, and tends to depress consumption.