Investments Trade Log

[zbigi]

I'm still hopeful enough significant trade partners agree to lower bidirectional barriers that the holdouts won't throw a wrench into the works. We'll see over the next 90 days.

I'm mostly worried that the "barriers" don' really exist, so there's nothing to negotiate. IOW, the trade deficit with most countries is caused by comparative advantage (countries with cheap labor being more efficient at low-value add labor than the US) and cumulative investment decisions of US companies from the past couple of decades, and not by foreign protectionism. It's corroborated by the foreign "tarrifs" demonstrated in the infamous table by Trump last week not being tarrifs at all, but simply numbers computed using an arbitrary forumula.
So, I'm worried that other countries, China especially, don't have much room to make major concessions regaring trade barriers. In practice Trump may choose to extract some kind of tribute out of each country (there are already talks that EU should buy hundreds of billions of dollars worth of US natgas to help fix the deficit "problem") - but, for example, what can Vietnam give the US that will be the equivalent to equalizing a large trade imbalance?

[chenda]

It's not like the US is introducing tariffs into a world with a totally free and fair trade market up until two weeks ago.

No but they are much higher than what other developed nations charge.

Now is anyone going to take a punt that the China tariffs might be suspended?

[loutfard]

Those yields did jump during "tariff week" but they had fallen just as sharply immediately before, and neither reached the 12-month highs they were at earlier in 2025. I'm not a bond market savant, but just looking at yield charts nothing looks terribly out of place compared to recent activity. I must be missing something?

US bonds and stocks went down together, while gold is up. Treasuries are not fully playing their expected role as safe havens anymore.

I believe the primary way the administration could damage reserve currency status is to ignore the deficit and the debt.

A government with external financing requires trust first and foremost. Trust in turn requires at least a modicum of predictability. The current administration sorely lacks that.

[loutfard]

No but they are much higher than what other developed nations charge.

Now is anyone going to take a punt that the China tariffs might be suspended?

I speculate that will only require a further fall in treasuries.

[IlliniDave]

No but they are much higher than what other developed nations charge.

Now is anyone going to take a punt that the China tariffs might be suspended?

I don't think tariff rates per se tell the whole story, for example Canada imposes de facto quotas and price controls on many US agricultural products. The one that gets a lot of attention is the 245% tariff on dairy imports over a certain amount, and the price minimums limit the ability of the US to gain competitive advantage though cost. Those are measures to protect the Canadian dairy industry, so understandable in that respect. But why should the ability to enact protective measures only be allowable in one direction?

China is another matter. I expect at some point the tariffs will be lowered, but China is well known to aggressively steal intellectual property, engages in widespread espionage, engages in government-subsidized dumping to drive domestic producers out of business, uses proxy nations like Mexico and Vietnam who have more favorable trading terms with the US to move their manufactured goods into the US and avoid tariffs, and in some situations have deplorable labor practices. So there's a whole lot to unwind there. It's almost like the US is giving the rest of the world an opportunity to step in and take as much of China's share of the US market as they can, without being undercut by not-so-fair/free trade practices. I don't know if that's what really what the administration is doing, but it seems like there's an opening for nations willing to let US products into their markets.

[IlliniDave]

US bonds and stocks went down together, while gold is up. Treasuries are not fully playing their expected role as safe havens anymore.


A government with external financing requires trust first and foremost. Trust in turn requires at least a modicum of predictability. The current administration sorely lacks that.

Okay, I get what your saying but I'm hesitant to base such a conclusion on less than two weeks activity. Bond prices are still above what they were earlier in 2025.

[chenda]

But why should the ability to enact protective measures only be allowable in one direction?

Well I agree both sides should be entitled to do so but it should be done on a reciprocal basis (or at least a transparent basis) My understanding is both countries have protected their dairy industries to some extent, for better or worse. We maybe drifting into politics....but it will be interesting to see what happens to the bond market in the next few days.

[IlliniDave]

Well I agree both sides should be entitled to do so but it should be done on a reciprocal basis (or at least a transparent basis) My understanding is both countries have protected their dairy industries to some extent, for better or worse. We maybe drifting into politics....but it will be interesting to see what happens to the bond market in the next few days.

