Just offering up a slightly different take. It’s more a function of the foreign demand for U$D assets in general. Looking at the current account balance is informative in that regard.
A simple interpretation of this : since the USA runs a trade deficit, it means we are kinda asking the exporters to the USA to “put it on our tab”.
Now the $ denominated assets can be a lot of things. Public debt, private debt, real assets (land & buildings?) or equities.
So not entirely the same as “the future output of the US economy”, but neither is it entirely unrelated to it.
Largely because of Japan’s terrible demographics. No way around that for them without immigration (which they block).
In addition, we are likely seeing the beginning of the end of the carry trade (and when this pops its going to be interesting as we are talking many billions).
Yeah, I wonder…
Japan has to import energy. Mostly fossil fuels today- LNG,coal,oil. Which means it will need to have exports somewhere along the away. Developing renewables is possible, but a pretty long time horizon. That Fukushima disaster put any nuclear on hold.
Since over 90% of the petrol imported came via the strait of Hormuz…they are in quite a short term bind. Inflation seems inevitable, at least in the short term.
Selling off US bonds may work, but it is crucial what assets they acquire in replacement. Buying controlling interests in energy supply providers might work..I dunno, way out of my knowledge.
And I still think Canada should drop the EV tariff on China, cut a deal to swap oil for investment in an EV plant or 2, and try to link up the existing auto businesses into the supply chain.
I expect the auto trade with the US will disappear entirely if US tariffs on Canadian car production stay above 15%. Not sure Canadian car manufacturing will be viable without some US exports. If it disappears Canada will just buy its cars from cheapest supplier, probably China. Not sure China can be enticed to manufacture in Canada unless they could export to the US market.
Handles Panamax..but not super large tankers now in use.
Thinking that Port Churchill would be a good alternative. Avoid the engineering hassle of putting a pipeline thru those pesky mountains
I am now using the two thirds international rule (someone posted the paper on here a few months ago) for my portfolio. It looks like it might come in handy.
