|
Feb 19, 06:28
|
@joequant @stray278 and go where?
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 05:25
|
@Iamhere4theAds @gdp1985 Happily technical balance of payments analysis mostly goes over the heads of the worst folks here. It isn't like talking about overcapacity or export controls and the like; no one has gone after me for posting about the huge fx settlement numbers as an example
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 05:15
|
@AnnaEconomist Xi and Trump are great friends, and the bilateral deficit with China is down. Trump isn't really pushing personally --
pressure here is coming from Europe, and some of the saner bits of the administration not POTUS imho
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 05:11
|
Tweet 9 should be the exchange rate is NOW substantially undervalued; hopefully clear in context
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:58
|
@a63738464 @AnnaEconomist 25 point thread out now ...
Anna, the Fund needs to hire you to do a simple current account model for China. They still haven't gotten CA forecasting down!
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:57
|
So a much improved staff report --
But the IMF still needs to go much further
And it is being let down, strangely, by weaknesses in its technical BoP work
26/26
https://t.co/87qyI9nGnw
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:54
|
Bottom line is that the IMF's current account forecast is at odds with its overall message -- if the CA surplus will naturally fall under 2 percent of GDP without real exchange rate adjustment & without pro consumption policies, there is no urgent need for a new growth model
25/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:52
|
Finally, there are some uber-technical factors (the surge in the foreign assets of the state banks, which are only consistent with low reported errors with a higher reported surplus) that point to a higher reported surplus in 2026
24/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:51
|
And in fact the high frequency indicators of investment suggest a new cyclical downturn in investment in q4 --
23/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:50
|
And last I checked the IMF didn't think the current elevated level of manufacturing investment was sustainable, and also doesn't think China is doing enough to support household consumption/ reduce savings
22/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:49
|
And there is nothing in the IMF's underlying analysis that suggests a cyclical recovery in demand in the near-term -- the IMF, for example, clearly doesn't think the real estate downturn is over
21/ https://t.co/4STwoQL4Ns
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:48
|
The reduction in the current account surplus is also at odds with the depreciation in the real effective exchange rate in 2025 (which will impact the 26 and 27 numbers) and the quite undervalued level of the RMB
20/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:46
|
To state the obvious, the IMF cannot simultaneously forecast that net exports will add a percentage point to China's growth over the next two years and also forecast that the external surplus will fall by a half a point
19/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:45
|
I hardly know where to begin with all the things that are wrong with this forecast. It is clearly at odds with the 4.5% of GDP surplus in q4, which led Goldman to increase its 2026 surplus ... It is also at odds with the IMF's growth forecast
18/ https://t.co/Orq4BPAgr4
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:42
|
Third, the IMF continues to get an F at current account forecasting. China's current account surplus is not poised to fall in 2026 & 2027
17/
("the trade surplus is projected to contract, with the current account surplus declining from a projected 3.3 percent of GDP in 2025 to 2.8 percent of GDP by 2027. Over the medium term, the current account surplus is projected to gradually decline to around 2 percent of GDP")
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:39
|
Saying that China's reported BoP goods number (after the 2022 methodology change) is "adequate for surveillance" lets China off the hook, and basically gives a China a free pass for data changes that wiped a percentage point off the reported CA surplus
16/ https://t.co/uE6i0fv9Qp
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:38
|
Second, the Fund in no way hinted that China's reported current account surplus is understated, and that it would be substantially larger if China used its pre-2022 balance of payments methodology and had a plausible investment income line
15/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:36
|
And with settlement now chalking in at $100b a month (give or take), it is just isn't plausible to ignore backdoor intervention. More generally, the Fund needs to recognize that China can and does target the exchange; it isn't just a derivative of monetary policy
14/ https://t.co/TxgfmrBQsW
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:34
|
If I were a part of the Treasury's fx/ China team I would be asking for a substantial raise, as the IMF's higher paid staff are FAR behind the Treasury in their analysis of exchange rate issues ...
13/
https://t.co/YkSB5aogXo
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:33
|
First, and most inexcusable, the IMF's analysis of China's exchange rate management remains thin -- this chart emphasizes the wrong variable (spot v the fix) and there is no analysis of the role of the state banks in fx management
12/ https://t.co/JOZPlT7Ivf
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:28
|
The Fund's argument around external imbalances though would be stronger if the IMF addressed some remaining gaps in its analysis, and if demonstrated a bit more expertise in China's balance of payments.
Let me highlight three gaps.