In the last few days Jacob updated the politics guidance and I believe even though in the wider world the topic is immersed in perjorative partisan rhetoric, talking about the fact of trade negotiations and tariff/trade barrier restructuring in the context of investment decision making (sans the pejorative political partisanship) is permissible. (@jacob, If I'm misunderstanding, please let me know).

I'm unsure if Canadian dairy faces any barriers coming into the US. It's possible. But in my local grocery store (a largish one) I can readily find imported dairy, mostly EU and UK, but some from Canada as well. It's generally slightly higher priced than domestic, but not always, and I'm a stone's throw from Wisconsin which is one of the largest dairy-producing areas in the country, meaning prices for domestic dairy are very favorable around here. I am virtually positive the US does have some protective measures in place for Canadian timber products and lumber. What I don't know is whether they are largely newish (i.e., appeared in the last 3 months) or are more longstanding. Countries A and B don't generally have the same list of goods and services (another area where nations impose barriers) to trade with each other, making pursuit of net fairness a nuanced endeavor.

Coming back to the thread topic, my investment trade decision at this juncture is that it is way too soon in the process to make any substantive decisions. A week of volatility isn't enough to throw out a long term investment plan I spent years crafting. I generally don't follow bonds closely. The idea expressed above that they are a safe haven is a novel idea to me. I hold a significant dollop in a fund because their returns at times are uncorrelated with stock market returns. My safe havens are real estate and FDIC-insured cash. Neither of those are robust havens in an absolute sense, of course. For better or worse, I'm an optimist who doesn't think the world is teetering on the brink of collapse just yet. I'm not trying to sell a hold strategy to anyone. We've all got to do what allows us to sleep well at night.

[jacob]

In the last few days Jacob updated the politics guidance and I believe even though in the wider world the topic is immersed in perjorative partisan rhetoric, talking about the fact of trade negotiations and tariff/trade barrier restructuring in the context of investment decision making (sans the pejorative political partisanship) is permissible. (@jacob, If I'm misunderstanding, please let me know).

If you guys are not misunderstanding it, you're definitely going right up to the line. Normalizing this kind of debate, where politics is obviously involved, makes it harder to keep the peace in the future.

Since politics does affect a lot of people these days, I am going to allow people to talk about how some politics affects them personally. You can talk about what you have done or what has been done to you or what you're actively going to do. The reason why this is allowed is that you're stating an objective fact AND more importantly that that fact is NOT up for debate.

So ... you can talk about actual investment decisions either of you have made in dairy or lumber, because that is not up for debate and therefore not up for infighting and therefore doesn't set a bad precedent.

As such what is NOT helpful is analysis, opinions, or debate about the political context. What is also NOT helpful is posting about [politics] you read in your newspaper or saw in your algorithmic video feed.

... because this just results in a "he said, she said", "I believe...", "I don't believe".

And that seems to be what you're actually doing.

Note, that I can't control or see what anyone puts in PMs. Thus, if anyone feels compelled to give their hot take on [political analysis] feel free to PM that person(s) and debate them via PM if you must. Also note, that the forum software makes it possible to block people in case you don't care for their PMs.

So if you and @chenda (and others) could move this to PM, it would be much appreciated. Discussions are off topic for the investment log anyway.

[IlliniDave]

Gotcha, and apologies for getting too close to the line. Please delete any of my recent posts you find objectionable. I'll take my newfound appetite to learn about/discuss international trade away from ere.

[CzechRetireeWannabe]

Bought quite new ETF "WisdomTree Europe Defence UCITS ETF EUR Unhedged Acc" @ 26.240 EUR
Sold a little of "ISHARES S&P 500 IT SECTOR" @ 28.910 USD

[Seppia]

I took advantage of the mini bump in recent days and sold the entirety of my BLV position, putting the proceeds into a money market fund at essentially the same yield.
Including dividends, I made… the dividends.
It was one of those situations where the risk outweighs the potential reward.

I may be buying some TMO with part of the proceeds.