11/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:26
|
Those calculations were based on the Fund's expectation that the 2025 surplus would be 3.3% of GDP. The actual number was 3.7% of GDP (Q4 exceeded expectations) so Fund's methodology actually implies a bigger undervaluation than in the staff report
10/
https://t.co/XinegO4ohY
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:24
|
The staff report also notes that the gap between China's current account norm and the reported current account surplus hsa widened, and thus the real exchange is not substantially undervalued (12-21%)
9/
https://t.co/abo8EAjUB5
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:22
|
And the IMF's recommendations for how China can do more to support consumption (and lower the insane rate of household savings) were on point. I particularly appreciated the renewed attention to the very regressive structure of taxation in China
8/
https://t.co/dz1WlkyKQt
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:20
|
Paragraph 12 also effectively shows how LIMITED fiscal support for consumption has been --
7/ https://t.co/kQEZkaJJAg
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:18
|
The IMF's analysis of the property sector and developer distress continues to be very strong
6/ https://t.co/89Tn19FYr8
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:16
|
I very much appreciate this shift; back in 2024 the IMF's policy advice was basically to use monetary easing and net exports (via a weaker exchange rate) to offset fiscal consolidation. It has recognized that this advice needs to evolve.
5/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:15
|
It is subtle, but the IMF also caveated its continued call for monetary easing in an important way in para 35:
"monetary loosening should be considered only as a part of a broader policy package that ensures a reduction in both the domestic and external imbalances and reflates the economy. Monetary easing in isolation could result in unwarranted further real exchange rate depreciation"
4/
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:13
|
The IMF's fiscal policy advice has also shifted. back in the summer of 2024, the Fund was pushing for the rapid initiation of a big fiscal consolidation. Not anymore
3/ https://t.co/IUL7k6lgZe
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:09
|
James Mayger and Jorgelina Do Rosario of Bloomberg reminded me that the 2024 staff report didn't mention external imbalances at all -- so there has been an important evolution in the IMF's thinking in the last couple of years
2/
https://t.co/TQE3udz6ar
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 04:07
|
The latest IMF analysis of China (The staff report/ Article IV) highlights that China's export driven growth has come at the expense of its trading partners.
That is welcome, and very necessary message
1/many https://t.co/RTYAzRkFAv
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 03:23
|
@Luissilv2000 yes, export growth is positive -- but beware of y/y comps for january (not usually a peak month for Argentina ag exports, and China doesn't always buy from Argentina). i need to look at the overall data
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 02:22
|
So I applaud the IMF's new message --
But think the IMF still has a lot of work to do if it wants to get a decent mark for the quality of its balance of payments analysis ...
more later
https://t.co/ndMIeWXLEn
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 02:21
|
Will have a lot more on this later (have a basketball game to watch) but the fall in the surplus in 2026 and 2027 is inconsistent with the 2026 real depreciation.
It is also inconsistent with the IMF's forecast that net exports will contribute a percentage point to growth!
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 02:21
|
Forecasting external imbalances away absent exchange rate moves or policy shifts is a cardinal sin in my book; an external forecast that is blatantly at odds with the growth forecast (see the NX contribution) is the kind of error the IMF isn't supposed to make https://t.co/kodhwzFmsY
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 02:18
|
I will give the IMF a free pass for missing the 2025 current account surplus (it was 3.7% of GDP not 3.3% of GDP), but there is NO basis for forecasting that it will fall to 2.8% of GDP over the next two years! https://t.co/pVDpchoGzi
|
N/A |
—
|
—
|
No analysis
|
|
Feb 19, 02:12
|
The messaging around the Article IV is all about external imbalances (good), and the Fund has changed its fiscal advice (very good). But good god the actual analysis of China's balance of payments is almost non-existent, and the current account forecast is a disaster!
Gerard DiPippo (@gdp1985)
@Brad_Setser where are you? Article IV is out and it's all about China's external imbalances. https://t.co/Dtmk5HbuF2
|
N/A |
—
|
—
|
No analysis
|
|
Feb 18, 23:19
|
@tedfertik @petereharrell @adam_tooze this bit is what has my antenna up for some changes v the structure suggested earlier ("The proceeds are structured so Japan earns its return, and America gains strategic assets")
|
N/A |
—
|
✓
|
Batch analyzed (2 ideas in batch of 50)...
|
|
Feb 18, 23:17
|
@tedfertik @petereharrell @adam_tooze The Commerce messaging suggests that Japanese investors will get a return (unlike the structure suggested earlier) and I have trouble imaging Softbank doing the deal if all the upside goes to someone other than Softbank. Hence my confusion
|
N/A |
—
|
✓
|
Batch analyzed (2 ideas in batch of 50)...
|
|
Feb 18, 22:40
|
@tedfertik @petereharrell @adam_tooze I am still a bit confused about the actual deal structure. maybe Peter has sorted it out
|
N/A |
—
|
✓
|
Batch analyzed (3 ideas in batch of 50)...
|